[Senate Hearing 110-1204]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 110-1204

 
                 U.S. COAST GUARD BUDGET AND OVERSIGHT

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

                                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

                             FIRST SESSION

                               __________

                             APRIL 18, 2007

                               __________

    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

                             FIRST SESSION

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

     SUBCOMMITTEE ON OCEANS, ATMOSPHERE, FISHERIES, AND COAST GUARD

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


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on April 18, 2007...................................     1
Statement of Senator Cantwell....................................     1
Statement of Senator Lautenberg..................................    18
    Prepared statement...........................................    19
Statement of Senator Nelson......................................    26
Statement of Senator Snowe.......................................     3
Statement of Senator Stevens.....................................     5

                               Witnesses

Allen, Admiral Thad W., Commandant, Department of Homeland 
  Security, U.S. Coast Guard.....................................     6
    Prepared statement...........................................    10

                                Appendix

Caldwell, Stephen L., Acting Director, Homeland Security and 
  Justice Issues, U.S. Government Accountability Office (GAO), 
  prepared statement.............................................    49
Inouye, Hon. Daniel K., U.S. Senator from Hawaii, prepared 
  statement......................................................    49
Reserve Officers Association of the United States, prepared 
  statement......................................................    69
Response to written questions submitted to Admiral Thad W. Allen 
  by:
    Hon. Maria Cantwell..........................................    77
    Hon. Daniel K. Inouye........................................    72
    Hon. John F. Kerry...........................................    85
    Hon. Frank R. Lautenberg.....................................    85
    Hon. Trent Lott..............................................    93
    Hon. Olympia J. Snowe........................................    89


                 U.S. COAST GUARD BUDGET AND OVERSIGHT

                              ----------                              


                       WEDNESDAY, APRIL 18, 2007

                               U.S. Senate,
Subcommittee on Oceans, Atmosphere, Fisheries, and 
                                       Coast Guard,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met at 2:30 p.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. This Senate Committee on Commerce, 
Science, and Transportation, Subcommittee on Oceans, 
Atmosphere, Fisheries, and Coast Guard will come to order. This 
afternoon we are having a hearing on the U.S Coast Guard budget 
and oversight of the budget proposal.
    We welcome Admiral Thad Allen, Commandant of the U.S. Coast 
Guard, to be before the Committee today. I will point out to my 
colleagues and staff that we also have written testimony 
submitted by Steven Caldwell from the GAO and we'll have that 
available and obviously the hearing, like all hearings, we'll 
make the record open for two weeks post the hearing for 
additional questions that we might propose to Commandant Allen 
and to Mr. Caldwell. Before we get to you Admiral, if I could 
make some remarks and then I am sure my colleague, Senator 
Snowe, if she arrives in time, will want to make some comments 
and then we'll turn it over to you.
    I'd like to thank everyone for joining us here today 
because I do believe that this important hearing on the Coast 
Guard and its Fiscal Year 2008 budget request is critically 
important.
    Admiral Allen, I think you have been now before this 
Committee numerous times even though your tenure as Commandant 
has been brief.
    But as you know from those time periods in your previous 
service that America expects a lot out of the Coast Guard. You 
are constantly being asked to balance the increased demands of 
an evolving homeland security mission while ensuring that the 
traditional missions are not cast aside.
    When confronting the challenges facing the Coast Guard and 
as we look at your budget, we must keep in mind that enormous 
challenge of mission balance and the fact that security is a 
critical component of that and probably no place knows that 
better than Washington State where we have one of the busiest 
and most complex waterways in the world--that is combined with 
Seattle and Tacoma, we're the nation's third busiest port. Last 
year more than 4 million cargo containers moved through our 
ports. Seattle is also one of our busiest ports as we move 
almost 26 million people and 11 million vehicles annually on 
our ferry system around Puget Sound.
    So when we talk about securing our borders and screening 
our communities, it isn't an afterthought, it's a critical 
component of the day-to-day lives and business operations in 
the Northwest as it is in many ports around the country.
    So we need to be sure that the Coast Guard has adequate 
resources to protect our ports and commerce from the threat of 
attack. While we depend on the Coast Guard for security, we 
also depend heavily on the Coast Guard to meet its traditional 
safety and stewardship missions.
    In Washington State, our crowded waterways make the threat 
of an oil spill particularly high. The Coast Guard plays a 
critical role in preventing and responding to oil spills, and 
I'm obviously concerned that we need to do more in this area to 
increase our safety net.
    I want to make sure that when we get to the Q&A that we 
talk about the Oil Pollution Act of 1990 and ways that we need 
to make sure that the increased salvage and oil spill response 
equipment is there for our Nation's coastline.
    Admiral no organization, as I said earlier does more with 
fewer resources than the United States Coast Guard, and I want 
to commend you for those efforts. Having said that though, I am 
concerned that the funding request for the Coast Guard's Fiscal 
Year 2008 budget--whether it is sufficient to meet all of the 
needs that we have outlined.
    Our request of $8.7 billion is a flat line increase, only 
$100 million over the Fiscal Year 2007 enacted levels and with 
those resources, we will want to be very detailed about exactly 
how missions, critical missions, of the Coast Guard are going 
to be met.
    In particular, there are a number of areas in this year's 
budget request that concern me and I hope that you will be able 
to shed some light on these in your testimony.
    First of all, Deepwater and Rescue 21. Of course the single 
most, largest acquisition in the Coast Guard's $8.7 billion 
2008 request, is the $836 million request for the Deepwater 
Program. This Subcommittee has already had one hearing, where 
my colleagues and I have voiced grave concerns about Deepwater, 
its oversight and the impact to the U.S. taxpayer. I know 
Senator Snowe will have her own comments and thoughts on that, 
but she has co-sponsored S. 924 to reform the Deepwater Program 
because I believe that it is absolutely essential that we 
ensure the greatest competition and transparency in the 
Deepwater Program and the Coast Guard has the personnel and 
tools to manage a contract of this size. The Coast Guard needs 
to complete its mission safely and effectively and the 
taxpayers need to get what they are paying for.
    Additionally, we need to apply a similar dose of 
transparency and oversight to Rescue 21. This critical upgrade 
of the Coast Guard's communication system is vital to locating 
and rescuing stranded mariners. Unfortunately though, the 
program has suffered from cost overruns and program delays. It 
is now scheduled for completion in 2011 instead of 2006. The 
Coast Guard cost estimate is now $730 million above the 
original plan. In addition, I hear that the outstanding 
contract negotiations may cause the cost of Rescue 21 to climb 
even higher.
    I'm also concerned and disappointed to see that once again, 
there is not a request for the funding of the Polar Icebreaker 
Fleet. I see the Coast Guard plans to rely on the National 
Science Foundation for reimbursement of the operation and 
maintenance cost of these vessels even though the Memorandum of 
Agreement that ensures this reimbursement might not even be 
signed this year. We consider this a huge problem and I think 
that is why we wrote into language in Maritime Transportation 
Act of 2006, a requirement that the Coast Guard provide to 
Congress with a long-term recapitalization plan for those Polar 
Icebreakers.
    The SAFE Port Act required the Coast Guard to establish 
interagency operation command centers at our highest risk ports 
within 3 years. I see little to no progress in this year's 
budget to attempt to meet this goal and this concerns me 
greatly.
    Finally, the Coast Guard's 2008 budget recommends 
realigning its five deployable Special Forces units into a 
Deployable Operations Group requiring a base reallocation under 
the Coast Guard's operating budget. Well, I can see that the 
reorganization may help streamline operations. I also want to 
make sure that there are no unintended or negative consequences 
to this redeployment. I am looking forward to hearing your 
reasoning for this reorganization and how we monitor its 
effectiveness and the potential hurdles that we may face.
    Before I turn things over to Senator Snowe, let me close by 
just thanking Senator Snowe for attending today and Admiral, 
for your presence here at today's hearing.
    The Coast Guard is a critical resource issue for our Nation 
and it's imperative that the budget of the Coast Guard and the 
Coast Guard itself deliver on these priorities for our Nation. 
We must provide both the oversight to prevent costly and 
dangerous delays in the procurement of assets but also ensuring 
that the American taxpayer gets the resources it needs for the 
mission of the Coast Guard.
    With that, I will turn it over to my colleague Senator 
Snowe.

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

    Senator Snowe. Thank you very much, Madam Chair and I 
appreciate the fact that you've called for this oversight 
hearing on the Coast Guard budget request for Fiscal Year 2008. 
Obviously this is a very important hearing to address the 
funding requirements for the Coast Guard, and I look forward to 
that critical review here today with the Commandant.
    Let me also say it's difficult if not impossible, under 
current circumstances, to deliberate on a blueprint for 
spending for the Coast Guard without recalling the flaws in the 
Deepwater Acquisition Program. Back in February, we met in this 
room to discuss the immense challenges the Coast Guard 
confronts in effectively executing what I still believe to be 
one of the Nation's most vital modernization efforts.
    So today provides us with an additional critical 
opportunity to ensure that we as a Committee leave no stone 
unturned in ensuring the mismanagement of the past is addressed 
for the future.
    We also recognize the significance of a properly executed 
Deepwater Program for the continued viability of the Coast 
Guard. There is no question that we must move from point A, 
which is the Coast Guard with woefully outdated, outmoded 
assets to a point B, with the outstanding men and women of the 
service have the ships and helicopters and equipment 
commensurate with not only the increased duties but also with 
their admirable skill and professionalism.
    As we meet here today, clearly the Coast Guard still finds 
itself in desperate need of those assets. The fact remains that 
the men and women of your service, Commandant, continue to 
serve our Nation aboard ships that comprise the third oldest 
naval fleet in the world. We've already invested more than $2.3 
billion in this recapitalization effort.
    As you stated yesterday, Admiral Allen, the Coast Guard 
must redefine its responsibilities, its industry relationships 
and frankly, its performance in managing this monumental 
program.
    I appreciate the fact that as Commandant, you have accepted 
responsibility even though all the decisions that resulted in 
the serious flaws in the Deepwater Program--all of the 
deficiencies--predate your tenure as Commandant. I am aware of 
the recent steps that you've taken to place Deepwater back on 
track.
    Your announcement yesterday that the Coast Guard will 
assume the lead systems integrator role is an appropriate, if 
long overdue step toward ridding the Coast Guard and the 
government of the self-serving practices of the contractors.
    But this is just the beginning of the process and if there 
is continued vigorous scrutiny and skepticism from this Ranking 
Member and the Chair of this Committee, I hope you understand 
it's with good reason.
    I know you respect the spirit in which I say that until I 
see proud new and fully functional ships displaying the Coast 
Guard's racing stripe as they patrol our shores, I will do 
everything in my power not just to watch your service pursue 
these assets but to guide your hands.
    To bolster your efforts to gain control of Deepwater, as 
the Chair indicated, she and I have introduced legislation that 
will eliminate the contractors' ability to certify their own 
work, mandate independent third party assessments of the Coast 
Guard's decisions, and provide regular reports to Congress 
specifically outlining how Deepwater funds are being spent, 
when assets will be delivered, and how those assets will 
facilitate completion of the Coast Guard's missions.
    The Coast Guard has requested over $836 million to extend 
the Deepwater Program into the Fiscal Year 2008. This funding 
must be accompanied by legislation that we have introduced that 
ensures the Coast Guard will adhere to the highest standards of 
oversight without deviation.
    Today we also must increase the scope of our discussion to 
review the ongoing challenges and budget needs facing the 
military service as a whole. As we all well know, the Coast 
Guard is tasked with protecting our shores from threats, 
natural and manmade, intentional and accidental, foreign and 
domestic. This military service is the cornerstone of our 
national security and we would be remiss if we failed to 
provide the Coast Guard with the adequate assets and resources 
to carry out the multitude of missions we have assigned to it 
and that it has accomplished so admirably over the years.
    The Fiscal Year 2008 budget request contains other items 
that raise considerable concern as well. For the third year in 
a row, the Administration request reduces funding for domestic 
fisheries enforcement, this year by more than $50 million. For 
the third consecutive year as well, the observed rate of 
compliance with fishery regulations during at-sea boardings was 
below the Coast Guard's goal of 97 percent.
    I would suggest that this is no coincidence. To improve 
stock status, help prevent overfishing and maintain a level 
playing field for fishermen, we must ensure enforcement teams 
have the funding they require. I do not see that taking place 
under the current budget structure and we cannot reasonably 
expect the Coast Guard to continue to do more while we 
perpetually provide them with less.
    Our Committee must ensure the Coast Guard is well 
positioned and prepared to meet our future maritime challenges 
and threats head on and to successfully fulfill its diverse yet 
critical missions. While the Coast Guard desperately requires 
additional resources, the job of this oversight Committee is to 
maintain a proper balance between equipping the service in a 
way that it can carry out its vital missions while protecting 
the investment of the American taxpayer.
    At today's hearing, I expect to learn how best to 
facilitate that goal. Again, Admiral Allen, I'd like to thank 
you for testifying here today. I have been impressed by your 
leadership, your increased focus on transparency and your 
candid and forthright assessment of the issues confronting the 
Coast Guard and I look forward to hearing your testimony on the 
roles and missions of this critical service and your plans to 
better align the Coast Guard's disparate missions and assets 
under a streamlined command structure.
    I want to thank the Chair as well, for her leadership on 
this issue and of course, on the legislation that she 
introduced and I joined that will help to streamline the 
approach and address the fundamental issues with Deepwater for 
now and for the future.
    Thank you, Madam Chair.
    Senator Cantwell. Thank you, Senator Snowe.
    Senator Stevens, would you like to make an opening 
statement?

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

    Senator Stevens. Yes, thank you, Madam Chairman. As many of 
you know, Alaska has half the coastline in the United States 
and the Coast Guard has a very daunting role of patrolling that 
area and particularly taking it out to the 200 mile limit--over 
three and a half million square miles.
    Whether it is rescuing fisherman in the icy waters of the 
Bering Sea or flying Medivac missions in the Southeast, the 
Coast Guard has played a critical role in saving many lives in 
Alaska. As a matter of fact, we used to call them midwives of 
Alaska because they delivered so many babies there for a while. 
The Coast Guard Station at Kodiak, the old former navy base, is 
the largest Coast Guard station in the United States now.
    On February 8, just 2 months before this hearing, the Coast 
Guard decommissioned its oldest ship, the Coast Guard Cutter 
STORIS, which I had the honor of traveling on for a while. It 
was home ported in Kodiak, Alaska and it was over 64 years of 
age. It was a wonderful vessel.
    Taking its place now as the ``queen of the fleet'' is the 
ACUSHNET. The ACUSHNET which is home ported in Ketchikan 
celebrated its 63rd birthday on February 5. We look 
forward to the day when the ACUSHNET will be replaced by one of 
the state-of-the-art National Security Cutters that have been 
developed under the Deepwater Program.
    But I am concerned about the recent reports of cost 
overruns and delays in that program. Many of the Coast Guard's 
existing fleet of vessels and aircraft are nearing or have 
reached the end of their useful service lives. Modernizing the 
Coast Guard and replacing these vessels and particularly the 
aircraft should remain a top priority.
    Admiral Allen, I think it's critical to get the program 
back on the right track and I look forward to trying to work 
with you to do so. Thank you very much for appearing today, 
sir.
    Senator Cantwell. Thank you, Senator Stevens. Admiral 
Allen, again welcome. We're glad that you are here this 
afternoon to give testimony about the budget and I think you've 
heard my colleague's concerns specifically about Deepwater, 
which I am sure will be part of your testimony but welcome and 
thank you for attending today's hearing.

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

    Admiral Allen. Thank you, Madam Chairman, Ranking Member 
Snowe and Senator Stevens. I have a statement for the record 
and I'll make a short oral statement to open with if that's OK.
    I was telling my staff before I got here today, I didn't 
know if I should prepare an opening statement for an 
authorization hearing, a budget hearing, or a Deepwater hearing 
and I think you've told me we need to talk about everything and 
I think that's very appropriate, given the external 
environment, what's going on with the Coast Guard right now.
    I'd like to start with a little context piece if I could, 
about what we are trying to do in the Coast Guard right now 
because it not only involves Deepwater, it involves mission 
balance, the budget and all the issues you've raised in your 
opening statements.
    When I became the Commandant less than a year ago, there 
were five things I thought I needed to do to position the Coast 
Guard to be successful moving forward in a very, very 
challenging environment with increased mission emphasis 
following 9/11 and following Katrina and the all hazards threat 
environment that we live in. I thought it was most important to 
focus on mission execution.
    After Katrina and the enormous pride that the Nation had in 
the Coast Guard, I thought it was very, very important that we 
not take our eye off the ball and that we have an organization 
out there that could keep up with the expectations of the 
American public and our own expectations of what we expect of 
ourselves as a service. But in order do that, we need the right 
force structure, we need to be able to effectively command and 
control those forces, we need to have a mission support 
organization that makes sure that those assets are ready when 
you need them in the hands of the people and properly trained. 
We also have to have them supported by business processes that 
make sense.
    In a lot of those areas, over the last few years in the 
Coast Guard, while we have made progress, there are areas where 
we are not as well positioned to move forward as we should have 
been. In February, in my State of the Coast Guard speech, I 
told our men and women the external environment is changing and 
the Coast Guard has to change. In fact, a number of changes 
were initiated right after I took command last May that impact 
what is going on with Deepwater, mission balance, and so forth 
and I will make that point in just a second.
    The bottom line from where I sit as the Commandant of Coast 
Guard is to make sure that we have a competent organization 
from top to bottom that is organized correctly in terms of 
force structure and how we do things to be able to sustain the 
mission execution the American public expects of us.
    To start with, we need to know where we're going in the 
Coast Guard and I remember at a hearing almost a year ago, we 
talked about strategy and whether or not incremental changes 
after 9/11 or after Katrina are the right way to manage the 
maritime environment, a maritime security regime for this 
country. We recently put out a maritime strategy that is 
intended to be the capstone document during my tenure as 
Commandant about what is important for safety, stewardship and 
security. They all have to be in balance. They are three legs 
of a stool. One cannot predominate and I agree with you, 
mission balance is very important. We can't focus on security 
at the exclusion of our other missions.
    Once we have the strategy set, we need a source to the 
strategy and that means budget, rulemaking, international 
agendas at IMO, legislation that needs to be focused on what it 
is we are trying to accomplish in terms of buying down risk, 
increasing safety and to be more effective stewards.
    So what I have tried to do in my first year as Commandant 
is take a pause, if you will and take a look, get the strategy 
right and then see how those pieces come together.
    When you do that, you need to make sure that legislation is 
cued up, that it will be able to result in rulemaking that 
we'll be able to buy down risk in ports but that the budget 
that you are submitting supports that also. If you are 
successful legislatively but you don't have the resources, 
you're not going to be effective.
    So what I've tried to do is put all that together in a 
comprehensive plan. That was not possible walking in the door, 
so what you have before you today is a current services budget. 
I will make no argument against that. That budget was almost in 
place when I took over. I didn't think it was appropriate to 
try and jam a lot of things into the budget without having 
given it proper thought.
    So Fiscal Year 2008 is somewhat of a contemplative 
reorganization focus year for the Coast Guard, get the strategy 
right, come to you all, have the policy discussions that we 
need to and then move forward having legislation, rulemaking 
and budget proposals linked together. There are places where 
there are no funds requested this year. We surely expect in 
future years to be requesting budgets, especially for command 
centers and things like that.
    There had been several comments made about Deepwater. 
Yesterday, I held a press conference and made an announcement 
regarding six strategic decisions that I had made in 
consultation with the CEO's of Northrop Grumman and Lockheed 
Martin.
    I have met and communicated frequently with Bob Stevens and 
Ron Sugar and these are decisions that we collectively came to 
because there is an essential part of Deepwater that needs to 
be understood as we move ahead with the conversation and that's 
that there was work in progress that if stopped, would cause 
cost and schedule implications that would not allow us to have 
assets online when some of these older ships start getting to 
the point where they cannot be operated and we may face a gap 
in coverage even more significant than we have right now. To 
that end, we all agreed that the Coast Guard had to play the 
major role in leading systems integrations.
    The reason we had to do that is that while ostensibly when 
the contract was awarded, the Integrated Coast Guard System 
will be systems integrator for the systems of systems related 
to cutters, aircraft and sensors.
    There is a larger Coast Guard out there. We have command 
centers, we have small boats, we have polar icebreakers, we 
have buoy tenders and the issue of who integrates the Deepwater 
System into the larger Coast Guard System with a capital S, was 
always silent.
    I think for the reasons listed in the reports from the 
oversight groups, from you all as we've had this discussion and 
in addition to the fact that we need to integrate Deepwater 
into the rest of the Coast Guard, nobody can do that except the 
Coast Guard.
    We will move forward as the systems integrator. We will use 
the contractor where it is appropriate but the Coast Guard will 
have the lead in making those decisions. Second, logistics 
support. An assumption was made going in that we would consider 
integrated logistic support provided through Integrated Coast 
Guard Systems as a logistics provider.
    Again, understanding that these platforms have to be 
transitioned into a larger Coast Guard maintenance and 
logistics system, the Coast Guard must be the lead logistics 
integrator, the second point we agreed to.
    Third point, external verification of construction and 
work. You mentioned this earlier in your statements. We are 
moving forward with a Fast Response Cutter B solicitation next 
month in May. We will class that by American Bureau shipping as 
needed. We will have an external certification as we move 
forward.
    Fourth, the National Security Cutter. We hope to have the 
final design details for the structural changes that needed to 
exceed--to meet the fatigue life standards that we need to 
operate that cutter for 30 years done next month. Once we get 
the third NSC baseline on what changes are needed, we then can 
go back and see what changes need to be made to the first and 
second hulls. We are prepared to move forward as fast as we 
can. We have the commitment to resolve these issues with our 
industry partners.
    Fifth, for all assets that are in production right now, we 
have agreed at some point when we demonstrated first article 
performance--in other words, the asset is performing as it was 
intended to specification. We need to question then whether or 
not there is added value to execute that contract through 
Integrated Coast Guard Systems and maybe it should be placed 
directly with the original equipment manufacturer. In other 
words, we are moving ICGS as the middleman with the additional 
layer and the cost associated with that.
    So we will look at every platform that's in production and 
see whether or not that needs to be placed directly with the 
manufacturer at a certain point in production. But we need to 
get through the first initial items and make sure we have 
performance demonstrated with each one of those assets.
    Finally, we cannot be effective moving forward, meeting the 
responsibilities that I have in the Coast Guard, the 
responsibilities we have to you, the oversight committees, the 
Inspector General, the Goverment Accountability Office, unless 
I am personally involved in this. I have the commitment of both 
CEOs of Lockheed Martin and Northrop Grumman moving forward as 
long as we have a contractual relationship that we will meet at 
least quarterly as a Senior Executive Group and provide 
personal oversight to how we move forward on this.
    The challenges associated with Deepwater, the challenges 
associated with strategy and authorization and the challenges 
associated with the budget all come against the backdrop of 
what I call the tyranny of the present in Washington. That is 
the day-to-day leadership and management of the Coast Guard and 
this first year has not been without its challenges.
    We were devastated by the loss of our shipmates on the 
HEALY. You've held an oversight hearing on that. We are 
tackling the problems associated with that. We lost a crewman 
of our MSST in Seattle. There was a deploy to Seattle not long 
ago--we need to look into that.
    We need to understand where we have vulnerabilities inside 
the organization because maybe we have grown fast and maybe we 
have young people out there operating in environments they've 
never operated before and it's my responsibility as Commandant 
to keep them safe.
    We just finished the top to bottom review of the Coast 
Guard Academy, where we laid out a comprehensive plan to move 
forward and redirect some of the energy that has been expended 
to the Academy more to character development and getting all 
assets of the Academy--the athletic programs, the faculty and 
the cadet barracks involved and everybody understanding what it 
takes to produce an officer.
    We have over 100 line items that came out of that study. We 
have placed that study online and it is open to the American 
public. We are being completely transparent about it. I've 
charged the Board of Trustees of the Coast Guard Academy to 
move out and give us an execution plan on how to tackle the 
recommendations that were made.
    I would have one request of the Committee. There is a 
legislative requirement for a Board of Congressional Visitors 
at the Coast Guard Academy and I would like to work with your 
staff to see if we can't re-energize that and get that back up 
and operating. I think that it is very, very important that the 
Congressional Board of Visitors play an active role moving 
forward with the Coast Guard Academy.
    So against that backdrop, thank you for having me here 
today. I'd be glad to answer any questions you may have of me.
    [The prepared statement of Admiral Allen follows:]

Prepared Statement of Admiral Thad W. Allen, Commandant, Department of 
                  Homeland Security, U.S. Coast Guard

Introduction
    Madam Chairman and distinguished members of the subcommittee: Good 
morning, I am pleased to appear before the Subcommittee today to 
discuss the President's Fiscal Year 2008 budget request for the Coast 
Guard.
    Before I begin, I would like to take this opportunity to explain 
how I view the roles and missions of the Coast Guard, as well as the 
direction in which I am taking the Service.

Roles and Missions
    The Coast Guard is the principal Federal service charged with 
maritime safety, security, and stewardship. The Coast Guard protects 
the Nation's vital interests--the safety and security of the Nation's 
citizenry, its natural and economic resources, and the territorial 
integrity of its maritime borders; it operates wherever those interests 
may be at risk--the navigable waters of the United States, along the 
Nation's coasts, and in international waters. These roles and missions 
have accrued to the Coast Guard over two centuries of service because 
they serve a collective good and, significantly, a single Federal 
maritime force can most efficiently and effectively accomplish them. 
More importantly, these roles and missions are converging. The Nation's 
response to increasing pressures on the Nation's waterways and maritime 
resources and expanding external security threats is having a profound 
impact on the development of new management regimes for the U.S. 
maritime domain and borders. In this time of dynamic change, the Coast 
Guard's multi-mission nature, which has always been a strong value 
proposition to the Nation, is taking on new dimensions and 
significance. For example:

   The Coast Guard's work in marine safety is closely coupled 
        with, and reinforces new initiatives and standards for, vessel 
        and facility security.

   Its waterways management capacity and expertise are 
        essential to maritime preparedness and port resilience (i.e., 
        the ability to restore rapidly commerce and economic stability 
        after massive damage, intentional or natural).

   Its Combating Maritime Terrorism missions and operations 
        contribute to the layered defense of the Nation.

   The mission to protect marine environment and resources 
        complements the safety and security missions and ensures that 
        uses of the Nation's waters and resources are balanced and 
        sustainable.

   The sovereignty enforced by the Coast Guard secures the 
        Nation's maritime borders from drug and alien smuggling, 
        contraband, illegal migrants, and robbery of the Nation's 
        natural resources.

   All Coast Guard forces can respond to natural disasters and 
        emergencies, scaling up to a Katrina-level response when 
        communities are in danger, regardless of the cause.

    In addition to these well known missions, in moments of 
international crisis, the Coast Guard can flow non-redundant and unique 
war fighting capabilities to the Department of Defense. During 
Operation Iraqi Freedom, the Coast Guard, along with U.S. Navy and 
coalition naval forces, participated in maritime interception 
operations, port security and defense operations, coastal security 
patrols. As well, the Coast Guard enforced U.N. sanctions prior to 
hostilities and prevented the movement of Iraqi military forces during 
and following hostilities. Since the cessation of major combat 
operations, Coast Guard forces, along with coalition allies, have 
maintained the integrity of Iraqi territorial seas from foreign 
encroachment, have provided security of vital Iraqi maritime 
infrastructure from insurgent threats, and have conducted training of 
Iraqi maritime security forces while ensuring the uninterrupted flow of 
the sea line of communications to coalition forces deployed in the 
Central Commands area of operations.
    The maritime border is unique and complex. It is a system that is 
at once an international border, an international highway, a coastal 
beltway, a playground for boating, and a site for a variety of economic 
enterprises. It requires that the Nation understand that its national 
maritime interests cannot be pursued in isolation from one another. As 
such, there are eleven specific statutorily-mandated Coast Guard 
mission-programs.\1\ Each directly supports the roles of safety, 
security, and stewardship. Table 1 shows the primary alignment of Coast 
Guard mission-programs to these roles.
---------------------------------------------------------------------------
    \1\ The term ``mission-program'' is used by the Coast Guard to 
identify one of its 11 statutorily mandated missions that guide Coast 
Guard budget presentations as well as strategic planning, programming 
and performance.

------------------------------------------------------------------------
                       Security Establishing
                          & Maintaining a      Stewardship Managing the
 Safety Saving lives  secure maritime system   sustainable &  effective
    & Protecting        while  facilitating   use of its inland, coastal
      Property            its use for the          and ocean waters &
                           national good       resources for  the future
------------------------------------------------------------------------
Search and Rescue     Drug Interdiction       Marine Environmental
                                               Protection

Marine Safety         Migrant Interdiction    Aids to Navigation

                      Ports, Waterways &      Living Marine Resources
                       Coastal
                      Security

                      Other Law Enforcement   Ice Operations
                      Defense readiness
------------------------------------------------------------------------
Table 1

``Strategic Trident''--Coast Guard Force Structure
    An important first step in aligning Coast Guard operational forces 
involves the development of a layered security posture in the maritime 
domain to meet all hazards and all threats.
    Multi-mission Shore Based Forces. The Coast Guard has aligned its 
shore-based operations in the establishment of interagency-enabled 
Sectors, unifying operations in the Nation's ports. This consolidation 
of these shore-based forces at the port level into Sector commands 
provides a single point of accountability for operations, unifies 
resource allocation, and enables risk-based decisionmaking tools, thus 
focusing Coast Guard capabilities and competencies to identify and 
mitigate threats.
    Maritime Patrol and Interdiction Forces. The centerpiece of the 
Coast Guard's future capabilities is the Integrated Deepwater System, 
revised to reflect post-9/11 mission requirements such as enhanced 
intelligence gathering and handling capabilities. The Integrated 
Deepwater System concept was designed to secure the Nation's maritime 
borders. This acquisition will integrate the Coast Guard maritime 
presence and patrol capability, especially with respect to extended 
offshore security operations, thereby allowing the Coast Guard to meet 
and defeat threats at the greatest distance from the Nation's shores.
    Deployable Specialized Forces. The final piece to the Coast Guard 
force structure is the effective employment of deployable forces. 
Deployable units will face increased threat levels, respond to 
incidents of national significance, and form into adaptive force 
packages within the Department of Homeland Security. The Coast Guard 
has long maintained teams and detachments that are deployable, but 
``stovepiped'' among different mission areas. In the future, these 
teams will be placed under one command, a force structure designed to 
integrate with the Department of Homeland Security and other Federal 
and state agencies, to create a more agile, flexible force that can 
deploy in advance of or after an event to mitigate any threats or 
hazards. This new force structure will be a more efficient and 
effective means of deployment in a post-Katrina environment. 
Additionally, it will offer the much needed opportunity to develop 
departmental doctrine to support adaptive force packaging for incident 
response or surge operations.

Organizational Alignment
    Past events have revealed the critical role the Coast Guard plays 
in providing safety, security, and stewardship of national maritime 
interests. The sinking of the TITANIC laid the foundation for the Coast 
Guard's premier role in maritime safety. The EXXON VALDEZ oil spill was 
the catalyst to the Coast Guard's much improved and highly visible 
maritime stewardship responsibilities. The response to the terrorist 
attacks of September 11th and subsequent participation in the Global 
War on Terrorism have clearly showcased the Coast Guard's key role in 
providing vital maritime security.
    The Coast Guard's transfer to the Department of Homeland Security 
was a significant step forward in providing for a capability that can 
respond to the evolving demand to protect the homeland. Thus, the Coast 
Guard's ability to adapt continuously in order to sustain and enhance 
its overall mission execution is of paramount importance. As a result, 
the Coast Guard is undertaking an organization-wide effort to 
restructure and realign command-and-control and mission-support 
(including organizational structures, human resources, maintenance, 
logistics, financial management, acquisition oversight, and information 
systems) to ensure more effective and efficient mission execution. 
Efforts currently underway include the consolidation of all 
acquisitions management functions to ensure the optimal balance of 
contract and administrative personnel between each major acquisition. 
Additionally, alignment between the command and control structure 
within Coast Guard Headquarters and field unit organization is being 
imposed to obtain proper oversight of Coast Guard functions and ensure 
optimal mission balance.
    This alignment will result in purposeful, service-wide 
transformation and enhancement designed to better enable the Coast 
Guard to meet the current and future needs of the Nation. The Coast 
Guard will become a more agile, adaptive, and responsive organization 
capable of working effectively with its interagency partners. 
Furthermore, overall Coast Guard mission execution will be enhanced; it 
will be even better prepared to fulfill its duty to the Nation. This 
new operational framework will facilitate the timely and accurate flow 
of information and direction among the strategic, operational and 
tactical levels of mission execution. A new command and control system 
will evolve and, like the Coast Guard itself, will be more agile, 
adaptive, and responsive.

The Coast Guard's Strategy
    The Coast Guard Strategy for maritime safety, security, and 
stewardship describes how the Coast Guard will work to safeguard the 
Nation against all threats, hazards, and challenges in the maritime 
domain, today and in the future. It discusses the Coast Guard's 
enduring roles, future challenges and threats, as well as a systems 
approach for improving maritime governance. From these foundations, the 
Strategy presents strategic priorities that build on the Coast Guard's 
strengths and best focus its capabilities to serve the Department of 
Homeland Security and the Nation. This Strategy is shaped by the laws, 
executive orders, international conventions and agreements, and other 
guidance that determine U.S. maritime policy (Figure 1).



    The Strategy takes significant shape from the National Strategy for 
Maritime Security (NSMS), the President's Ocean Action Plan (OAP), 
National and Homeland Security Presidential Directives (NSPD/HSPD), and 
the Department of Homeland Security goals and priorities. Additionally, 
it is the product of the Coast Guard's Evergreen Project, which looks 
across alternative futures to determine robust strategies that best 
position the Coast Guard and the Nation for a changing world.
    Challenges to maintaining America's maritime sovereignty and 
security are looming, and the key strategic actions that the Nation 
must take lie in three areas: improving operational capability, 
building maritime awareness, and strengthening and integrating existing 
domestic and international maritime regimes to protect the United 
States and other coastal nations against growing transnational threats.
    Regimes are the system of ``rules'' that shape acceptable 
activities. Maritime Domain Awareness (MDA) allows for the detection 
and monitoring of activities occurring within the maritime domain. 
Together, regimes and MDA inform decisionmakers and allow them to 
identify trends, anomalies, and activities that threaten or endanger 
U.S. interests. Operational capabilities deter, respond to, verify, and 
counter threats. They also ensure the safe and sustainable day-to-day 
use of the maritime domain and speed recovery from natural or man-made 
impacts in times of crisis.
    These activities are not the sole province of the Coast Guard; they 
are ineffective without state, local, private and international 
participation. Similarly, they are not solely domestic; they span the 
globe and take place on all waters. Finally, this framework provides a 
common approach to safety, security, and stewardship, often serving all 
three objectives through common frameworks and activities.
    Viewing maritime initiatives and policies as part of a larger 
system enables a better understanding of their inter-relationships and 
effectiveness. A well designed system of regimes, awareness, and 
operational capabilities creates overlapping domestic and international 
safety nets, layers of security, and effective stewardship. Taken 
together, they provide a comprehensive system of maritime governance 
for the Nation.
    One of the fundamental building blocks of this system is Law of the 
Sea Convention. Although we have signed this important Convention, we 
are not yet a party. Joining the Convention with the declaration and 
understandings reflected in Executive Report 108-10 (Senate Foreign 
Relations Committee) is an important step in ensuring that we can 
exercise the necessary leadership to make this happen.

Update of Deepwater Program
Six Principles of Strategic Intent
    I met with the Lockheed Martin CEO Robert Stevens and Northrop 
Grumman CEO Ronald Sugar in January to determine near and long-term 
objectives and goals for the Deepwater program. Since then, we've 
spoken frequently as both the Coast Guard and our industry partners 
have taken a number of steps to improve the management, oversight and 
performance of the Deepwater program. More recently, we reached 
agreement on six fundamental principles that we have begun implementing 
to ensure that the government's interests are fully and fairly achieved 
in acquiring and fielding assets and capabilities being developed and 
produced under the Integrated Deepwater System.
    These principles will guide us as we seek to obtain the best value 
for the government through robust competition and vigilant contract 
oversight and management.
    Working together with industry, the Coast Guard will make the 
following six fundamental changes in the management of our Deepwater 
program:

        1. The Coast Guard will assume the lead role as systems 
        integrator for all Coast Guard acquisitions; including all 
        Deepwater assets (while continuing to employ ICGS, as 
        appropriate, to perform specific management, engineering and 
        system integration functions for which the Coast Guard 
        determines they are best suited).

        2. The Coast Guard will take full responsibility for leading 
        the management of all life cycle logistics functions within the 
        Deepwater program (under an improved logistics architecture 
        established with the new Mission Support organization).

        3. The Coast Guard will expand the role of the American Bureau 
        of Shipping (or other third-parties as appropriate) for 
        Deepwater vessels to increase assurances that Deepwater assets 
        are properly designed and constructed in accordance with 
        established standards.

        4. The Coast Guard will work collaboratively with ICGS to 
        identify and implement an expeditious resolution to all 
        outstanding issues regarding the first two National Security 
        Cutters (we are close to final resolution on NSCs #1 and #2).

        5. The Coast Guard will consider placing contract 
        responsibilities for continued production of an asset class (on 
        a case-by-case basis) directly with the prime vendor, 
        consistent with competition requirements, if: (1) deemed to be 
        in the best interest of the government, and (2) only after the 
        Coast Guard verifies lead asset performance within established 
        mission requirements.

        6. Finally, I will meet no less than quarterly with my 
        counterparts from industry until any and all Deepwater program 
        issues are fully adjudicated and resolved.

    These changes in program management and oversight going forward 
will change the course of Deepwater.
    By redefining our roles and responsibilities, redefining our 
relationships with our industry partners, and redefining how we assess 
the success of government and industry management and performance, the 
Deepwater program of tomorrow will be fundamentally better than the 
Deepwater program of today.

123-Foot Patrol Boat Decommissioning
    A significant step in changing the course of Deepwater is resolving 
outstanding issues within the program; I have made the determination to 
permanently decommission the eight 123-foot patrol boats converted 
under the Deepwater program.
    As most of you know, a variety of structural failures occurred on 
the 123-foot patrol boats between September 2004 and November 2006.
    Despite two structural modifications, the cutters were forced to 
operate under increasingly prohibitive operational restrictions in an 
attempt to limit further structural damage.
    On November 30, 2006, I directed that all eight cutters be 
temporarily removed from service due to the heavy repair burden on the 
crews along with the need for increased restrictions which would have 
rendered the cutters operationally ineffective.
    All eight cutters were relocated from Key West, FL to the Coast 
Guard Yard in Baltimore in January 2007, where they have been in a 
special, inactive status as we considered our options going forward.
    Multiple extensive studies and analyses by both Coast Guard 
engineers and third-party naval architects and marine engineers over 
many months have described the failures in these vessels. They have 
been unable to determine a definitive root cause for the 123-foot 
patrol boat structural problem; although several design deficiencies 
were identified that are consistent with the observed failures.
    We believe the design of 123-foot patrol boat cut down on the 
structural cross section necessary to support the added weight 
distribution following the conversion. Our analysis has been 
complicated, however, by the fact that we've observed permanent 
deformations of each hull in slightly different ways.
    Based on this analysis, any strategy to permanently repair these 
cutters would require an iterative, phased approach over a long period 
of time (years vs. months) with uncertain costs.
    We estimate the total cost for repairing and modernizing these 
eight cutters, including a Mission Effectiveness Project (MEP), would 
be well over $50 million. The residual value from decommissioning these 
cutters is about $50 million, including Deepwater funded equipment 
materials and operating expenses that can be reused or redirected to 
other programs.
    The excessive cost and time associated with continuing to pursue an 
uncertain resolution to these structural problems has convinced me that 
permanently removing these cutters from service while recouping any 
residual value and redirecting funds to other programs is in the best 
interest of the government.

Fiscal Year 2008 Budget Request
    The Coast Guard will head into FY 2008 making notable progress with 
implementing a number of specific initiatives supported by Congress. 
These include $10 million appropriated in FY 2006 for Area Maritime 
Security Exercises as well as $15 million appropriated in FY 2007 for 
foreign port assessments, spot checks of Maritime Transportation 
Security Act (MTSA) regulated facilities, and domestic threat/
vulnerability assessments. These initiatives, coupled with requirements 
in the SAFE Port Act such as the establishment of port security 
training and exercise programs, facility exercise requirements and 
interagency operational centers to name a few, all work in concert with 
the initiatives shown below toward improving maritime security.



    The President's Fiscal Year 2008 Budget Request maintains a 
mission-focused Coast Guard that remains capable of answering the 
Nation's call by improving operational capability, building maritime 
awareness and creating comprehensive regimes. Some of these specific 
initiatives within the Fiscal Year 2008 budget addressing capability 
and awareness include:

Improving Operational Capability
    Integrated Deepwater System (IDS) $836.9 Million (AC&I): The IDS is 
a 25-year, performance-based, ``system of systems'' acquisition to 
replace or modernize major Coast Guard cutters, offshore patrol boats, 
fixed-wing aircraft, multi-mission helicopters and the communications 
equipment, sensors, and logistics systems required to maintain and 
operate them. As an integrated, interoperable network-centric system, 
when complete, IDS will maximize operational capability while 
minimizing total ownership costs by leveraging current and future 
technologies to achieve maritime awareness in all maritime regimes in 
which Coast Guard operates. This request funds the sixth year of 
implementation after award and, among other things, will fund four 
additional Maritime Patrol Aircraft (MPA), long lead time material for 
the National Security Cutter (NSC) #5 and complete funding for NSCs #1-
4, initiate production of the Replacement Patrol Boat (FRC-B), and 
complete funding for Airborne Use of Force (AUF) outfitting for the 95 
HH-65s and 42 HH-60s.
    The IDS procurement is the largest and most complex acquisition 
ever undertaken by the Coast Guard, and the acquisition strategy allows 
flexibility to accommodate the continuously changing nature of this 
evolutionary procurement action, enabling rapid response to changes in 
technology, funding, and operational mission requirements. The Coast 
Guard is also taking important steps to improve the management of the 
program by evaluating the current acquisition strategy and reassessment 
of the acquisitions management structure.
    Deployable Operations Group (DOG) $132.7 Million base re-allocation 
(OE): In the same way that Sector Commands improved unity of effort and 
command among the Coast Guard's shore-based forces in the Nation's 
ports and coastal regions, the DOG will be a new force structure that 
aligns the Coast Guard's Deployable, Specialized Forces (DSF) under a 
single unified command. Coordination of existing maritime safety and 
security missions will improve and the capabilities of each unit can be 
better exploited and used. Once the DOG is fully operational, it will 
focus on improving contingency planning, developing adaptive force 
packages to address a wide spectrum of national contingencies and 
leading efforts to train for an ``all hazards . . . all threats'' 
response.
    Movement of Personnel from Acquisition, Construction & Improvements 
(AC&I) into the Operating Expenses (OE) Appropriation $80.5 Million 
base re-allocation: This funding transfer will significantly improve 
the Coast Guard's ability to successfully manage, oversee and 
administer Coast Guard Acquisition, Construction and Improvement (AC&I) 
contracts. Consolidating all AC&I personnel funding into the OE 
appropriation will allow the Coast Guard to maximize efficiencies and 
leverage potential synergies in acquisition activities and management, 
as well as increase the Coast Guard's ability to surge personnel to 
AC&I-related positions as appropriated project funding levels 
fluctuate.
    Integrated Deepwater System Surface and Air asset follow-on $55.5 
Million (OE):

   National Security Cutter (NSC) 751--Provides personnel, and 
        funding to operate the 2nd National Security Cutter. The NSC is 
        the largest of the new Integrated Deepwater Systems surface 
        assets (418,) with vastly improved capabilities over legacy 
        378, High Endurance Cutters. The NSC will be the most 
        sophisticated and capable cutter the Coast Guard has ever 
        operated. It will have a range of 12,000 nautical miles and an 
        underway endurance of 60 days. The cutter will be capable of 
        patrolling singly or with multiple Coast Guard vessels, U.S. 
        Navy vessels, or vessels from other nations' navies or coast 
        guards. The NSC will conduct proactive and reactive patrols 
        within its assigned operating areas and will provide a robust 
        Command and Control capability for the Task Unit Commander or 
        the On-Scene Commander. It will be capable of performing all 
        maritime Department of Homeland Security (DHS) missions, non-
        General Defense Operations and General Defense Operations with 
        the Navy such as Ports, Waterways and Coastal Security as well 
        as Maritime Intercept Operations, Port Operations, Security and 
        Defense, and Peacetime Military Engagements.

   C-130J--The Fiscal Year 2008 budget request provides 
        operation and maintenance funding for 800 annual flight hours 
        for the Coast Guard's HC-130J aircraft. These 800 flight hours, 
        combined with the 3,200 flight hours already appropriated, will 
        enable the Coast Guard to meet its full operating capability 
        requirement of 4,000 flight hours for five HC-130J operational 
        aircraft. The C-130J is the Coast Guard's long-range 
        surveillance aircraft. This four-engine, turbo-prop aircraft is 
        used extensively throughout the United States, the Pacific 
        Ocean and the Caribbean Sea in support of search and rescue, 
        homeland security, pollution prevention, logistics, personnel 
        transport and ice patrol missions.

   Atlantic Area Deployment Center--This newly established 
        deployment center will replace the Coast Guard's Helicopter 
        Interdiction Squadron (HITRON), complete with Airborne Use of 
        Force (AUF)-capable aircraft and crews. The HITRON initiative 
        to lease eight MH-68 helicopters was developed as a bridging 
        strategy to bolster the Coast Guard's illegal drug interdiction 
        capability and support Port, Waterways and Costal Security 
        missions until the service could arm its organic helicopter 
        fleet. On February 1, 2008, the Coast Guard plans to complete 
        this strategic plan by terminating HITRON and activating the 
        Atlantic Area Deployment Center. More specifically, this action 
        will replace the eight leased HITRON MH-68 helicopters with ten 
        Coast Guard Airborne Use of Force (AUF) equipped, re-engined 
        MH-65C helicopters at the Jacksonville, Florida facility.

    Special Purpose Craft-Law Enforcement Boat (SPC-LE) follow-on $3.3 
Million (OE): This request provides funds to operate and maintain the 
SPC-LE boats acquired with funding provided in Fiscal Year 2007. These 
increased boat allowances will support Certain Dangerous Cargo (CDC) 
and high-capacity passenger vessel security, migrant and drug 
interdiction, shoreside and waterborne patrols, and boards of High 
Interest Vessels (HIV).
    Rescue Swimmer Training Facility $13.3 Million (AC&I): This project 
will recapitalize the existing Rescue Swimmer Training Facility at 
Aviation Technical Training Center, Elizabeth City, NC. As witnessed 
during Hurricane Katrina, Aviation Survival Technicians are a vital 
component of the Coast Guard's Search and Rescue mission. The existing 
facility was built in 1948 and was initially used as a recreational 
pool. It must be closed when winds exceed 40 mph due to the poor roof 
structure and roof trusses. Funds requested will allow for the 
construction of a new building containing a 50x25 meter, 12 foot deep 
training pool; Modular Egress Training Simulator; classrooms; and a 
dunker tank.
    Maritime Security Response Team (MSRT) Shoothouse $1.8 Million 
(AC&I) and $644K (OE): Funding will allow the Coast Guard to construct 
a shoothouse training facility at Camp Lejeune, NC, for the Special 
Mission Training Center to train deployable forces. This facility would 
be unique in that it will provide the opportunity to train in a 
shipboard like environment; in addition, due to its proximity to the 
water, students would be able to train in the shoothouse in the morning 
and on the water in the afternoon. These specialized forces rely on 
interagency support to train their members to ensure standardization 
and integration with Department of Defense (DOD) forces. Request also 
includes funding to complete equipment and training requirements of the 
MSRT's third Direct Action Section (DAS) and CBRNE Section funded in 
Fiscal Year 2007.
    Rescue 21 $80.8M (AC&I) and $8.2 Million (OE): The FY 2008 budget 
request provides for maintenance and recapitalization of the aging 
National Distress System in the Northeastern areas of the United 
States, West Coast and Alaska. Rescue 21 will replace the existing 
National Distress and Response System and enhance the Coast Guard's 
ability to execute all of its missions through improved communications, 
command and control capabilities in the coastal zone. It is the 
foundation for coastal Search and Rescue, and is a critical enabler of 
efficient and effective command and control of all missions in the 
coastal zone.

Building Awareness
    National Capital Region Air Defense $11.5 Million (AC&I) and $4.3 
Million (OE): This project represents the second of a two-year project 
to increase the Coast Guard HH-65C fleet by seven HH-65C helicopters 
and related support facility improvements. These seven helicopters are 
required to support the newly-assigned mission providing air intercept 
to protect the National Capital Region. Primary responsibility for air 
defense of the National Capitol Region Air Defense rests with DOD under 
OPERATION NOBLE EAGLE. Within DOD, the North American Aerospace Defense 
Command (NORAD) is responsible for execution of the air defense 
mission. The Coast Guard is the responsible service within DHS to 
execute rotary wing air intercept operations to protect the National 
Capital Region and has been performing this mission since September 
2006.
    Integrated Deepwater Systems Engineering and Integration $35.1 
Million (AC&I): The Integrated Deepwater Systems (IDS) solution is 
designed to incorporate off-the-shelf systems components where 
possible. Systems Engineering and Integration is essential to ensuring 
interoperability at the unit, system and organizational levels, both 
internal to the Coast Guard and with other DHS and DOD assets. 
Effective systems integration--bringing things technically and 
operationally together so they operate as a whole--will minimize the 
cost of asset acquisition, operations and maintenance, maximize the 
assets' abilities to interoperate internally and externally, and 
minimize the risk inherent in a comprehensive and complex engineering 
project of Deepwater's scope and magnitude.
    Nationwide Automatic Identification System (NAIS) $12 Million 
(AC&I): Funds requested will continue implementation of NAIS to achieve 
Initial Operating Capability (IOC) for receive and transmit capability 
of AIS messages nationwide. Funding also covers costs associated with 
systems currently operational.
    Integrated Deepwater Systems C4ISR $89.6 Million (AC&I): Funds 
requested will be used for design work for the upgrade of the Multi-
mission Cutter Helicopter (MCH) and the long-range surveillance 
aircraft to increase maritime domain awareness capabilities.

Conclusion
    The Coast Guard has already taken important measures in many areas 
that will reduce security risk in the maritime domain. Since September 
11th the Service accelerated efforts to improve the Nation's maritime 
regimes, awareness and operational capabilities. Efforts are also 
underway to integrate initiatives, build collaboration, and increase 
unity of effort--as called for by the National Strategy for Maritime 
Security. But much work remains to be done. Gaps in safety, security, 
and stewardship are broadly recognized, and the Coast Guard and DHS 
will work with the Executive Branch, Congress and other Federal, state, 
local, private, and international partners to make needed changes.
    Events, such as the September 11th terrorist attacks and Hurricane 
Katrina, have demonstrated the importance of preparing for complex 
threat situations and highlight America's growing vulnerability. 
Although the U.S. capacity to save lives in the aftermath of these 
tragedies proved unparalleled, more can be done to prepare for and 
respond to the next major disaster.
    No one can predict the next catastrophic event, nonetheless, 
history tells us it will come. When it does, it will be vital to have 
an ``all threats, all hazards'' Coast Guard--Semper Paratus. The 
character of Coast Guard men and women has been tested from the 
rooftops of New Orleans to the oil platforms of the Persian Gulf and 
throughout the Nation's history there remains one constant: if Coast 
Guard men and women are provided the training and equipment to do the 
job, they won't let us down.
    Thank you for the opportunity to testify before you today. I will 
be happy to answer any questions you may have.

    Senator Cantwell. Thank you, Admiral Allen and for my 
colleagues, we will start with five minute rounds and hopefully 
we'll have time for a couple rounds of questioning. Senator 
Lautenberg, would you like to make an opening statement?

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

    Senator Lautenberg. I'll just take 2 minutes to say I'm 
sorry that I arrived a little bit late and that I can't stay. I 
want to say, Admiral Allen, that we're proud of you and the 
entire Coast Guard Corp. There is never a time when the Coast 
Guard is asked to take on a task, that they don't do it fully 
even with resources slimming down, even with budgets being 
retarded from where they should be. So, I want to say, my hat's 
off to the Coast Guard and I thank all of them, all the Coast 
Guard service people for the work that they do, for the heroics 
that they perform when called upon.
    They are a wonderful branch of the service, of our 
government and I don't understand why here we are, fortunate 
enough to have a Corp like the Coast Guard and when we think 
about the size and Madam Chairman, I would ask that the full 
statement be placed in the record.
    Senator Cantwell. Without objection.
    Senator Lautenberg. But I just want to say that for the 
total act of duty for what's barely larger than New York City's 
police department, the Coast Guard is being asked to patrol 
nearly 93,000 miles of coastline with evermore assignments 
being dished out and having too few dollars and too little 
support from what I think it should be.
    You know, I offered an amendment in 2004 to add $100 
million to the Coast Guard budget Fiscal Year 2005 and the GAO 
agreed that this money would be necessary in times of high 
operating tempo and after my amendment was voted down, guess 
what happened? The Administration came back to Congress for an 
additional $112 million in supplemental funding and each one of 
us sitting here has a coast that needs your attention but you 
don't have to be a costal state to love the Coast Guard, I can 
tell you that. They are called upon for many other things.
    So, Madam Chair, if I can submit my questions in writing, I 
would appreciate that and I will take no more of the 
Committee's time.
    [The prepared statement of Senator Lautenberg follows:]

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

    Madam Chair, thank you for holding today's hearing where--once 
again--it appears the Coast Guard is being given too few resources to 
effectively accomplish its missions.
    With a total active-duty force barely larger than the New York City 
Police Department, the Coast Guard is being asked to patrol nearly 93 
thousand miles of U.S. coastline. And since 9/11, the Coast Guard has 
taken on a host of homeland security duties, including security patrols 
in the waters off Iraq and security duties at our ports here at home.
    But despite these homeland security missions, the Bush 
Administration continues to cut resources for the Coast Guard's 
traditional missions, such as search and rescue, boating safety, and 
protecting our environment and commercial fisheries. So for Fiscal Year 
2005, I tried to get the Coast Guard the resources they needed and 
deserved. I offered an amendment to add an additional $100 million to 
the Coast Guard's annual operating budget. The GAO agreed that this 
money would be necessary in times of high operating tempo. And after my 
amendment was voted down, guess what happened? The Administration came 
back to Congress for an additional $112 million in supplemental 
funding.
    We need a budget that honestly reflects the demands we are placing 
on the Coast Guard. And with one of the oldest fleets in the world, we 
need a budget that provides the men and women of the Coast Guard the 
tools they need to do their jobs. This means new ships, planes and 
communications gear. To purchase those vehicles and equipment, the 
Administration has relied on its Deepwater program which--to put it 
mildly--is a mess.
    I support funding for Deepwater. But I do not support the 
Administration's complacency when it comes to its contracting. I am 
encouraged by Admiral Allen's recent announcements to take back Federal 
control and oversight of this vital procurement program from the 
contractors.
    I look forward to hearing from our witnesses.
    Thank you Madam Chair.

    Senator Cantwell. Thank you, Senator. Admiral Allen, thank 
you for your testimony and thank you for your comment 
specifically about the Deepwater Program, because as you know, 
it is the single largest acquisition project in the budget that 
is being submitted and I know that yesterday--well, let me just 
step back for a second and say thank you for mentioning your 
process of strategic review of Coast Guard assets and 
presenting those to a future Committee hearing.
    We'll look forward to that. Thank you for mentioning the 
integration issue on an international basis. I believe you are 
correct, that the more that we can work together on an 
international basis on security regimes, the more that we will 
both lower our cost and increase our security, so I applaud you 
for stepping back and taking a strategic review of that on 
behalf of the U.S. taxpayers.
    On the other side of the equation, your testimony also 
included working together with the contractor, the systems 
integrator and comments about not wanting to miss deadlines on 
the delivery of assets. I can assure you that most Committee 
members do not want you to miss deadlines either but we also 
want to make sure that we are getting the assets that we are 
paying for and not running into further problems and 
predicaments in the specs and designs and the actual 
effectiveness of those assets.
    So with that, I want to turn to your statements yesterday 
because I believe that you gave a review of some of the changes 
in a speech yesterday, about the Deepwater Program and the fact 
that the Coast Guard, you believe, should take on more roles 
and responsibilities as the lead systems integrator.
    As Senator Snowe said, she and I have been working together 
on legislation, S. 924, which is very specific about what we 
think needs to be done to make sure that we don't run into the 
same situation again with a major procurement project that the 
Coast Guard is undertaking. So if I could ask you a few 
questions about yesterday's comments and concepts that are 
similar to the legislation that we have introduced.
    First of all, one of the biggest problems, I believe, in 
the Deepwater Program was our decision to get rid of the major 
Systems Acquisition Manual. So, basically in an attempt to 
expedite and encourage integration, which is not a bad 
concept--integration is not a bad concept--we basically threw 
out the SAM. Do you intend to reinstitute the Systems 
Acquisition Manual and the rules that obviously it implies?
    Admiral Allen. Madam Chair, we didn't throw out the Systems 
Acquisition Manual, we just didn't follow it. We have one. It 
is a viable document. It probably needs some updating to 
reflect what we need to do for Deepwater. As a Commander, I was 
part of the project team that extended the service life of the 
378 foot cutters that they are needing now that require 
replacement. The Systems Acquisition Manual is a solid way to 
go. Every acquisition the Coast Guard needs to be managed under 
that and a project management regime that is standard across 
the organization.
    Senator Cantwell. Well, if you're not using it, then in my 
sense, it has been out----
    Admiral Allen. For the Deepwater project, there was an 
exclusion for the Systems Acquisition Manual, for the other 
projects it applies.
    Senator Cantwell. And now you are reinstituting that in any 
acquisition----
    Admiral Allen. We will integrate all doctrine related to 
acquisition in a Systems Acquisition Manual that will apply to 
all acquisitions.
    Senator Cantwell. In language in any contracts moving 
forward, are you committing to language of ending self-
certification?
    Admiral Allen. Yes.
    Senator Cantwell. Are you committing to requiring a 
comprehensive analysis of alternatives?
    Admiral Allen. Yes. Business case analysis.
    Senator Cantwell. Are you adhering to other reporting 
requirements similar to what DOD provides to Congress, like the 
SAR?
    Admiral Allen. I'm not sure I--if I were to be given an 
example, we could compare and contrast current reporting 
requirements and give you a status on that ma'am. We'd be happy 
to do it.
    Senator Cantwell. I think that obviously, there are many 
processes and procedures that have been good safety nets and 
particularly, I think, for our Committee in notification of 
cost overruns and problems so that we don't build up to a point 
where we did where the Committee was without information until 
a point in time that was pretty far down the road in the 
contract.
    Now, if I could get that information from our staff, I'll 
be happy to, in the next round. Provide--ask some additional 
questions on that point.
    As it relates to your Engineering and Logistics Center, 
will they be the lead organization and final decision on design 
and performance standards?
    Admiral Allen. They will. In fact, their responsibilities 
will expand. As I said earlier, it's hard to disaggregate some 
of the business changes that I am proposing for what we need to 
do with Deepwater because I came into the job knowing we had to 
fix some things about Deepwater in terms of the acquisition, 
organization and the logistics and the maintenance 
organization. The Engineering Logistics Center at Curtis Bay, 
Maryland will evolve into a logistics center that will support 
all surface assets of the Coast Guard in a similar way that the 
Aircraft Repair and Supply Center in Elizabeth City is the 
single logistics point for all aviation assets.
    We, in the past, when I came in the Coast Guard, individual 
districts did their own engineering of ships and you can 
imagine, it was pretty uneven across the Coast Guard. In 1986, 
we established maintenance and logistics commands on both 
coasts. That left us with two maintenance and logistics 
commands and the Engineering Logistics Center. We need to go to 
one unified logistics center that provides life cycle 
management of these assets though product lines and they are 
the single technical authority.
    Senator Cantwell. Thank you. Senator Snowe?
    Senator Snowe. Thank you very much, Madam Chair. Admiral 
Allen, getting back to this ICGS management of Deepwater 
assets, there has been a real question as to why the Coast 
Guard is even extending the 43-month contract with the ICGS. I 
mean, why do that at all? I know you're in the process of 
renegotiating that contract, as I understand it, at least 
indicated by the news reports.
    Admiral Allen. Yes ma'am, happy to explain. Based on the 
evaluation of the first award term, which was completed last 
May before I took office as a Commandant, we are contractually 
allowed to issue a contract for 43 months. The ICGS sets the 
next award term.
    Now, within that contract, we issue task orders. Our 
intention right now is to sustain the contractual relationship 
with the Integrated Coast Guard System because there are 
certain things that are going on right now--were we to stop 
would cause severe disruption and there are things that are not 
visible because they are not related to a specific asset.
    One of them is the development of an Integrated Logistics 
Management Information System, which work needs to continue 
because it's part of our ability to transition to a mission 
support organization that I have talked about. Our goal right 
now is to transition into the new contract period with task 
orders only for work in progress and limit those task orders to 
somewhere between and 18 to 24 months and issue no task orders 
unless they meet the requirements that Senator Cantwell 
mentioned earlier and that we issue no task orders unless we 
have competition, third party validation and making sure we are 
achieving the best value for the government.
    But we do need to have the ongoing contractual relationship 
because I believe I'll get a question pretty quick, if you 
haven't already asked it, about well, if you're going to become 
the systems integrator, how are you going to do that? The 
question is, you have to have a transition period so there are 
some contractual relationships we need to maintain with ICGS 
while we are transitioning and putting that competency and that 
organizational structure into the Coast Guard.
    For instance, we have a Systems Integration Program office 
in Roslyn that is an ICGS facility. Ultimately, we need to 
close that down and take that function and put in to the new 
mission support organization in the Coast Guard. You can't do 
that overnight so I need the continuity of continuing the work 
in progress under the current contract.
    Senator Snowe. I see and it would be specifically for those 
ships, for example, that are under production now?
    Admiral Allen. Correct. In other words, we would issue no 
task order--there would be no task order for pricing in the new 
contract period, for instance, for the Offshore Patrol Cutter. 
We need to be convinced we have the right design and the right 
value for the government there.
    Senator Snowe. Well, I just happened to notice yesterday 
that an ICGS spokeswoman said she did not believe that your 
announcement represented significant change in the Coast Guard 
contractor relationship. I'd like to have your comment on that. 
I mean, I think that that is sort of interesting, if not an 
illustration of the problem that we are facing. They don't 
accept that there should be a fundamentally altered 
relationship and they did not acknowledge the problems that 
existed and manifested themselves under their leadership. So 
how would you characterize this announcement yesterday? Is it 
major change or is it not--because I hope it is a major 
change--and why is there a fundamentally different 
interpretation of that relationship?
    Admiral Allen. There is a fundamental change in how we are 
doing business and the roles the Coast Guard will assume. I 
have personally discussed this and negotiated it with Bob 
Stevens and Ron Sugar, the two CEO's. I think what they are 
referring to is the continuity of the contracting vehicle that 
I just discussed.
    Senator Snowe. I hope so. I hope that is clear----
    Admiral Allen. I know what I intend, Senator.
    Senator Snowe. OK. Well, that's fine and we'll obviously be 
engaged in that oversight in the months to come because I think 
it is absolutely imperative. How are we going to get this back 
on track but still engaging in the oversight--it's going to be 
so vital.
    To that point, I noticed that you are in the process or 
haven't determined yet, how much the government will recover 
from the contractors, for all these deficiencies and the back 
scheduling. The issues that happened with the Fast Response 
Cutter that you've now really had to jettison and the National 
Security Cutter. How are we going to modify these deficiencies? 
How is that process going to come about? And does the 
contractor accept any responsibility or are we going to have to 
negotiate endlessly?
    Admiral Allen. Well, I think we have two distinct issues 
with the 123 foot cutters and National Security Cutter, if I 
can talk about each for just a second.
    There is no doubt in our minds that the 123, cutters and on 
inspection, when you see basically deformed rails on our ships 
and I think I have a picture of one in the handouts we provided 
you. It's visual evidence that we are not getting performance 
out of these hulls that were intended and the fact that we 
can't retain them in service means that the Government needs to 
have the value for the money that is invested. I have talked 
with the DHS IG, whether it is contractual, legal--whatever 
recourse we have, we will make sure that the government's 
interests are protected here.
    In response to a question at the news conference yesterday, 
I made the statement that we are providing all materials 
associated with this, with the DHS Inspector General, work very 
closely with him to ascertain whether there may be any 
accountability and recovery required and we will vigorously 
pursue that.
    Senator Snowe. Well, how would you characterize this? I 
think this is a travesty, frankly, but how would you 
characterize the Fast Response Cutter in terms of its 
deficiency to the point----
    Admiral Allen. I think in general--I'm sorry, ma'am.
    Senator Snowe. Go ahead.
    Admiral Allen. In general and I'm not a naval engineer, I 
think there was a mis-estimation of the amount of structure 
that could be applied to these ships that had already been 
operated for a good number of years and whether or not they 
were strengthened, what they call the hull girder, the inside 
interior of the ship, to accommodate new weight on the end and 
then the buckling and the forces that the hull is subjected to 
in the sea states that were encountered.
    We have gone back and taken a look at whether or not the 
right computer models that calculated what we would call the 
section modulus or the strength of the width of the ship was 
correct to begin with and my guess is, if we're going to--we 
may not get down to a single root cause. I think we're going to 
find that played a major, major role.
    Senator Snowe. Did you find it shocking?
    Admiral Allen. Absolutely. I visited the ships myself. I 
went to the shipyards. They pulled the starboard shaft out of 
the VASHON at a shipyard in Savannah that I visited and when 
they pulled the shaft out, the actual stern section came one 
inch off the blocks they were resting on, which meant the shaft 
was keeping the hull in alignment. Ships aren't supposed to 
work like that, Senator.
    Senator Snowe. Well, I can't imagine the contractor not 
taking responsibility for that.
    Admiral Allen. We are proceeding at this point--the 
decision was just taken to--that is the question, yes, ma'am.
    Senator Snowe. I know. It really is unfathomable. They are 
the ones that are supposed to design and build the ships and if 
they come out this way, I mean, that's a travesty to the Coast 
Guard and to the American taxpayer, frankly. Thank you, Madam 
Chair.
    Senator Cantwell. Thank you. Senator Stevens?
    Senator Stevens. Thank you very much. Let me first 
congratulate you for that tremendous thing that took place with 
the SELANDANG AYU, the vessel up by the Aleutian Chain and the 
grand movie, The Guardian, I think that really did the service 
a great deal of good.
    I've been told that you have about a $150 million transfer 
at the Department of Homeland Security and in the Department of 
Defense. Does that offset the costs of your involvement of the 
Coast Guard in the activities that are involved with homeland 
security and defense?
    Admiral Allen. Sir, are you talking about whether or not a 
transfer of money within the allocations----
    Senator Stevens. You've got basically money for equipment. 
I don't see any money for operations in terms of interceptions 
around Iraq, in terms of the activities of the homeland 
security. Are you getting fully funded from them?
    Admiral Allen. Yes, sir, we are. I'm sorry I didn't 
understand the question. For the activities in Iraq, we're 
fully funded through the Supplementals, yes sir. It's included 
in the Defense request for funding, sir.
    Senator Stevens. If we get the Supplemental, yes, that's 
true.
    Admiral Allen. Yes, sir. We can give you a detailed 
breakdown on the cost, sir.
    [The information referrd to follows:]

    Based upon the Fiscal Year 2007 Operating Iraqi Freedom budget 
request, the following is a detailed breakdown of operational/
reconstitution costs:

------------------------------------------------------------------------
                       Category                         Funding Request
------------------------------------------------------------------------
Military Pay and Allowances                                  $42,080,000
------------------------------------------------------------------------
Temporary Duty (TDY) and Temporary Additional Duty            18,020,000
------------------------------------------------------------------------
Clothing and Other Personnel Equipment and Supplies            1,070,000
------------------------------------------------------------------------
Medical Support and Health Services                            3,180,000
------------------------------------------------------------------------
Reserve Component Activation and Deactivation                  2,040,000
------------------------------------------------------------------------
Other Personnel Support                                       11,500,000
------------------------------------------------------------------------
Training                                                       3,730,000
------------------------------------------------------------------------
Operational Tempo                                             45,445,000
------------------------------------------------------------------------
Other Supplies                                                 5,510,000
------------------------------------------------------------------------
Facilities/Base Support                                        7,600,000
------------------------------------------------------------------------
Reconstitution                                                54,658,000
------------------------------------------------------------------------
Command and Control                                            6,730,000
------------------------------------------------------------------------
Airlift                                                        5,230,000
------------------------------------------------------------------------
Sealift                                                        3,500,000
========================================================================
    Total                                                   $210,293,000
------------------------------------------------------------------------


    Senator Stevens. What about the GPS? We're told the GPS 
looks like it may become unreliable and yet we asked for a 
report on the LORAN in the bill last year. To my knowledge, the 
Coast Guard hasn't prepared that LORAN report. Are you still 
going to close down LORAN before we know what the future of GPS 
is?
    Admiral Allen. Yes, sir. A couple of comments related to 
that. Number one, the big issue before us right now--we are 
aware of the fact that GPS can be jammed. There is an 
interagency group that has been looking at this for quite a 
while. We are in the final decision stages right now between 
Homeland Security and the Department of Transportation on how 
to move forward and there are three options facing us at this 
point.
    One is phasing out LORAN-C. The other one is maintaining 
status quo and repair the equipment we have in place. The third 
option will be, go to what they call E-LORAN, which operates 
very much like DGPS, that would be an Enhanced LORAN that could 
be considered as a backup to GPS. We're very close to a final 
decision with the interagency group and we should be able to 
give you an answer shortly.
    We are in the final stages of those determinations. That's 
the reason the information hasn't been provided, sir.
    Senator Stevens. Well, I've been on several small vessels 
up my way where they still have LORAN and they really can't use 
GPS in the areas they are in. Are you familiar with that?
    Admiral Allen. If you give me the exact area, sir, I'd be 
happy to comment on it. I understand there are reports where 
there are coverage problems up there, sir.
    Senator Stevens. Yes, they are out of Russell Bay and 
north, basically but I understand there is a similar problem on 
the Northeast Coast and we tried to get LORAN preserved at 
least for Seattle north and for I think it was Massachusetts 
north. Have there been similar complaints about the southern 
part of the country? I know there are complaints in the 
northern part. Is LORAN-C being abandoned easily in the 
southeast, southwest and on to the Gulf Coast?
    Admiral Allen. Sir, in general, most of the concerns I've 
heard expressed have to do largely with the commercial fishing 
community because of the repeatability of LORAN's signal and 
the ability to return to where their fixed gear or pots are at.
    Of the three options that I laid out before you, Enhanced 
LORAN, which has an augmented signal very similar to DGPS will 
continue service to that community if that is the outcome that 
is chosen, sir.
    Senator Stevens. Another subject--I'm told now within 5 
years, we'll have at least 40 percent of our natural gas come 
in the form of LNG. Will that change your activities with 
regard to coastline protection?
    Admiral Allen. Yes, sir. You've raised a very, very 
significant point. There are a number of permits being sought 
right now for liquid natural gas facilities around the country, 
in almost all parts of the country because of the economic 
viability of transporting gas in a liquefied form.
    There are significant issues related to the impact on 
waterways. The Coast Guard works with the Department of the 
Interior through Minerals Management Service for the 
Continental Shelf LNG facilities and with FERC for LNG 
facilities that are within harbors and we do a waterway 
suitability assessment and then we issue a waterways 
suitability report as part of the permitting process for every 
LNG facility that lays out what the Coast Guard thinks are the 
adequate precautions or controls that need to be put in place 
to adequately, safely and securely transfer LNG at those 
facilities and they vary with where the facilities are proposed 
but we are extensively involved in that, sir.
    Senator Stevens. Thank you. I'll have some other questions 
later, Madam Chair.
    Senator Cantwell. Thank you, Senator Stevens. Senator 
Nelson?

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Nelson. Your Miami Coast Guard and all that area of 
Florida, the Florida Straits, they do a good job and they are 
quite busy down there, as you know. The fact that you've had 
this difficulty with these 123-foot boats, how do you expect 
that the 100-foot boats are going to mitigate the 
decommissioned boats?
    Admiral Allen. Yes, sir. We have two strategies. Obviously, 
we need to replace these boats as fast as we can and that's an 
acquisition plan which we will have a request for proposals 
released next month to the industry and the Coast Guard will do 
that acquisition ourselves.
    In the meantime, we have taken the eight crews of the 123-
foot patrol boats that have now been laid up and we are pairing 
them with 110-foot patrol boats, both in Miami and St. Pete and 
we are double-crewing those boats so we're able to recoup about 
50 percent of the hours we would have had out of the 123-foot 
cutters.
    In addition to that, we are using other cutters to cover 
and we are also using more aviation patrols to cut down on the 
amount of time that boats are out there doing patrol and make 
them more effective by using air assets to vector them in. In 
addition, I've negotiated with the Chief of Naval Operations to 
retain three 179-foot patrol craft that we were scheduled to 
give back at the end of Fiscal Year 2008. We've got those 
through Fiscal Year 2011 and the combination of all of those is 
allowing us to bridge the gap but we need to move at best speed 
and replace these cutters, sir.
    Senator Nelson. In the Key West sector, how many Coast 
Guard ships are currently on patrol?
    Admiral Allen. I'd have to check our morning brief to give 
you that answer, sir and I can give you the answer for today. I 
would tell you that a lot of the assets that are in the Key 
West sector are not from Key West. Our large cutters, which are 
stationed around the coastline routinely deploy down there so 
we might have a cutter from the mid-Atlantic homeport area down 
in Key West at any particular time. We'd be happy to give you 
the force lay down for this morning, sir.
    Senator Nelson. Well, can you give me an approximation 
right now?
    Admiral Allen. We--as a rule, we keep two large cutters in 
and around the Straits of Florida. We usually keep a cutter 
down in Windward Pass and another large cutter in Mona Pass, 
between the Dominican Republic and Puerto Rico. In addition, we 
have patrol boats that operate at a lower level because they 
are faster. They go out and they can actually intercept the 
targets of interest and we also have a significant aviation lay 
down. I would rather not get into the exact number for some 
obvious reasons. I'd be happy to provide it to you off the 
record, sir.
    Senator Nelson. OK. That's two, three big boats and then a 
bunch of smaller boats and then aircraft and of course, you all 
are doing a lot down there. You're doing search and rescue, 
you've got the largest concentration of recreational vessels in 
the country down there. You're interdicting drugs. You're 
interdicting migrants. It's quite busy and you're doing that 
with three boats plus a few little boats.
    Admiral Allen. No, sir. Within the approaches to the 
Southeast United States at any one particular time, 
approximately five major cutters--there will probably be 
anywhere from, I would say, four to six patrol boats and as you 
know, we have the 33-foot fast interceptors and a lot of other 
boats down there. In addition, further south, there are a large 
number of vessels that are working for a Joint Interagency Task 
Force South as the second layer down there and we move those 
boats back and forth from what we would call the tactical 
command of the Joint Task Force South, back to the 7th District 
if we think we need them, if there was a spike from either 
Cuba, Haiti or the Dominican Republic, more than what we're 
used to seeing, sir.
    Again, what I would propose if I could is to give you a 
classified brief, sir.
    Senator Nelson. OK. Now you all, along with the Navy and 
other agencies, have a plan on the shelf called Operation 
Vigilant Sentry.
    Admiral Allen. Yes, sir.
    Senator Nelson. In case we had a mass migration. So if you 
had--well, first of all, what would you consider a mass 
migration? How many?
    Admiral Allen. Sir, we measure the migrant threat down 
there in terms of flow. In other words, we interdict migrants 
today. They are interviewed for a credible fear of persecution, 
lacking reason----
    Senator Nelson. That's the present.
    Admiral Allen. Right.
    Senator Nelson. I'm talking about a mass migration. What 
would you consider a mass migration?
    Admiral Allen. We go through three stages of readiness. 
When we start getting up to about 300 a day, that gets us to 
one level. When we get up to about 7,000 a week, that gets us 
to another level and then a higher threshold and at each point, 
if we cannot keep up with the flow or the decision is made that 
we might not--we might have to use the facilities at Guantomino 
Bay. A higher-level threshold kicks in and the Navy assets are 
sent to support us. Again, those cutoff areas, I'd like to 
provide you a separate briefing, if I could, sir. But the plan 
is in place and the Navy is prepared to provide the assets, 
sir.
    Senator Nelson. Right. But for the record now, let's say 
that you had a mass migration in your second stage there, 7,000 
a week. How many boats would you deploy to interdict?
    Admiral Allen. Well, there are certain events, whether it 
is Katrina or a mass migration or the events we had when we had 
President Aristide leave Haiti and we thought we were going to 
have a mass migration just a couple years ago. That's an all 
hands on deck evolution. We would look at all assets that were 
available in the Atlantic area and would send a number of 
cutters down there. I think within at least 72 hours--and we 
would have warning on this because we have indications that 
would tell it was coming--we would have upwards of 19 to 20 
cutters there, sir.
    Senator Nelson. And you could get 19 to 20 cutters in the 
Key West Straits, in the Florida Straits, you could get that 
there within 3 days?
    Admiral Allen. Yes, sir.
    Senator Nelson. What percentage of the migrants do you 
think would get through with 19 or 20 cutters with your second 
level migration of 7,000 per week?
    Admiral Allen. Yes, sir. Were the plans to kick in, we 
would basically have two picket lines. One would be sitting off 
the north coast of Cuba and one would be sitting off the 
Florida Keys because you have both the chance of both 
northbound and southbound traffic. So you have back-to-back 
picket lines, if you will. We understand there may be leakage, 
the planning of factors that Admiral Kunkle has been using down 
in the 7th District to do exercises lately. Even if we 
interdicted 95 percent and you had 5 percent come ashore, you 
would be dealing with migrants ashore, which I think is the 
question you're asking, sir.
    Senator Nelson. So you're saying that you would have a 95 
percent pick-up rate?
    Admiral Allen. We would attempt to do that, yes sir.
    Senator Nelson. Well, what are you expecting with your 
Level 2 of 7,000 per week?
    Admiral Allen. Well, you have to have the flow--you take a 
look at the flow you're expecting and you put the number of 
assets and you keep bringing assets in. If we had to employ an 
entire expeditionary strike group from the Navy, that would be 
done, sir. It would not be all Coast Guard.
    Senator Cantwell. Senator Nelson? Your time has expired 
here.
    Senator Nelson. Well, I'm just getting warmed up.
    Senator Cantwell. Good. Is that an area, do you think, that 
we should have a separate hearing on as well?
    Senator Nelson. I'll wait until the second round.
    Senator Cantwell. OK. I think it's an important area as we 
talk about Deepwater assets and the challenges with the 
Deepwater Program and making improvements to it that we also do 
understand our security emergencies that may occur. So I think 
your line of questioning is very important and I--besides going 
to a second round, I hope that if you believe we should have 
further oversight of this that the Committee would consider it.
    Admiral back to a couple of questions----
    Senator Nelson. Madam Chair, I was under the impression 
that we were concerned about the reduction of these 120-some 
foot boats and we've got a potential crisis that we hope it's 
not going to occur but there certainly are rumblings and I'd 
like to know the effect of that from the Commandant with regard 
to the Straits of Florida and the protection of the homeland.
    Senator Cantwell. A very important question, Senator, very 
important. Admiral, I'm back to my question earlier in the 
first round about DOD. There are two program reporting 
requirements that Congress uses in other military acquisitions. 
One is the Selected Acquisition Reports and the other is the 
Unit Cost Reports. Both of these provide different types of 
information on the schedule and cost problems of acquisition 
and it's something, obviously, we'd like to see the Coast Guard 
use moving forward. I don't know if you have thoughts on that 
today or if you can get us an answer in writing.
    Admiral Allen. I'm not familiar with the specifics of the 
report but I'd be more than happy. If I could just make a 
comment, though, on Navy processes and Coast Guard processes, 
I've had several meetings with Secretary Winter, the Secretary 
of the Navy and I've had several meetings with Admiral Mike 
Mullins, the Chief of Naval Operations. In addition to the 
announcements that I made yesterday, we are going to be meeting 
periodically with Deputy Secretary Jackson, Secretary Winter, 
Admiral Mike Mullin, and myself to take a look at how both of 
our shipbuilding programs are going, what we might learn from 
each other and how we might get more equal approach on how 
we're dealing with industry. I'd be happy to report back to you 
on how that moves. Our first meeting is scheduled within the 
next month.
    Senator Cantwell. Admiral Allen, another area, obviously, 
of concern is the Rescue 21 program and as we've looked at this 
program within the budget here, it obviously has had its 
problems. You've done some demonstration but I'm troubled by 
the GAO reports that Rescue 21 may not deliver on its 
capabilities either. Could you make some comment about that and 
the production sites that have already been underway and the 
results of those studies and analyses?
    Admiral Allen. Yes, ma'am. I don't think there is any doubt 
that we had a couple of barriers early on in this program. One 
of them was, I don't think we realize in the Coast Guard that 
we weren't really buying a radio system, we were buying a large 
software application with radios attached to it. The software 
code that had to be written and the integration that had to be 
done to be able to manage this system, I think, was 
underestimated by both parties.
    We are over that now. We have passed the test and 
evaluation of the software. We have passed low rate production 
and are moving into full rate production this year. We have 
successfully deployed these systems on the East Coast in 
Atlantic City and the eastern shore of Virginia. We most 
recently rolled it out in the Tampa area. They were successful 
in establishing an emergency site south of New Orleans 
following Katrina and I think as you well know, most notably, 
recently we've come online in the Port Angeles area.
    We think the program is back on track. We're looking to go 
ahead and finish the execution of this program in the next 
three to 4 years, as was noted in the opening statement. We 
think it has stabilized. The issue now is to make sure that we 
control costs, we provide the proper oversight and we stay 
within the acquisition baseline.
    Senator Cantwell. And what about asset tracking and data 
transfer? Are those going to be included in the Rescue 21 
system?
    Admiral Allen. They may or may not. Asset tracking was a 
problem earlier on but we may have alternate technologies or 
alternate ways where we need--we can probably deal with that.
    As you know, in the commercial world now, we have automated 
identification systems so technology has moved past where we 
were when we solicited that proposal. That was problematic from 
a technical standpoint early on and we removed that from the 
requirements and we may come at that from a different direction 
for the Coast Guard.
    Senator Cantwell. Well, being I think the second largest 
acquisition program within the budget and having some of the 
same problems that we've seen in Deepwater; that is, project 
monitoring, risk management, executive level oversight and some 
of these things you're saying, you're right. We're not going to 
do them now because they were challenging the asset tracking.
    That whole question of the oversight and the specification 
of what capabilities are required, what the Coast Guard really 
wants to see in the delivery of these assets is critically 
important and critically important who owns them when we're 
going to make that commitment and not just because of the 
complexity of the project, come back and change or drop some of 
these assets. So I am very concerned about that oversight and 
how we get to a final date for delivery that we all feel 
confident that we're going to achieve.
    Admiral Allen. I think we're fairly confident in the 
delivery date right now. A lot of the things that we have just 
talked about with Deepwater--we actually went through last 
summer and last fall with General Dynamics. I personally met 
with the CEO. I went to Scottsdale and we re-baselined the 
program. We established a good technical baseline from which to 
operate and moved into 4A production. My confidence is 
increasing every day that we will come in on schedule on Rescue 
21.
    Senator Cantwell. But do you think that there is a 
particular problem here in how the specification and designs 
are done for these assets, across the Coast Guard?
    Admiral Allen. Rescue 21 was dramatically different than 
our other acquisitions, as I said early on. And this is my 
impression. I haven't received a lot of briefs on it. The 
amount of software or code that had to be written because what 
we were doing is we were taking analog signal and an antenna, 
digitizing it and going to Voice over Internet Protocol and 
basically taking it to a data network. So from the minute that 
signal hits the antenna, we're all of a sudden dealing with a 
much different technical solution that we had ever dealt with 
in the Coast Guard before that involved a lot of software 
integration. In my view, that was the biggest technical issue 
that we did not understand going into it.
    We are past the software test and integration right now and 
we're into production so I think we are behind that or past 
that.
    Senator Cantwell. I'll have more questions on this but my 
time has expired. Senator Snowe?
    Senator Snowe. Thank you. Admiral Allen, one other question 
regarding the Deepwater contract. I notice in the budget, 
obviously with the Coast Guard taking over as lead systems 
integrator, that there has not been a commensurate request for 
an increase in staffing, particularly for acquisition staff and 
personnel. Obviously you'd be shifting certain personnel, from 
within the budget, within your agency, but they will not have 
the acquisition expertise that is essential to allow the Coast 
Guard to effectively manage the oversight of the Deepwater 
Program. How do you explain that contradiction in this budget 
and why haven't you requested additional resources to provide 
for acquisition personnel that have expertise tailored and 
designed for this oversight responsibility?
    Admiral Allen. We're coming at it from a couple different 
directions. The desired end-state is a unified mission support 
organization where acquisition and life cycle maintenance are 
all contained in the same organization in the Coast Guard work 
for the same senior manager with single point accountability.
    As we make the transition, we will look at a mix of Coast 
Guard, other government employees, Navy or other people that 
have that expertise as needed. Independent contractors not 
associated with the ones that do work for us, subject to 
signing disclosure statements, should we use them. We have 
requested in this year's budget that we unify our personnel 
account for the purpose of personnel funding. In the past, each 
one of our accounts has had to source their own personnel from 
that appropriation. Putting all of our personnel together and 
all the acquisition organization together gives you much more 
flexibility on how to apply the personnel that you do have.
    Additionally, some of the funds that have been allocated in 
the past for systems integration and project oversight that 
would have been executed through ICGS are going to flow to the 
Coast Guard and if you look at the request for Coast Guard 
program management versus the traditional amount of money that 
was given to ICGS to do that, it's going to start flowing 
incrementally as we make this transition from the ICGS contract 
to the Coast Guard.
    Senator Snowe. Well, in the ICGS, how many Coast Guard 
personnel were assigned to it?
    Admiral Allen. Within the Deepwater Program overall, we 
have a little over 400 people. About a third of those are 
military, about a third are civilian and about a third of them 
are independent contractors.
    Senator Snowe. Because one of the original reasons for 
creating the ICGS was the shortage of trained and experienced 
acquisition personnel within the Coast Guard. So obviously, we 
don't want this to be a weakness that ultimately results in the 
problems that we're confronting today.
    Admiral Allen. Your point is well taken, Senator. Again, 
getting back to my opening statement, this is an issue I 
recognized when I became the Commandant last year and the 
reorganization of the acquisition organization wasn't in 
response to the press disclosures of the IG report. We already 
knew well over a year ago that we needed to do this to organize 
the Coast Guard more effectively to be able to execute these 
acquisitions.
    Senator Snowe. The Administration is requesting an $8.7 
billion budget and I know you explained the reasons why you're 
essentially focusing on strategy and reshaping the command 
structure. But it only represents a 1 percent increase from 
last year. We just recently passed the SAFE Port Act, for 
example. That alone, I think would put inordinate pressures on 
resources within the Coast Guard, which is managing not only 
that mission but obviously the other missions that have, I 
think, been underserved by the Coast Guard recently. This is a 
departure, I think, from the standard that the Coast Guard has 
adhered to with fisheries enforcement onboard compliance, with 
fishery regulations below the 97 percent rate, as I mentioned 
in my opening statement.
    So how are you going to respond to port security, for 
example, given the constraints in this budget? I do think it is 
under-funded when you think of your multimissions, your 
traditional missions that also are going to be handicapped with 
this budget as well, the way it has been in the recent past.
    Admiral Allen. Well, as you know, we're working through the 
2009 budget bill process inside the Administration right now 
and clearly there are issues that are not in the budget this 
year that I am dealing with right now to go ahead and seek 
funding for that although we haven't finalized it so I'm not at 
liberty to detail it.
    But rest assured, based on my comments earlier, now that 
the strategy is set and we know where we're going, we have to 
source the strategy and whatever resources we are seeking need 
to be aligned with that and that is my intention. What we do 
need to focus on very shortly here is the Command Center issue 
and I'll explain--for two reasons. Number one, the SAFE Port 
Act has a time limit associated with that but in a larger 
sense, if you take a look at what we need to be doing in it as 
far as integrating things across the Coast Guard, we have 
Rescue 21. We have a need to configure and standardize our 
command centers and be responsive to the SAFE Port Act. We have 
automated identification systems and long range tracking and 
our need to be interoperable with the Navy where we have fleet 
concentrations and we work with them. All that tells me that 
the solution has got to be coming forward, at least next year, 
on where we're going with command centers, ma'am.
    Senator Snowe. Thank you.
    Senator Cantwell. Senator Stevens?
    Senator Stevens. Just following up on that, we mandated in 
the SAFE Port Act that we have a long range vessel tracking 
system by April 1. We don't have one yet, do we?
    Admiral Allen. Sir, we have access to sufficient locating 
data right now. Our problem is, once the data has been 
gathered, how do you display it and share it with everybody. 
Access to the data is not a problem with us between 
unclassified and classified systems, we have access to all the 
locating data that we need right now, sir. The challenge is 
bringing that down and putting it in a commonly held 
architecture that everybody has access to, sir.
    Senator Stevens. We are trying to deal now with the concept 
of illegal, unreported and unregulated fishing beyond our 200 
mile limit. One of the problems we have is that--take the Gulf 
of Alaska. There are more and more of those vessels that are 
just outside our limit or outside even the Russian limit that 
are literally vacuum cleaning the oceans with new tackle, new 
techniques. I assume you've seen the National Geographic 
article from last month?
    Admiral Allen. Yes, sir.
    Senator Stevens. That would cover that. We're trying to 
find some way to deal with that and we've been discussing the 
concept of having transponders on every vessel that fishes in 
the world and have those be capable of being tracked by 
satellite. Is that feasible, in your opinion?
    Admiral Allen. It is feasible, sir. Under the agreements we 
negotiated last year at IMO, there is a requirement now for 
vessels over 300 gross tons and you get to a cutoff of what 
size fishing vessel you're talking about. But at least for 
vessels over 300 gross tons, from countries that are signatory 
to the SOLUS Convention, they will be required to carry long 
range tracking or transponders that can be picked up within a 
1,000 miles of a coastal state or if they've declared their 
intent to enter a particular port, 2,000 miles, sir.
    We are negotiating at IMO right now the technical standards 
and how that is going to be actually implemented. In our view, 
in the long run, that will be the way we need to do that. The 
question is, will there be vessels less than 300 gross tons 
that we're going to need and how to treat those? Inside the 
United States, I've been directed by the Maritime 
Transportation Security Act of 2002 to drive transponder 
carriage requirements down to vessels, commercial vessels 65 
feet and above. That would pretty much take care of the United 
States so the gap that would be remaining at that point would 
be vessels less than 300 gross tons, sir.
    Senator Stevens. Well, we're trying to figure out where 
these vessels have been and what they've harvested. National 
Geographic is working with us on this. We thought we might go 
to the U.N. and ask them to give us some assistance like they 
did on the drift nets. That hasn't been a complete success yet 
but it has been a considerable success in eliminating drift 
nets.
    I don't know really how to tackle this in terms of 
enforcement. You don't have enough vessels in Alaska right now 
to take care of our over 3 million square miles. If we add that 
Gulf to it, it's not possible to be dealing with it. We asked 
you to try and pioneer using UAVs. Are you going to continue 
that experiment?
    Admiral Allen. Yes, I don't think--if I could just make a 
statement. What we're really dealing with here is what I would 
call tyranny of distance, sir and it's an issue--in Alaska, 
it's an issue in the high seas drift net areas in the Central 
Pacific. It is an issue of the new marine sanctuary north of 
Hawaii and I think we need to take a new technology look at 
this and see where we can leverage technology because it's 
impossible to put enough floating assets out there to cover all 
those areas.
    Senator Stevens. It has to be sort of identification of who 
is there and then have the capability to warn them and where 
there is persistent violation, to have some kind of law 
enforcement.
    Admiral Allen. Yes, sir.
    Senator Stevens. It has to be in the third level. What 
would it take for you to have that third level capability in 
the North Pacific?
    Admiral Allen. The response capabilities, sir?
    Senator Stevens. Yes.
    Admiral Allen. I think we have to figure out what the 
standard is. Do you want to have somebody, if you sighted a 
violation on the scene, say within 24, 48 or 72 hours. As you 
know, we have some of these cases where it takes us 10 or 14 
days to get to the sighting where a C-130 had actually been 
over the top. The amount of vessels it would take to do that 
would be astronomically high, sir. I think you'd have to come 
up with a risk-based situation--what is it you want to achieve 
and what is it you're willing to give up to do that? Where 
would you place the vessels and how fast you'd want them there, 
sir. I'd be glad to give it some thought and give you an 
answer, sir.
    Senator Stevens. One last question, if I may, Madam 
Chairman Do you have enough correspondence and communication 
with your foreign counterparts in the Pacific to keep track of 
what they find out, in terms of what vessels come back to their 
ports that may have been in our waters or may have been in 
those unregulated waters?
    Admiral Allen. I wouldn't say it's perfect but it is 
improving, sir. We belong to something called the North Pacific 
Coast Guard Forum and that's--there is annual meeting of the 
Heads of Coast Guards for the United States, Canada, Russia, 
South Korea, Japan and China. We meet every year. I was in the 
Hainan Island in China last October. We meet in St. Petersburg, 
Russia this coming September. One of the things we are 
addressing are the illegal fisheries out there. Last year, we 
actually deployed a Coast Guard cutter with a Chinese ship 
rider who would help us enforce when we encountered those 
vessels. Those conversations are maturing but you're right. 
Those are the type of forum we're going to have to get into if 
we're going to solve the problem, sir.
    Senator Stevens. Well, we wish you luck. I'm sure the state 
of Washington has the same interests in this. We lost two 
complete runs. They didn't even come back. And we're certain 
now that something is intercepting them and it's too large a 
loss to be attributed to ocean mammals. This has to be a 
concerted attack on specific species that are very valuable now 
on the world market. So I'd like to be able to work with you in 
the coming year to see how we might find some way to put the 
fear of God in those people to just lay off our fish. Thank 
you.
    Admiral Allen. Yes, sir. And I might add, we're in the 
process of standing up a North Atlantic Coast Guard Forum with 
the countries that are in the North Atlantic, too.
    Senator Cantwell. Senator Nelson?
    Senator Nelson. Thank you, Madam Chair. Picking up, you had 
stated that you have approximately 4 to 6 of these cutters 
within Florida Straits area and I can't say enough good things 
about your people because I see them down in the Miami Beach 
station and I see them down in the St. Petersburg station and 
they are excellent.
    My concern is trying to get ahead of the power curve on if 
we were to have a mass migration. Now, if you've got 4 to 6 
down there and you say that you can surge to 19 to 20 ships 
within 72 hours, that's 3 days. You would then have to bring 
assets from Norfolk and New England, would you not?
    Admiral Allen. It would depend on which cutters were 
underway at the time, sir. We would bring them from wherever we 
would need them. Obviously from New England, it wouldn't be 
there in 72 hours. The steaming time is a little further than 
that but we have cutters in the Gulf. We have cutters in the 
Southeast that could be surged down there, sir.
    Senator Nelson. How many cutters in Norfolk would you have 
available to you?
    Admiral Allen. Well, we have a certain number of cutters in 
Norfolk. Some of them are on patrol. Some of them are in a 
maintenance period. I can give you an exact lay down of all the 
cutter homeports and the traveling times to the Straits, sir, 
in great detail for the record, if you'd like.
    Senator Nelson. All right, if you would and if you would 
also include not from the time that you sail out of the port 
but the preparation time for the ship--the loading of the ship, 
the loading of the food and equipment, the gathering of the 
crew. From the time the signal comes to how long in addition to 
the 3 days traveling, for example, that you just said, from 
Norfolk, is it going to take to get people there and if you 
would also supply for the record, your greater elucidation on 
the fact of a 95 percent interdiction rate.
    [The information referred to follows:]

    The ability of various cutters to respond to a mass migration is 
dependent on numerous variables including number and flow of migrants, 
as well as weather and the number and type of assets underway in the 
Florida Straits, Caribbean Sea and along the Eastern seaboard. The 
Atlantic Area Commander and Operation Vigilant Sentry Commander, in 
accordance with OPLAN VIGILANT SENTRY, coordinate the deployment of all 
assets and resources to South Florida in the event of a mass migration. 
The first cutters to respond to a mass migration would be those assets 
in an underway or standby status in the Florida Straits. For example, 
Coast Guard District Seven has, on average, 10 cutters underway or in a 
standby status within a 12 hour transit of the Florida Straits that 
could respond immediately in the event of a mass migration. 
Subsequently, the Coast Guard would then deploy other cutters underway 
or in standby from other locations.
    For instance, patrol boats from the Gulf Coast or Medium Endurance 
Cutters (MEC) from the Caribbean Sea can be redeployed. The last 
cutters to be deployed in the event of a mass migration would be those 
assets inport in a dedicated maintenance period. These cutters would 
likely be unable to get underway on short notice.
    While OPLAN VIGILANT SENTRY details how many cutters are required 
to respond to a mass migration, below lists the 101 cutters that the 
Atlantic Area Commander has available to respond to a mass migration in 
the Florida Straits:

----------------------------------------------------------------------------------------------------------------
                                                                                                    Transit time
                                                                          Underway       Transit        to FL
   Cutter Class            Cutter Name                 Homeport          Preparation    Distance       Straits
                                                                         Time (Hrs)       (NM)          (Hrs)
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Drummond               Key West, FL                       48             0             0
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Mohawk                 Key West, FL                       72             0            10
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Thetis                 Key West, FL                       72             0             0
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Sawfish                Key West, FL                       48             0             0
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Sitkinak               Miami Beach, FL                    48           175            12
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Farallon               Miami Beach, FL                    48           175            12
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Chandeleur             Miami Beach, FL                    48           175            12
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Nantucket              Miami Beach, FL                    48           175            12
----------------------------------------------------------------------------------------------------------------
210 WMEC            CGC Valiant                Miami Beach, FL                    72           175            12
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Dolphin                Miami Beach, FL                    48           175            12
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Gannet                 Fort Lauderdale, FL                48           204            14
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Marlin                 Fort Meyers, FL                    48           250            17
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Key Biscayne           St. Petersburg, FL                 48           286            19
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Knight Island          St. Petersburg, FL                 48           286            19
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Kodiak Island          St. Petersburg, FL                 48           286            19
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Pea Island             St. Petersburg, FL                 48           286            19
----------------------------------------------------------------------------------------------------------------
175 WLM             CGC Joshua Appleyby        St. Petersburg, FL                 48           286            19
----------------------------------------------------------------------------------------------------------------
210 WMEC            CGC Venturous              St. Petersburg, FL                 72           286            19
----------------------------------------------------------------------------------------------------------------
210 WMEC            CGC Resolute               St. Petersburg, FL                 72           286            19
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Hawk                   St. Petersburg, FL                 48           286            19
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Cormorant              Fort Pierce, FL                    48           300            20
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Bluefin                Fort Pierce, FL                    48           300            20
----------------------------------------------------------------------------------------------------------------
210 WMEC            CGC Confidence             Cape Canaveral, FL                 72           320            21
----------------------------------------------------------------------------------------------------------------
210 WMEC            CGC Vigilant               Cape Canaveral, FL                 72           320            21
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Shrike                 Cape Canaveral, FL                 48           320            21
----------------------------------------------------------------------------------------------------------------
175 WLM             CGC Maria Bray             Jacksonville, FL                   48           470            31
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Kingfisher             Jacksonville, FL                   48           470            31
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Seahawk                Carabelle, FL                      48           506            34
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Bonito                 Pensacola, FL                      48           506            34
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Coho                   Panama City, FL                    48           520            35
----------------------------------------------------------------------------------------------------------------
225 WLB             CGC Cypress                Mobile, AL                         72           544            36
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Stingray               Mobile, AL                         48           544            36
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Cobia                  Mobile, AL                         48           544            36
----------------------------------------------------------------------------------------------------------------
210 WMEC            CGC Decisive               Pascagoula, MS                     72           558            37
----------------------------------------------------------------------------------------------------------------
PC-179              CGC Tempest                Pascagoula, MS                     48           558            37
----------------------------------------------------------------------------------------------------------------
PC-179              CGC Tornado                Pascagoula, MS                     48           558            37
----------------------------------------------------------------------------------------------------------------
PC-179              CGC Shamal                 Pascagoula, MS                     48           558            37
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Razorbill              Gulfport, MS                       48           558            37
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Pompano                Gulfport, MS                       48           558            37
----------------------------------------------------------------------------------------------------------------
225 WLB             CGC Oak                    Charleston, SC                     72           579            39
----------------------------------------------------------------------------------------------------------------
378 WHEC            CGC Dallas                 Charleston, SC                     96           579            39
----------------------------------------------------------------------------------------------------------------
378 WHEC            CGC Gallatin               Charleston, SC                     96           579            39
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Yellowfin              Charleston, SC                     48           579            39
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Tarpon                 Savannah, GA                       48           584            39
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Sturgeon               Grand Isle, LA                     48           600            40
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Pelican                Abbeville, LA                      48           600            40
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Block Island           Atlantic Beach, NC                 48           668            45
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Staten Island          Atlantic Beach, NC                 48           668            45
----------------------------------------------------------------------------------------------------------------
210 WMEC            CGC Diligence              Wilmington, NC                     72           668            45
----------------------------------------------------------------------------------------------------------------
225 WLB             CGC Elm                    Atlantic Beach, NC                 72           668            45
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Heron                  Sabine, TX                         48           736            49
----------------------------------------------------------------------------------------------------------------
210 WMEC            CGC Dauntless              Galveston, TX                      72           771            51
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Manowar                Galveston, TX                      48           771            51
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Skipjack               Galveston, TX                      48           771            51
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Manta                  Freeport, TX                       48           797            53
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Amberjack              Port Isabel, TX                    48           849            57
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Manatee                Ingleside, TX                      48           850            57
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Steelhead              Port Aransas, TX                   48           856            57
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Brant                  Corpus Christi, TX                 48           873            58
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Bear                   Portsmouth, VA                     72           906            60
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Forward                Portsmouth, VA                     72           906            60
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Harriet Lane           Portsmouth, VA                     72           906            60
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Legare                 Portsmouth, VA                     72           906            60
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Northland              Portsmouth, VA                     72           906            60
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Tampa                  Portsmouth, VA                     72           906            60
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Albacore               Little Creek, VA                   48           906            60
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Beluga                 Little Creek, VA                   48           906            60
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Cochito                Little Creek, VA                   48           906            60
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Shearwater             Portsouth, VA                      48           906            60
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Sea Horse              Portsmouth, VA                     48           906            60
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Ocracoke               San Juan, PR                       48           965            64
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Sapelo                 San Juan, PR                       48           965            64
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Matinicus              San Juan, PR                       48           965            64
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Cushing                San Juan, PR                       48           965            64
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Key Largo              San Juan, PR                       48           965            64
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Chincoteague           San Juan, PR                       48           965            64
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Bainbridge Island      Highlands, NJ                      48         1,106            74
----------------------------------------------------------------------------------------------------------------
210 WMEC            CGC Dependable             Cape May, NJ                       72         1,106            74
----------------------------------------------------------------------------------------------------------------
210 WMEC            CGC Vigorous               Cape May, NJ                       72         1,106            74
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Sailfish               Sandy Hook, NJ                     48         1,106            74
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Mako                   Cape May, NJ                       48         1,106            74
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Finback                Cape May, NJ                       48         1,106            74
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Ibis                   Cape May, NJ                       48         1,106            74
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Ridley                 Montauk, NY                        48         1,150            77
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Chinook                New London, CT                     48         1,183            79
----------------------------------------------------------------------------------------------------------------
225 WLB             CGC Juniper                Newport, RI                        72         1,185            79
----------------------------------------------------------------------------------------------------------------
225 WLB             CGC Willow                 Newport, RI                        72         1,185            79
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Tiger Shark            Newport, RI                        48         1,185            79
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Grand Isle             Gloucester, MA                     48         1,343            90
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Sanibel                Woods Hole, MA                     48         1,343            90
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Tybee                  Woods Hole, MA                     48         1,343            90
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Escanaba               Boston, MA                         72         1,343            90
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Seneca                 Boston, MA                         72         1,343            90
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Spencer                Boston, MA                         72         1,343            90
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Flyingfish             Boston, MA                         48         1,343            90
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Hammerhead             Woods Hole, MA                     48         1,343            90
----------------------------------------------------------------------------------------------------------------
210 WMEC            CGC Reliance               Portsmouth, NH                     72         1,360            91
----------------------------------------------------------------------------------------------------------------
110 WPB             CGC Jefferson Island       South Portland, ME                 48         1,384            92
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Campbell               Kittery, ME                        72         1,400            93
----------------------------------------------------------------------------------------------------------------
270 WMEC            CGC Tahoma                 Kittery, ME                        72         1,400            93
----------------------------------------------------------------------------------------------------------------
87 CPB              CGC Moray                  Jonesport, ME                      48         1,400            93
----------------------------------------------------------------------------------------------------------------

   The time required for a cutter to transit from their 
        homeport to the Florida Straits assumes that each cutter 
        transits at a speed of 15 knots.

   The amount of time needed for preparing the cutter to get 
        underway and transit to the Florida Straits assumes that each 
        cutter is in a maintenance status in their homeport with no 
        significant systems (engines, generator, etc.) down for 
        maintenance. Cutters that are underway or in a readiness status 
        will be able to be on scene in the Florida Straits much sooner 
        than the table may indicate. At any given time, two LANT WPBs 
        and two LANT MECs are in drydock at the CG Yard in the Mission 
        Effectiveness Project (MEP).

   Underway preparation time by cutter class and size:

        --378, WHEC 96 hrs
        --270, WMEC 72 hrs
        --225, WLB 72 hrs
        --210, WMEC 72 hrs
        --PC-179, 48 hrs
        --175, WLM 48 hrs
        --110, WPB 48 hrs
        --87, CPB 48 hrs

    Senator Nelson. For example, in the Cuban migrants that 
came in 1994, you had a surge as many as 3,000 in the first 
day. How are we going to interdict 3,000 in the first day?
    Admiral Allen. Yes, sir. A couple of responses to that and 
I would also offer you another classified brief, if I could, on 
indications and warning and what we would know and how we would 
know it, sir.
    There are some different conditions right now that exist 
that didn't exist before the 1994-95 mass exodus because they 
are based on the migrant accords that we have negotiated with 
Cuba since then and that is the ability to repatriate to Cuba. 
A lot of what we may encounter down there is based on policy 
decisions that will be made at the time and what would be the 
reaction of the Cuban government. As long as we can manage the 
flow, we can interdict and repatriate them to Cuba and it's not 
an issue. The issue is when we don't have enough hulls out 
there or hull space for the amount of people we are 
interdicting and then if the overflow is Guantomino Bay, Cuba 
after that, that's when we would ask for support from the Navy. 
Not when it happened but well before and at that point, we are 
capable of holding a significant amount of folks on decks out 
there. The real issue is, how to repatriate them, sir.
    Senator Nelson. And of course, what would spark a mass 
migration, you would have to assume the worst, that you 
couldn't repatriate them to the Island of Cuba because it would 
be because of the turmoil of the Cuban government that would 
cause such a mass migration that would not be a cooperative 
government and when you're talking about having lots of folks 
on deck, may I ask you also to respond to us, you probably know 
that there is some huge percentage of the Cuban population that 
has tuberculosis today.
    So you get a whole bunch of migrants on a ship and one of 
them has tuberculosis, how long is it going to take you to 
clean that ship before you can turn it around and use it again? 
So I would like you to consider all of those things and please 
respond for the record.
    Admiral Allen. Yes, sir. I would offer again, it would be 
very helpful just to make sure I am responsive to you, if I 
could arrange a classified briefing for you, sir.
    Senator Nelson. Absolutely. I'll look forward to that, at 
your convenience.
    Admiral Allen. Yes, sir.
    Senator Nelson. Thank you.
    Admiral Allen. And if I could, it might be a good idea to 
include Admiral Stavridis from the U.S. Southern Command 
because they have a play in this, too, sir.
    Senator Nelson. And I've been in touch with him as well. Of 
course.
    Senator Cantwell. Thank you. Admiral Allen, my colleagues, 
I have a few questions. I'm happy to stay for a third round of 
questions if anybody has any additional questions but Admiral, 
if I could, back to the Deepwater Program and again, since it 
is the major acquisition part of the budget here, you can 
imagine our concern, obviously, from what's been--what we know 
to date of the Deepwater Program and acquisition. But back to 
your earlier comment in answering Senator Snowe about moving 
forward with the changes in contracts.
    I think you were referring to the fact that the new 
contracts would reflect assets that were part of the Deepwater 
plan but not necessarily part of the original contract and that 
you would apply these new standards to those assets moving 
forward. Is that correct? You're not going to go back to those 
assets that are already contract and apply standards?
    Admiral Allen. If I can give you a two-part answer----
    Senator Cantwell. The manual, the----
    Admiral Allen. The entire program needs to be brought under 
an acquisition doctrine that is responsive to the way we have 
acquired things in the past and the way we need to do it in the 
future. That's work in progress and everything else. The actual 
structure of the contract for the next 43 months when awarded, 
will put new criteria, performance criteria on a contract that 
will allow us, even under work in progress, to be able to 
monitor that. And if we are not satisfied we're getting the 
performance we need out of the contractor, we do not have to 
issue the task order against the contract.
    Senator Cantwell. Including the Acquisition Manual Rules 
and Regulations?
    Admiral Allen. Yes, ma'am.
    Senator Cantwell. OK. On a specific asset that is under 
contract now and obviously an expansion of that is the CASA 
Maritime Patrol Aircraft? I'm assuming that you are familiar 
with that.
    Admiral Allen. Yes, ma'am.
    Senator Cantwell. One of the issues that I want to make 
sure that we're focusing on moving forward is transparency and 
obviously, I think we want to understand the decisionmaking 
process on the CASA Maritime Patrol Aircraft. Was security part 
of the analysis, safety and security issues?
    Admiral Allen. I would have to go back and check the 
evaluation that was done on the proposals exactly how that 
manifested itself. I'm not sure I understand by security what 
you mean, ma'am.
    Senator Cantwell. Well, more specifically, safety.
    Admiral Allen. If you're talking about safety in regards to 
the airframe itself, we are satisfied it has an adequate safety 
record. We are aware that there have been incidents with CASAs 
around the world. In fact, I had my staff take a look at it and 
our analysis of that leads us to believe that in most cases, it 
was pilot error that was associated with those mishaps.
    Senator Cantwell. Nine crashes resulting in 92 fatalities?
    Admiral Allen. Yes, ma'am. I've actually got a list and I 
can provide it for the record.
    [The information referred to follows:]


                        List of CASA 235 Crashes
------------------------------------------------------------------------
   Date        Location     Occupants    Fatalities       Narrative
------------------------------------------------------------------------
25FEB92     Antarctica              11            0  Crashed in snow.
------------------------------------------------------------------------
18OCT92     Indonesia               31           31  The CASA was
                                                      descending from
                                                      11,000 ft to 8,000
                                                      ft when it struck
                                                      a hill (Puntang
                                                      Mountain). The
                                                      accident happened
                                                      during a heavy
                                                      rainstorm.
------------------------------------------------------------------------
22MAY97     Indonesia                6            6  Lost control while
                                                      testing the LAPES
                                                      (Low Altitude
                                                      Parachute
                                                      Extraction System)
                                                      to drop a 400kg
                                                      load from a height
                                                      of 200m. The
                                                      parachute harness
                                                      apparently
                                                      detached during
                                                      the process,
                                                      causing the 400kg
                                                      load to remain on
                                                      the cargo door.
                                                      Control was lost
                                                      and the aircraft
                                                      crashed.
------------------------------------------------------------------------
19JAN01     Turkey                   3            3  Crashed after
                                                      entering a spin
                                                      from which
                                                      recovery was not
                                                      possible.
------------------------------------------------------------------------
16MAY01     Turkey                  34           34  Control was lost at
                                                      17,000 ft and the
                                                      aircraft crashed.
------------------------------------------------------------------------
18MAY01     Turkey                   4            4  Crashed after
                                                      reaching an
                                                      altitude of just
                                                      100 feet. The CN-
                                                      235 plane was one
                                                      of eight that was
                                                      being modified for
                                                      use by the Turkish
                                                      Navy, and was on
                                                      its final test
                                                      flight.
------------------------------------------------------------------------
29AUG01     Spain                   47            4  The flight was
                                                      cleared for an
                                                      instrument landing
                                                      approach. After
                                                      switching from the
                                                      Approach to the
                                                      Tower radio
                                                      frequency, a no. 1
                                                      engine fire
                                                      warning was noted
                                                      by the crew. The
                                                      co-pilot advised
                                                      Malaga Tower of
                                                      the emergency
                                                      ``estamos en corta
                                                      final, llevamos
                                                      fuego en un motor,
                                                      declaramos
                                                      emergencia.'' The
                                                      co-pilot followed
                                                      emergency
                                                      procedures, during
                                                      which both engines
                                                      were switched off.
                                                      The plane
                                                      descended and
                                                      collided with the
                                                      post of the first
                                                      approach lights,
                                                      538 meters short
                                                      of the runway
                                                      threshold. It slid
                                                      220 meters, during
                                                      which it hit five
                                                      approach light
                                                      stanchions and
                                                      finally hit the
                                                      embankment of the
                                                      N-340 motorway.
------------------------------------------------------------------------
17DEC03     France                   7            7  The CASA departed
                                                      Toulouse-Francazal
                                                      to drop
                                                      parachutists in
                                                      the area of Foix.
                                                      The airplane
                                                      crashed in a
                                                      mountainous area,
                                                      killing all
                                                      aboard. Reportedly
                                                      a number of
                                                      parachutists had
                                                      already left the
                                                      plane.
------------------------------------------------------------------------
21JUL05     Indonesia               23            3  Crashed while on
                                                      final approach to
                                                      Lhokseumawe's
                                                      runway 24. It has
                                                      been reported that
                                                      an engine failed
                                                      on finals.
------------------------------------------------------------------------
Note: Taken from Flight Safety Foundation Aviation Safety Network. This
  information is not presented as the Flight Safety Foundation or the
  Aviation Safety Network's opinion as to the cause of the accident. It
  is preliminary and is based on the facts as they were known at the
  time.


    Senator Cantwell. So if we went back to the Deepwater 
Program, would we see--you're saying as far as the 
specification and design and asset capability, safety would 
have been----
    Admiral Allen. Oh, air worthiness is always a concern. They 
have to be certified for use in this country. I would tell you 
that all three industry teams that submitted a proposal for 
Deepwater included the CASA--included Boeing, who is an 
aircraft manufacturer.
    Senator Cantwell. I'm more interested in this, our process 
of laying out because I see a trend here and at least with 
Rescue 21 and with the Deepwater Program, I want to understand 
how the Coast Guard lays out the specifications that it wants 
to see in the design and the delivery of the assets and how 
that then is communicated. Obviously one of the greatest 
concerns about the Deepwater Program was the concern about 
coming back and then changing the specifications of the assets 
that were to be delivered.
    So obviously we want to be very clear moving forward what 
that process is, how the specification and design work is done 
and obviously, we want the engineering logistic team in 
Baltimore to play the key role. We want to go back to using the 
Systems Acquisition Manual so that those processes are clear. 
We don't want contractors coming back and saying--making the 
ultimate decision nor do we want the contractors saying that 
somehow the process changed three times and that's why the 
taxpayers are going to pay instead of $300 million for the 
National Security Cutter, closer to a billion dollars. So this 
is a very, to me, a key point about how the process works.
    Admiral Allen. Yes, ma'am. We're in complete agreement. I 
might add that regarding the aviation assets, we do have an 
established technical authority. We have a product manager at 
the Aviation Recovery and Supply Center in Elizabeth City. They 
were completely involved in this and in fact, the first 
aircraft that was offered by ICGS was rejected by the Coast 
Guard. It was a CASA 235 extended range that we felt didn't 
meet the operation parameters and there might have been safety 
problems and actually rejected the first airframe offered.
    Senator Cantwell. And is the U.S. Border Protection--they 
are purchasing a different aircraft?
    Admiral Allen. They are. They are purchasing the Dash 8.
    Senator Cantwell. That's not an aircraft that the Coast 
Guard wanted to purchase?
    Admiral Allen. It's in the same area regarding performance. 
There were a couple of things that the CASA gives us that the 
Dash 8 didn't. The CASA has a stern rear ramp that drops down. 
It can take up to three military pallets. In fact, that's the 
way we're putting the sensor operator system into it and we 
also introduced a very large observer window because when we 
fly these things on search and rescue cases, we have to be able 
to look down for folks that are in the water so the 
configuration is slightly different and the Dash 8 wouldn't 
have given us that level of performance. It is a little faster 
than our CASA. Customs puts a premium on that because they do 
air intercepts.
    Senator Cantwell. So the $19 million difference between 
those two planes, you're saying, is that ability to release 
cargo?
    Admiral Allen. There are a couple other differences. It has 
to do with the avionics and the cockpit configuration but we 
can give you a side by side.
    Senator Cantwell. Can I get the original, as I said, spec 
and design requirements that the Coast Guard was providing 
that, provided for the bidding on that aircraft?
    Admiral Allen. I'd be happy to do that, ma'am.
    [The information referred to follows:]

    During Phase I of the Deepwater Program in March 1999, Team 
Deepwater, which later became Integrated Coast Guard Systems (ICGS) 
conducted an evaluation of 16 candidate aircraft to consider for 
selection as the Coast Guard's Maritime Patrol Aircraft (MPA). 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 in the Integrated Deepwater System 
(IDS). Candidate alternatives were evaluated to reduce operating costs, 
improve mission performance, and expand upon Legacy fixed-wing multi-
mission capabilities. Most likely candidates were recommended for 
further analysis. The evaluation included three separate CASA products.
    As part of the Deepwater Final Phase II Proposal, submitted to the 
Coast Guard in June 2002, the Coast Guard accepted ICGS's Integrated 
Deepwater Systems design that included the CASA CN-325-300M ER. This 
extended-range version of the Commercial Off The Shelf (COTS) CN-235-
300 included modifications to the basic aircraft in order to meet the 
performance specifications unique to Coast Guard missions.
    Coast Guard Aviation officials had concerns about the capabilities 
of the proposed aircraft. The main concern was with the aircraft's 
growth margin because the proposed aircraft included airframe 
modifications, but did not include a modified powerplant. These 
concerns over the perception that the CN-235-300M ER could not safely 
carry a full fuel load while operating in certain hot weather locations 
that led the Coast Guard to request that ICGS conduct a another MPA 
Analysis of Alternatives (AoA). Aircraft performance, total ownership 
cost, and capability to perform mission were examined. The results of 
the analysis recommended the change to the CN-235-300M from the CH-235-
300M ER.
    The results of this analysis were briefed to the Commandant in 
March 2003. The Commandant approved the selection with a decision memo 
on 10 March 2003, designating the CN-235-300M as a Maritime Patrol 
Aircraft in the IDS (the HC-130H/J is the other MPA). A contract for 
the development and demonstration of the first two CN-235-300Ms was 
signed in May 2003.
    A subsequent business case analysis was completed by ICGS in 
December 2004. This analysis, once again, compared the CN-235-300M, CN-
235-300M ER, and C-27J. The analysis assessed the operational 
effectiveness and total ownership costs of switching from the CN-235-
300M from the CN-235-300M ER. The analysis confirmed the CN-235-300M 
was capable of performing all its missions and exhibited better weight 
growth and climb performance characteristics.
    In December 2006, the first CN-235-300M was delivered to the Coast 
Guard at the CASA facility in Seville, Spain. Pilot and aircrew 
training were conducted onsite. The aircraft was then flown from Spain 
to the Coast Guard Aircraft Repair and Supply Center (ARSC) in 
Elizabeth City, North Carolina, where the mission pallet is being 
integrated with the aircraft. The pilot in command, CDR Douglas Nash 
from Aviation Training Center Mobile, AL had this to say about the CASA 
CN-235-300M (official military designation HC-144A):

        ``It has been a pleasure learning to fly the HC-144 with its 
        docile flight characteristics, simple mechanical systems, and a 
        state-of-the-art avionics suite providing incredible 
        situational awareness and ease of operation. Its wide array of 
        automated safety and surveillance systems and built in 
        mechanical redundancy will help avert potential mishaps, while 
        it's roomy cockpit and quiet, comfortable cabin are ideal for 
        the 7 to 10 hour surveillance missions the aircraft will be 
        performing. Also impressive is the aircraft's low speed 
        handling characteristics, and the outstanding visibility from 
        the large cockpit windows and cabin bubble windows, features 
        that will prove crucial in performing surveillance and SAR 
        missions.''

    It is important to point out that individual aviation assets are 
not required to meet each requirement and/or fill every function, just 
as Aviation assets are not intended to meet each and every requirement 
of the entire System Performance Specification (SPS). Aviation assets 
that contribute to the overall IDS and the aviation asset mix were 
selected based on performance and cost. The MPA is one part of the 
Deepwater Program. It provides a Medium Range Surveillance capability 
that supports the 11 Congressionally mandated missions assigned to the 
Coast Guard.

------------------------------------------------------------------------

------------------------------------------------------------------------
                              MPA Timetable
------------------------------------------------------------------------
March 1999                         Deepwater Phase I Analysis of
                                    Alternatives for Aviation Assets
                                    complete.
------------------------------------------------------------------------
June 2002                          Revised Final Proposal from ICGS
                                    accepted by Coast Guard. Proposal
                                    included CN-235-300M ER as
                                    replacement MPA.
------------------------------------------------------------------------
November 2002                      MPA Platform Analysis study by ICGS
                                    to validate selection of CN-235-300M
                                    ER.
------------------------------------------------------------------------
March 2003                         Analysis of Alternatives on risk
                                    mitigation activities for MPA
                                    complete. Showed upgrade to CN-235-
                                    300M ER from CN-235-300M not
                                    appropriate.
                                   Results briefed to Commandant.
                                    Congressional language in FY03
                                    budget directs Coast Guard to
                                    acquire replacement MPA.
                                   Commandant signed decision memo
                                    designating CN-235-300M as MPA
                                    within IDS.
------------------------------------------------------------------------
May 2003                           Contract signed with ICGS for
                                    development and demonstration of MPA
                                    1 & 2.
------------------------------------------------------------------------
December 2004                      ICGS conducted business case analysis
                                    on MPA selection. Analysis confirmed
                                    performance characteristics a
                                    mission performance capabilities of
                                    CN-235-300M as compared with CN-235-
                                    300M ER.
------------------------------------------------------------------------
CY 2005                            Design & production of CN-235-300M.
------------------------------------------------------------------------
December 2006                      Delivery of first CN-235-300M to
                                    Coast Guard. Pilot in command gives
                                    very favorable endorsement to
                                    aircraft's performance & safety
                                    characteristics.
------------------------------------------------------------------------


    Senator Cantwell. Thank you. And we will have other 
questions, I'm sure, that we'll want you to answer in writing 
about the Deepwater Program but if I could, because there are 
so many issues that the Committee is concerned with as it 
relates to the Coast Guard 2008 budget. One of them is the 
polar icebreakers and I mentioned that in my statement earlier. 
Why does the budget request again not include funds for the 
Polar Icebreaker fleet?
    Admiral Allen. We are in the process right now of trying to 
get a policy determination on how to move forward with polar 
icebreaking. If I could take you back a few years when we were 
in the process of acquiring HEALY. That was done pursuant to a 
Presidential determination requiring the need for icebreakers.
    The National Academy of Science has produced a study last 
fall that basically validated the need for three icebreakers 
and that we should proceed with a plan on how to recapitalize 
those. We are attempting to work through the policy apparatus 
in the Administration right now to establish what the 
requirements are for polar icebreaking and I've laid out 
internally to the Coast Guard, there are three knotty problems 
that I've got to get my arms around while I'm Commandant. One 
of them is the polar icebreakers.
    The other one is the inland Aids to Navigation vessels and 
the third one is the condition of our shore infrastructure and 
moving forward into the 2009 budget and beyond, we'll be 
looking to attack those problems, ma'am.
    Senator Cantwell. And I know, Admiral, that you are just 
new as Commandant, relatively new but we did include--this is 
not the first time that this Committee has been very direct or 
the Congress has been very direct about this. In fact, in the 
Maritime Transportation Act of 2006, we called for the Coast 
Guard to submit such a plan. We required that plan and instead 
what we got is basically that we're going to continue to rely 
on the National Science Foundation.
    So this is of great concern to many of us on the Committee 
that the specific plan funding, recapitalization all need to be 
there. We are not going to continue to see this mission 
undermined by an Administration who wants to contract out for 
these kinds of services through the National Science 
Foundation, leaving the critical resources that are there with 
the--is it the POLAR STAR or the POLAR SEA?
    Admiral Allen. POLAR SEA is the one that is operating now, 
ma'am.
    Senator Cantwell. The POLAR SEA--we're not going to see a 
budget play that leaves the resources of the POLAR SEA to play 
catch up to a contractor that couldn't deliver to begin with 
and now we have vessels stranded and then the POLAR SEA has to 
respond to support them. So it seems to us--it's very clear 
that there is a budget game going on here and the real question 
is, do these assets need to be funded through the Coast Guard? 
My sense is looking at scientific information even though we 
have climate warming, it's only going to lead to more traffic 
and transportation in these areas and a higher need of the 
delivery of these services, not less.
    So getting this right, getting this clear that these are 
resources of the Coast Guard and must be budgeted for is a key 
priority and so as far as we're concerned, that 2006 language 
was specific and we think the Coast Guard is past due on 
delivering a plan to us. So what is the time-frame for a 
response for a real plan?
    Admiral Allen. Yes, ma'am. As I said, we're working that 
through the Administration right now and the baseline we're 
working from is the report that was issued by the National 
Academy of Sciences last fall and as we move forward, we'd be 
glad to give you an update on our progress on that. We have to 
have a way forward with the polar icebreakers. I'm in total 
agreement with you and there are two issues. One is the 
recapitalization but the other one is this situation right now 
where we own the ship and the people but the funding is 
resident in the National Science Foundation. I would rather 
have all the money in the Coast Guard budget, even if it wasn't 
enough.
    And I said at a previous hearing, the current funding 
process for the annual appropriations to execute this mission 
is dysfunctional.
    Senator Cantwell. Do you believe that the contracting out 
of some of these services often time leaves the Coast Guard 
still playing clean up on the security and mission?
    Admiral Allen. Well, I'm not going to comment on National 
Science Foundation's prerogatives. The problem is, all of our 
vessels, even if they are icebreakers, which would seem to be 
single mission vessels, are multimissioned. On the way back 
from Antarctica this year, the POLAR SEA was diverted for that 
Japanese oil processing ship that was on fire between 
Antarctica and New Zealand, and we just had an Argentinian ship 
catch fire and burn and sink just in the last week down in that 
area there. We do other things in those regions.
    The National Science Foundation is only bound by 
appropriations law to reimburse us for what is related to the 
``billable hours'' that support the science mission down there. 
You can never get there from here. I think it needs to be 
unified, ma'am.
    Senator Cantwell. So we basically are not paying for these 
services--we're not budgeting for these services.
    Admiral Allen. Our operating budget for the polar 
icebreakers is in the National Science Foundation's budget, 
ma'am and they are only----
    Senator Cantwell. And they're not reimbursing you?
    Admiral Allen. Well, they are reimbursing us for what has 
to do with the science missions, not everything we do with 
those vessels.
    Senator Cantwell. Well, I think just about every member of 
the Committee brought up an issue in which they think that 
either the security mission or the safety mission or the 
resource allocation of the Coast Guard is coming into question 
and I think we have to have the budgeting for these vessels in 
a program and framework that actually accounts for the cost of 
delivering those services and when you only have that allocated 
through the National Science Foundation for some of the 
services, it doesn't provide us an adequate budget for those 
needs and I predict that they will be in even more demand in 
the future.
    Admiral Allen. I take no objection to your statement, 
ma'am.
    Senator Cantwell. Well, we will have to figure out an 
appropriate action because I think that Congress has been clear 
about this so we'll have to figure out exactly how we work to 
get the--as you said, the recapitalization and the resources to 
make sure that they are adequately budgeted because I would 
make the point that then we're really stealing from other 
resources, other security missions that the Coast Guard has to 
meet as well and these security missions are serious 
responsibilities of the Coast Guard as well.
    Admiral Allen. Yes, ma'am, I would tell you in regards to 
polar icebreakers, a concern that I have. If you look at what's 
happening with the polar icecap, the potential for an 
unfettered access from Europe across the top to Asia could cut 
5,000 miles off a trip that would normally be through the 
Panama Canal. I would tell you at that point, safety, 
stewardship and security converge in the Artic and these become 
less of a science platform than a national asset that we need 
to seriously think about.
    Senator Cantwell. And I would assume that the investment in 
something like the POLAR SEA is not a resource that a lot of 
other vessels have, is that correct?
    Admiral Allen. It is a unique resource, yes.
    Senator Cantwell. OK and just one last question, if I 
could, Admiral. Obviously, our national fisheries are very 
important. Again, it's part of this challenge of funding within 
the budget and I know that this year's request--well, first of 
all, the 2007 request--the 2006 to 2007 request was a decrease 
and this year is an even lower trend. Can you explain that?
    Admiral Allen. Yes, ma'am. I'm a former budget officer in 
the Coast Guard and I'm going to try to explain this without 
getting too, I guess, geeky or something here. There is an 
anomaly in how we present budget figures and I'd be glad to 
expound on it later on if it gets too arcane here.
    The way we distribute the money in the budget as presented 
is based on a cost allocation model by the number of hours we 
allocated to those missions historically. We have the 
capability through what we call a Mission Cost Model in the 
Coast Guard to take an hour of high endurance cutter time or an 
hour of C-130 time and load that with the cost of the 
personnel, the fuel and so forth. So the cost of operating a 
high endurance cutter is much more than the cost of operating a 
patrol boat.
    We then have every asset in the Coast Guard keep track of 
their employment by hour so for X number of hours for a high 
endurance cutter for a year, we can break that down into every 
mission set that we have performance parameters for and can 
load the cost.
    The field commanders in all the districts out there apply 
resources to the highest need or the risk in their area of 
responsibility based on the threats that are presented to them 
and they are not the same every year.
    Our search and rescue numbers for Katrina in 2005 go 
completely off the scope and so what you're seeing when we 
allocate those costs--it's really not a projection of what we 
intend to spend on the program, it's an historical allocation 
of cost as we allocated the assets in the past projected 
forward to the budget and if that's not the proper way to 
present it then we need to think of another way but we've been 
doing it this way.
    I've been involved in this for over 20 years, going back to 
when I was a commander in the Coast Guard and it has been the 
way we've presented the cost and it may not be the most 
meaningful way to present them to you but it is not a 
prediction of what we are going to spend, it's a historical 
allocation of cost to the level of effort that we have done in 
the past.
    Senator Cantwell. And you think those--then the reflection 
of the 2008 budget, you think will be on target?
    Admiral Allen. It rarely is the same because what we're 
doing is we're saying if the past was perfect and we did the 
same thing next year, that's what you would get and it never 
is, ma'am.
    Senator Cantwell. Well, I think for those of us--I mean, 
just in the reauthorization of the Magnuson-Stevenson Act and 
fisheries management, it's an important industry. It's very 
important that we adequately enforce the laws and the Coast 
Guard plays a key role in that.
    So I think perhaps we ought to take a look at that, the 
budgeting in this particular area so that we can--I think it 
becomes challenging for each member of this Committee as they 
look at various issues and regional issues to understand 
whether the assets and resources are going to be there and when 
budget numbers reflect a decrease or as in Senator Nelson's 
case, he's trying to understand the current Deepwater proposal 
and resource allocation might mean for the response time to an 
emergency situation.
    In the Florida Keys area, I think it is very important that 
we be able to give some specific answers. We don't want to 
continue to be with a Coast Guard at a second guessing point 
about what the budget actually means.
    We ought to be in agreement about the level of funding and 
what that level of funding will provide. We might disagree 
about those priorities or something but we ought to be able to 
agree that this is the resource level that you will get with 
this budget and so if you can help the Committee with that, 
we'd much appreciate it.
    Admiral Allen. Senator, going back to my more junior days 
as a commander working the budget here and seeing how this has 
evolved, if there was a way to kill this way of presentation, I 
would come up with something else. I think it is probably time 
to have that discussion.
    Senator Cantwell. Well, Admiral, thank you for your 
testimony today. We will keep the record open for two weeks. We 
hope that--we do want to provide--submit some questions that we 
hope you would answer in writing related to the Deepwater 
Program but we thank you for your testimony this afternoon and 
the Committee is adjourned.
    [Whereupon, at 4:07 p.m., the hearing was adjourned.]


                            A P P E N D I X

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

    The Coast Guard has faced many unanticipated challenges during the 
past few years, from saving lives during natural disasters such as 
Hurricanes Katrina and Rita, to protecting the public from harm by 
carrying out additional security responsibilities assigned to it after 
9/11 and through enactment of the SAFE Port Act of 2006. In addition to 
these challenging missions, the Coast Guard has had to maintain its 
traditional responsibilities. These have not been easy tasks, and the 
problems associated with the Deepwater procurement program very well 
may hamper the agency's ability to respond equally well in the future. 
I would like to commend the men and women of the Coast Guard for their 
tireless efforts, and the Commandant for his commitment to getting 
Deepwater back on track.
    However, I have just mentioned 2 of the Coast Guard's 11 missions. 
Congress must ensure that the Coast Guard has the resources it needs to 
carry out all 11 missions, each one vital to protecting the American 
people, our natural resources and our way of life.
    I am concerned that the Coast Guard's Fiscal Year 2008 budget 
request does not account for all 11 missions. For example, the budget 
proposes a significant decrease in funding for living marine resource 
missions. As you well know, Hawaii is the home of the Coast Guard's 
District 14, which is responsible for the protection and enforcement of 
the largest geographical area in the United States.
    In addition to this, the President recently declared the 
Northwestern Hawaiian Islands a Marine National Monument, further 
increasing the Coast Guard's enforcement responsibilities in this area. 
Given that the Administration's budget proposes a reduction in funding 
for enforcement of marine resource laws, I am interested to hear how 
the Coast Guard plans to address its enforcement requirements for this 
expanded area of responsibility in the future.
    Another issue of concern is the steady shifting of funding within 
the total Coast Guard budget between security and non-security missions 
given that the total budget has remained constant.
    I continue to support priority funding for security 
responsibilities in the aftermath of the events of 9/11, but those 
added responsibilities should not be funded solely at the expense of 
other responsibilities such as enforcing our natural resource laws, our 
search and rescue programs, and our marine safety regulations.
    I also have questions regarding other issues such as the status of 
Rescue 21, the Coast Guard's project to modernize its maritime 
emergency communications system, and the proposed realignment of the 
Coast Guard's Deployable Operation Groups.
    I look forward to hearing from the witnesses, and working with them 
to resolve these issues in the future.
                                 ______
                                 
 Prepared Statement of Stephen L. Caldwell, Acting Director, Homeland 
  Security and Justice Issues, U.S. Government Accountability Office 
                                 (GAO)

    Madame Chair and Members of the Subcommittee:
    I am pleased to provide this statement for the record about the 
President's Fiscal Year 2008 budget request for the Coast Guard. As you 
know, the Coast Guard has grown significantly since September 11, 2001, 
to help meet its responsibility to protect America's ports, waterways, 
and waterside facilities from terrorist attacks while maintaining 
responsibility for many other programs important to the Nation's 
interests, such as helping stem the flow of illegal drugs and illegal 
immigration, protecting important fishing grounds, and responding to 
marine pollution. While the Coast Guard budget request continues to 
increase in FY 2008, it also shows shifts in direction. By placing less 
emphasis on acquiring new assets and reorganizing some of its 
functional areas, the Coast Guard is attempting to rectify some of its 
management concerns of the past while better preparing itself for the 
challenges of the future.
    My statement today provides:

   an overview of the Coast Guard's Fiscal Year 2008 budget 
        request and key performance indicators;

   a discussion of various organizational changes and related 
        management initiatives;

   a status update on some current acquisition efforts and 
        challenges; and

   a look at additional challenges related to traditional 
        legacy missions.

    My statement is based in part on prior GAO work focusing on the 
Coast Guard's programmatic and management initiatives (a listing of 
related reports is included at the end of my statement). Additionally, 
we conducted interviews with headquarters, Pacific Area, and Sector San 
Francisco personnel, and reviewed budget, performance, and acquisition 
documents. The scope of our work did not include evaluating whether the 
proposed funding levels are commensurate with the Coast Guard's stated 
needs. Our scope was limited due to the short time available between 
the release of the President's Fiscal Year 2008 budget request and the 
hearing date of mid-April. All work for this statement was conducted in 
accordance with generally accepted government auditing standards 
between February and March 2007.

Summary
    The Coast Guard's Fiscal Year 2008 budget request is moderately 
higher than its Fiscal Year 2007 budget, but it increased at a lower 
rate, mainly reflecting a slowing in requests for funding acquisition, 
construction, and improvement (AC&I) projects. The 2008 overall budget 
request of $8.73 billion is approximately 3 percent higher than the 
2007 enacted budget, but unlike in prior years, the AC&I budget 
decreased by 19 percent. According to Coast Guard officials, this 
decrease is in part due to some recognized problems with ongoing 
acquisition programs and the desire to strengthen operating 
capabilities, including contract and acquisition oversight. While the 
AC&I budget request is down, a substantial pool of unspent funds 
appropriated for acquisition projects in previous years remains 
available to the Coast Guard. Current unobligated balances in these 
projects total $1.96 billion, of which $1.63 billion is associated with 
Integrated Deepwater Systems acquisitions. The Coast Guard expects to 
meet its performance goals in 6 of the 11 mission areas in FY 2006 (as 
compared to meeting performance goals in 8 of 11 missions in FY 2005). 
Performance trends over the past 5 years also show that increased 
homeland security activities have not prevented the Coast Guard from 
meeting its non-homeland security mission goals. The Coast Guard 
continues to develop ways to better understand the links between 
resources it expends and the results it achieves.
    The budget request reflects a continued emphasis on reorganization 
efforts, all of which carry ongoing challenges. These efforts began 
with the combination of marine safety offices and Coast Guard groups 
into sectors in 2006. While the Coast Guard has completed its 
organizational changes to place local units under sector commands, not 
all of the units have been able to move to a single location, a key 
ingredient in bringing about the improved integration expected from the 
realignment. Funding was not provided in the Fiscal Year 2008 budget to 
complete the desired colocation. A reorganization effort that is to 
begin this year is designed to bring the different mobile deployable 
units responsible for such actions as pollution response, law 
enforcement, port security, and counterterrorism under a single command 
rather reporting to three different authorities. The Coast Guard hopes 
to gain more effective management, oversight, and coordination of these 
deployable forces. Challenges here include addressing ``buy-in'' and 
related issues from units affected by the changes, ensuring that 
mission performance of sectors that previously made use of these units 
for everyday activities is not compromised, and effectively 
establishing and operating the new centralized command. A third 
organizational effort to improve Coast Guard operations--in this case, 
to improve its troubled acquisition contract management--is the merging 
of the various acquisition management efforts under a Chief 
Acquisitions Officer. One challenge in making this move effective is 
the need to build a more robust cadre of acquisition management 
professionals.
    Three major Coast Guard acquisition projects are making progress at 
varying rates, but challenges remain for all three in the future. The 
record for Deepwater has been mixed. Seven of 10 asset classes being 
acquired are on or ahead of schedule. Three classes, however, are 
behind schedule for various reasons and several factors add to the 
uncertainty about the delivery schedule of other Deepwater assets. 
Contract management issues, accountability of the contractor, and cost 
control through competition have been recurring challenges for the 
Coast Guard. Separate from Deepwater, the National Automatic 
Identification System (NAIS), a program designed to allow the Coast 
Guard to monitor and track vessels as far as 2,000 nautical miles off 
the U.S. coast, is under way, and infrastructure for the first phase of 
the system is currently being installed. The Coast Guard is considering 
whether to require more types of vessels to install and operate 
tracking equipment--an issue that affects the extent to which the 
system will provide information on the location of vessels of interest. 
The Coast Guard's timeline for achieving full operating capability for 
its search and rescue communications system, Rescue 21, was delayed 
from 2006 to 2011, and the estimated total acquisition cost increased 
from 1999 to 2005, but according to Coast Guard officials, many of the 
issues that led to these problems are being addressed. Coast Guard 
acquisition officials said they are providing more oversight to the 
contractor after we reported on contract management shortcomings. 
According to Coast Guard officials, the contracts that would set 
specific schedules and budgets for the last 25 regions in which the 
system will be installed have yet to be signed. Also, there has been a 
reduction in promised improvements to limit communications gaps; 
originally, Rescue 21 was intended to limit communications gaps to 2 
percent, and that target was reduced to less than 10 percent.
    Some of the Coast Guard's non-homeland security missions are facing 
challenges based on competition for resources with homeland security- 
oriented funding needs. Many domestic icebreaking and Aids-to- 
Navigation vessels are also reaching the end of their designed service 
lives. While these vessels have been able to meet mission goals to 
date, without major rehabilitation or replacement, their ability to 
carry out their designated missions will likely decline in the future. 
The Coast Guard is currently examining options for addressing this 
issue. Similarly, the inability to obtain needed maintenance funding 
has led the Coast Guard to take one Polar-class icebreaker out of 
service to keep its remaining aging Polar-class vessel, the POLAR SEA, 
operational. With only one icebreaker capable of keeping access to 
Antarctica open, there is a greater possibility that mechanical 
problems or other maintenance issues could affect this mission.

Background
    The U.S. Coast Guard is a multimission, maritime military service 
within the Department of Homeland Security (DHS). 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 
multimission stations and patrol boats. In Fiscal Year 2005, the Coast 
Guard had over 46,000 full-time positions--about 39,000 military and 
7,000 civilians. In addition, the agency had 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. Furthermore, the Coast Guard also had about 
31,000 volunteer auxiliary personnel help with 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                        program
------------------------------------------------------------------------
                       Homeland Security Missions
------------------------------------------------------------------------
Ports, waterways, and coastal     Conducting harbor patrols,
 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 Missions
------------------------------------------------------------------------
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                Managing U.S. waterways and providing
                                   a safe, efficient, and 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 protection   Preventing and responding to 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 (foreign    Protecting U.S. fishing grounds by
 fish enforcement)                 ensuring that foreign fishermen 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 drug interdiction and other law
  enforcement as non-homeland security missions for budgetary purposes.

    For these 11 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 Fiscal Year Budget-in-Brief. The 
Coast Guard's 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. This, and other documents, 
reports the performance measures for each of the Coast Guard's 
programs, as well as descriptions of the measures and explanations of 
performance results.
    To continue executing its missions, the Coast Guard has programs to 
acquire a number of assets such as vessels, aircraft, and command, 
control, communications, computer, intelligence surveillance, and 
reconnaissance (C4ISR) systems. The Coast Guard's Deepwater program is 
a 25-year, $24 billion effort to upgrade or replace existing vessels 
and aircraft in order 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. The Coast Guard also 
has an acquisition program called the National Automatic Identification 
System to identify and track vessels bound for or within U.S. waters. 
Another acquisition program is called Rescue 21, a program to replace 
the Coast Guard's 30 year old search and rescue communications systems. 
Rescue 21 was to be used not only for search and rescue, but to support 
other Coast Guard missions, including those involving homeland 
security.

Budget Places More Emphasis on Operational Expenses; Overall 
        Performance Trends Remain Positive
    The Coast Guard's Fiscal Year 2008 budget request reflects a 
smaller increase than in years past. Requests for new capital spending 
are down, as the agency slows the pace of new acquisitions for 
Deepwater and other capital projects. Instead, several of the budget 
initiatives being emphasized reflect a reorganization of internal 
operations and support command infrastructure. Although the Coast Guard 
met fewer performance targets than last year, overall performance 
trends for most mission programs remain positive. That is, many of the 
measures that Coast Guard uses to evaluate performance have improved 
since last year, even though the agency did not meet as many of its 
performance targets in 2006 as in the year before.
Overall Budget Request Is 3.3 Percent Higher Than Previous Year's
    The Coast Guard's budget request in Fiscal Year 2008 is $8.73 
billion, approximately $275 million, or 3.3 percent, more than in 
Fiscal Year 2007 (see fig. 1).\1\ About $5.9 billion, or approximately 
68 percent, is for operating expenditures (OE). This funding supports 
its 11 statutorily identified mission programs; increases in cost of 
living, fuel, and maintenance costs; and previous administration and 
congressional initiatives. The greatest change from the previous year 
is in the AC&I request, which at $949 million reflects about a 19 
percent decrease from Fiscal Year 2007. According to Coast Guard 
officials, no new appropriations are requested in Fiscal Year 2008 for 
several Deepwater assets until business case reviews can be completed 
to assess the viability of technology and contracting oversight. The 
remaining part of the request consists primarily of funds requested for 
retiree pay and health care fund contributions. If the Coast Guard's 
total budget request is granted, overall funding will have increased by 
over 55 percent since 2002, an increase of $3.1 billion.



    The Coast Guard's budget request for homeland security missions 
represents approximately 35 percent of the overall budget.\2\ Figure 2 
illustrates the percentage of funding requested for homeland security 
versus non-homeland security funding, and figure 3 shows the funding 
levels by each mission program.





Budget Includes Reallocations to Match Reorganization
    Two key budget initiatives--both reallocations rather than 
increases--reflect reorganization efforts. First, a major budget 
reallocation within the operating expenditures category establishes a 
single unified command for the agency's deployable specialized forces. 
These are the Coast Guard's response teams that can deploy wherever 
needed for natural disasters, terrorism incidents, and other concerns. 
According to senior Coast Guard officials, this initiative entails a 
one-time, budget-neutral reallocation of $132.7 million from the 
Atlantic and Pacific Area Commands to a new deployable operations 
command, which will be located in Ballston, Virginia. No new funds have 
been requested for this initiative. This initiative is discussed in 
more detail later in this testimony. The second reallocation involves 
an $80.5 million transfer from AC&I into the operating expense 
appropriation. The operational aspect of this reallocation is 
associated with creating a new consolidated acquisition function, also 
discussed in further detail below. Coast Guard officials said this 
reallocation consolidates all personnel funding into the operating 
expense appropriation and enables the Coast Guard to manage one 
personnel system for the entire agency. They said although this 
reallocation is budget neutral in 2008, future budget requests may 
include financial incentives that will enable the Coast Guard to 
develop a more robust cadre of acquisition professionals.

Acquisition Budget Request Declines, but Substantial Unobligated 
        Balances Are Also Available
    The 19 percent decrease in Fiscal Year 2008 for AC&I reflects a 
slowing in the pace of acquisition efforts, which, according to Coast 
Guard officials, is an attempt to address technology issues and 
contracting oversight associated with Deepwater programs such as the 
Vertical Unmanned Aerial Vehicle and Fast Response Cutter. The Coast 
Guard also recognizes that it is carrying significant unobligated 
balances for a number of its acquisition projects. These balances 
reflect money appropriated but not yet spent for projects included in 
previous years' budgets. During our work for this testimony, we 
reviewed budget data and Coast Guard documentation showing the current 
status of the agency's unobligated balances. We found, for example, 
that the current unobligated balances total $1.96 billion for all 
acquisition projects. The Deepwater acquisition alone has $1.6 billion 
in total unobligated balances, which is nearly double the Coast Guard's 
Fiscal Year 2008 request for the Deepwater project. Other acquisition 
programs, such as the Nationwide Automatic Identification System and 
Rescue 21, also have unobligated balances, but these are considerably 
lower (see table 2). The unobligated balance for Rescue 21, for 
example, is $30.5 million.

 Table 2.--Total Unobligated Balances for Selected Acquisition Projects
                          [dollars in millions]
------------------------------------------------------------------------
                                     Fiscal year 2008     Unobligated
        Acquisition project              request            balance
------------------------------------------------------------------------
Integrated Deepwater Systems                   $836.9           $1,632.6
------------------------------------------------------------------------
Shore Facilities and Aids to                     37.9              156.8
 Navigation
------------------------------------------------------------------------
Nationwide Automatic                             12.0               36.0
 Identification System
------------------------------------------------------------------------
Rescue 21                                        80.8               30.5
------------------------------------------------------------------------
Vessels and Critical                              9.2               30.3
 Infrastructure Projects
------------------------------------------------------------------------
Source: GAO analysis of Coast Guard data.

    These unobligated balances have accumulated for a variety of 
reasons as the Coast Guard has found itself unable to spend previous-
year acquisition appropriations. For example, we and others have 
documented technical design issues involving the Coast Guard's 123-foot 
patrol boat and the Fast Response Cutter. These problems have led to 
major delays in some programs and outright cancellations in others. We 
asked Coast Guard officials about their plans to spend these 
unobligated balances either in Fiscal Year 2008 or beyond, but at this 
point they were unable to provide us with detailed plans for doing so. 
To the agency's credit, steps have been taken to address the issue, 
including reporting quarterly acquisition spending levels. Since these 
unobligated balances represent a significant portion of the Coast 
Guard's entire budget, the degree to which the Coast Guard spends these 
balances in Fiscal Year 2008 could have a substantial impact on the 
overall level of capital spending for the year.
    According to senior Coast Guard officials, each acquisition project 
is now receiving more scrutiny and oversight of how previous funds are 
spent. The Coast Guard is not requesting additional funds for the 
Offshore Patrol Cutter, Fast Response Cutter, and Vertical Unmanned 
Aerial Vehicle in the Fiscal Year 2008 budget request until business 
case reviews are completed to assess the viability of the technology 
and contracting oversight.

Performance Trends Generally Positive and Non-Homeland Security 
        Measures 
        Generally Sound
    Despite the fact that Coast Guard met fewer performance targets 
than last year, overall performance trends for most mission programs 
remain positive. Performance in 7 of 11 Coast Guard mission areas 
increased in the last year, but the Coast Guard also set performance 
targets at a higher level than it did last year. Coast Guard's 
performance did not improve sufficiently for the Coast Guard to meet as 
many of its higher performance targets in 2006 as it did in 2005. In 
Fiscal Year 2006, the Coast Guard reported that 5 of its 11 programs 
met or exceeded program performance targets. In addition, agency 
officials reported that the Coast Guard expected to meet the target for 
1 additional program when results become available in August 2007, 
potentially bringing the total met targets to 6 out of 11 (see fig. 4). 
In comparison, last year we reported that in Fiscal Year 2005, Coast 
Guard met 8 out of 11 targets. In Fiscal Year 2006, the agency narrowly 
missed performance targets for 3 programs--Search and Rescue, Living 
Marine Resources, and Aids to Navigation. In Fiscal Year 2005, it 
missed only 1 of these 3, Living Marine Resources. The Coast Guard more 
widely missed performance targets for 2 programs, Defense Readiness and 
Marine Safety. In Fiscal Year 2005, Coast Guard met its Marine Safety 
target, but missed on Defense Readiness. See appendix I for more 
information on Coast Guard performance results.



    Congressional committees have previously expressed concern that 
Coast Guard's shift in priorities and focus toward homeland security 
missions following the events of September 11, 2001, may have affected 
the agency's ability to successfully perform its non-homeland security 
missions. However, the Coast Guard's performance on its non-homeland 
security indicators has not changed substantially over the past 5 
years.
    This past year, we also completed an examination of some of the 
performance indicators themselves.\3\ We found that while the Coast 
Guard's non-homeland security measures are generally sound and the data 
used to collect them are generally reliable, there are challenges 
associated with using performance measures to link resources to 
results. Such challenges include comprehensiveness (that is, using a 
single measure per mission area may not convey complete information 
about overall performance) and external factors outside agency control, 
(such as weather conditions, which can affect the amount of ice that 
needs to be cleared or the number of mariners who must be rescued). The 
Coast Guard continues to work on these measures through such efforts as 
the following:

   Standardized reporting. The Coast Guard is currently 
        developing a way to standardize the names and definitions for 
        all Coast Guard activities across the agency, creating more 
        consistent data collection throughout the agency.

   Measurement readiness. The Coast Guard is developing a tool 
        to track the agency's readiness capabilities with up-to-date 
        information on resource levels at each Coast Guard unit as well 
        as the certification and skills of all Coast Guard uniformed 
        personnel.

   Framework for analyzing risk, readiness, and performance. 
        The Coast Guard is developing a model for examining the links 
        among risk, readiness management, and agency performance. This 
        model is intended to help the Coast Guard better understand why 
        events and outcomes occur, and how these events and outcomes 
        are related to resources.

    While the Coast Guard appears to be moving in the right direction 
and is about done with some of these efforts, it remains too soon to 
determine how effective the Coast Guard's larger efforts will be at 
clearly linking resources to performance results. These initiatives are 
not expected to be fully implemented until 2010.\4\

Coast Guard Continues to Make Organizational Changes Designed to 
        Improve Operational Effectiveness and Resource Management
    The 2008 budget request reflects a multiyear effort to reorganize 
the Coast Guard's command and control and mission support structures. 
Three efforts are of note here--reorganizing shore-based forces into 
sector commands, placing all deployable specialized forces under a 
single nationwide command, and consolidating acquisitions management 
programs. Each of these efforts faces challenges that merit close 
attention.

Further Action Needed to Ensure Operational Benefits from Sector 
        Reorganization
    As we reported for the last 2 years, the Coast Guard has 
implemented a new field command structure that is designed to unify 
previously disparate Coast Guard units, such as air stations and marine 
safety offices, into 35 different integrated commands, called sectors. 
At each of these sectors, the Coast Guard has placed management and 
operational control of these units and their associated resources under 
the same commanding officer. Coast Guard officials told us that this 
change helped their planning and resource allocation efforts. For 
instance, Coast Guard field officials told us the sector command 
structure has been valuable in helping to meet new homeland security 
responsibilities, and in facilitating their ability to manage incidents 
in close coordination with other Federal, state, and local agencies. 
Our follow-up work found, however, that work remains to ensure the 
Coast Guard is able to maximize the potential benefits of sector 
realignment. In particular, Coast Guard officials reported that some 
sectors had yet to colocate their vessel tracking system (VTS) centers 
with the rest of their operational command centers. According to field 
officials, the lack of colocation has hindered communications between 
staff that formerly were from different parts of the agency.
    According to Coast Guard officials, competing acquisition 
priorities are limiting the progress in obtaining funding needed to 
colocate these facilities. The Fiscal Year 2008 budget does not provide 
funds to colocate the VTS centers and command centers. Coast Guard 
headquarters officials told us they would work to address this 
challenge as part of the capital investment plan to build interagency 
operational centers for port security, as required under the SAFE Port 
Act, but they had not yet developed specific plans, timelines, and cost 
estimates.\5\

Unified Command Structure for Deployable Forces Is Being Developed
    The Coast Guard is planning to reorganize its deployable 
specialized forces under a single unified command, called the 
Deployable Operations Group (DOG). This change is reportedly budget 
neutral in the Fiscal Year 2008 request, but it bears attention for 
operational effectiveness reasons. According to Coast Guard officials, 
the agency is making this change based on lessons learned from the 
Federal response to Hurricane Katrina. They said the response 
highlighted the need to improve effectiveness of day-to-day operations 
and to enhance flexibility and interoperability of forces responding to 
security threats and natural disasters. Currently, there are five 
different types of Coast Guard specialized forces, totaling about 2,500 
personnel. Their roles and missions vary widely, ranging from 
conducting antiterrorism operations to conducting environmental 
response and cleanup operations (see table 3).

  Table 3.--Coast Guard Deployable Specialized Forces, Mission Area and
              Primary Operational Activity, and Force Size
------------------------------------------------------------------------
                           Mission area and primary
    Specialized Force       operational activities        Force size
------------------------------------------------------------------------
National strike force      Marine environmental      3 strike teams/328
 (NSF)                      protection                personnel
                            Domestic and
                            international response
                            for oil spills
                            Hazardous
                            material cleanup
                            Chemical,
                            biological, and
                            radiological response
------------------------------------------------------------------------
Tactical law enforcement   Law enforcement           2 units/180
 teams (TACLET)             Maritime          personnel
                            interception operations
------------------------------------------------------------------------
Port security units (PSU)  Defense readiness         8 units/1,144
                            Expeditionary     personnel
                            port security
------------------------------------------------------------------------
Maritime safety and        Ports, waterways, and     12 units/924
 security teams (MSST)      coastal security          personnel
                            Domestic port
                            security
                            Antiterrorism
------------------------------------------------------------------------
Maritime security          Ports, waterways, and     1 unit/208
 response team (MSRT)       coastal security          personnel
                            Counterterroris
                            m
------------------------------------------------------------------------
Source: Coast Guard.

    The Coast Guard's existing structure divides operational control of 
specialized forces into three different command authorities--
headquarters, Pacific Area, and Atlantic Area. Under the planned 
realignment, these forces would be available under a single operational 
command, with the expectation of more effective resource management, 
oversight, and coordination.\6\ The Coast Guard plans to establish 
operating capability for this unified approach by July 20, 2007, with 
an initial command center located in Ballston, Virginia. Officials told 
us they were well under way in planning for this reorganization. 
Officials expect about 100 staff will be assigned to the center when it 
reaches its initial operating capability, growing to about 150 
personnel once the command structure is completed. According to 
officials, all administrative staff selected for the center will be 
drawn from headquarters, district, and area levels.
    We have not studied this reorganization, but our prior work on 
other aspects of Coast Guard operations suggests that the Coast Guard 
may face a number of implementation challenges. Some may be similar to 
those that Coast Guard faced when it created its sector commands, such 
as obtaining buy-in from personnel that will be affected by the 
reorganization or addressing realignment issues at the district level. 
Another challenge is to ensure that the change does not adversely 
affect mission performance at the sector and field unit levels. 
Currently, for example, sector commanders make use of available local 
MSST units--made available by district and area commanders--to help 
meet shortfalls in resource availability for everyday missions, such as 
conducting high-risk vessel escorts and harbor security patrols. If 
these units were not available to support mission needs, additional 
strain could be put on the performance of these local units.
    These changes to the command structure are part of plans that 
extend beyond Fiscal Year 2008. In his recent State of the Coast Guard 
speech, the Commandant of the Coast Guard unveiled a proposal to 
combine the Coast Guard's Atlantic and Pacific Area command functions 
into a single Coast Guard operations command for mission execution. In 
addition, the Coast Guard plans to establish a new mission support 
command, which will have responsibility for nationwide maintenance, 
logistics, and supply activities. According to Coast Guard officials, 
the current structure is not well suited to responding to post-
September 11 transnational threats. For example, Coast Guard officials 
said the current structure at times works against the Coast Guard in 
operations with Joint Interagency Task Forces, whose operating areas 
are not the same as the Coast Guard's established area boundaries. 
Coast Guard officials told us a working group had developed a blueprint 
of the new operational force structure, but the Coast Guard is not 
ready to release it. Coast Guard officials told us they expected the 
reorganization would be implemented during the current Commandant's 4-
year term.

Consolidation of Acquisitions Oversight Management Challenged By 
        Staffing 
        Shortfalls
    The Coast Guard also plans to consolidate its acquisitions 
management offices, placing all major acquisitions programs and 
oversight functions under the control of a single acquisitions officer. 
The goals of this consolidation are to improve Coast Guard oversight of 
acquisitions, better balance contracting officers and acquisition 
professionals among its major acquisition projects, and address staff 
retention and shortage problems associated with the acquisitions 
management program. However, the Coast Guard has not adequately staffed 
the acquisitions management program to meet its current workload, and 
maintaining an appropriate staff size will be challenging, despite the 
reorganization. For example, a February 2007 independent analysis found 
that the Coast Guard does not possess a sufficient number of 
acquisition personnel or the right level of experience needed to manage 
the Deepwater program.\7\ Headquarters officials told us the 
reorganization would address retention problems by creating a new 
acquisitions specialty career ladder that could attract new pools of 
talent. Still, given its past history of staff shortages and 
difficulties retaining acquisition staff, the Coast Guard will face 
challenges maintaining an appropriately sized acquisition staff, at 
least in the near term. Coast Guard headquarters officials told us the 
Deepwater program had pushed other important acquisitions priorities 
aside, and this new organization would help the Coast Guard advance 
these other priorities, such as boats, piers, and other shoreside 
physical infrastructure. In our view, it is unclear how the 
reorganization of the acquisition function will improve the prospects 
for these other programs, given Coast Guard's priorities and ongoing 
constraints on funding.
    The reorganized acquisition office is expected to merge the now 
stand-alone Deepwater acquisition project with the existing acquisition 
directorate and research and development centers. The new office is 
expected to be led by a new Coast Guard Chief Acquisition Officer who 
will have responsibility over all procurement projects and by a deputy 
who will deal largely with Deepwater issues. At the program management 
level, Coast Guard is establishing four program managers to lead each 
acquisitions area, including (1) surface assets; (2) air assets; (3) 
command, control, communications, computers, intelligence, 
surveillance, and reconnaissance; and (4) small boats and shore-based 
infrastructure, such as command centers and boathouses. The Coast Guard 
plans to begin implementing this reorganization in July 2007. It is too 
early to tell if the Coast Guard's reorganization will enable it to 
achieve its goals--notably, better balance of acquisitions support 
between Deepwater and the Coast Guard's other acquisitions programs.

Acquisition Challenges Continue as Several Programs Make Progress
    While some Coast Guard major acquisition projects continue to face 
challenges, especially the Deepwater program, several of these projects 
are making progress. The record for Deepwater has been mixed, with 7 of 
10 asset classes on or ahead of schedule. Three classes, however, are 
behind schedule for various reasons and several factors add to the 
uncertainty about the delivery of other Deepwater assets. Contract 
management issues that we have reported on previously continue to be 
challenges to the Coast Guard. Installation of equipment for the 
initial phase of NAIS, an acquisition that is designed to allow the 
Coast Guard to monitor and track vessels as far as 2,000 nautical miles 
off the U.S. coast, is currently under way, but without changes to 
existing regulations, some vessels will be able to avoid taking part in 
the system. The Coast Guard's timeline for achieving full operating 
capability for its search and rescue communications system, Rescue 21, 
was delayed from 2006 to 2011, and the estimated total acquisition cost 
increased from 1999 to 2005, but according to Coast Guard officials, 
many of the issues that led to these problems are being addressed. 
Coast Guard acquisition officials said they are providing more 
oversight to the contractor after we reported on contract management 
shortcomings.

Coast Guard Continues to Face Acquisition Challenges with Deepwater 
        Program
    The Coast Guard continues to face challenges in managing the 
Deepwater program. The delivery record for assets is mixed and 
technology and funding uncertainties, recent changes to Coast Guard 
plans for procuring Deepwater assets, as well as the 25 year timeframe 
for asset delivery add to uncertainties about the delivery schedule for 
future Deepwater assets. We have reported concerns about management of 
the Deepwater program for several years now and have made 
recommendations aimed at improving the program. The Coast Guard 
continues to address these recommendations as it seeks to better manage 
the Deepwater program. In addition to these program management issues, 
performance and design problems for certain Deepwater assets have 
created additional operational challenges for the Coast Guard. The 
Coast Guard is taking steps to mitigate these problems, but challenges 
remain. Below is a summary of our recent Deepwater work.\8\

Deepwater Asset Delivery Schedule Is Mixed and Somewhat Uncertain
    The Coast Guard's Deepwater program is a 25 year, $24 billion plan 
to replace or upgrade its fleet of vessels and aircraft. Upon 
completion, the Deepwater program is to consist of 5 new classes of 
vessels--the National Security Cutter (NSC), Offshore Patrol Cutter 
(OPC), Fast Response Cutter (FRC), Short-Range Prosecutor (SRP), and 
Long-Range Interceptor (LRI); 1 new class of fixed-wing aircraft--the 
Maritime Patrol Aircraft (MPA); 1 new class of unmanned aerial 
vehicles--the Vertical Unmanned Aerial Vehicle (VUAV); 2 classes of 
upgraded helicopters--the Medium-Range Recovery Helicopter (MRR) and 
the Multi- Mission Cutter Helicopter (MCH); and 1 class of upgraded 
fixed-wing aircraft--the Long-Range Surveillance Aircraft (LRS).\9\ 
Figure 5 illustrates the 10 classes of Deepwater assets.



    Our preliminary observations indicated that, as of January 2007, of 
the 10 classes of Deepwater assets to be acquired or upgraded, the 
delivery record for first-in-class assets (that is, the first of 
multiple aircraft or vessels to be delivered in each class) was mixed. 
Specifically, 7 of the 10 asset classes were on or ahead of schedule. 
Among these, 5 first-in-class assets had been delivered on or ahead of 
schedule; and 2 others remained on schedule but their planned delivery 
dates were in 2009 or beyond. In contrast, 3 Deepwater asset classes 
were behind schedule due to various problems related to designs, 
technology, or funding. Using the 2005 Deepwater Acquisition Program 
Baseline as the baseline, figure 6 indicates, for each asset class, 
whether delivery of the first in class asset was ahead of schedule, on 
schedule, or behind schedule as of January 2007.



    As part of our ongoing work, we are analyzing Coast Guard planning 
documents to evaluate the current estimates of Deepwater asset delivery 
dates. Several factors add to the uncertainty about the delivery 
schedule of Deepwater assets. First, the Coast Guard is still in the 
early phases of the 25 year Deepwater acquisition program and the 
potential for changes in the program over such a lengthy period of time 
make it difficult to forecast the ability of the Coast Guard to acquire 
future Deepwater assets according to its published schedule. For 
example, technology changes since the award of the original Deepwater 
contract in 2002 have already, in part, delayed delivery of the VUAV, 
and the Coast Guard is currently studying the potential use of an 
alternative unmanned aerial vehicle. Second, changes to funding levels 
can impact the future delivery of Deepwater assets. For example, 
despite earlier plans, the Fiscal Year 2008 Department of Homeland 
Security congressional budget justification indicates that the Coast 
Guard does not plan to request funding for some Deepwater assets in FY 
2008, such as the OPC and the VUAV. Acquisition of these two Deepwater 
assets has now been delayed until FY 2013, at the earliest. Finally, 
the Coast Guard has recently made a number of program management and 
asset-specific changes that could impact the delivery schedules for its 
Deepwater assets. For example, the Coast Guard has begun to bring all 
acquisition efforts under one organization. Further, the Coast Guard 
announced that it has terminated acquisition of the FRC-B, an off-the-
shelf patrol boat that is intended to serve as an interim replacement 
for the Coast Guard's deteriorating fleet of 110, patrol boats, through 
the system integrator and plans to assign responsibility for the 
project to the Coast Guard's acquisition directorate. These types of 
programmatic changes will take time to implement, and thus add to 
uncertainty about the specific delivery dates of certain Deepwater 
assets.

Deepwater Program Management, Contractor Accountability, and Cost 
        Control
    In 2001, we described the Deepwater program as ``risky'' due to the 
unique, untried acquisition strategy for a project of this magnitude 
within the Coast Guard.\10\ The Coast Guard used a system-of-systems 
approach to replace or upgrade assets with a single, integrated package 
of aircraft, vessels, and unmanned aerial vehicles, to be linked 
through systems that provide C4ISR and supporting logistics. In a 
system of systems, the deliveries of Deepwater assets are 
interdependent, thus schedule slippages and uncertainties associated 
with potential changes in the design and capabilities of any one asset 
increases the overall risk that the Coast Guard might not meet its 
expanded homeland security missions within given budget parameters and 
milestone dates. The Coast Guard also used a systems integrator--which 
can give the contractor extensive involvement in requirements 
development, design, and source selection of major system and subsystem 
subcontractors. The Deepwater program is also a performance-based 
acquisition, meaning that it is structured around the results to be 
achieved rather than the manner in which the work is performed. If 
performance-based acquisitions are not appropriately planned and 
structured, there is an increased risk that the government may receive 
products or services that are over cost estimates, delivered late, and 
of unacceptable quality.
    In 2004 and in subsequent assessments in 2005 and 2006, we reported 
concerns about the Deepwater program related to three main areas--
program management, contractor accountability, and cost control.\11\ 
The Coast Guard's ability to effectively manage the program has been 
challenged by staffing shortfalls and poor communication and 
collaboration among Deepwater program staff, contractors, and field 
personnel who operate and maintain the assets. Despite documented 
problems in schedule, performance, cost control, and contract 
administration, measures for holding the contractor accountable 
resulted in an award fee of $4 million (of the maximum $4.6 million) 
for the first year. Through the first 4 years of the Deepwater 
contract, the systems integrator received award fees that ranged from 
87 percent to 92 percent of the total possible award fee (scores that 
ranged from ``very good'' to ``excellent'' based on Coast Guard 
criteria), for a total of over $16 million. Further, the program's 
ability to control Deepwater costs is uncertain given the Coast Guard's 
lack of detailed information on the contractor's competition decisions. 
While the Coast Guard has taken some actions to improve program 
outcomes, our assessment of the program and its efforts to address our 
recommendations continues, and we plan to report on our findings later 
this year.

Deepwater Performance and Design Problems Creating Operational 
        Challenges for Coast Guard
    In addition to the program management issues discussed above, there 
have been problems with the performance and design of Deepwater patrol 
boats that have created operational challenges for the Coast Guard. The 
Deepwater program's bridging strategy to convert the legacy 110, patrol 
boats into 123, patrol boats has been unsuccessful. The Coast Guard had 
originally intended to convert all 49 of its 110, patrol boats into 
123, patrol boats in order to increase the patrol boats' annual 
operational hours and to provide additional capabilities, such as small 
boat stern launch and recovery and enhanced and improved C4ISR. 
However, the converted 123, patrol boats began to display deck cracking 
and hull buckling and developed shaft alignment problems, and the Coast 
Guard elected to stop the conversion process at eight hulls upon 
determining that the converted patrol boats would not meet their 
expanded post-September 11 operational requirements.
    These performance problems have had operational consequences for 
the Coast Guard. The hull performance problems with the 123, patrol 
boats led the Coast Guard to remove all of the eight converted normal 
123, patrol boats from service effective November 30, 2006. The 
Commandant of the Coast Guard has stated that having reliable, safe 
cutters is ``paramount'' to executing the Coast Guard's missions.\12\ 
Thus, removing these patrol boats from service affects the Coast 
Guard's operations in its missions, such as search and rescue and alien 
and migrant interdiction. The Coast Guard is taking actions to mitigate 
the operational impacts resulting from the removal of the 123, patrol 
boats from service. Specifically, in recent testimony, the Commandant 
of the Coast Guard stated that the Coast Guard has taken the following 
actions:

   multicrewing eight of the 110, patrol boats with crews from 
        the 123, patrol boats that have been removed from service so 
        that patrol hours for these vessels can be increased;

   deploying other Coast Guard vessels to assist in missions 
        formerly performed by the 123, patrol boats;

   securing permission from the U.S. Navy to continue using 
        three 179, cutters on loan from the Navy (these were originally 
        to be returned to the Navy in 2008) to supplement the Coast 
        Guard's patrol craft; and

   compressing the maintenance and upgrades on the remaining 
        110, patrol boats.

    The FRC, which was intended as a long-term replacement for the 
legacy patrol boats, has experienced design problems that have 
operational implications as well. As we reported in 2006, the Coast 
Guard suspended design work on the FRC due to design risks such as 
excessive weight and horsepower requirements.\13\ Coast Guard engineers 
raised concerns about the viability of the FRC design (which involved 
building the FRC's hull, decks, and bulkheads out of composite 
materials rather than steel) beginning in January 2005. In February 
2006, the Coast Guard suspended FRC design work after an independent 
design review by third party consultants demonstrated, among other 
things, that the FRC would be far heavier and less efficient than a 
typical patrol boat of similar length, in part, because it would need 
four engines to meet Coast Guard speed requirements.
    One operational challenge related to the FRC is that the Coast 
Guard will end up with two classes of FRCs. The first class of FRCs to 
be built would be based on an adapted design from a patrol boat already 
on the market to expedite delivery. The Coast Guard would then pursue 
development of a follow-on class that would be completely redesigned to 
address the problems in the original FRC design plans. Coast Guard 
officials recently estimated that the first FRC delivery will slip to 
Fiscal Year 2009, at the earliest, rather than 2007 as outlined in the 
2005 Revised Deepwater Implementation Plan. Thus, the Coast Guard is 
also facing longer-term operational gaps related to its patrol boats.

Initial Deployment of Nationwide Automatic Identification System Is 
        Under Way, with Decisions Still to Come about Extending 
        Coverage to Additional Vessels
    Outside Deepwater, one acquisition project included in the Fiscal 
Year 2008 budget is the Nationwide Automatic Identification System, a 
system designed to of identify, track, and communicate with vessels 
bound for or within U.S. waters and forwarding that information for 
additional analysis. NAIS uses a maritime digital communication system 
that transmits and receives vessel position and voyage data. The Coast 
Guard describes NAIS as its centerpiece in its effort to build Maritime 
Domain Awareness, its ability to know what is happening on the water.
    NAIS is not expected to reach full capability until 2014, when the 
system will be able to track ships as far as 2,000 nautical miles away 
and communicate with them when they are within 24 nautical miles of the 
U.S. coast. It is being implemented in three phases, the first of which 
is scheduled to be fully operational in September 2007. At that time, 
the Coast Guard expects to have the ability to track--but not 
communicate with--vessels in 55 ports and 9 coastal areas. The largest 
areas of the continental U.S. coastline that will remain without 
coverage after this first phase are the Pacific Northwest and Gulf 
coasts. The second phase calls for being able to track ships out to 50 
nautical miles from the entire U.S. coast and communicate with them as 
far as 24 nautical miles out. This is the phase addressed in the Fiscal 
Year 2008 budget.
    The $12 million Fiscal Year 2008 AC&I request for NAIS is expected 
to pay for implementing the initial operating capability for phase two. 
The Coast Guard has received approval from the Department of Homeland 
Security to issue solicitations and award contracts for this initial 
capability, and the agency has held information sessions to gauge 
industry interest in participating and to help refine its statement of 
work for the initial solicitation. The initial solicitation will 
provide requirements for full receiving and transmitting capability for 
two sectors within one Coast Guard area and one sector in another area. 
With this infrastructure in place the Coast Guard expects to be able to 
test identification, tracking, and communication performance, including 
such features as the ability to determine if the vessel transmissions 
are accurately reflecting the actual location of a vessel.
    The Coast Guard is considering whether to require additional types 
of vessels to install and use the equipment needed for the Coast Guard 
to track vessels and communicate with them. Current regulations require 
certain vessels (such as commercial vessels over 65 feet in length) 
traveling on international voyages or within VTS areas to install and 
operate the transmission equipment.\14\ Vessels that are not subject to 
current regulations generally include noncommercial and fishing vessels 
and commercial vessels less than 65 feet long. This means that many 
domestic vessels are not required to transmit the vessel and voyage 
information and therefore will be invisible to the NAIS. The Coast 
Guard has indicated in the Federal Register that it is considering 
expanding the requirements to additional vessels.\15\

Coast Guard Has Taken Actions to Improve Oversight of Rescue 21 
        Contracts, but System Coverage Has Been Reduced
    Another non-Deepwater project covered in the budget request is 
Rescue 21, the Coast Guard's command, control, and communication 
infrastructure used primarily for search and rescue. The Fiscal Year 
2008 AC&I budget includes $81 million for continued development of 
Rescue 21. In May 2006 we reported that shortcomings in Coast Guard's 
contract management and oversight efforts contributed to program cost 
increases from $250 million in 1999 to $710.5 million in 2005 and 
delays in reaching full operating capability from 2006 to 2011.\16\ Our 
recommendations included better oversight of the project, completion of 
an integrated baseline review of existing contracts, and development of 
revised cost and schedule estimates. According to the Coast Guard, it 
has taken a series of actions in response, including program management 
reviews and oversight meetings, conducting integrated baseline reviews 
on existing contracts, and meeting regularly to assess project risks.
    According to the Coast Guard officials we met with, the contractor 
is currently on time and on budget for installing the full system in 11 
Rescue 21 regions, including such regions as New Orleans, Long Island/
New York, and Miami. The last of the 11 regions covered by current 
contracts is scheduled to be completed by October 2008. Contracts for 
the 25 regions that remain have not been signed. To keep to current 
project cost and schedule baselines, however, the Coast Guard has 
reduced the required performance of the system. Originally, Rescue 21 
was supposed to limit coverage gaps to 2 percent, meaning that the 
system had to be able to capture distress calls in 98 percent of the 
area within 20 nautical miles of the coast and within navigable rivers 
and other waterways. The current contract calls for coverage gaps of 
less than 10 percent. Rescue 21 was also intended to have the 
capability to track Coast Guard vessels and aircraft and provide data 
communication with those assets. Neither the capability to track the 
Coast Guard's own assets nor data communications is included in the 
current technology being installed.

Coast Guard Faces Additional Challenges Addressing Traditional Missions
    While the Fiscal Year 2008 budget request contains funding for 
specifically addressing the projects discussed above, certain other 
projects were judged by Coast Guard officials to be lower in priority 
and were not included. We have examined two of these areas in recent 
work--vessels for Aids-to-Navigation and domestic icebreaking activity, 
and vessels for icebreaking in polar areas.

Decline in Condition of Some ATON and Domestic Icebreaking Assets May 
        Require More Attention for Recapitalization or Outsourcing 
        Options
    Last September, we completed work for this committee on the 
condition of Coast Guard Aids-to-Navigation (ATON) and icebreaking 
assets.\17\ More than half of these assets have reached or will be 
approaching the end of their designed service lives. In 2002, the Coast 
Guard proposed options for systematically rehabilitating or replacing 
164 cutters and boats in these fleets after determining that the age, 
condition, and cost of operating these assets would diminish the 
capability of the Coast Guard to carry out ATON and domestic 
icebreaking missions. We noted that no funds had been allocated to 
pursue these options, apparently due to competing needs for replacing 
or rehabilitating other Coast Guard assets. These competing needs, 
reflected largely in the Coast Guard's expensive and lengthy Deepwater 
asset replacement program, will continue for some time, as will other 
pressures on the Federal budget. The Coast Guard is requesting no 
additional spending for ATON assets or infrastructure in Fiscal Year 
2008.
    Without specific funding to move forward, the Coast Guard has 
attempted to break the project into smaller components and pursue 
potential funding from within the Coast Guard's budget, focusing on the 
assets most in need of maintenance or replacement. In February 2006, 
the Coast Guard began a project to replace its fleet of 80 trailerable 
Aids-to-Navigation boats with new boats that have enhanced capabilities 
to do ATON work as well as other missions.\18\ According to a Coast 
Guard official, this acquisition would cost approximately $14.4 million 
if all 80 boats are purchased and would bring on new boats over a 5-
year period as funds allow. The Coast Guard official responsible for 
the project said the Coast Guard intends to make the purchases using a 
funding stream appropriated for the maintenance of nonstandard boats 
that can be allocated to the boats with the most pressing maintenance 
or recapitalization needs. Availability of these funds, however, 
depends on the condition and maintenance needs of other nonstandard 
boats; if this funding has to be applied to meet other needs, such as 
unanticipated problems, it may not be available for purchasing these 
boats.
    In addition to carrying out their primary missions of ATON and 
domestic icebreaking, these assets have also been used in recent years 
for other missions such as homeland security. The Coast Guard's ATON 
and domestic icebreakers saw a sharp increase in use for homeland 
security missions after the attacks of September 11, and while this 
trend has moderated somewhat, the use of some assets in these missions 
continues well above pre-September 11 levels. This increase is most 
prominent for domestic icebreakers, which are being operated more 
extensively for other purposes at times of year when no icebreaking 
needs to be done. Newer ATON vessels, which have greater multimission 
capabilities than older vessels, tend to be the ATON assets used the 
most for other missions.
    In addition to considering options for replacing or rehabilitating 
its ATON assets, the Coast Guard also has examined possibilities for 
outsourcing missions. In 2004 and 2006, the Coast Guard completed 
analyses of what ATON functions could be feasibly outsourced. Although 
possibilities for outsourcing were identified for further study, Coast 
Guard officials noted that outsourcing also carries potential 
disadvantages. For example, they said it could lead to a loss of 
``surge'' capacity--that is the capacity to respond to emergencies or 
unusual situations. Coast Guard officials noted that outsourcing or 
finding a contractor to do work after an event such as Katrina is 
difficult due to the increased demand for their services as well as the 
fact that the labor pool may have been displaced. When a contractor is 
found, it usually takes a long time to get the work completed due to 
the backlog of work and tends to be very expensive. In addition, this 
surge capability may be needed for other missions, such as those that 
occur when ATON assets can be used to support search and rescue 
efforts. In the aftermath of Hurricane Katrina, for example, some ATON 
assets provided logistical support for first responders or transported 
stranded individuals. Coast Guard officials stated that after Hurricane 
Katrina, its own crews were able to begin work immediately to repair 
damaged aids and get the waterways open to maritime traffic again. 
Coast Guard officials also indicated that outsourcing may adversely 
affect the Coast Guard's personnel structure by reducing opportunities 
to provide important experience for personnel to advance in their 
careers.

Coast Guard Faces Decision on Future of Polar Icebreakers
    The Coast Guard confronts ongoing maintenance challenges that have 
left its polar icebreaking capability diminished. The Coast Guard has 
two Polar-class icebreakers for breaking channels in the Antarctic.\19\ 
Both are reaching the end of their design service lives, and given the 
funding challenges associated with maintaining them, the Coast Guard 
decided to deactivate one of the two, the POLAR STAR, in 2006. This 
reduced icebreaking capability since only one Polar-class icebreaker, 
the POLAR SEA, was available, and for the POLAR SEA it increased 
maintenance needs while reducing time available to conduct 
maintenance.\20\



    Coast Guard officials and others have reported that failure to 
address these challenges could leave the Nation without heavy 
icebreaking capability and could jeopardize the investment made in the 
Nation's Antarctic Program.\21\ According to Coast Guard officials, the 
remaining Polar-class icebreaker's age and increased operational tempo 
have left it unable to continue the mission in the long term without a 
substantial investment in maintenance and equipment renewal. One 
option, refurbishing the two existing Polar-class icebreakers for an 
additional 25 years of service, is estimated to cost between $552 
million and $859 million. Another option, building new assets, would 
cost an estimated $600 million per vessel, according to Coast Guard 
officials.\22\
    Coast Guard officials have begun planning a transition strategy to 
help keep the sole operating Polar-class icebreaker mission-capable 
until new or refurbished assets enter service, which would take an 
estimated 8 to 10 years.\23\ According to officials, this 10 year 
recapitalization plan will identify current and projected maintenance 
service needs and equipment renewal projects and associated costs, 
alternatives to address these needs, and timelines for completing these 
projects.
    Madam Chair and members of the subcommittee, this completes my 
statement for the record.

            Appendix I: Performance Results by Program from Fiscal Year 2002 through Fiscal Year 2006
 [Appendix I provides a detailed list of Coast Guard performance results for the Coast Guard's 11 programs from
                                         Fiscal Year 2002 through 2006.]
----------------------------------------------------------------------------------------------------------------
                                                                                                    Performance
      Program            Program performance        2002       2003      2004     2005     2006     target for
                               measure                                                                 2006
----------------------------------------------------------------------------------------------------------------
Programs meeting 2006 targets:
----------------------------------------------------------------------------------------------------------------
U.S. Exclusive       Number of detected                250        152      247      174      164             199
 Economic Zone        Exclusive Economic Zone
 Enforcement          (EEZ) incursions by
                      foreign fishing vessels.
----------------------------------------------------------------------------------------------------------------
Ice Operations       Number of waterway closure          7          7        4        0        0              2a
 (domestic            days.
 icebreaking)
----------------------------------------------------------------------------------------------------------------
Marine               Average of oil and               35.1       29.4     22.1     18.5     16.3              19
 Environmental        chemical spills greater
 Protection           than 100 gallons per 100
                      million tons shipped.
----------------------------------------------------------------------------------------------------------------
Ports, Waterways,    Percent reduction in              n/a        n/a      n/a      14%      17%             14%
 and Coastal          maritime terrorism risk
 Security             over which the Coast
                      Guard has influence.
----------------------------------------------------------------------------------------------------------------
Undocumented         Percentage of interdicted       88.3%      85.3%    87.1%     85.5     89.1             89%
 migrant              illegal migrants entering
 interdiction         the United States through
                      illegal means.
----------------------------------------------------------------------------------------------------------------
Program expected to meet 2006 target:
----------------------------------------------------------------------------------------------------------------
Illegal Drug         Percentage of cocaine             Not        Not    30.7%    27.3%    TBD c             22%
 Interdiction         removed out of total        reported   reported
                      estimated cocaine
                      entering the United
                      States through maritime
                      means b.
----------------------------------------------------------------------------------------------------------------
Programs that did not meet their 2005 targets:
----------------------------------------------------------------------------------------------------------------
Aids to Navigation   Number of collisions,           2,098      2,000    1,876    1,825    1,765           1,748
                      allisions, and grounding.
----------------------------------------------------------------------------------------------------------------
Defense Readiness    Percentage of time that           70%        78%      76%      67%      62%            100%
                      units meet combat
                      readiness level.
----------------------------------------------------------------------------------------------------------------
Living Marine        Percentage of fisherman         97.3%      97.1%    96.3%    96.4%    96.6%             97%
Resources             found in compliance with
                      Federal regulations.
----------------------------------------------------------------------------------------------------------------
Marine Safety        5-year average annual           5,766      5,561    5,387    5,169    5,036            4721
                      mariner, passenger, and
                      boating deaths and
                      injuries.
----------------------------------------------------------------------------------------------------------------
Search and           Percentage of distressed        84.4%      87.7%    86.8%    86.1%    85.3%             86%
Rescue                mariners' lives saved.
----------------------------------------------------------------------------------------------------------------
Source: GAO analysis of Coast Guard data.
Note: TBD, to be determined; n/a, not available. Italic numbers indicate that performance targets were met
  previously.
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. Because 2002 and
  2004 were designated as average winters, the 7 and 4 days did not meet the target.
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
  anticipates meeting the performance target for this program based on past performance.

Related GAO Products
    Coast Guard: Status of Efforts to Improve Deepwater Program 
Management and Address Operational Challenges. GAO-07-575T. Washington, 
D.C.: March 8, 2007.
    Coast Guard: Preliminary Observations on Deepwater Program Assets 
and Management Challenges. GAO-07-446T. Washington, D.C.: Feb. 15, 
2007.
    Coast Guard: Coast Guard Efforts to Improve Management and Address 
Operational Challenges in the Deepwater Program. GAO-07-460T. 
Washington, D.C.: Feb. 14, 2007.
    Homeland Security: Observations on the Department of Homeland 
Security's Acquisition Organization and on the Coast Guard's Deepwater 
Program. GAO-07-453T. Washington, D.C.: Feb. 8, 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.: Sept. 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: Observations on the Preparation, Response, and 
Recovery Missions Related to Hurricane Katrina. GAO-06-903. Washington, 
D.C.: July 31, 2006.
    Maritime Security: Information-Sharing Efforts Are Improving. GAO-
06-933T. Washington, D.C.: July 10, 2006.
    Coast Guard: Status of Deepwater Fast Response Cutter Design 
Efforts. GAO-06-764. Washington, D.C.: June 23, 2006.
    United States Coast Guard: Improvements Needed in Management and 
Oversight of Rescue System Acquisition. GAO-06-623. Washington, D.C.: 
May 31, 2006.
    Coast Guard: Changes in Deepwater Acquisition Plan Appear Sound, 
and Program Management Has Improved, but Continued Monitoring Is 
Warranted. GAO-06-546. Washington, D.C.: April 28, 2006.
    Coast Guard: Progress Being Made on Addressing Deepwater Legacy 
Asset Condition Issues and Program Management, but Acquisition 
Challenges Remain. GAO-05-757. Washington, D.C.: July 22, 2005.
    Coast Guard: Preliminary Observations on the Condition of Deepwater 
Legacy Assets and Acquisition Management Challenges. GAO-05-651T. 
Washington, D.C.: June 21, 2005.
    Maritime Security: Enhancements Made, but Implementation and 
Sustainability Remain Key Challenges. GAO-05-448T. Washington, D.C.: 
May 17, 2005.
    Coast Guard: Preliminary Observations on the Condition of Deepwater 
Legacy Assets and Acquisition Management Challenges. GAO-05-307T. 
Washington, D.C.: April 20, 2005.
    Coast Guard: Observations on Agency Priorities in Fiscal Year 2006 
Budget Request. GAO-05-364T. Washington, D.C.: March 17, 2005.
    Coast Guard: Station Readiness Improving, but Resource Challenges 
and Management Concerns Remain. GAO-05-161. Washington, D.C.: January 
31, 2005.
    Maritime Security: Better Planning Needed to Help Ensure an 
Effective Port Security Assessment Program. GAO-04-1062. Washington, 
D.C.: September 30, 2004.
    Maritime Security: Partnering Could Reduce Federal Costs and 
Facilitate Implementation of Automatic Vessel Identification System. 
GAO-04-868. Washington, D.C.: July 23, 2004.
    Maritime Security: Substantial Work Remains to Translate New 
Planning Requirements into Effective Port Security. GAO-04-838. 
Washington, D.C.: June 30, 2004.
    Coast Guard: Deepwater Program Acquisition Schedule Update Needed. 
GAO-04-695. Washington, D.C.: June 14, 2004.
    Coast Guard: Station Spending Requirements Met, but Better 
Processes Needed to Track Designated Funds. GAO-04-704. Washington, 
D.C.: May 28, 2004.
    Coast Guard: Key Management and Budget Challenges for Fiscal Year 
2005 and Beyond. GAO-04-636T. Washington, D.C.: April 7, 2004.
    Coast Guard: Relationship between Resources Used and Results 
Achieved Needs to Be Clearer. GAO-04-432. Washington, D.C.: March 22, 
2004.
    Contract Management: Coast Guard's Deepwater Program Needs 
Increased Attention to Management and Contractor Oversight. GAO-04-380. 
Washington, D.C.: March 9, 2004.
    Coast Guard: New Communication System to Support Search and Rescue 
Faces Challenges. GAO-03-1111. Washington, D.C.: September 30, 2003.
    Maritime Security: Progress Made in Implementing Maritime 
Transportation Security Act, but Concerns Remain. GAO-03-1155T. 
Washington, D.C.: September 9, 2003.
    Coast Guard: Actions Needed to Mitigate Deepwater Project Risks. 
GAO-01-659T. Washington, D.C.: May 3, 2001.
    Coast Guard: Progress Being Made on Deepwater Project, but Risks 
Remain. GAO-01-564. Washington, D.C.: May 2, 2001.
    Coast Guard: Strategies for Procuring New Ships, Aircraft, and 
Other Assets. GAO/T-HEHS-99-116. Washington, D.C.: Mar. 16, 1999.
    Coast Guard's Acquisition Management: Deepwater Project's 
Justification and Affordability Need to Be Addressed More Thoroughly. 
GAO/RCED-99-6. Washington, D.C.: October 26, 1998.
Endnotes
    \1\ GAO's analysis of the Coast Guard's Fiscal Year 2008 budget 
request is presented in nominal terms. Supplemental funding received 
for Operation Iraqi Freedom and Hurricane Katrina are not included in 
the analysis, except where noted.
    \2\ Beginning with the Fiscal Year 2007 budget, the Office of 
Management and Budget designated the Coast Guard's drug interdiction 
and other law enforcement programs as non-homeland security missions 
for budgetary purposes. If these two programs are included as homeland 
security missions, overall homeland security funding in the Fiscal Year 
2008 budget request is approximately 52 percent of the total budget.
    \3\ GAO, Coast Guard: Non-Homeland Security Performance Measures 
Are Generally Sound, but Opportunities for Improvement Exist, GAO-06-
816 (Washington, D.C.: August 2006).
    \4\ For more details on the Coast Guard's efforts to match 
resources to performance results, see Appendix III in GAO-06-816.
    \5\ Pub. L. No. 109-347, 120 Stat. 1884 (2006).
    \6\ Although the deployable forces will be reorganized under a 
single command authority, officials told us the units would remain 
based in their current locations. However, personnel on these teams may 
be rotated or cross-deployed with other specialized teams. For example, 
an MSST located at Seattle will remain based in that location, but the 
personnel attached to that MSST may be rotated or mixed with other MSST 
units to meet ongoing needs.
    \7\ Defense Acquisition University, Quick Look Study: United States 
Coast Guard Deepwater Program, (Fort Belvoir, Virginia, 2007).
    \8\ For a more complete description of our reviews of the Deepwater 
program, see GAO, Coast Guard: Preliminary Observations on Deepwater 
Program Assets and Management Challenges, GAO-07-446T (Washington, 
D.C.: Feb. 15, 2007).
    \9\ In addition to these asset classes, the Deepwater program 
includes other projects such as Command, Control, Communications, 
Computers, Intelligence, Surveillance and Reconnaissance (C4ISR) 
systems. For example, the Coast Guard plans to procure surveillance 
data from another unmanned aerial vehicle, the RQ-4A. Because this is 
not to be acquired as a capital investment, we do not include it among 
the assets to be acquired or upgraded.
    \10\ GAO, Coast Guard: Progress Being Made on Deepwater Project, 
but Risks Remain, GAO-01-564 (Washington, D.C.: May 2, 2001).
    \11\ 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); Coast Guard: Progress Being 
Made on Addressing Deepwater Legacy Asset Condition Issues and Program 
Management, but Acquisition Challenges Remain, GAO-05-757 (Washington, 
D.C.: Jul. 22, 2005); and Coast Guard: Changes in Deepwater Plan Appear 
Sound, and Program Management Has Improved, but Continued Monitoring is 
Warranted, GAO-06-546 (Washington, D.C.: Apr. 28, 2006).
    \12\ U.S. Coast Guard, Office of Public Affairs, Coast Guard 
Suspends Converted Patrol Boat Operations, (Washington, D.C., 2006).
    \13\ GAO, Coast Guard: Status of Deepwater Fast Response Cutter 
Design Efforts, GAO-06-764 (Washington, D.C.: June 23, 2006).
    \14\ Vessel traffic services areas are locations where the Coast 
Guard monitors and communicates with vessels using AIS, radar, and 
other technologies to prevent collisions and other accidents.
    \15\ In our previous report we recommended that the Coast Guard 
should pursue opportunities to cost-share with private entities that 
were interested in receiving vessel and voyage information 
transmissions. According to Coast Guard officials, subsequent to the 
publication of the report they have partnered with private entities in 
Tampa, Florida, and Alaska.
    \16\ GAO, United States Coast Guard: Improvements Needed in 
Management and Oversight of Rescue System Acquisition, GAO-06-623 
(Washington, D.C.: May 2006).
    \17\ 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.: Sept. 22, 
2006).
    \18\ These boats can be placed on trailers and transported on land 
by truck.
    \19\ In addition to the Polar-class icebreakers, the Coast Guard 
acquired a third icebreaker, the HEALY, in 2000. Unlike the Polar-class 
icebreakers, the HEALY was designed to be an Arctic scientific platform 
and does not have the capabilities to break ice in the Antarctic under 
most conditions. According to Coast Guard officials, although the HEALY 
also has maintenance issues, the condition and extent of maintenance 
needed for the Polar-class icebreakers is more severe.
    \20\ Coast Guard officials estimated it would require $40 million 
to $50 million and 2 to 3 years of service to refurbish the deactivated 
Polar-class icebreaker--the POLAR STAR--to a capability level 
commensurate with its other Polar-class icebreaker. Coast Guard 
officials noted that this funding would cover upgrades to systems and 
to replace vessel infrastructure and parts that Coast Guard had 
cannibalized over the past years to replace parts on the POLAR SEA.
    \21\ In the Antarctic, the United States maintains 3 year-round 
scientific stations. Coast Guard Polar-class icebreakers provide heavy 
icebreaking support necessary to open a shipping channel and allow 
maritime resupply of fuel, food, and cargo to these scientific 
stations. Polar icebreakers deploy to support primary missions such as 
the U.S. Antarctic Program, but while present in the polar region, they 
often support secondary missions such as search and rescue or respond 
to maritime environmental response situations as situations arise.
    \22\ According to the Coast Guard, this estimate this is based on 
HEALY construction costs, making adjustments for increased structural 
and power requirements.
    \23\ 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 Coast Guard's assessment of 
the increased risks faced by the deteriorating condition of these 
vessels and recommended that Congress immediately take action to 
design, plan, and build two replacement polar icebreaking vessels to 
replace the aging Polar-class vessels. Moreover, because these new 
vessels would not be available for another 8 to 10 years, the report 
recommends that Congress provide the Coast Guard with a sufficient 
operations and maintenance budget to address maintenance backlogs on 
the two operating polar icebreakers to ensure a minimum level of 
icebreaking capability during this period. The report also recommends 
leaving the POLAR STAR in caretaker status until the new vessels enter 
service.
                                 ______
                                 
        Prepared Statement of the Reserve Officers Association 
                          of the United States

    The Reserve Officers Association of the United States (ROA) is a 
professional association of commissioned and warrant officers of our 
Nation's seven uniformed services and their spouses. ROA was founded in 
1922 during the drawdown years following the end of World War I. It was 
formed as a permanent institution dedicated to national defense, with a 
goal to teach Americans about the dangers of unpreparedness. When 
chartered by Congress in 1950, the act established the objective of ROA 
to: ``. . . support and promote the development and execution of a 
military policy for the United States that will provide adequate 
National Security.'' The mission of ROA is to advocate strong Reserve 
Components and national security, and to support Reserve officers in 
their military and civilian lives.
    The Association's 70,000 members include Reserve and Guard 
Soldiers, Sailors, Marines, Airmen, and Coast Guardsmen who frequently 
serve on Active Duty to meet critical needs of the uniformed services 
and their families. ROA's membership also includes officers from the 
U.S. Public Health Service and the National Oceanic and Atmospheric 
Administration who often are first responders during national disasters 
and help prepare for homeland security. ROA is represented in each 
state with 55 departments plus departments in Latin America, the 
District of Columbia, Europe, the Far East, and Puerto Rico. Each 
department has several chapters throughout the state. ROA has more than 
450 chapters worldwide.
    ROA is a member of The Military Coalition where it co-chairs the 
Tax and Social Security Committee. ROA is also a member of the National 
Military Veterans Alliance. Overall, ROA works with 75 military, 
veterans, and family support organizations.

Disclosure of Federal Grants or Contracts
    The Reserve Officers Association is a private, member-supported, 
congressionally chartered organization. Neither ROA nor its staff 
receive or have received grants, sub-grants, contracts, or subcontracts 
from the Federal Government for the past three fiscal years. All other 
activities and services of the Association are accomplished free of any 
direct Federal funding.

Introduction
    Mr. Chairman and distinguished members of the Senate Subcommittee 
on Oceans, Atmosphere, Fisheries, and Coast Guard, on behalf of ROA's 
70,000 members, the Reserve Officers Association thanks the Committee 
for the honor, privilege, and opportunity to submit testimony on issues 
relating to the Coast Guard budget.
    The U.S. Coast Guard and its Selected Reserve are a valuable, 
unique and increasingly visible service within the armed forces 
structure of this Nation. ROA would like to thank the Subcommittee for 
its on-going stewardship that it has demonstrated on issues of homeland 
security as the Coast Guard is a non-DOD uniformed service. The USCG 
structure needs and capabilities do not always receive the public 
attention ROA believes they should. Since Hurricanes Katrina and Rita, 
the Nation has come to expect even more from this proud service and has 
levied additional consequence management missions upon it, while 
retaining the mission as lead Federal agency for maritime homeland 
security.

Executive Summary
    Our Coast Guard's plate is overflowing with workload demands for 
homeland security. That our men and women in the Coast Guard and its 
Selected Reserve have kept their heads above water is a testimony to 
exemplary leadership and selfless personnel motivation and dedication.
    ROA asks the Committee to respond to the unselfish service of U.S. 
Coast Guard's men and women and recognize the need for funding 
assistance in order for the Coast Guard and its Reserve to continue 
this outstanding work.
    This high level of performance can only be sustained by supporting 
the Total Force. The USCG Reserve component is cost effective and 
provides flexibility in responding to changing demands and threats. The 
Selected Reserve augments the active Coast Guard and reinforces all 
eleven of the Coast Guard's missions. Yet like the active Coast Guard, 
its Reserve has more missions than people to perform them. While the CG 
Reserve is authorized at 10,000 serving members, it has only been 
funded at a level of 8,100 Reservists.

        ROA's testimony recommends an increase in funding to an interim 
        end-strength level of 9,300 for FY 2008, which will create a 
        more robust Coast Guard Selected Reserve by enhancing its 
        capabilities toward mission accomplishment.

Issues

1. Resetting the Force
    In 1995 the Coast Guard Selected Reserve was fully integrated into 
the Active duty Coast Guard to be trained and employed as a part-time 
workforce doing the same jobs as Active duty members. The Congress 
indicated, in 1995, that the minimum size of the CG Reserve be 8,000 
serving members. Over the past several years, the Active duty Coast 
Guard budget and mission scope has expanded to meet the service's 
increased responsibilities for maritime homeland security.
    A 2004 GAO report noted that resource hours for many of the Coast 
Guard's traditional missions have decreased as demands for its critical 
port security mission have increased. Coast Guard legacy vessels are 
experiencing increased unscheduled maintenance and personnel stress 
issues are arising as a result of higher operational demands across its 
eleven missions.
    ROA believes insufficient oversight has been given to the personnel 
resources required to meet these new missions which are in addition to 
the Coast Guard's traditional missions. This mission burden has clearly 
had an effect on the overall readiness of the Coast Guard. In FY 2006 
the Coast Guard was able to satisfactorily meet only 8 of its present 
11 mission goals. Of particular note was the failure to meet its 
Defense Readiness combat rating standard (69 percent achieved versus 
100 percent target).
    Sources within the Coast Guard have indicated to ROA that they have 
recruiting and training resources that would permit them to expand 
beyond an end-strength level of 8,100 to 9,300 in FY 2008.

        ROA urges Congress to increase the funded size of the Coast 
        Guard Selected Reserve from the Fiscal Year 2007 level of 8,100 
        to 9,300 in FY 2008.

    ROA Resolution Number 04-12 recommends increasing the authorized 
end-strength of the Coast Guard Selected Reserve to at least 15,000. 
The USCG has come up with similar results. In a recent study, the Coast 
Guard identified through its Contingency Personnel Requirements List 
(CPRL) an end-strength of 14,000 officers and enlisted by FY 2011.
    The Coast Guard has the ability and infrastructure to immediately 
begin recruiting to, and training of, a Selected Reserve funded to a 
level of 9,300 serving members. As for the future, the Coast Guard can 
ramp up to attain an authorized end-strength of 14,000 Selected 
Reservists by FY 2012.

        ROA suggests increasing authorization and funding of the Coast 
        Guard Selected Reserve to 10,475 in FY 2009, with further 
        sequential end-strength authorization increases and funding of 
        1,175 personnel each Fiscal Year from FY 2010 to FY 2012.

    This increased end-strength will permit a highly cost effective way 
for the Coast Guard to match the Contingency Personnel Requirements 
List (CPRL) developed from the eleven mission performance goals 
presently assigned to the service.

        ROA recommends hearings by the U.S. Senate to determine FY 2008 
        authorization and funding levels for the USCGR and the 
        development of annual incremental increases to obtain an end-
        strength level of 14,000 by FY 2012.

2. Not fulfilling Mission Areas
    The Commandant's recent USCG Reserve policy prioritizes the CG 
Reserve missions as follows: (1) Maritime Homeland Security (MHS), (2) 
Domestic and Expeditionary National Defense, (3) Disaster Response and 
Recovery. These mission areas are designed to support our Homeland 
Security. In looking at how the USCG is accomplishing these missions 
the following are illustrative examples.

1. Maritime Homeland Security (MHS)
    Maritime Homeland Security is considered by many the most important 
issue facing the United States today. Maritime Transportation Security 
is a major element of this mission area. The 2002 Maritime 
Transportation Security Act (MTSA) levied requirements that included 
Port Security Vulnerability Assessments in 55 strategic ports and the 
development and implementation of Area Maritime Security Plans. These 
are time and manpower intensive tasks. In an attempt to address these 
mission assignments the Coast Guard has identified the need to set up 
13 Maritime Safety and Security Teams (MSST). A significant slice of 
the team's 100 members are programmed to come from the Selected 
Reserve. Insufficient Selected Reserve end-strength has allowed only 
the partial staffing of just four teams for this strategically and 
operationally important mission.
    Additionally, the National Guard Bureau has asked the Coast Guard 
to assume the state-level MTSA port and waterway responsibilities which 
requires the assignment of senior Coast Guard Reserve officers to each 
State Guard Headquarters as liaison officers. To date insufficient 
Selected Reserve end-strength has allowed only three officers to be 
assigned to this important Homeland Security duty.

2. Domestic and Expeditionary Support to National Defense
    Port Security units (PSUs) are identified in Coast Guard and 
Combatant Commander contingency plans that call for 11 Port Security 
Units. PSUs perform maritime interception operations (MIO), coastal 
security patrols, and port security missions for military and 
humanitarian missions worldwide, including the protection of national 
assets. Presently only 8 of the 11 PSUs, with a staffing of 115 Reserve 
and 5 Active duty billets are operational.
    PSUs are units that are being frequently deployed. As a result, the 
USCGR is having a difficult time recruiting to these units from other 
billets within the CG Reserve. As a result, this is the program with 
the highest frequency of individual repeat mobilization for CG 
Reservists, which has resulted in retention problems.

3. Disaster Response and Recovery
    Since the 2005 hurricane season, Coast Guard Reserve liaison 
officers to Federal, state and local disaster response agencies are in 
high demand but short supply. Of more than 80 required positions, only 
6 emergency preparedness liaison officers (EPLOs) can be filled from 
the Coast Guard Reserve as requested.
    These examples illustrate that some of the most vital missions 
required to support Homeland Security and prevent or respond to another 
terrorist incident are not being achieved due to inadequate reserve 
end-strength. The country can ill-afford to ignore these requirements 
any longer and risks not preventing the next terrorist incident.

        ROA strongly recommends funding at a higher end-strength level 
        in order to accomplish all mission areas vital to Homeland 
        Security.

Conclusion
    Mr. Chairman and members of the Subcommittee, since 9/11 the Coast 
Guard has added 7,000 Active personnel and 5,000 civilian members, a 
very expensive approach in a resource constrained environment that has 
not yielded sufficient risk mitigation in the Homeland Defense and 
Maritime Security mission areas.
    With only 8,100 funded billets, the USCG is playing musical chairs 
with its Reserve personnel. Insufficient Reserve end-strength requires 
the Coast Guard Selected Reserve to transfer personnel from other vital 
Reserve missions to another in an attempt that only partially addresses 
these legislated national security requirements. Adding to Active 
structure is an expensive solution and hiring civilians cannot 
realistically solve these operational shortfalls. With the present size 
of the CG Reserve, these missions have no realistic chance of being 
fully accomplished. Neither can technology, in the near-term, address 
these constraints on the Coast Guard's operational capabilities and 
reach within the maritime domain.
    Using FY 2007 Coast Guard budget data, the Coast Guard Reserve, as 
presently structured only comprises about 2.25 percent of the Coast 
Guard's budget. The tasks that the Congress has mandated in current 
homeland defense legislation could actually be accomplished by the CG 
Reserve at a cost of about one-fifth of what an active duty personnel 
solution would cost. An increase in funded end-strength of the Coast 
Guard Selected Reserve to 9,300 billets is a cost effective solution to 
attain higher and more sustainable levels of mission performance and 
accomplishment.
    An under-strength Coast Guard Reserve was able to perform in a true 
national disaster, but how long can this performance be sustained? The 
right for increased funding has been earned. ROA does not wish to take 
funds away from the active Coast Guard and its projects; we feel that 
the CG Reserve is a good investment for additional funding.
    The Reserve Officers Association respectfully asks the Committee to 
support this requested funding in FY 2008 and review a programmatic and 
sequenced increase in the authorized and fully funded end-strength for 
the Selected Reserve of the U.S. Coast Guard.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                         Admiral Thad W. Allen

    Question 1. Adequacy of Coast Guard Assets in District 14--Hawaii. 
Does the Coast Guard have enough assets and personnel to fully 
implement all of its intended missions in the Northwestern Hawaiian 
Islands Marine National Monument?
    Answer. Yes. The Coast Guard will be able to enforce its missions 
in the Pacific by leveraging the multi-mission character of our assets 
to increase efficiency and effectiveness. Additionally, our budget 
provides sufficient funding to support the manpower and asset 
requirements needed for the Coast Guard to effectively execute its 
statutorily mandated eleven mission-programs.

    Question 1a. Does the Coast Guard have plans to increase the number 
of assets and personnel in District 14 in the future?
    Answer. The Coast Guard distributes available assets and personnel 
according to the overall risks and goals across all of our mission-
programs. Adjustments to assets and personnel are made as necessary 
through real-time asset tracking and annual budget requests. All Coast 
Guard Operational Commanders carefully and judiciously balance 
available resources against mission demands to apply resources to best 
meet statutory requirements, particularly concentrating on those 
missions and geographic areas that present the greatest risk. While 
addressing capacity, capability, and operational tempo challenges, the 
Coast Guard continues to ensure coverage of all mission areas based on 
the assessment of risk and the careful allocation of available 
resources.

    Question 1b. Given these limited assets, and the designation of the 
Northwest Hawaiian Islands Marine National Monument by President Bush 
in June 2006, how does the Coast Guard plan to properly and efficiently 
enforce the prohibitions on passage, fishing and other activities in 
the National Monument?
    Answer. The Coast Guard does not anticipate increasing deployments 
in this area at this time. However, the Coast Guard will continue to 
provide law enforcement presence with aircraft and cutter deployments 
in the Monument area commensurate with threat levels and competing 
demands.

    Question 1c. Why has the Coast Guard not asked for more funding for 
District 14 in the FY 2008 budget?
    Answer. The President's FY08 budget provides sufficient funding to 
maintain the manpower and asset requirements needed for the Coast Guard 
to effectively execute its statutorily mandated mission-programs.

    Question 1d. Admiral, are you familiar with the AIS Base Station 
Network or the proposal to provide global access of commercial vessels 
for tracking?
    Answer. The term AIS Base Station Network is generic in nature and 
can refer to a number of different systems deployed internationally or 
for sale by a number of different vendors. The Coast Guard is 
establishing a Nationwide Automatic Identification System (NAIS) to 
collect, integrate, and analyze information from vessels equipped with 
AIS systems that are subject to the jurisdiction of the United States 
using a combination of ground-based and space-based AIS receivers.

    Question 1e. Is this a system that could be beneficial to the Coast 
Guard in the tracking of vessels?
    Answer. No. They are not suited to monitoring of remote oceans 
areas.

    Question 1f. Is the Coast Guard interested in engaging in a 
private-public partnership for vessel tracking systems? Why, or why 
not?
    Answer. Yes, the U.S. Coast Guard is partnering with local 
Automatic Identification System (AIS) providers in numerous locations 
as part of the NAIS project and installing its own receive-only 
capability in others. Additionally, the Coast Guard has contracted to 
receive AIS information from a satellite that is scheduled to be 
launched this year to enable access to information from thousands of 
miles offshore.

    Question 1g. Does the Coast Guard plan to include a budget request 
for the enclosed air station hangar at Barbers Point, Hawaii in FY 
2009's budget?
    Answer. No. The Coast Guard will be initiating a Planning Proposal 
to examine alternatives for the replacement of hangar facilities at Air 
Station Barber's Point.

    Question 2. Admiral, we have discussed on numerous occasions the 
Coast Guard international inspection program for foreign ports. What do 
you think about the possibility of developing a third party 
verification system to better verify a foreign ports compliance with 
ISPS?
    Answer. The idea of third party verification using contractors is 
generally unacceptable to our trading partners. Many, if not most 
countries would likely be unwilling to allow a third party entity to 
evaluate ISPS compliance at their ports due to matters of sovereignty. 
Early on, the Coast Guard attempted to use a contractor to gather 
preliminary information for a country visit and that government 
objected. Even though the Maritime Transportation and Security Act 
(MTSA) requires the Coast Guard to assess the effectiveness of 
antiterrorism measures in foreign ports, we cannot do so unless 
invited, and must respect the sovereignty of our trading partners. 
However, to overcome some of the resistance to this program, we have 
invited some of our trading partners to the United States to share 
objectives.
    While there are potential problems with a private third party 
verification system using contractors, the International Maritime 
Organization (IMO) has adopted a member audit scheme that has member 
nations examine the compliance of other nations with various 
international maritime safety instruments. The IMO has agreed to expand 
this member audit scheme to include maritime security at a future date. 
We are supportive of this approach and believe such an arrangement 
would serve to leverage Coast Guard competencies and improve ISPS 
compliance.

    Question 3. Why do we keep seeing a trend of the Coast Guard's 
security missions taking the majority of resources over non-security 
missions?
    Answer. The Coast Guard distributes available assets and personnel 
according to the overall risks and goals across all of our mission-
programs. Adjustments to assets and personnel are made as necessary 
through real-time asset tracking and annual budget requests. Coast 
Guard operational commanders carefully and judiciously balance 
available resources against mission demands to apply resources to best 
meet statutory requirements, particularly concentrating on those 
missions and geographic areas that present the greatest risk. This use 
of risk is a fundamental aspect of Coast Guard operations. While 
addressing capacity, capability, and operational pace challenges, the 
Coast Guard continues to ensure coverage of all mission areas based on 
the assessment of risk and the careful allocation of available 
resources. Operational commanders will continue to allocate multi-
mission assets based on overall achievement of performance goals, given 
current intelligence and risk assessments.

    Question 3a. What, if anything, are you doing to make sure the non-
security missions are allocated as many resources if not more than the 
security missions?
    Answer. The GAO has determined that despite congressional concern 
about an increased focus on homeland security missions, overall non-
homeland security mission performance has not suffered to any great 
degree. In fact, in the case of domestic fishery enforcement--the 96.6 
percent actual observed compliance rate (only .4 percent short of the 
goal of 97 percent) has been constant since 2004. The Coast Guard 
continues to strive to meet the demands of its traditional missions 
while embracing its expanded homeland security duties. Coast Guard 
assets are inherently multi-mission in character--this provides the 
Service the flexibility to rapidly transition resources between 
mission-programs as needed to support multiple priorities. We firmly 
believe that this multi-mission capability, coupled with a risk-based 
approach to resource allocation, has allowed our Service to improve 
efficiency and effectiveness in both our homeland and non-homeland 
security roles.

    Question 3b. Can you explain why the Coast Guard was unable to meet 
its target goals in all of its mission areas?
    Answer. During Fiscal Year 2006, the Coast Guard met the 
performance targets for many of its core missions, including marine 
environmental protection, foreign fishery enforcement, and domestic ice 
breaking. However, we missed performance targets by less than 1 percent 
for search and rescue and domestic fishery enforcement. Over the past 3 
years, only the Defense Readiness and Living Marine Resource mission 
areas have trended away from targeted performance.
    Although the overall SAR caseload continues to slowly decline, the 
number of ``difficult'' cases where mariners are in danger continues at 
a steady rate. Delays in fielding Rescue 21 is the major limiting 
factor in achieving the 2006 SAR performance target of 86 percent of 
mariners in imminent danger being saved.
    Marine Safety performance improvement hinges on addressing the 
remaining risks associated with recreational and towing vessels as 
these account for the preponderance of current maritime accidents. 
Coast Guard improvements to regulatory regimes and partnerships have 
not led to as rapid a decrease in mariner, passenger, and boating 
deaths and injuries as models suggested when the 2006 targets were 
established. Additionally, the normalization of recreational vessel 
injuries into the marine safety performance metric has increased the 
variability of reported performance. The Coast Guard has adjusted its 
performance targets for 2009-2013 to reflect this variability, and will 
refine performance data to improve the accuracy of mission performance 
reports while continuing to implement regulatory changes needed to 
address the root causes of mariner, passenger, and boater deaths and 
injuries.
    Waterways Management/Aids to Navigation performance is likewise 
driven largely by the uninspected towing vessel industry, to which 60 
percent of the collisions, allisions, and groundings can be attributed. 
As with Marine Safety, regulatory regime and partnership improvement 
initiatives have not resulted in as rapid a decline in collisions, 
allisions, and groundings as had been anticipated when the 2006 target 
was established. As a result, the Coast Guard has adjusted its 
performance targets for 2009-2013. The Coast Guard is currently 
undergoing an independent program evaluation through the Center for 
Naval Analyses with an aim to improving the performance metrics of this 
mission.
    Living Marine Resource performance is driven by excessive 
violations in three major fisheries: Atlantic Sea Scallop, Northeast 
Groundfish, and the Gulf of Mexico/Southeast Atlantic shrimp fisheries. 
Three-fourths of all significant violations are from these three 
fisheries. Days at sea restrictions, complex and continuously changing 
regulations, and poor economic conditions have continued to create a 
strong incentive for illegal fishing. Coast Guard boarding efforts are 
back to near historical levels, and improvements in fishing vessel 
monitoring technology, intelligence, and partnerships with enforcement 
partners should slowly improve the compliance rate from 96.6 percent to 
the targeted 97 percent.
    Defense Readiness performance targets were not achieved primarily 
due to Port Security Unit (PSU) readiness and declining High Endurance 
Cutter material condition. PSU readiness shortfalls were primarily in 
the area of training; and remediation of these shortfalls is subject to 
reservists being available to attend training.

    Question 3c. Protecting living marine resources is of particular 
importance to my home state of Hawaii. Why are we seeing a trend of 
decreasing resources requested for this mission?
    Answer. The Coast Guard does not budget by or allocate funding by 
mission-program; however, to project how funding will be distributed 
across mission-programs the Coast Guard uses a tool called the Mission 
Cost Model (MCM). The MCM's depiction of how funding is allocated and 
expended across the Coast Guard's 11 mission-programs have caused 
concern over the past few years, particularly when mission costs appear 
to ``go down.'' Funding distribution using the MCM, in most cases, does 
not have a direct correlation to ``doing less'' to support one mission 
or another. For example, in the case of Search and Rescue, each year we 
answer every call for assistance; however, severe winter conditions may 
cause more resources to be used in 1 year than another. In addition, 
extraordinary occurrences, such as a mass migration or a Hurricane 
Katrina-like event contribute to large spikes in mission execution 
during the year the event occurs.
    The primary attributes to keep in mind when discussing the MCM in 
general terms:

   The Coast Guard does not budget for, nor allocate, funding 
        by mission, but rather by Congressionally-established 
        appropriations and PPAs.

   The MCM represents a two-year rolling average of how funding 
        was spent by mission, primarily according to hours captured in 
        the Coast Guard's Abstract of Operations (AOPS).

   Forcing the Coast Guard to increase funding to support a 
        given mission will jeopardize the agency's multi-mission nature 
        and ability to respond effectively to evolving threats.

Decreasing resources requested for LMR
    As stated in the recent GAO report for OAF&CG, despite 
congressional concern about an increased focus on homeland security 
missions, non-homeland security mission performance has not suffered. 
In the case of domestic fisheries enforcement the 96.6 percent actual 
observed compliance rate (only .4 percent short of the goal of 97 
percent) has been constant since 2004. We are also realizing 
efficiencies in executing this mission through leveraging the National 
Oceanic and Atmospheric Administration's (NOAA) National Vessel 
Monitoring System (NVMS), as well as intelligence and interagency 
cooperation.

    Question 3d. What do you plan to do over the next year to ensure 
that the Coast Guard's overall performance increases, so that it meets 
its target goals in each of its 11 mission areas?
    Answer. The Commandant has launched a number of initiatives to 
ensure that the Coast Guard's overall performance increases and that we 
meet our annual performance targets in each mission area. We have 
developed a Coast Guard Strategy for Maritime Safety, Security and 
Stewardship, which lays out the necessary changes required to 
strengthen maritime regimes, achieve domain awareness, and enhance 
operational capabilities. We are also reorganizing our command and 
control structure around one commander in the field responsible for 
Mission Execution and reorganizing our support systems around one 
commander in the field responsible for Mission Support. Our strategic 
focus for the next year will be to improve our operational capability, 
improve awareness within the maritime domain, and improve maritime 
regimes both domestically and internationally.
    Within each mission area, program managers continually assess 
performance toward our long term and annual outcomes to ensure 
continuous improvement. Annually we develop specific targets and 
milestones for each of our 11 mission programs and communicate 
priorities to our field commanders through detailed operational 
planning guidance.
    Through the Coast Guard's Deepwater and other acquisition programs, 
we will continue to improve operational efficiency and capability 
across all mission-programs. HH-65 helicopters, recently re-engined 
through the Deepwater program, will enhance mission performance in such 
areas as search and rescue, environmental protection and ports, 
waterways and coastal security. Current acquisition projects such as 
the Deepwater National Security Cutter, Response Boat-Medium and Rescue 
21 will further enhance Coast Guard capabilities to perform both 
homeland security and traditional missions, including Living Marine 
Resources, illegal drug interdiction, undocumented migrant 
interdiction, and search and rescue.

    Question 3e. If the Coast guard failed to meet its targets in 6 
mission areas last year, should we expect significantly improved 
performance this year, when a similar proportion of assets is devoted 
to these non-security missions?
    Answer. Efforts are underway to ensure performance improves in each 
of our mission areas. Program managers have conducted assessments of 
current performance, examined the external maritime trends, conducted 
analysis of the key drivers of performance in mission areas, and 
developed new performance targets and milestones. Detailed operational 
planning guidance highlighting the priorities for FY08 will be 
communicated to our field commanders for to use in developing tactical 
level plans for conducting operations. Performance in each mission area 
will be assessed quarterly to determine progress and to identify the 
need for changes in tactical direction and/or resource allocation.

    Question 4. I see the cost of the Rescue 21 project has increased 
to $730.2 million from original estimates of $210 million in 1999. I 
know that a portion of the increased cost is due to necessary changes 
because of 9/11, but can you tell me what else went wrong that required 
such a significant increase in the cost of Rescue 21?
    Answer. Adjustments to the Rescue 21 total acquisition cost 
estimate from 1999 to present have been driven by a combination of 
factors, including refinement of operational requirements, 
incorporation of technical analysis performed during the Concept and 
Technology Development Phase (Phase 1) of the project, and cost and 
schedule variances during initial Capability Development and 
Demonstration/Production and Deployment (Phase 2) of the project. A 
chronological summary of adjustments to the Rescue 21 total acquisition 
cost estimate follows:

   The original Rescue 21 Acquisition Program Baseline (APB), 
        dated April 16, 1999 estimated a total acquisition cost 
        threshold of $250 million. This initial planning-level estimate 
        was developed in preparation for Phase 1 of the project and was 
        based on preliminary assumptions prior to development of the 
        Rescue 21 Operational Requirements Document (ORD).

   In preparation for Phase 2 of the Rescue 21 project, and 
        based on Phase 1 lessons learned, the Coast Guard revised the 
        Rescue 21 APB (APB Revision 2, dated March 11, 2002) total 
        acquisition cost threshold to $580 million. This represented 
        the first Rescue 21 acquisition cost estimate that incorporated 
        fully refined operational requirements, technical feasibility 
        analysis, and industry life cycle cost estimate input.

   During the Initial Operating Capability (IOC) and Low Rate 
        Initial Production (LRIP) segments of Phase 2, the Rescue 21 
        project experienced cost overruns and schedule delays due to 
        Rescue 21 Ground Subsystem (GSS) infrastructure preparation, 
        construction and permitting activities, and software 
        development, integration, and testing efforts. Additionally, 
        the initial Vessel Subsystem (VSS) prototype and testing 
        efforts experienced significant cost escalation and schedule 
        delays. On May 25, 2005 the Department of Homeland Security 
        (DHS) approved Rescue 21 APB Revision 3, which adjusted the 
        estimated total acquisition cost threshold to $720 million to 
        account for the cost and schedule variances experienced during 
        IOC and LRIP.

   Rescue 21 APB Revision 4, dated April 10, 2006, set the 
        total acquisition threshold at $730.2 million, which 
        incorporated the $10.2 million in hurricane supplemental 
        funding appropriated (P.L. 109-148) to the Coast Guard to 
        repair storm damaged legacy communications infrastructure along 
        the Gulf Coast subsequent to Rescue 21 APB Revision 3.

    Question 4a. What steps are you taking to ensure that Rescue 21 is 
delivered on time and at no higher cost to the American taxpayers than 
already required?
    Answer. Major actions taken by the Coast Guard over the past year 
to control Rescue 21 project cost and schedule include:

   Through APB Revision 4, the Coast Guard down-scoped the VSS 
        asset tracking and data communications components. This 
        approach is more affordable and will result in a non-
        proprietary, Automatic Identification System (AIS)-based 
        solution that is more compatible with other current or planned 
        Coast Guard vessel tracking/data communications systems.

   Additionally, through APB Revision 4, the Coast Guard 
        committed to recapitalizing the legacy system, vice full R21 
        installation, in the Western Rivers regions (Ohio River Valley, 
        Upper Mississippi, and Lower Mississippi) to reduce total 
        Rescue 21 program acquisition costs while meeting Coast Guard 
        operational requirements within these geographic areas.

   Chartered a team of executive-level Defense Acquisition 
        University specialists to conduct a comprehensive review of the 
        Rescue 21 project, identify areas of concern, and formulate an 
        execution strategy for the remainder of the production phase.

   Implemented project management actions in response to 
        recommendations contained in Government Accountability Office 
        audit GAO-06-623 (``U.S. Coast Guard: Improvements Needed in 
        Management and Oversight of Rescue System Acquisition''), 
        including:

     Conducted an Integrated Baseline Review (IBR) on the 
            contracted deployment activities for the first 11 FRP 
            regions to more accurately project cost, schedule, and 
            performance, enabling the Coast Guard to better identify 
            future cost and schedule variances, and implement 
            corrective actions as necessary.

     Implemented quarterly executive governance meetings 
            between the Coast Guard's Assistant Commandant for 
            Acquisition and contractor's Executive Vice President to 
            monitor project performance and risk.

     Established an executive oversight committee, 
            consisting of senior Coast Guard and DHS officials, to help 
            monitor the project's cost and schedule risks. The 
            committee first met in June 2006 and continues to meet on a 
            quarterly basis.

    The Rescue 21 PM has initiated an independent government cost 
estimate (IGCE) to validate current program costs.

    Question 5. Admiral, do you think the creation of a Deployable 
Operations Group (DOG) within the Coast Guard will make it easier for 
resources to be allocated away from non-security missions? What 
possible problems do you see, if any, in regards to this 
reorganization?
    Answer. No. The missions of all the units consolidated under the 
command of the Deployable Operations Group will not change. The focus 
of these units will remain maritime safety, security and environmental 
response. The Deployable Operations Group will provide unified command 
and an enhanced ability to develop adaptive force packages for 
executing more efficient and effective responses to a threat or event. 
There are no such challenges anticipated with this internal 
reorganization.

    Question 6. Admiral, I see that your budget proposes cutting 
positions within the Civil Engineering Units of the Coast Guard. As you 
know, some of the positions that would be cut would be from my state. 
Can you tell me what benefit would actually be received from cutting 57 
Federal positions nationwide?
    Answer. The Coast Guard's Civil Engineering High Performing 
Organization (HPO) initiative provides more effective processes and 
services. Promulgated from OMB Circular A-76, the proposal includes a 
bi-level maintenance system that standardizes procedures and provides 
centrally-managed depot-level maintenance activities. We use a similar 
model for aviation engineering that minimizes costs while maximizing 
service quality.

    Question 7. Could you please explain how the Coast Guard plans to 
operate and maintain the three Coast Guard polar icebreakers, without 
relying on funds from other Federal agencies?
    Answer. The Coast Guard operates within the framework of the 2005 
MOU with NSF and has not developed any alternative plan for polar 
icebreaker operations and maintenance.

    Question 7a. Considering the age and deteriorating condition of the 
current polar icebreaker fleet, and the amount of time and money it 
will require recapitalizing these assets, could you please explain why 
the Coast Guard has not come up with any long-term plans on how to deal 
with this looming problem?
    Answer. The HEALY, commissioned in 2000, has an anticipated service 
life of XX years. The need for any new icebreaking capability in the 
polar regions is currently under review by the Coast Guard in 
conjunction with interagency review of the current U.S. polar policy.

    Question 7b. Why did you not provide a plan that would fund the 
Coast Guard's polar icebreakers without relying on an agency, such as 
the NSF, as was required by the Coast Guard and Maritime Transportation 
Act of 2006?
    Answer. In January 2007, DHS provided a report to Congress 
outlining the operational intentions and fiscal requirements to operate 
and maintain POLAR SEA and HEALY in Fiscal Year 2007 and the fiscal 
maintenance plans for Fiscal Years 2008 and 2009.

    Question 7c. Admiral Allen, is it true that the Memorandum of 
Agreement between the Coast Guard and the National Science Foundation 
has not been signed as of today for FY 2007?
    Answer. The USCG-NSF Memorandum of Agreement (MOA) was signed in 
August 2005 and serves as the guiding document for transfer of funds 
from NSF to the USCG each year to support polar icebreaker personnel, 
maintenance and operations under the current budget authority. For 
Fiscal Year 2007, the NSF received supplemental Continuing Resolution 
funding of $60 million to fund International Polar Year initiatives and 
polar icebreaker costs. To date, NSF has indicated it would provide $48 
million through the third quarter of Fiscal Year 2007 but has not 
provided a definitive funding total.

    Question 7d. How will this affect the operations and maintenance of 
the Coast Guard's polar icebreaker fleet for this year and beyond?
    Answer. The Coast Guard and NSF will work within the framework of 
the MOU to administer the icebreaking program plan.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                         Admiral Thad W. Allen

    Question 1. Do we know how much money NSF will be providing to the 
Coast Guard for Polar Icebreaker operations for Fiscal Year 2008?
    Answer. No. In accordance with the Memorandum of Agreement (MOA), 
NSF will provide the Coast Guard with a list of operational 
requirements for FY08, and the Coast Guard will build a program plan to 
meet them. We are currently gathering requirements from NSF and plan to 
have the proposed program plan, and estimated cost, ready for NSF's 
consideration by July 1st.

    Question 1a. What steps is the Coast Guard currently taking to plan 
for the longer term replacement or recapitalization of these unique 
assets?
    Answer. The need for any new icebreaking capability in the polar 
regions is currently under review by the Coast Guard in conjunction 
with interagency review of the current U.S. polar policy.

    Question 1b. As you know, language was included in the Fiscal Year 
2007 Continuing Resolution requiring the National Science Foundation to 
reimburse the Coast Guard for polar icebreaker maintenance and 
operations. But I understand that NSF never signed an official 
agreement with the Coast Guard to provide these funds. Is this the 
case?
    Answer. The USCG-NSF Memorandum of Agreement (MOA) was signed in 
August 2005. Under this MOA, NSF annually sets the tasking for the 
vessels, informed by coordination meetings hosted by NSF and attended 
by the USCG and other agencies with a need for icebreaking services. 
The USCG submits a program plan (a budget with operating and 
maintenance information, as well as supporting documentation) to NSF 
that addresses the tasking. The agencies then negotiate the program 
plan, agree upon a budget that meets the plan requirements, and NSF 
reimburses USCG for agreed-upon expenses. NSF's Congressionally-
approved FY07 operating plan allocates $57 million for polar 
icebreaking. To date, NSF has approved $48 million through the third 
quarter of FY07 in reimbursements to the USCG. The Coast Guard is 
finalizing its fourth quarter request and will submit it to NSF 
shortly.

    Question 1c. If so, How can the Coast Guard assure that NSF will 
reimburse the full $57 million slated for the polar icebreaker fleet 
under this year's Continuing Resolution?
    Answer. Coast Guard senior leadership is engaged with NSF senior 
leadership on polar icebreaker funding issues.

    Question 2. Do you agree that the Coast Guard should provide 
reporting to Congress similar to what DOD provides? Specifically, what 
are your thoughts on requiring Coast Guard reporting similar to the 
DOD's Selected Acquisition Reports and Unit Cost Reports, as was 
mentioned during the hearing?
    Answer. Most Coast Guard acquisition projects, with the exception 
of the NSC, are not at the stage or investment level that would require 
a Selected Acquisition Report or Unit Cost Report under DOD standards 
($2.7B). The Coast Guard is a mid-sized Federal acquisition agency and 
it would be unduly burdensome to hold an agency of its size to DOD 
reporting standards.

    Question 3. There have been concerns raised to my staff about the 
safety and cost of the CASA Maritime Patrol Aircraft. I understand that 
out of the 220 CASA-CN-235 aircraft operating around the world in 24 
countries, there have been 9 crashes resulting in 92 fatalities. As you 
promised during the hearing, could you please provide a side-by-side 
comparison between the CASA CN-235 and other, similar planes considered 
by the Coast Guard such as the Dash 8?
    Answer. A side-by-side comparison between the CASA CN-235 and 
other, similar planes is provided in the table below.

------------------------------------------------------------------------
                                  Number of Aircraft   Years Since First
          Aircraft Type            Loss Occurrences         Flight
------------------------------------------------------------------------
Aerospatiale/Aeritalia ATR-42                    17                  23
------------------------------------------------------------------------
Beechcraft 1900                                  22                  22
------------------------------------------------------------------------
CASA CN-235                                       9                  24
------------------------------------------------------------------------
De Havilland DHC-8 (Dash 8)                      19                  24
------------------------------------------------------------------------
Dornier Do-228                                   30                  26
------------------------------------------------------------------------
Embraer 120 Brasilia                             14                  24
------------------------------------------------------------------------
Saab 340                                         19                  24
------------------------------------------------------------------------
Shorts 360                                       11                  26
------------------------------------------------------------------------

    These facts can be checked on the Aviation Safety Network site 
(http://aviation-safety.net).

    Question 3a. I understand the Inspector General of the Department 
of Homeland Security is doing an analysis of whether the costs of 
making these airframes operational are too high. Is it your opinion 
that continuing with the CASA is in the best interest of the Coast 
Guard and the American taxpayer?
    Answer. Yes, continuing with the CASA is in the best interest of 
the Coast Guard and the U.S. Government. The CASA CN-235 was designed 
and built to meet strict performance specifications in order to execute 
Coast Guard missions. Operational testing for the CASA will begin in 
November 2007.

    Question 4. It is my understanding that flight training facilities 
are limited for the CASA aircraft and located in Spain, and parts and 
qualified service personnel are also limited because of the relatively 
small number of these aircraft in service. What are the additional 
operating costs that will be incurred with the CASA because of this 
limitation on training, parts, and qualified service personnel?
    Answer. The CASA procurement contract includes training for Coast 
Guard personnel. Currently, 6 Coast Guard pilots have been trained in 
Spain at the facility of the Original Equipment Manufacture (OEM). 
Maintenance and loadmaster training have also been provided to enlisted 
personnel. The OEM will provide instructor pilot training at a future 
date so that pilot training can be conducted at Aviation Training 
Center (ATC) Mobile, AL. ATC Mobile is also developing course 
curriculum for mechanic maintainer and loadmaster training for the 
enlisted personnel.
    To date, approximately $15M has been allocated for aircraft spare 
parts and $2.5M for Mission System Pallet spare parts.

    Question 4a. Will pilots have to be trained in Spain and will the 
aircraft have to be serviced in Spain as well? If not, has the Coast 
Guard invested additional funds in the CASA program to develop training 
and service capabilities in the United States?
    Answer. Aircraft Repair & Supply Center (AR&SC) Elizabeth City, NC 
is currently working to establish contracts with CASA and Lockheed 
Martin Eagan for field service representative access until the Coast 
Guard program is self sustaining. The current procurement contract has 
provisions for training two pilots for each aircraft procured and 
additional maintenance and loadmaster training for enlisted crew 
members. Pilot training, maintenance training and loadmaster training 
will be provided at ATC Mobile, AL on future procurements.
    The aircraft will not have to be serviced in Spain. They are 
currently being serviced at AR&SC Elizabeth City, NC.

    Question 4b. Were these kinds of extra costs factored into the 
original estimated costs of the CASA when it was compared to (and 
chosen over) other aircraft?
    Answer. We do not see additional costs related to the CASA 
procurement that would be significantly different than those incurred 
with other aircraft. Any aircraft procured would require spare parts, 
pilot training, instructor pilot training, maintenance training, 
loadmaster training, course curriculum and other training and 
infrastructure.

    Question 5. As you know, the original Deepwater contract called for 
a composite FRC. We were told that the reasons for going with 
composites, rather than steel, were that composites have lower 
maintenance and life-cycle costs, a longer service life, and are 
lighter weight. Admiral, I'm wondering what changed in this analysis to 
justify moving away from composites to steel?
    Answer. The Coast Guard identified high technical risks with the 
Integrated Coast Guard Systems' (ICGS) proposed composite design 
leading to suspension of the composite Fast Response Cutter (FRC) 
design efforts in February 2006. These risks were validated by an 
independent third party design review conducted by Alion--John J. 
McMullen & Associates (JJMA) that was completed in April 2006, and by a 
panel of independent composite technology experts from the U.S. Navy, 
private industry, academia, and the U.S. Coast Guard who participated 
in a Technology Readiness Assessment in December 2006. These technical 
risks would impact manufacture of the composite hull and had the 
potential to impact cost and schedule.
    An FRC-A Class Business Case Analysis (BCA), which included a 
Technology Readiness Assessment (TRA), was also conducted. The FRC-A 
BCA, completed by Designers and Planners, Inc. (D&P), an independent 
third party, was reviewed by ICGS and comments were received in March 
2007. The Coast Guard in concert with D&P reviewed the ICGS comments 
and determined they do not materially change the results of the BCA. 
The BCA and TRA results indicated there is no clear benefit to pursuing 
a composite-hulled patrol boat. The TRA indicated a score between 4 and 
5 for the composite FRC-A, while a score of 7 or higher is preferred to 
keep technical risk acceptable. The BCA indicated the ``break-even'' 
point of TOC for steel versus composite patrol boat hulls occurs 
whenever the composite can be shown to last 15-17 years longer than the 
steel. The Coast Guard believes that the life span gap between 
composite and steel hulls would be less.

    Question 6. You recently announced that the Coast Guard will be 
taking on full responsibility as the lead systems integrator for 
Deepwater, rather than using ICGS. But you also stated that ``ICGS will 
have an enduring role''. Could you please explain specifically how the 
relationship with ICGS is changing, and specifically what role you 
envision ICGS playing in the future? Also, will ICGS continue in its 
current role for all 8 National Security Cutters and all 36 CASA 
aircraft? As the Coast Guard takes on these new responsibilities as 
lead systems integrator, will you require additional funds, and how 
will this be reflected in the Coast Guard's budget requests?
    Answer. As the Deepwater program has matured, the Coast Guard has 
assumed a greater role both in management and oversight to the point 
that the next logical and prudent step is to assume the lead role as 
the systems integrator. This change will involve transition over a 
period of time as the Coast Guard acquires additional expertise. 
Specifically, the Coast Guard has taken over responsibility and control 
in the following areas:

   Development of the System Concept of Operations or Asset 
        Statements of Objectives

   Responsibility for Technical Authority

   Development of Business Case Analysis decisions to validate 
        the selection and mix of Deepwater Program assets

   Leadership of Integrated Product Teams

   Management of the Risk Management Plan

   Greater oversight of ICGS's application of accepted System 
        Engineering principles and practices at the Deepwater System 
        design level

   Greater oversight and control of Integrated Logistics 
        Support

    In terms of what is different contractually, the work performed by 
the systems integrator was accomplished under the System Engineering 
and Program Management Delivery Task Orders (DTOs). Future DTOs will be 
modified to de-scope or reduce those tasks accomplished by the systems 
integrator since it will now be done increasingly by the Coast Guard.
    ICGS has the potential to continue to provide the goods and 
services already under contract, such as the MPA and the NSC; however, 
the Coast Guard remains open to recompeting these assets if it is in 
the best interest of the government to do so. ICGS may also participate 
in future work; however, all future assets will be competitively 
awarded.
    It will most likely be necessary to shift additional funding to 
government program management as the Coast Guard assumes more system 
integration and oversight responsibilities.

    Question 7. Do you currently have the authority and funding that 
you need to fully staff your Deepwater acquisition team?
    Answer. The Coast Guard is in a transition period as it assumes 
greater oversight and assumes additional system integration 
responsibilities. We have adequate funding for FY07 and we have 
requested additional funding in FY08 as part of the President's Budget 
Request.

    Question 8. Recent reports have indicated that the Coast Guard's 
Deepwater program is experiencing a massive cash backlog, carrying over 
$700 million in unspent funds. It seems that we, the Congress, are 
funding the program at a rate faster than you can spend it. Please 
explain why such vast amounts of taxpayer dollars sit idle and remain 
unspent.
    Answer. The Deepwater Program is administrating an aggressive but 
prudent obligation plan that will address some of the outstanding 
unspent or unobligated funds. Based on this plan, the Coast Guard 
expects to carryover approximately $350 million into FY2008. The table 
below outlines our obligation plan. Unobligated funds are primarily for 
3 assets:

   FRC B-Class (Replacement Patrol Boat) which will be awarded 
        in FY 2008;

   VUAV which will not be restarting until 2012 or later; and

   FRC A-Class which will not be restarting until 2012 or 
        later.

                                 Deepwater Financial Status Prepared 9 May 2007
                                        [FY 2007 Carryover into FY 2008]
----------------------------------------------------------------------------------------------------------------
                                                                             Total Projected    Total Projected
                                          3 May 2007        Obligations         Balance as       Balance on  30
                                         Unobligated      Planned  Between     Obligations         Sept. 2007
                                           Balance        3 May 2007  and   Completed through   (Carryover into
                                                            31 July 2007       31 July 2007          FY08)
----------------------------------------------------------------------------------------------------------------
Armed Helicopter Equipment                  $41,997,062        $39,257,062     $1,236,276,826         $2,740,000
----------------------------------------------------------------------------------------------------------------
C-130H Conversion/Sustainment               $56,611,596        $46,328,596     $1,189,948,230        $10,283,000
----------------------------------------------------------------------------------------------------------------
C-130J Fleet Introduction                    $4,845,000         $4,845,000     $1,185,103,230                 $0
----------------------------------------------------------------------------------------------------------------
Covert Surveillance Aircraft                   $263,386           $263,386     $1,184,839,844                 $0
----------------------------------------------------------------------------------------------------------------
HH-60 Conversion Projects                   $46,624,602        $34,713,602     $1,150,126,242        $11,911,000
----------------------------------------------------------------------------------------------------------------
HH-65 Conversion/Sustainment                $20,412,346                 $0     $1,150,126,242        $20,112,316
----------------------------------------------------------------------------------------------------------------
Maritime Patrol Aircraft (MPA)              $37,915,023        $37,915,023     $1,112,211,219                 $0
----------------------------------------------------------------------------------------------------------------
Unmanned Aerial Vehicle                     $38,608,977         $3,608,977     $1,108,602,242        $35,000,000
----------------------------------------------------------------------------------------------------------------
C4ISR                                       $41,139,992        $41,139,992     $1,067,462,250                 $0
----------------------------------------------------------------------------------------------------------------
Logistics                                   $16,152,346        $16,152,346     $1,051,309,904                 $0
----------------------------------------------------------------------------------------------------------------
Government Program Management               $32,144,850        $32,114,850     $1,019,195,054                 $0
----------------------------------------------------------------------------------------------------------------
Fast Response Cutter (FRC)--A Class         $41,580,181                 $0     $1,019,195,054        $41,580,181
----------------------------------------------------------------------------------------------------------------
Fast Response Cutter (FRC)--B Class/       $116,160,369                 $0     $1,019,195,054       $116,160,369
 Replacement Patrol Boat
----------------------------------------------------------------------------------------------------------------
FY 2006 Congressional Reprogramming          $8,247,000                 $0     $1,019,195,054         $8,247,000
 (123 WPB Close, OPC, NSC)*
----------------------------------------------------------------------------------------------------------------
IDS Small Boats                              $1,804,137                 $0     $1,019,195,054         $1,804,137
----------------------------------------------------------------------------------------------------------------
Medium Endurance Cutter Sustainment          $9,751,620         $8,460,620     $1,010,734,434         $1,291,000
----------------------------------------------------------------------------------------------------------------
National Security Cutter (NSC)             $643,587,106       $643,587,106       $367,147,328                 $0
----------------------------------------------------------------------------------------------------------------
Offshore Patrol Cutter (OPC)               $105,142,331         $6,355,331       $360,791,997        $98,787,000
----------------------------------------------------------------------------------------------------------------
Surface Ships Other                                  $0                 $0       $360,791,997                 $0
----------------------------------------------------------------------------------------------------------------
System Engineering and Integration          $12,875,994        $12,875,994       $347,916,003                 $0
----------------------------------------------------------------------------------------------------------------
    Total                                $1,275,533,888       $927,617,885                          $347,916,003
----------------------------------------------------------------------------------------------------------------
*Note: This reprogramming is not a stand alone CIP line item. It is accounted for in previous CIP summaries and
  unobligated balance questions in the ``110 Patrol Boat SLEP/Fast Response Cutter--B Class'' category.

    It is important to have funds available and ready to obligate. Such 
availability helps to garner more bids and greater competition, as 
could be important in the upcoming FRC B-class (replacement patrol 
boat) and other projects.

    Question 9. Will industry continue to self-certify any design or 
performance specifications for NSCs 1 and 2?
    Answer. The Deepwater contract with Integrated Coast Guard Systems, 
LLP (ICGS) currently uses tailored Cutter Specific Certification 
Matrices (CSCM) to define the standards that are to be used for the 
design and construction of each class of surface assets. This set of 
standards was proposed by ICGS for each surface asset based on a 
generic set compiled by the Coast Guard and American Bureau of Shipping 
(ABS). Under the terms of the Cutter Certification Program, ICGS must 
use ABS to certify compliance with all ABS standards (e.g., rules, 
guidelines) cited in the CSCM. On the National Security Cutter (NSC), 
fewer than 100 of the almost 1,000 standards of the CSCM involve ABS; 
Federal agencies are the certification agent for six standards. The 
contract permits ICGS to certify the remainder of the CSCM, and ICGS 
has chosen that option.
    Though the contractor ``certifies'' a line item in the CSCM, the 
government retains the means to protect its interest. First, the Coast 
Guard can challenge the certification, which is exactly what the Coast 
Guard did in the Integrated Product Team process. Second, the 
contractor is required to meet the terms of the contract; Coast Guard 
members and representatives from ABS, the Navy, and qualified support 
contractors conduct random inspections/tests as well as scheduled 
inspection/tests to ensure this.
    The Coast Guard intends to expand the role of ABS in the Deepwater 
Program to increase the assurance that Deepwater surface assets are 
properly designed and constructed to an integrated and comprehensive 
set of standards.
    The Coast Guard is also looking to ABS to strengthen the cutter 
certification program and to augment Coast Guard resources for design 
review and construction oversight. ABS is recognized in statute as the 
classification agent for U.S. Government ship owners. 46 U.S.C. 3316(a) 
states in part that ``Each department, agency, and instrumentality of 
the U.S. Government shall recognize the American Bureau of Shipping as 
its agent in classifying vessels owned by the Government and in matters 
related to classification.'' ABS has been participating in the design 
of the NSC and the Fast Response Cutter (FRC). They are a sound choice 
for supporting the Deepwater Program.
    The Coast Guard and ABS are actively engaged in defining revised 
certification and/or classification plans for the NSC, Offshore Patrol 
Cutter (OPC) and FRC. Even with an expanded role for ABS, there are 
systems and equipment, (mostly in the area of C4ISR and combat 
systems), where ABS does not have the required expertise. For these, 
the Coast Guard will continue to practice its overall program of 
quality management, consisting of onsite Coast Guard personnel or 
representatives conducting random inspections, in addition to the use 
of independent tests and evaluations.

    Question 10. What Deepwater assets is the Coast Guard planning on 
putting under contract in the next 6 months? In the Coast Guard budget 
hearing, Admiral Allen, you stated to me that for all contracts moving 
forward the Coast Guard would take on the responsibilities of the lead 
systems integrator, implement the Coast Guard's Systems Acquisition 
Manual, end self-certification, conduct independent business case 
analysis, expand the role of the Coast Guard's engineering and 
logistics center, and improve reporting to Congress. How exactly will 
you ensure that you meet these standards for all future contracts 
moving forward? How will this impact your management of the NSC and MPA 
program?
    Answer. The Coast Guard plans to award contract modifications for 
NSC #1, #2, and award NSC #3. The Coast Guard also plans to put 
contracts in place for sustainment and conversion of legacy assets to 
include the HH-60J, HC-130H, Medium Endurance Cutters (for 270, and 
210,) Mission Effectiveness Project (MEP), and 110, Patrol Boats MEP. 
Even though these are not for assets, contracts for Program Management, 
Systems Engineering/Integration, C4ISR and Logistics are also planned 
for award.
    The Coast Guard has significantly increased contract oversight and 
lead systems integrator responsibilities. Specifically, the Coast Guard 
has made improvements in the following areas:

   Development of the System Concept of Operations or Asset 
        Statements of Objectives

   Definitive Role of Technical Authority

   Development of Business Case Analysis decisions to validate 
        the selection and mix of Deepwater Program assets

   Leadership of Integrated Product Teams

   Active management of the Risk Plan

   Greater oversight of ICGS's application of accepted System 
        Engineering principles and practices at the Deepwater System 
        design level

   Greater oversight and control of Integrated Logistics 
        Support

    To implement these activities and assume this workload, the 
consolidation of the Deepwater and Acquisition offices will leverage 
the combined expertise of contracting and program management personnel. 
Together with the deployment of the ``Blueprint for Acquisition 
Reform'', we expect improvements in program management, contract 
execution, and obligation of appropriated funds.
    Both the NSC and MPA projects will benefit from increased direct 
government oversight and management, CG technical expertise, and use of 
Coast Guard practices in total logistics support.

    Question 11. Coast Guard personnel and resources have increased 
significantly since 9/11. This has resulted in increased maritime 
domain awareness, increased presence in patrols, increased targeting 
and inspection of facilities and vessels--an overall increase in field 
presence. The multiple mission aspect of the Coast Guard has been a 
tremendous benefit to our citizens. Can you detail specific steps and 
actions that are you taking to leverage this multiple mission 
tradition, to ensure personnel are cross-trained and to ensure the 
focus and increased budget for homeland and port security missions is 
also improving Coast Guard performance in traditional missions such as 
marine safety, environmental protection, search and rescue and law 
enforcement?
    Answer. Following the tragic events of September 2001, and to 
fulfill an operations strategy from the Coast Guard's 1999 Strategic 
Plan, the Coast Guard shifted from a program-focused approach to policy 
development, mission planning and execution to an integrated cross-
programmatic approach. The traditional program-focused approach led to 
single-mission thinking and single-mission focus. The events of 
September 11, 2001 reinforced the importance of a unified command 
construct that increased interactions between operational commands and 
interagency partners to improve performance across a full range of 
mission activities and systems.
    In 2004, the Coast Guard reorganized operational field commands 
across the United States to form Sector Commands. The creation of 
Sectors transformed a diverse array of field structures into a standard 
organizational architecture, consisting of Prevention, Response and 
Logistics components. The military, maritime, multi-mission character 
of the Coast Guard is reinforced and strengthened by the Sector 
structure. Relationships between the Sector's Prevention and Response 
components have improved the Coast Guard's effectiveness and efficiency 
across all mission areas. Coast Guard Sectors provide a unified command 
and control structure responsible for assessing risks across all 
mission areas, developing priorities, training forces to conduct 
operations in homeland security and non-homeland security mission 
areas, and allocating resources to activities in support of all Coast 
Guard mission areas. This current organization has proven to be an 
ideal alignment for coordinating our many missions.
    At the beginning of each fiscal year, the Coast Guard issues 
Operational Planning Guidance to field units to communicate priorities 
and performance targets in each mission area. This guidance also 
includes information to assist Area Commanders in making resource 
apportionment and allocation decisions in support of annual performance 
targets across all missions.
    In June 2005, the Commandant issued ten Commandant Intent Action 
Orders aimed at improving and sustaining mission execution across all 
mission areas. Each of the Action Orders represent a change to the way 
we do business to better prepare the Coast Guard for challenges in the 
future within an ``all threats, all hazards'' environment. The single 
most visible adjustment will be to the Coast Guard's command and 
control structure. We will focus our entire organization on improving 
and sustaining Mission Execution. We will do this by structuring our 
service as a three-pronged force: shore-based operations, maritime 
operations, and deployable operations. We have taken bold steps forward 
by creating Sectors for shore-based operations. And we have created 
truly deployable forces. The Coast Guard is taking a significant step 
toward improving the Nation's ``all hazards . . . all threats'' 
response capability by establishing the Deployable Operations Group 
(DOG). Across all of our forces, we will partner with other services 
and agencies to integrate our efforts.
    We have taken similar steps by advancing the Deepwater acquisition 
for maritime presence, patrol, and response. Through the Coast Guard's 
Deepwater and other acquisition programs, we have and will continue to 
improve operational efficiency and capabilities across all mission 
areas. HH-65 helicopters, re-engined through the Coast Guard's 
Deepwater program, have not only enhanced homeland security missions, 
but have improved the Coast Guard's capabilities to perform non-
Homeland Security missions such as search and rescue and environmental 
protection. Current acquisition projects such as the Deepwater National 
Security Cutter, Response Boat-Medium and Rescue 21 will further 
enhance not only Homeland Security missions, but also the Coast Guard's 
capabilities to perform its traditional missions including Living 
Marine Resources, Illegal Drug Interdiction, Undocumented Migrant 
Interdiction and Search and Rescue.

    Question 12. The Oil Pollution Act of 1990 has led to significant 
reduction in oil spills throughout the country. There are still 
provisions, however, that need to be implemented--specifically 
provisions calling for Marine Firefighting and Salvage capabilities. I 
understand these are complex issues but the implementation of these 
rules has been delayed several times and now here we are in 2007 with 
another announced delay. These rules are not only important to my home 
state of Washington where the entrance from sea is a long distance from 
our major ports but in many other areas throughout the Nation. Can you 
summarize in detail what the main issues are that are holding up 
implementation? What is being done to resolve these issues? When do you 
expect to enact these important rules?
    Answer. The Coast Guard implemented salvage and marine firefighting 
regulations for all tank vessels carrying oil as cargo with the 
publication of the Final Rule for Vessel Response Plans in 1996. These 
regulations were mandated by the Oil Pollution Act of 1990. After 
implementing the vessel response plan regulations, it was determined 
that a more robust and detailed regulation was needed to determine the 
specific equipment and response times for required salvage and marine 
firefighting resources. During the Coast Guard's push to implement the 
Maritime Transportation Security Act of 2002, we put the majority of 
our other rulemaking projects on hold, including the new and improved 
regulations for salvage and marine firefighting. An unintended result 
of this delay, however, was that the underlying analyses that were 
relied upon in the Notice of Proposed Rulemaking (environmental and 
economic) became stale. We completed the public comment period for the 
updated environmental analysis in January of 2006, and we are working 
diligently to finalize the rule.

    Question 13. I am hearing from Merchant Mariners in my state and 
all over the country about the excessive time it takes to apply for and 
receive a Merchant Mariner document. For some in the Gulf region and in 
the inland waterways systems, it is taking anywhere from six to 8 weeks 
if not longer. Additionally, when TWIC is finally implemented, there is 
concern that wait times will only be further exacerbated. What steps is 
the Coast Guard taking to reduce this backlog of applications, their 
process time and the transparency of the application process?
    Answer. The Coast Guard Mariner Licensing and Documentation (MLD) 
program is diligently working to meet the increased demanded for 
Merchant Marine Credentials (MMC's) by:

   The need to meet growing international credentialing 
        requirements;

   More rigorous evaluations to meet post-9/11 security 
        concerns;

   The NTSB recommendation, from Staten Island Ferry allision, 
        for more stringent medical fitness evaluations; and

    The restructuring and centralization plan currently being 
implemented will increase efficiencies and decrease response time. The 
end-state will be a more nimble program that provides better customer 
service and is poised to meet emerging credentialing challenges.
    In an effort to reduce the backlog and decrease processing time, 
the following recent enhancements to data collection procedures will 
help the Coast Guard to better compile, process, and track application 
material for more responsive credentialing issuance, and will make the 
process more transparent to the customer:

   Electronic fingerprinting;

   Upgrades to our internal database;

   Online user fee submission via www.pay.gov;

   Online ability to view status of application; and

   Information exchange and assistance available to customers 
        via 1-888 Mariner Information Help Desk.

    Future initiatives include:

   Developing a combined Credential (MMC);

   Upgrading examination administration and grading; and

   Implementing additional upgrades to our internal database.

    The Coast Guard does not anticipate an increase in processing time 
of MMCs when TWIC is implemented. We are working with TSA to establish 
a process to share security check information. When TWIC is 
implemented, applicants will be able to provide fingerprints, 
citizenship, and identity information at any of 131 TWIC enrollment 
centers nationwide and appearing in person at one of the 20 Coast Guard 
Regional Exam Centers (REC) or Monitoring Units. This will enhance 
customer service and program efficiency.

    Question 14. There are over 5.7 million residents of America's 
domestic offshore communities who depend on waterborne commerce for 
essential supplies of energy and for virtually everything they eat, 
wear, and use. A security incident that closed our ports could 
devastate those communities. Can you tell me what steps the Coast Guard 
is taking to assure that the highest priority is assigned to restoring 
these services in the event of a catastrophe?
    Answer. The Coast Guard together with the Department of Homeland 
Security (DHS) Customs and Border Protection and other interagency 
partners are developing national protocols for recovery and the 
resumption of trade following a significant disruption to the Maritime 
Transportation System (MTS). These protocols provide for improved 
interagency coordination and enhanced collaboration with the private 
sector to facilitate rapid recovery. Guidance for Coast Guard field 
units is also being prepared that will provide local Commanders with 
considerations for prioritizing vessel and cargo movements upon 
reopening waterways. These considerations include the need for fuels, 
foodstuffs and other locally important commodities.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                         Admiral Thad W. Allen

    Question 1. Last year, Congress rejected the Coast Guard's request 
to shut down the LORAN system and directed the Departments of Homeland 
Security and Transportation to develop a national LORAN policy. I 
understand that officials from those agencies as well as others met 
recently as part of a committee called the National Space-Based 
Positioning, Navigation and Timing (PNT) Executive Committee and have 
reached a consensus that the United States should maintain the LORAN 
system. Why did the Coast Guard again request the termination of the 
LORAN system as part of its FY08 budget at the same time this committee 
was in the process of determining what the policy should be?
    Answer. The submission of the Fiscal Year 2008 President's Budget 
pre-dated the March 28, 2007 convening of the National Space-Based 
Positioning, Navigation and Timing (PNT) Executive Committee. 
Therefore, the Coast Guard continued to recommend termination pending a 
final decision on LORAN's future.

    Question 1a. Did you alert leadership in DHS and DOT of your 
request? Is there a disconnect between the Coast Guard and the policy 
departments within those agencies?
    Answer. There is no disconnect among agencies. All appropriate 
leadership and policy departments within the Department of Homeland 
Security (DHS) and the Department of Transportation (DOT) have been 
fully involved with the Coast Guard in the process of developing the 
Administration's position on LORAN.

    Question 1b. Can you provide a copy of the Committee report, along 
with any briefing materials that were used to inform DOT/DHS and other 
affected agency officials about the team's work?
    Answer. The minutes of the March 28, 2007 National Space-Based PNT 
Executive Committee are controlled by the National PNT Coordination 
Office The Coast Guard does not have authority to release this document 
or any of the briefing materials used during deliberations.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                         Admiral Thad W. Allen

    Question 1. How does the Coast Guard intend to meet the mandate of 
the 2006 SAFE Port Act to create Interagency Operations Command Centers 
at all high priority ports within 3 years of the date of enactment if 
you don't request any funding for this in the 2008 budget?
    Answer. Leveraging prototype Interagency Operations Command Centers 
in Charleston, SC; San Diego, CA; and Hampton Roads, VA, the Coast 
Guard developed an acquisition project called Command 21. Command 21 is 
a five-year project that will meet the SAFE Port Act requirements for 
interagency operations centers in 24 high-priority Coast Guard Sectors. 
The Coast Guard is currently refining project requirements and 
milestones; construction should begin in 2009 as outlined in the Fiscal 
Year 2008 President's Request Capital Investment Plan (CIP).

    Question 2. What are your plans for the Port of New York and New 
Jersey, the largest port on the East Coast, with some 40-50 public 
agencies coordinating in the region?
    Answer. The Port of New York and New Jersey is included in the 
Command 21 acquisition proposal for Coast Guard Sector New York. 
Command 21 is designed to field:

        1. A surveillance network of radars and cameras covering 
        critical areas;

        2. An information system for situational awareness and 
        collaboration (conceptually called WatchKeeper); and

        3. Command center facility upgrades to host port partners.

    Question 3. Has the Coast Guard made available its Maritime 
Security Risk Assessment Model to ports, so they can evaluate project 
risk scores on a level playing field? If not, when will it be made 
available? If so, has anybody used it?
    Answer. MSRAM is used by the Coast Guard Sector Commander/Captain 
of the Port (COTP) and the Port Security Specialist with the maritime 
stakeholders through the Area Maritime Security Committees (AMSCs). If 
a maritime stakeholder requests a risk analysis of their facility, the 
AMSC facilitates the request and Coast Guard Port Security Specialists 
provide the analysis using the MSRAM tool. The Coast Guard conducted 
outreach meetings at each AMSC in early 2007. These meetings provided 
briefs on MSRAM the FY 2007 Port Security Grant Program and port risk 
management.
    Coast Guard COTP use MSRAM to evaluate port security grant 
applications to determine their potential risk reduction. With the 2007 
round of grants announced in May, the Sector Commanders will engage 
grant applicants and provide feedback on how individual projects were 
scored.

    Question 4. What is the status of the Coast Guard's establishment 
of the Delaware River and Bay Oil Spill Advisory Committee? When will 
that Committee be formally established?
    Answer. The charter to establish the Delaware River and Bay Oil 
Spill Advisory Committee is under review at Coast Guard Headquarters. 
The review is expected to be complete by the end of June 2007. After 
charter establishment, solicitation for committee members will be 
promulgated via the Federal Register, which is estimated to occur in 
June 2007. When solicitation is complete, committee members will be 
nominated and the Committee formally established.

    Question 5. I understand the Coast Guard has made certain approvals 
for a new liquid natural gas facility in Logan Township, New Jersey, so 
long as certain security measures are taken, including armed U.S. Coast 
Guard escorts. Is there funding in the proposed budget to manage the 
security escorts for this and other planned LNG facilities? If not, who 
will pay for these operations, and how? Is the Coast Guard meeting its 
current escort requirement for existing LNG facilities?
    Answer. The Coast Guard has not issued an approval for the LNG 
terminal proposed for Logan Township, NJ. Coast Guard ``approval'' 
comes in the form of a Letter of Recommendation (LOR) attesting to the 
suitability of the waterway for LNG vessel traffic. In December 2005, 
the local Coast Guard Captain of the Port (COTP) provided the Federal 
Energy Regulatory Commission (FERC) with a Waterway Suitability Report 
(WSR) that made a preliminary determination that the Delaware River was 
suitable for LNG vessel traffic provided certain security measures, 
including armed USCG vessel escorts, are in place.
    In June 2006, FERC approved the construction of the proposed Logan 
Township, NJ, LNG facility, with certain conditions to be satisfied 
prior to the commencement of facility construction and/or operation. 
These conditions include issuance of the LOR from the COTP, and 
resolution of certain jurisdictional issues related to a 1905 
Interstate Compact between New Jersey and Delaware in a region of the 
Delaware River belonging to the State of Delaware.
    The LOR, and an accompanying LNG vessel transit management plan 
(TMP) that precisely establishes the amount of CG and other government 
agency resources necessary to responsibly manage the safety and 
security risks of LNG vessel operations, is not expected to be issued 
until the interstate jurisdictional questions are ultimately resolved 
by the Supreme Court. Pending completion of the TMP, it is unclear what 
the ultimate costs of CG security resources will be for the Logan 
Township LNG facility.
    As background in April 2007, a Special Master appointed by the 
Supreme Court to examine the jurisdictional issues determined that the 
state of Delaware has jurisdiction over the proposed LNG vessel pier. 
Delaware has stated that construction of the LNG pier is inconsistent 
with its federally approved Coastal Zone Management Plan, and will not 
issue the necessary permits for pier construction. New Jersey has 
indicated it will appeal the Special Master's determination to the 
Supreme Court.
    The Coast Guard strives to meet its current escort requirements for 
all Certain Dangerous Cargoes (of which LNG is one). Coast Guard 
Captains of the Port weigh these responsibilities, together with 
statutory responsibilities for other legislatively-mandated missions, 
to optimally balance resource allocation with risk mitigation.

    Question 6. Can you highlight some aspects of the Deepwater program 
which have been successful so far?
    Answer. Examples of the Integrated Deepwater System Acquisition 
include:

    Legacy C4ISR upgrades

   Four shore-side command centers upgraded; significantly 
        enhancing operational effectiveness and Maritime Domain 
        Awareness.

   Initial upgrades of secure Internet, commercial satellite 
        communications, and automatic vessel identification equipment 
        have been completed on all 39 legacy cutters (378, HECs, 270, 
        and 210, MECs).

   Successfully demonstrated core capabilities Increment 1 at 
        the Maritime Domain Awareness Center.

   Two Communications Area Master Stations delivered and Sector 
        San Juan and District 7 command centers completed upgrades that 
        are being certified for delivery.

    HH-65 Helicopter Re-Engining

   84 re-engined operational HH-65Cs delivered (as of May 
        2007).

   All HH-65 equipped units are now operating the HH-65C.

    Medium-Range Surveillance Aircraft (CASA CN-235)

   The first eight CASA CN-235s have been placed on contract 
        along with the first three mission pallets. (Aircraft 4 & 5 
        were awarded in Jan. 2007. Aircraft 6, 7, and 8 were awarded in 
        April 2007.)

   The first aircraft arrived at the Coast Guard Aircraft 
        Repair and Supply center (AR&SC) in Dec. 2006. The second 
        aircraft arrived in Feb. 2007. Mission pallets will be 
        integrated on the aircraft at AR&SC.

   Official readiness status at the first air station (3 A/C) 
        is projected to occur by January 2009.

    Question 7. I am aware that some of the new communications 
equipment developed as part of the Deepwater program has already been 
implemented. Do you believe that the Coast Guard's mission performance 
has improved because of this equipment? If so, how? And is it possible 
to accelerate funding for this part of the program?
    Answer. The Coast Guard's mission performance has improved because 
of the communications upgrades on legacy cutters. The Deepwater program 
has provided an avenue to implement critical C4ISR system upgrades much 
earlier than originally planned within the Coast Guard's organic 
planning and upgrade cycle. The upgrades have significantly improved 
the ability to exchange mission essential information in a timely 
manner and improved interoperability with other government agencies.
    Installation of a classified Local Area Network and access to the 
Department of Defense's classified network provides access to near 
real-time intelligence information during operations and a means to 
quickly exchange information between cutters and shore units. Upgrades 
to the existing commercial satellite communications systems double the 
data throughput and now allows two cutters to share a single satellite 
channel, thereby providing greater access to a limited number of 
channels. The addition of the Automatic Identification System (AIS) has 
improved situational awareness, maritime domain awareness, and 
navigational safety.
    The Coast Guard supports full funding of the President's FY 2008 
budget ($89.6M for C4ISR), which is necessary to keep the projects on 
track to meet objectives.

    Question 8. How are you encouraging the contractors developing the 
communications equipment to expedite the delivery of these products? 
Have these efforts been successful?
    Answer. The Coast Guard has been able to implement a number of 
communications upgrades on legacy cutters through the Deepwater 
program. These improvements include:

        1. Installation of a classified Local Area Network and access 
        to the Department of Defense's classified network providing 
        access to near real-time intelligence information during 
        operations and a means to quickly exchange information between 
        cutters, aircraft and shore units.

        2. Upgrades to the existing commercial satellite communications 
        systems doubles the data throughput and now allows two cutters 
        to share a single satellite channel, thereby providing greater 
        access to a limited number of channels.

        3. The addition of the Automatic Identification System (AIS) 
        has improved situational awareness, maritime domain awareness, 
        and navigational safety.

    The Coast Guard has been unable to provide an incentive for 
contractors to further expedite delivery of communication capabilities 
due to limited C4ISR program funding. Moreover, a planned CG-C2 
(Tactical and Communications Suite) Upgrade for legacy cutters and 
additional SATCOM technology improvements has been deferred due to 
funding levels. The Coast Guard desires to restore these additional 
Command, Control, and Communications (C3) improvements in order to 
improve mission performance and interoperability.

      C4ISR Comparison between President's Budget and Congressional
                              Appropriation
------------------------------------------------------------------------
            Fiscal Year ($M)                2006       2007      Total
------------------------------------------------------------------------
President's Budget Request                    74.4       60.8      135.2
------------------------------------------------------------------------
Appropriated (Includes Rescissions            44.0       50.0       94.0
 through 2006)
------------------------------------------------------------------------
Difference (Requested vs. Enacted )         (30.4)     (10.8)     (41.2)
------------------------------------------------------------------------

    Question 9. There appears to be a mixed record on some early 
problems combined with more recent successes in the aviation, 
communications, and logistics sectors of the Deepwater program. What 
lessons have both the Coast Guard and the involved contractors learned 
based on these successes and failures, and how will you use these 
lessons to improve the performance of the program going forward?
    Answer. The Coast Guard has engaged in a collaborative manner with 
ICGS to review and change the terms and conditions of the contract for 
the upcoming award term. As an example, CG-4 will lead an interim 
logistics support plan for MPA 1-3. This effort is a mix of organic 
Coast Guard support, use of other government agencies (NAVAIR), and 
ICGS (through operations & sustainment CLINS). The interim support plan 
is being managed from the MPA Product Line at the Aircraft Repair and 
Service Center (AR&SC). An example of a lessons-learned was the 
Commandant's decision to terminate the ICGS FRC-B proposal and 
designate G-A (office symbol for the ``Coast Guard Acquisitions 
Directorate'') as the lead directorate to acquire the FRC-B/Replacement 
Patrol Boat. This decision ensures increased government management and 
oversight, while leveraging CG-4 technical expertise in shipbuilding & 
design. The ``parent craft'' approach will deliver a much needed 
capability sooner as both design and production stages can be combined.
    Most of these changes reflect lessons-learned from the business 
practices that have developed during the first 4 years of the program. 
For instance, in the original concept, ICGS developed the asset 
performance specifications and the Implementation Plan for how those 
assets would be fielded. For a variety of reasons, the Coast Guard has 
taken ownership of the performance specifications and the 
Implementation Plan. In the original concept, the Coast Guard provided 
performance based Statements of Objectives; in this award term, the 
Coast Guard will issue Statements of Work which contain specific 
requirements. Finally, the Coast Guard has mandated the use of Earned 
Value Management, competition at the Northrop Grumman Ship Systems 
(NGSS) and Lockheed Martin (LM) level (via the award term metrics) and 
use of a ``make-or-buy'' analysis, all of which have elements that will 
improve cost control and performance.
    Since the specification will be known more explicitly, the type of 
contract action or contract order will also be shifting from ``cost 
plus'' to ``fixed priced'' contracting. The shift to fixed-price will 
depend on how extensively the Statement of Work is detailed and how 
stable the specification of the asset or component is in terms of 
requirements and production. This shift to more fixed-price contracts 
will be accompanied with clauses for inflation adjustments, known as 
Economic Price Adjustments. Overall, the more detailed Statements of 
Work with fixed-price contracting will reduce the risk of cost 
increases that are not tied to inflation.
    The Coast Guard has also implemented improvements to Deepwater 
program management. The major improvements to help the program move 
forward include:

   Merge Deepwater with the Acquisition Directorate to form one 
        Acquisition Organization to increase efficiency and improve 
        processes.

   Designate the Assistant Commandant for Engineering & 
        Logistics Resources (CG-4) as the Coast Guard's technical 
        authority for all new ship acquisition designs.

   Add staff on the government side to the Deepwater Program to 
        perform greater contractor oversight and assume some of the 
        system integrator duties.

   Initiate a Business Case Analysis for all new acquisition 
        decisions to ensure that Deepwater is building and buying the 
        right tools for our Coast Guard men and women for a fair and 
        reasonable price.

   Increasing application of Independent Third Party Review and 
        Analyses.

   Coast Guard personnel will chair all Integrated Product 
        Teams.

    Question 10. How will the Coast Guard's experiences with Deepwater 
contractors thus far affect the actions you will take during the next 
award term of the program?
    Answer. The Coast Guard has engaged in a collaborative manner with 
contractors to review and modify contract terms and conditions for the 
next award term. Most of these changes reflect lessons learned from the 
business practices that evolved during the first 4 years of the 
Deepwater Project. For instance, in the original concept, ICGS 
developed the asset performance specifications and the Implementation 
Plan for how assets would be fielded. The Coast Guard has now taken 
full ownership of the performance specifications and the Implementation 
Plan. In the original concept, the Coast Guard provided performance-
based Statement of Objectives. In the next award term, the Coast Guard 
will issue Statements of Work that contain specific requirements 
metrics. Finally, the Coast Guard has mandated the use of Earned Value 
Management, competition at the Northrop Grumman Ship Systems and 
Lockheed Martin level (via the award term metrics) and use of a ``make-
or-buy'' analysis; each of these have elements that will improve our 
ability to control costs.
    The type of contract action or contract order will likely shift 
from cost-plus contracting to fixed-priced contracting. The shift to 
fixed-price will depend on how detailed the Statement of Work is as 
well as how stable the specification of the asset or component is in 
terms of requirements and production. This shift to fixed-price 
contracts would be accompanied with clauses for inflation adjustments, 
known as Economic Price Adjustments. Overall, the more detailed 
Statements of Work combined with fixed-price contracting will reduce 
risk of cost increases not tied to inflation.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                         Admiral Thad W. Allen

    Question 1. One of the reasons the Coast Guard structured the 
Deepwater contract using a lead systems integrator was the shortage of 
trained and experienced acquisitions staff within the service. S. 924 
includes language that would permit you to expand or contract your 
acquisitions staff as you see fit. How will this help alleviate the 
problem of staff shortage? By how much will you need to increase your 
acquisitions staff in order to provide the vigorous oversight that 
Deepwater has lacked to date?
    Answer. The Deepwater Program has conducted a preliminary analysis 
and identified a need for an additional 31 government billets for FY 
2008, beyond those already approved, to efficiently obligate Deepwater 
Program funding and ensure successful delivery of new assets to the 
fleet. However, this preliminary analysis has not considered the 
Deepwater Merger with the Acquisition Directorate to form one 
Acquisition Organization. The staffing needs of the new organization 
will be identified and implemented as this initiative evolves.
    The Coast Guard's assumption of greater oversight and more system 
integration responsibilities is in the transitional stage, and 
therefore, we have not completed an assessment or identification of all 
necessary staff changes. However, the increased funding in FY 2007 is 
adequate for this year and we have requested additional funding in FY 
2008.

    Question 2. A case could be made that the missteps Deepwater has 
experienced since its inception are all symptoms of a larger problem--
the reason why this program has gone so wrong. What is the heart of 
this issue? Please explain how it can come to pass that we have 
invested so much in this program, yet we have to little to show for it.
    Answer. Before addressing the question asking about a single reason 
for problems with Deepwater, it is prudent to address some of what 
Deepwater has accomplished for the Nation. A discussion of the 
accomplishments will set the stage appropriately to address the 
challenges. The Deepwater Program is the top capital priority for the 
Coast Guard. The program, only in its fifth year of execution, is the 
modernization and recapitalization solution for the Coast Guard's aging 
fleet of cutters, aircraft and mission systems. The Coast Guard's 
ability to save lives, prevent and respond to terrorist attacks, 
interdict drugs and alien smugglers, and to protect the environment are 
completely dependent on the assets and capabilities provided by the 
Deepwater program. Secretary Chertoff and I remain one hundred percent 
(100 percent) committed to the success of this crucial endeavor.
    The Deepwater aviation projects have been successful, delivering 
assets early and on cost. For example, all eighty-four of 95 HH-65 
helicopters have been re-engined and modernized, as part of their 
eventual conversion to the Multi-mission Cutter Helicopter (MCH) 
configuration, which is one and one-half months ahead of schedule and 
within the projected budget. The Multi-mission Cutter Helicopter (MCH) 
configuration starts with the HH-65 Dolphin helicopters and is upgraded 
to the C-model aircraft, which features new Turbomeca Arriel 2C2 
engines and upgraded gearboxes. The aircraft have 40 percent more power 
than the B-models, and greater operational reliability. Already the HH-
65C has proven itself in challenging missions. The re-engined HH-65Cs 
with their improved performance characteristics have saved lives across 
the Nation, over 300 in Hurricane Katrina for example.
    The Coast Guard has accepted delivery of two new HC-144A medium-
range Maritime Patrol Aircraft. The aircraft are undergoing 
missionization at AR&SC Elizabeth City, N.C. Six aircraft are under 
contract. Additionally, the first of six new, more capable HC-130J 
long-range search aircraft has begun modifications for Coast Guard 
missions, with delivery expected later in 2007. Meanwhile, Deepwater is 
modernizing the existing fleet of HC-130Hs.
    Since contract award in 2002, the IDS program has made significant 
progress toward improving the capabilities of the legacy force, even as 
the Coast Guard and industry work on the next generation of assets. For 
example, all medium and high endurance cutters have received the 
Deepwater Command, Control, Communication, Computers, Intelligence, 
Surveillance and Reconnaissance (C4ISR) upgrades--which already are 
making a difference in operations. A recent success was in March 2007, 
when the cutters SHERMAN and HAMILTON and a Coast Guard C-130 aircrew 
executed a record seizure of 19.5 metric tons of cocaine aboard the 
motor vessel GATUN, off Panama.
    The C4ISR upgrades installed on the SHERMAN through the Deepwater 
program contributed to mission success by improving communications and 
situational awareness among the cutters' and aircraft's crews. The 
Deepwater C4ISR upgrade included new equipment--such as digital 
radios--as well as additional computer processing bandwidth (which 
allowed the cutter crew to share classified information, and to monitor 
other activities in the operating space).
    The SHERMAN also was equipped with the Nationwide Automatic 
Identification System, enabling the crew to locate the GATUN near the 
heavily-trafficked approaches to the Panama Canal. Additionally, the 
system enabled the cutter's crew to monitor the GATUN while maintaining 
the element of surprise, until the crew received permission to halt and 
board the target.
    But there were challenges to overcome, highlighting the continued 
need for new assets. The SHERMAN, a 40-year-old vessel, operated with 
significant mechanical casualties, including the loss of one main 
engine--reducing speed and maneuverability. The SHERMAN also had 
problems with its evaporation system resulting in the inability to make 
fresh water. Additionally the crew overcame a problem with a small boat 
that affected end-game capability.
    The crew's success in spite of materiel adversity was a tribute to 
their competency and commitment. Yet the situation also underscored the 
urgent need to recapitalize and to modernize the Coast Guard's fleet 
assets, which the Deepwater program is accomplishing today.
    There are two National Security Cutters (NSC) under construction at 
the shipyard in Pascagoula, MS. The NSC is designed to operate away 
from homeport for approximately 230 days per year, contrasted with 185 
days per year for 378, WHECs. The NSC also is much more capable than 
legacy platforms, in terms of its aviation, C4ISR and other mission 
systems capabilities.
    As is the case with many Deepwater-provided assets, the NSC is a 
good example of cooperative development, with the taxpayers gaining 
best value by a concerted effort between government stakeholders and 
industry. For example, based upon a standing agreement between the 
Deepwater Program Executive Officer, and U.S. Navy and U.S. Marine 
Corps counterparts, Deepwater is able to share common systems, 
technologies and processes for improved interoperability and cost 
avoidance.
    No core factor has been identified as singularly responsible for 
the Deepwater problems or setbacks. The findings and information 
presented by the GAO, DHS-OIG, and the Coast Guard initiated Defense 
Acquisition University Study are acknowledged as the factors 
responsible for the problems and setbacks. The GAO reported in March 
2004 that the CG's Deepwater Program needed increased attention to 
management and contractor oversight. The CG has started implementing 
the recommendations that GAO suggested in order to improve program 
management.
    The GAO indicated in a follow-on report issued in April 2006 that 
these changes to Deepwater appear sound and that program management has 
improved but continued monitoring is warranted. The Coast Guard has 
taken the same approach and intensity to the DHS-OIG findings and 
recommendations. Overall, the results have been similar to the GAO 
results in that the DHS-OIG indicates that improvements have been made 
while others require more information or longer-term monitoring.
    Implementing these recommendations will improve Deepwater and the 
rest of the CG acquisition system to obtain the appropriate cutters, 
aircraft, and information systems for the service to the Nation.

    Question 3. In the Coast Guard's FY08 authorization proposal, you 
outline a strategy that proposes a considerable realignment of your 
operational forces to comprise what you refer to as the ``strategic 
trident.'' However, what is missing is a description of what the final 
re-alignment will look like and how these pieces will integrate.
    Can you describe what these changes will mean to the Coast Guard 
once the operations are complete? If there will be geographic changes 
to individual stations, please explain, to the extent possible, what 
those will be. Given that you are still finishing up your establishment 
of Sectors and trying to get a handle on the problems of Deepwater, how 
will this initiative further disrupt the day-to-day operations of your 
service?
    Answer. Background:
    The ``strategic trident'' is a management concept that aligns with 
the proposed transformation of the Coast Guard's command and control 
structure, as well as, the enhanced emphasis on readiness and mission 
support to improve Coast Guard operational capabilities.
    Description of Realignment:
    Notional plans are to transform the Coast Guard command and control 
structure so that it will ultimately be more flexible, nimble, and 
capable of operating with multiple partners to respond to incidents, 
surge operations, and increased threat levels while continuing to 
sustain performance in traditional areas.
    Key to enhancing these operational capabilities is the development 
of a clear, coherent method to employ Coast Guard forces. This 
strategic trident provides the layered defense our Nation needs 
through:

   Shore-based, multi-mission forces assigned to Sectors

   Maritime Patrol and Interdiction Forces (High/Medium 
        Endurance Cutters and Maritime Patrol Aircraft)

   Deployable specialized forces organized into a single 
        unified operational structure, the Deployable Operations Group 
        (DOG)

    Other than the establishment of the DOG, the realignment into the 
``strategic trident'' does not create or move any new operational field 
commands. Rather, it realigns the management of existing forces to 
better prepare the Service to meet emerging threats and challenges 
through an adaptable packaging system of capabilities, established 
competencies, authorities, and strong partnerships.
    This planned organizational structure will transform the Service's 
Atlantic and Pacific Area Commands, aligning operational mission 
execution command functions into a single command entitled Coast Guard 
Operations Command (CG OPCOM), and mission readiness functions into a 
single command entitled Coast Guard Forces Readiness Command (CG 
FORCECOM).
    There will be one commander responsible for Coast Guard operational 
mission execution. This same commander will also coordinate and 
optimize mission execution and unity of effort with external partners 
at the operational level i.e., DOD, DHS agency partners, EPA, etc. CG 
OPCOM will serve as the Service's one single point of accountability, 
completely focused on planning and executing operations.
    CG FORCECOM will be responsible for the current and future 
readiness of the Coast Guard's workforce, platforms, and 
infrastructure, and ensuring the Service maintains the capabilities to 
execute its missions. This one single command will direct and manage 
the overall Coast Guard readiness posture, doctrine and force 
allocation; including equipping the Service's work force. Unifying 
readiness in this manner will eliminate geographical variances that 
exist in current practices and provide a single point of accountability 
for Coast Guard readiness, just like CG OPCOM will do for all Coast 
Guard operations.
    Re-aligning our command and control structure in this manner will 
do away with current east coast/west coast organizational boundaries 
that are irrelevant to drug trafficking organizations, and other 
transnational threats, and are not aligned with the other armed 
services. It will streamline the Service's operational decisionmaking, 
and better facilitate the timely and accurate flow of information and 
direction between the strategic, operational, and tactical levels of 
mission execution.
    Conclusion:
    While the proposed reorganization constitutes a substantial change 
in the way the Coast Guard manages operations, readiness, and support 
functions, it will have no disruption to the day-to-day execution of 
our missions. Districts and units at the Sector level and below will 
continue operations without any disruption of service to the public. 
Similarly, major cutters will face a change in reporting and support 
structure, but will continue to conduct operations in support of 
District Commanders, Joint Interagency Task Forces and DOD Combatant 
Commanders.
    Overall the proposed reorganization will improve the Coast Guard's 
ability to serve the public, and provide appropriate support to the 
Service's workforce.

    Question 4. Your FY08 request includes the creation of a command 
cell to manage your deployable assets. You have mentioned that there is 
a potential to wrap other Department of Homeland Security assets into 
this concept. Which particular assets do you have in mind, and what is 
the rationale for transferring those assets?
    Answer. To clarify, the command cell referred to in the question 
will be a deployable command and control (C2) element that provides 
tactical commanders expertise regarding the capabilities of deployable 
forces under their control. Additionally, the C2 element would be 
immediately available to assist operational and tactical commanders in 
managing during an attack, disaster, or other contingencies.
    There are no specific assets identified at this time. However, the 
Deployable Operations Group (DOG) staff is conducting outreach to 
agencies within the Department of Homeland Security (DHS), interagency 
and Department of Defense (DOD). The primary purpose of this outreach 
is to familiarize other agencies with the capabilities of the DOG and 
to lay the foundation for future partnerships where possible.

    Question 5. Your FY08 Authorization proposal seeks to close gaps in 
Nation's Maritime Alien Smuggling law to close gaps in law enforcement 
activities. Why, specifically, is current law insufficient and what 
tangible benefits will the provision bring to enforcement of 
immigration laws and border security?
    Answer. Each year, maritime smugglers transport thousands of aliens 
to the United States with virtual impunity because the existing law 
does not sufficiently punish or deter such conduct. Only a small 
fraction (less than 3 percent) of interdicted maritime alien smugglers 
are referred for prosecution because the smugglers successfully 
circumvent the elements necessary for the Government to prevail on 
existing felony offenses.
    Professional maritime smugglers often charge large fees and use 
high-speed craft and increasingly sophisticated deception techniques to 
avoid detection and apprehension, rapidly modifying their methods to 
counter changes in law enforcement tactics. Smuggling routes primarily 
involve transit from the Dominican Republic, Cuba, Haiti and the 
Bahamas, but routes include travel from Canada, Ecuador, Guatemala, 
Mexico and other countries as well.
    Smugglers use various deceptions to conceal from law enforcement 
that the venture is for-profit, including ``coaching'' smuggled aliens 
in how to respond to law enforcement interviews and feigning rescues at 
sea. Employing these and other methods and routes, maritime smugglers, 
including organized crime syndicates, often evade criminal prosecution 
while realizing annual revenues possibly ranging up to billions of 
dollars from these activities.
    Presently, 8 U.S.C. Sec. 1324 is the principal Federal criminal 
statute under which alien smugglers, including maritime smugglers, are 
prosecuted. That law was not designed for prosecuting the unique 
evidentiary and jurisdictional issues associated with maritime 
smuggling cases. Many of the difficulties encountered by the Coast 
Guard in maritime smuggling enforcement stem from a statutory framework 
that fails to consider the unique aspects of extraterritorial maritime 
law enforcement operations. Further, under Sec. 1324, alien smuggling 
is only a felony if the Government can prove beyond a reasonable doubt 
that an alien smuggler sought commercial advantage or private financial 
gain, caused serious bodily injury, or placed in jeopardy the life of 
any person.
    Maritime smuggling is inherently dangerous. Smugglers treat the 
migrants like cargo; typically packing migrants into overcrowded, un-
seaworthy vessels, with little or no life saving equipment available, 
no provisions for sanitation and little or no food or other basic 
necessities. Moreover, smugglers often engage in efforts to evade 
maritime law enforcement at high speeds, further subjecting migrants to 
serious risks. Given the inherent dangers of this illegal trade of 
human trafficking, felony prosecution should not be predicated on 
additional proof of injury or risk. Likewise, maritime smugglers have 
exploited the ``profit'' requirement for felony prosecution by offering 
incentives to the aliens to lie and coaching the aliens to tell 
criminal investigators that the smuggler was a ``good Samaritan'' who 
``rescued'' them.
    Thus, in the majority of cases, the Coast Guard is able to rescue 
and interdict the smuggled aliens, but the Government is not able to 
prosecute the crew or others involved in the smuggling operation. Such 
actions have little deterrent effect on the crews or the trafficking 
organizations. In the highly lucrative human smuggling trade, smugglers 
consider such occasional seizures as a cost of doing business.
    In 1980, Congress recognized and cured similar shortcomings in the 
Comprehensive Drug Abuse Prevention and Control Act of 1970 by enacting 
the Maritime Drug Law Enforcement Act. The Administration's proposal, 
as well as several other bills now pending before the House and the 
Senate, would provide the Government with the ability to enhance our 
national security and ensure the safety of lives at sea by providing 
maritime law enforcement and prosecutors the tools necessary to bring 
meaningful consequences to human smugglers interdicted at sea. In 
pertinent part, the Administration's proposal, as well as the other 
pending bills, would: (1) remove the requirement to prove ``profit'' 
``inducement'' or subjecting migrants to specific risks of serious 
bodily injury to reach a felony level prosecution; (2) establish 
reasonable mandatory minimum penalties that would provide a genuine 
deterrent to human smugglers and appropriately reflect the criminality 
of the conduct; and (3) eliminate the possibility of smugglers using a 
fabricated ``Good Samaritan'' defense while preserving such a defense 
for legitimate rescues by requiring Good Samaritans to provide notice 
to appropriate authorities of any rescue. The Coast Guard considers 
these elements essential to any bill that Congress may enact.

    Question 6. In the FY08 budget, the inland river tenders emergency 
sustainment project is not funded nor is there recapitalization funding 
for these rapidly aging vessels which, among their many duties, provide 
critical ice-breaking services on Maine's rivers each spring. What is 
your plan to address the needs of your aging inland river buoy tender 
fleet, 140, ice breakers, and utility tugs?
    Answer. The Coast Guard intends to continue to use maintenance 
funding to correct casualties aboard individual cutters of all classes 
when they arise.
    Additionally, the Coast Guard will use maintenance funding for 
subsystem renewal on all cutter classes in order to contain maintenance 
costs.
    The Coast Guard is evaluating a range of options for accomplishing 
the AtoN mission throughout the inland river system that may or may not 
necessarily require replacement of inland assets.
    The first groups of cutters to be addressed in this evaluation are 
the Inland River Tenders and Construction Tenders. After completion of 
this mission analysis, the Coast Guard expects to plan for a 
replacement vessel that may approach AtoN in a different manner from 
existing River Tenders, and will likely have increased capabilities to 
address a wider mission set.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Trent Lott to 
                         Admiral Thad W. Allen

    Question 1. Both the FY07 supplemental appropriations bill and S. 
924 would prohibit the Coast Guard from executing certain Deepwater 
contracting actions until the Coast Guard completed certain reports, 
studies or consultations. Do you believe such legislative contingencies 
are necessary in order to compel the Coast Guard to take those required 
actions? Would the Coast Guard be responsive to legislation imposing 
reasonable deadlines for completing such reports, studies, or 
consultations without the Deepwater contracting contingencies?
    Answer. No, legislative contingencies are neither necessary nor 
preferred. The potential for unintended consequences is high.
    Yes. The Coast Guard would prefer reasonable deadlines that did not 
preclude timely contract actions that were in the best interest of the 
Government.
    The Coast Guard Acquisition Program has utilized the GAO Framework 
for Acquisition Management (GAO-05-218G ``Framework for Assessing the 
Acquisition Function at Federal Agencies'') as a tool to assess and 
improve Coast Guard acquisition in the four areas of Organizational 
Alignment and Leadership, Policy and Process, Human Capital, and 
Knowledge and Information Management. As a result, the Coast Guard has 
aggressively implemented a series of improvements in contract and 
program management to ensure effective management oversight, sound 
stewardship of taxpayer dollars and timely delivery of much-needed 
assets. The improvements already underway include:

   Consolidation of Coast Guard acquisition activities 
        (Deepwater, Office of Acquisition, acquisition policy, Research 
        and Development Center) into one directorate to increase 
        efficiency;

   Designation of the Assistant Commandant for Engineering and 
        Logistics Resources as the Technical Authority for Deepwater;

   Extensive progress in the implementation of the GAO 
        recommendations resulting from the 2004 Deepwater Contract 
        Management audit;

   Development of new evaluation criteria for follow-on 
        Deepwater contract term;

   A commitment to seek independent, third party evaluations of 
        new asset designs in Deepwater;

   Increasing funds for Government Program Management for 
        Deepwater;

   Increasing Government staffing at Deepwater manufacturing 
        facilities focusing on contract/quality management;

   Contracted for Defense Acquisition University sponsored 
        panel of experts to assess current state and propose strategic 
        planning elements to improve Rescue 21 and Deepwater contract 
        executions;

   Leadership focus on Human Capital to include Workforce 
        Training and Certification, Pay Incentives, Direct Hire 
        Authority and Recruitment and Retention of qualified 
        contracting and program management personnel;

   Lessons Learned Exchange between Coast Guard and the 
        Department of Homeland Security staff;

   Adoption of a DOD 5000 based revision to Coast Guard's Major 
        System Acquisition policies;

   Extensive consulting with Defense Acquisition University 
        experts regarding training and program management competency 
        development.

    Question 2. You testified that you plan to use the current 
Deepwater contract with Integrated Coast Guard Systems to continue 
ordering additional assets and systems of the types that are already 
under production through that contract. Please describe these plans in 
greater detail and describe the impact on the Cost Guard's plans to 
replace legacy assets if the Congress prohibited the Coast Guard from 
continuing to use the current Deepwater contract for that purpose.
    Answer. The Coast Guard is assuming a greater role both in 
management and oversight and will assume the lead role as systems 
integrator Specifically, the Coast Guard has taken over responsibility 
and control in the following areas:

   Development of the System Concept of Operations or Asset 
        Statements of Objectives

   Definitive Role of Technical Authority

   Development of Business Case Analysis decisions to validate 
        the selection and mix of Deepwater Program assets

   Leadership of Integrated Product Teams

   Active Management of the Risk Plan

   Greater oversight of ICGS's application of accepted System 
        Engineering principles and practices at the Deepwater System 
        design level

   Greater oversight and control of Integrated Logistics 
        Support

    In terms of what is different contractually, the System Integrator 
work performed by Integrated Coast Guard System (ICGS) was accomplished 
under the System Engineering and Program Management Delivery Task 
Orders (DTOs). Future DTOs will be modified to de-scope or reduce those 
tasks accomplished by the systems integrator since it will now be done 
by the Coast Guard, which is moving as rapidly as possible to assume 
lead systems integrator responsibilities. A combination of time and 
funding is required to develop the necessary staff competencies and 
capabilities for the Coast Guard to assume all of the systems 
integrator responsibilities. The Coast Guard will accomplish this 
gradually over the next few years in conjunction with the consolidation 
of the Deepwater and Acquisition Directorates to form one Directorate 
for all Coast Guard acquisitions. The staffing required for the new 
organization to accomplish the system integrator role will be 
identified and implemented as this initiative evolves.
    ICGS has the potential to continue to provide the goods and 
services already under contract, primarily the MPA and the NSC. 
However, the Coast Guard remains open to re-competing these assets, if 
it is in the best interest of the government to do so. ICGS also has 
the potential for future work, but all future assets will be 
competitively awarded. If the Coast Guard is prohibited from using the 
current Deepwater contract, the best case scenario will take another 
five plus years to get a NSC or MPA. A delay of 5 years in delivering 
assets will have a serious operational impact on the Coast Guard and 
the service provided to the American taxpayers.

    Question 3. Please describe: (1) the condition of the legacy 
cutters and aircraft that would be replaced by the NSC and MPA; (2) how 
the maintenance expenses and operational availability of these legacy 
assets have changed over the past several years; and (3) how you expect 
the maintenance expenses and operational availability of these legacy 
assets to change until they are completely taken out of service upon 
replacement.
    Answer.
NSC
    1. The 378, WHEC will be replaced by the NSC with the first NSC 
scheduled for operations in 2010. The 378, WHEC fleet is aging and 
equipment obsolescence issues are degrading overall performance. In 
1999, a ship structure and machinery evaluation board (SSMEB) was 
convened on two WHEC 378, cutters to determine the condition and 
estimate the remaining service life of the cutter class. In August 
2003, a fleet sustainment conference was held to re-evaluate the 
condition and remaining service life and identify all systems and 
components that were difficult or becoming too expensive to reliably 
maintain. The conference estimated the fleet's remaining service life 
at 11 years using four criteria--safety, readiness, payback and 
probability. To assure the capability and reliability of these cutters 
until their decommissioning, the Coast Guard is dedicating OE funding 
to address specific sub-system issues, (see table 1 below).
    2. The 378, WHEC has consistently exceeded its Standard Support 
Level (SSL) maintenance funding due to old and obsolete systems and 
sub-systems. The chart below depicts fiscal year SSL funding per 
cutter, the actual maintenance expense per cutter and maintenance 
expenses plus re-capitalization project expenses per cutter. The SSL is 
the budgeted amount for depot level maintenance and is increased each 
year by Cost of Living Adjustments (COLA). COLA increases have been 
inadequate to meet the actual maintenance expenses fleet wide. Due to 
the high cost of a WHEC Mission Effectiveness Project (MEP) sustainment 
initiative, the Coast Guard has decided to target specific replacement 
of sub-systems identified as the most troublesome through ongoing 
engineering and technological assessments.

                             Table 1.--WHEC 378--SSL vs. Actual Expenses (FY03-FY06)
----------------------------------------------------------------------------------------------------------------
                                     Standard Support Level      Actual Maintenance     Actual Maintenance &  Re-
                                              (SSL)                    Expense            cap Projects Expenses
----------------------------------------------------------------------------------------------------------------
FY03                                             $1,137,577                $1,937,812                $2,604,789
----------------------------------------------------------------------------------------------------------------
FY04                                             $1,126,394                $1,967,451                $2,758,164
----------------------------------------------------------------------------------------------------------------
FY05                                             $1,104,150                $2,055,975                $2,879,913
----------------------------------------------------------------------------------------------------------------
FY06                                             $1,104,409                $1,725,885                $2,623,121
----------------------------------------------------------------------------------------------------------------
FY07                                             $1,142,953
----------------------------------------------------------------------------------------------------------------

    The operational availability of the 378, WHECs as determined from 
the Coast Guard Business Intelligence Data Base is depicted below.

------------------------------------------------------------------------
                                                   Percent Time Fully
                                               Mission  Capable (PTFMC)*
              MEASURES as values              --------------------------
                                                 2004     2005     2006
------------------------------------------------------------------------
WHEC (entire fleet)                              26.4%    48.2%    41.0%
------------------------------------------------------------------------
*PTFMC is defined as the percent of time the cutter has no category 3 or
  4 equipment casualties during operational days. Major equipment
  casualties are category 3 or 4, which are defined as ``deficiency in
  mission critical equipment which caused a major degradation or loss of
  a primary mission.'' The Coast Guard's PTFMC goal for WHEC's is 86
  percent, with lower percentages indicating a decrease in operational
  readiness.

    3. The worst conditioned WHEC 378, are to be decommissioned 
starting in 2009. Maintenance and re-cap projects are expected to 
remain above SSLs until the entire class is decommissioned. The 
operational availability is expected to remain fairly constant as the 
worst conditioned WHECs will continue to be assessed and targeted for 
removal from service. Maintenance expenses are expected to increase in 
real dollars as inflationary pressures in this sector of the economy 
outpace normal inflation.
    Answer.
MPA
    1. Under the current Integrated Deepwater System plan, the number 
of fully operational HU-25's will gradually decline until all are 
decommissioned in 2014. The HU-25 airframe is aging but maintains full 
operating capability through an operating expense (OE) funded unit and 
depot level maintenance and repair program. A recent Supplemental 
Structural Inspection Program (SSIP) study determined that critical 
airframe structural components are at less than half of their life 
limit. However, the engines, many sensors, and aircraft systems are 
becoming more difficult to maintain. These systems will continue to be 
supported through the OE funded maintenance programs.
    2. The operational availability has remained relatively stable over 
the past several years, but falls short of the COMDT's goal of 71 
percent. However, as the HU-25 ages, it becomes more maintenance 
intensive as reflected by the increasing Labor Hour Per Flight Hour 
(LHPFH) and cost per flight Hour (CPFH) The CPFH represents the 
variable costs of spare parts and depot-level maintenance associated 
with operating each aircraft type per flight hour. The HU-25 product 
line is able to minimize support costs by cannibalizing high value, 
hard to procure components from Coast Guard HU-25's stored at the 
Aircraft Maintenance And Regeneration Center (AMARC) in Tucson, AZ.

------------------------------------------------------------------------
                      2002       2003       2004       2005       2006
------------------------------------------------------------------------
AVAILABILITY           64.0%      67.2%      66.2%      68.7%      68.1%
------------------------------------------------------------------------
LHPFH                   12.9       12.8       13.5       13.3       14.5
------------------------------------------------------------------------
CPFH                  $1,807     $1,780     $1,896     $2,081     $2,178
------------------------------------------------------------------------

    3. Operational availability has stabilized and is expected to 
remain constant as long as the Coast Guard can afford rising 
maintenance expenses. Maintenance expenses will continue to increase as 
parts become obsolete or difficult to procure. The Coast Guard will 
maintain the current 60 month OE Program Depot Maintenance (PDM) cycle 
incorporating a PDM extension program during the last year of the 
aircraft's service. The product line has initiated several engineering 
modifications and reviewed maintenance procedures to decrease 
maintenance hours and reduce costs.
    Additionally, efforts to minimize operational impacts are underway, 
including a long-term engine overhaul contract with the Original 
Equipment Manufacturer (OEM). The ATF-3 engine reliability and overhaul 
expense continues to be the most significant HU-25 cost factor, and 
engineering modifications by the OEM are being negotiated as part of 
the new contract. The OE funded engine overhaul contract will provide 
sufficient replacements until 2014 when the aircraft is completely 
phased out. The annual Non-pay inflation and PPA VI industry specific 
inflation funding increases are crucial for the Coast Guard to keep 
pace with escalating maintenance costs.

    Question 4. The failure of the 110-foot to 123-foot patrol boat 
conversion program has left the Coast Guard with a significant patrol 
boat gap. To date, the Coast Guard has mitigated the gap by extending 
the lease of three of the five Navy Patrol Craft and initiating the 
FRC-B program. Please provide timelines and expected results for these 
and any other planned actions to mitigate the patrol boat gap.
    Answer. Approved Mitigating Initiatives: The Coast Guard has 
approved two initiatives to assist in the mitigation of the patrol boat 
gap. These initiatives will recoup 18,700 operational hours.

        1. Multicrewing: The Coast Guard is utilizing crews from the 
        non-operational 123' WPBs in a multi-crewing effort to help 
        reduce both the overall Patrol Boat gap and the hour gap 
        specific to the District Seven Area of Responsibility (AOR). 
        Specifically, two crews are attached to each of the eight D7 
        Florida multi-crewed 110, WPBs and they operate at a pace of 
        3,600 hours per year thereby (recouping 11,200 hours) annually. 
        Multi-crewing began in February 2007.

        2. Extending 179, WPC Memorandum of Agreement with Navy: After 
        Commandant/CNO discussions, negotiations with the Navy to 
        modify the current 179, WPC MOA to extend use until 2011 has 
        occurred. An Addendum to extend the use of three 179, WPCs for 
        a period of 3 years has been signed by both parties. Three of 
        the WPCs will remain in Pascagoula, MS until the end of Fiscal 
        Year 2011. This will provide 7,500 programmed hours each year.

    Potential Near-term Mitigating Options: There are five potential 
options that the Coast Guard is analyzing to mitigate the loss of hours 
and hulls in District Seven:

        1. Adjust WPB MEP Timeline: A Coast Guard decision to shorten 
        the WPB Mission Effectiveness Project (MEP) timeline is being 
        considered. By reducing the number of 110, inducted per year 
        into MEP from four hulls to three hulls and decreasing the time 
        spent undergoing MEP from 12 months to 9 months, the Coast 
        Guard can reduce the need for 110, WPBs in MEP by 21 months per 
        year recouping approximately 3,000 hours per year. If approved, 
        the schedule change would take effect in September 2007.

        2. Procurement of Additional 87, Coastal Patrol Boats: The GWOT 
        Supplemental provided funds for the procurement of four 87, 
        Coastal Patrol Boats (CPBs) which are now under contract. The 
        additional 87, CPBs would be homeported in District Seven to 
        allow the most positive impact on Southern Florida AOR and 
        would add 7,200 programmed hours per year to the 87, CPB fleet. 
        One 87, CPB will be operational by the end of Fiscal Year 2008 
        with the remaining three becoming operational in Fiscal Year 
        2009.

        3. Lease of Commercial Vessels: Lease four commercial high-
        speed boats with similar characteristics of a Patrol Boat for 
        execution of Coast Guard missions in the District Seven Area of 
        Responsibility (AOR). Each leased vessel would be multi-crewed 
        using the former 123, WPB crews and operate 4,400 hours per 
        year. This option provides 17,600 hours per year (6,400 more 
        hours than the current multi-crewing initiative) and would 
        replace half of the hull and surge capacity lost by the non-
        operational 123, WPBs. The Coast Guard Office of Acquisition is 
        currently conducting a lease vs. buy analysis to determine the 
        feasibility of leasing commercial vessels. If approved, the 
        lease vessels are projected to be available for Coast Guard 
        operations by February or March 2008.

        4. Increase 87, Coastal Patrol Boat Programmed Hours: The Coast 
        Guard is assessing the costs and impacts of increasing 
        programmed operating hours for the entire fleet of sixty-five 
        87, CPBs from 1,800 hours to 2,000 hours per year. This would 
        provide an additional 13,000 hours per year to assist in the 
        mitigation of the WPB Op Hour Gap. If approved, this initiative 
        would take effect on October 1, 2008.

        5. Increase 110, Patrol Boat Programmed Hours: The Coast Guard 
        is assessing the cost and impacts of increase programmed 
        operating hours for all non-District Seven 110, WPBs by 400 
        hours which will provide 5,400 hours per year to assist in the 
        mitigation of the WPB Op Hour Gap, a timeline when this option 
        could begin has not been determined. A specific funding source 
        has not been identified as these options arew still being 
        studied and evaluated.

    Long-term Mitigating Options: The Coast Guard's primary long-term 
mitigation strategy is procurement of the Fast Response Cutter.
    FRC-B: The Coast Guard's Office of Acquisition (G-A) is developing 
the Request for Proposal (RFP) package for the FRC-B. Overall, the 
Coast Guard is planning to acquire twelve FRC-B assets. The first FRC-B 
is anticipated to be delivered in Fiscal Year 2010 with the final hull 
delivered by the end of Fiscal Year 2013.

    Question 5. The Deepwater contractor raised several questions 
concerning the validity of the Coast Guard's third party Business Case 
Analysis for a composite hull FRC-A design. The Department of Homeland 
Security Science and Technology Directorate has requested FY08 funding 
to begin construction of a composite demonstrator vessel to reduce 
technical risk and construction cost risk for a composite hull FRC-A. I 
also understand that the Coast Guard has assigned a senior officer to 
assist DHS S&T. Does the CG plan to request or reprogram Deepwater 
funds to accelerate the construction of this demonstrator vessel? Will 
the Coast Guard provide DHS S&T with performance requirements for the 
demonstrator vessel?
    Answer. The DHS S&T Scalable Composite Vessel Prototype (SCVP) 
program is designed to mitigate technical and manufacturing risks 
identified in the FRC-A Business Case Analysis (BCA). The actual 
design, production, and repair costs could be used to validate the 
calculated values used in the BCA. DHS S&T will develop the performance 
specification and requirements for the prototype vessel and has asked 
for Coast Guard input. A decision to request or reprogram Coast Guard 
funding would be made if S&T and USCG develop a Memorandum of Agreement 
(MOA). No reprogramming is in development at present.

    Question 6. More than $130 million has been appropriate for 
Deepwater vertical unmanned aerial vehicles (VUAV) since the program's 
inception. I understand that the development of the Eagle Eye VUAV is 
behind schedule and will not be ready to deploy on the first NSC. Is 
the Coast Guard planning to evaluate alternative existing VUAV designs 
for shipboard use? If so, is the Coast Guard prepared to use Deepwater 
funds to adapt an existing VUAV design for Coast Guard missions? Please 
provide a timeline for how the Coast Guard plans to proceed.
    Answer. Last Fall, the Deepwater Program Executive Officer 
commissioned an independent study to assess the viability of the VUAV 
program and to address the shortfalls in capability if the VUAV program 
was postponed or canceled. The study was divided into three phases. 
Phase 1 of the study, completed in February 2007, compared the Eagle 
Eye to the U.S. Navy's Fire Scout Vertical Takeoff and Landing (VTOL) 
program. After close evaluation, the study recommended not to procure 
either the Eagle Eye or Fire Scout due technical risks and estimated 
costs beyond the Coast Guard's VUAV program baseline. A stop-work order 
has been issued to discontinue further development of the Eagle Eye 
VUAV. The Coast Guard will not seek further funding for the VUAV until 
cost, schedule, and risks associated with development have been more 
thoroughly considered and addressed.
    The Coast Guard is continuing with Phase 2 of the independent study 
to explore alternatives to the VUAV program, including cutter-based and 
land-based Unmanned Aerial Systems (UASs), as well as manned aviation 
assets. The Phase 2 report is due August 2007. The Coast Guard is 
considering Phase 3 to the independent study, which would be a 2-year 
effort to refine alternative solutions to the VUAV through UAS proof of 
concept demonstration flights, operational simulation modeling, and UAS 
air safety analyses.

    Question 7. Why does the Coast Guard FY08 budget request include 
funding for four MPAs? What is the impact of buying these aircraft 
earlier than previously planned? Would similar benefits apply to buying 
NSCs faster as well?
    Answer. The original Deepwater Acquisition Plan of 2002 had seven 
(7) MPA operational by CY-2007. Since these were not funded at levels 
necessary to meet that original plan, an ``MPA Flight Hour Gap'' was 
created where the declining availability of the HU-25 fleet has not 
been offset by the expected arrival of CASA CN-235 300M aircraft. There 
is a compelling need to fill this gap, which is currently estimated at 
44,000 flight hours annually. Continued production and delivery of the 
new MPA will increase the Coast Guard's Maritime Domain Awareness 
capabilities.
    The Coast Guard will benefit from maintaining steady production 
lines at the CASA facility. Continuous production ensures experienced 
engineering and manufacturing teams remain intact, and maximizes 
efficiencies which can be translated to faster production and higher 
quality deliveries.
    This strategy will also allow the Coast Guard to maintain its 
phase-out plan of the HU-25. There have been no plans to invest in the 
HU-25 to extend its service life, and support contracts for major 
aircraft systems, such as the engine, will expire at the end of FY 
2007. There will, however, be sufficient sparing and support to 
maintain a reduced fleet until 2012.
    There are additional benefits to maintaining steady production on 
the NSC. As the sole customer of the NSC, breaks in production would 
have major cost and schedule impacts for the Coast Guard. Again, no 
investment in 378, High Endurance Cutters has been made and the 378, 
decommissionings start in FY 2009, so keeping the NSC production steady 
is the best investment given limited funding.

    Question 8. Some are advocating that the Coast Guard should make 
greater use of the Naval Sea Systems Command in procuring Deepwater 
cutters. However, The Navy's handling of its Littoral Combat Ship 
program has shown that its own program management capabilities need 
improvement, and that its requirements for similar sized ships are 
significantly different from the Coast Guard's. It seems to me that, 
while the Navy has expertise that could benefit the Deepwater Program, 
buying cutters to meet Coast Guard mission requirements require Coast 
Guard oversight. Please describe the Coast Guard's previous and planned 
use of Navy shipbuilding expertise with respect to the Deepwater 
Program?
    Answer. There has been extensive collaboration between the Navy and 
the Coast Guard Deepwater Program, and the Deepwater Program will 
continue to consult with the Navy as vessel acquisitions move forward. 
In particular, the Coast Guard has received extensive support from 
Superintendents of Shipbuilding, Conversion, and Repair Management 
Group (Supships) at the Naval Sea Systems Command (NAVSEA) Gulf Coast 
for on-site management of the production of NSC 1 and NSC 2. The 
attached table describes recent and continuing support from multiple 
resources within the U.S. Navy. As the FRC and the OPC move into 
production, there will be increased consultation with the Navy to 
provide the necessary support that the CG requires.

------------------------------------------------------------------------
         Navy Organization                       Description
------------------------------------------------------------------------
ATG                                 Crew Readiness for Sea Training.
San Diego
Afloat Training Group
------------------------------------------------------------------------
COMOPTEVFOR                         Supporting CG-3 and DPM in
Commander, Operational Test &        performance of Operational Testing.
 Evaluation Forces
------------------------------------------------------------------------
DOD International AIMS Program      Will conduct IFF Platform
 Office                              Certification for WMSL Class.
Robins Air Force Base
------------------------------------------------------------------------
INSURV                              Manage Acceptance Trials.
Board of Inspection and Survey
------------------------------------------------------------------------
Magnetic Silencing Facility         Degaussing and deperming.
Naval Stations Norfolk & San Diego
------------------------------------------------------------------------
NAVAIR                              NSC aviation facilities
Naval Air Systems Command,           certification and helicopter
Patuxent River, MD                   dynamic interface testing (HDIT).
------------------------------------------------------------------------
NAVAIR                              Aviation System Inspection
Norfolk Field Office                 Representative (ASIR).
------------------------------------------------------------------------
NAVAIR PMA2133D                     ILS, AN/URN-25 TACAN. Funding
                                     provided by SPAWAR.
------------------------------------------------------------------------
NAVAIR PMA251                       Navy PARM for Visual landing Systems
                                     being procured for the WMSL Class.
                                     Provides hardware, logistics, and
                                     engineering support.
------------------------------------------------------------------------
NAVICP                              Navy Supply agent for all spares for
                                     the WMSL, WPC, and WMSM Classes for
                                     Navy equipment being provided as
                                     GFE to these classes.
------------------------------------------------------------------------
NAVSEA SEA062                       Program guidance on NSC platform
                                     certification.
------------------------------------------------------------------------
NAVSEA PMS 317                      Provides electronic database TSME,
                                     for documentation of discrepancies,
                                     trial card management and support
                                     of test, trials & DD250
                                     development.
------------------------------------------------------------------------
NAVSEA PMS501                       Provides detailed data on LCS
                                     Freedom Class for feasibility
                                     studies for OPC.
------------------------------------------------------------------------
NAVSEA SEA04L                       Navy PARM for Radiological Equipment
                                     being procured for the WMSL Class.
------------------------------------------------------------------------
NAVSEA SEA05T1                      Radar cross section technical
                                     assistance.
------------------------------------------------------------------------
NAVSEA SUPSHIP                      PMRO support covering all aspects of
Gulf Coast                           engineering, ship design, ship
Supervisor of Shipbuilding,          construction, QA, program &
 Conversion & Repair                 production management, contract
                                     admin. & financial management.
------------------------------------------------------------------------
Navy Interoperability Center        Interoperability Certification.
------------------------------------------------------------------------
Navy Supply Center Detachment       Navy ISEA and depot for Radiological
Yorktown                             Equipment being provided to the
                                     WMSL Class. Funded via SEA 04L.
------------------------------------------------------------------------
NAWC-AD                             Navy PARM and ISEA for the UPX-36/
Naval Air Warfare Center, Aircraft   UPX-29A being procured for the WMSL
 Division                            Class. Provides systems, logistcs,
                                     and engineering services in support
                                     of the integration and installation
                                     of the system on the WMSL Class.
                                     PARM for APX-118 being installed on
                                     the WPC. Developing IFF
                                     Certification Stage 5 & 7 Test
                                     Procedures for WMSL Class.
------------------------------------------------------------------------
NAWC-AD                             Navy ISEA for Visual Landing Aids,
Naval Air Warfare Center--Aircraft   provides technical and logistics
 Division Lakehurst                  support to the ICGS ship
                                     integration and installation
                                     efforts. Supports Aviation
                                     Certification on WMSL Class. VLA
                                     effort funded via PMA 251.
------------------------------------------------------------------------
NOSSA                               Weapons System Explosive Safety
Naval Ordnance Safety and Security   Review Board review of the NSC
 Office                              weapons system.
------------------------------------------------------------------------
NSWC Crane                          Navy PARM and ISEA for the AN/SLQ-32
                                     Electronic Warfare System being
                                     procured for the WMSL Class.
                                     Provides systems, logistics, and
                                     engineering services in support of
                                     the integration and installation of
                                     the system on the WMSL Class.
------------------------------------------------------------------------
NSWC-CD                             WPC (FRC original) cost estimations
Naval Surface Warfare Center,        from: a parametric model; using
 Carderock Division                  ship yard actuals; and Total
                                     Ownership Cost (TOC), to support
                                     the IPT; and special tradeoffs,
                                     such as Steel vs. Composite [soon
                                     to be mod' to add Combatant Craft
                                     Department (CCD) support on the FRC
                                     B efforts.]
                                    --WMSM (OPC) cost estimations from:
                                     a parametric model; using ship yard
                                     actuals [NSC]; and TOC, to support
                                     the IPT; and special tradeoffs,
                                     such as number of engines;
                                     [additionally supported an
                                     assessment of NSC actuals and EAC
                                     for PM and REA input.]
                                    --NSC Structures to determine
                                     fatigue life and special detailed
                                     studies on issue areas, such as the
                                     hanger racking.
------------------------------------------------------------------------
NSWC-CD                             Degaussing system technical support.
------------------------------------------------------------------------
NSWC-CD                             Board of Inspection and Survey
Philadelphia Detachment              (INSURV)--Technical Assist Support.
------------------------------------------------------------------------
NSWC-DD                             Providing System Engineering and
Dahlgren Division                    Integration support for integrating
                                     the Mk 48 Gun Weapon System for the
                                     WMSL Class. Funded via PEO IWS 3C.
                                     USCG DW funds NSWC DD support for
                                     Gun Weapon System Cut-outs, WMSL-
                                     750 Principal for Safety, EMC/
                                     RADHAZ Surveys, Gun Structural
                                     Firing Tests. Also supports WSESRB
                                     effort for WMSL Class. When funded
                                     will support CG-2 System Software
                                     IV&V and certification.
------------------------------------------------------------------------
NSWC-PHD                            Navy ISEA for the SPQ-9B, provides
                                     technical support to the ICGS ship
                                     integration and installation
                                     efforts. Funded via PEO IWS 2.0.
------------------------------------------------------------------------
NSWC-PHD                            Supporting the USCG in the planning
                                     and execution of the Combat Systems
                                     Ship Qualification Test (CSSQT) for
                                     WMSL-750. Develops Combat System
                                     Alignment Manual. Funded via PEO
                                     IWS 1.0.
------------------------------------------------------------------------
NSWC-PHD                            Navy ISEA for the Mk 15 CIWS BLK 1B
Louisville Detachment                provides technical and logistics
                                     support to the ICGS ship
                                     integration and installation
                                     efforts. Funded by PEO IWS 3B.
------------------------------------------------------------------------
NSWC-PHD                            Navy ISEA for the Mk 160 GCS, Mk 38
Louisville Detachment                Gun, MK 110 Gun and Mk 46 OSS
                                     provides technical and logistics
                                     support to the ICGS ship
                                     integration and installation
                                     efforts. Funded via PEO IWS 3C.
------------------------------------------------------------------------
NSWC-PHD                            Navy ISEA for the Mk 53 Decoy
Louisville Detachment                Launching System provides technical
                                     support to the ICGS ship
                                     integration and installation
                                     efforts. Funded via PEO IWS 2E.
------------------------------------------------------------------------
NWDC                                Supporting the USCG in development
Newport                              of the Tactical Manual for the WMSL
Naval Warfare Development Center     Class.
------------------------------------------------------------------------
ONR                                 Composite hull R&D/Risk Mitigation
Office of Naval Research             for FRC Program. The FRC also
                                     utilized the MOU between CG and ONR
                                     for data sharing, production
                                     inspection and joint design reviews
                                     during the CHSV project and FRC
                                     composite design. Also OPTEVFOR
                                     participated during several FRC
                                     design reviews . . .
------------------------------------------------------------------------
OPNAV N76                           Navy Resource Sponsor for Navy Type/
Chief of Naval Operations            Navy Owned Equipment going on WMSL,
                                     WPC, and WMSM Classes. Sponsors
                                     USCG-Navy Permanent Joint Working
                                     Group and the Naval Operations
                                     Capabilities retirements for the DW
                                     Cutters.
------------------------------------------------------------------------
PEO IWS 1.0                         Navy Program Manager for CSSQT
Program Executive Officer,           activities in support of the WMSL
 Integrated Warfare Systems          Class.
------------------------------------------------------------------------
PEO IWS 1A5                         PEO IWS Program Manger for USCG NTNO
                                     equipment and resource allocation
                                     of Navy WPN/WPN funds. Lead POC for
                                     all NTNO technical, logistics, and
                                     financial issues and requirements
                                     for WMSL, WPC, and WMSM Classes.
------------------------------------------------------------------------
PEO IWS 1B                          Navy PARM for BFTT Electronic
                                     Warfare Trainer (BEWT) being
                                     procured for the WMSL Class.
------------------------------------------------------------------------
PEO IWS 2.0                         Navy PARM for Mk SPQ-9B Radar being
                                     procured for the WMSL Class.
------------------------------------------------------------------------
PEO IWS 2E                          Navy PARM for Mk 53 Decoy Launching
                                     System being procured for the WMSL
                                     Class.
------------------------------------------------------------------------
PEO IWS 3B                          Navy PARM for MK 15 CIWS Blk 1B
                                     being procured for the WMSL Class.
------------------------------------------------------------------------
PEO IWS 3C                          Navy PARM for MK 160 Gun Control
                                     System, and Mk 46 Optical Sight
                                     System, being procured for the WMSL
                                     Class. Procuring the Mk 38 Gun for
                                     the WPC class. Procuring the Mk 110
                                     57 MM Gun for the WMSL 752 thru
                                     757.
------------------------------------------------------------------------
PEO IWS3C                           56MM Gun Weapons System--ammunition
                                     & system development, safety and
                                     integration. U.S. Navy Funded.
------------------------------------------------------------------------
SPAWAR                              ILS, AN/SYQ-26(V)4 Tactical
Charleston                           Messaging System (NAVMACS II).
------------------------------------------------------------------------
SPAWAR                              Navy PARM for TACAN and SRR-1
San Diego                            Communication systems being
                                     procured for the WMSL Class.
------------------------------------------------------------------------
SPAWAR                              Navy PARM for SCIF systems being
San Diego                            procured for the WMSL Class.
                                     Providing systems and engineering
                                     support to the integration and
                                     installation of SCIF on the WMSL
                                     Class.
------------------------------------------------------------------------
SPAWAR C4I                          CG-C2 Software.
Philadelphia
------------------------------------------------------------------------

    Question 9. There has been much criticism of the Coast Guard's 
Deepwater program. Please describe the Deepwater Program's success 
stories.
    Answer. Successes from the Integrated Deepwater System Acquisition 
include:

    HH-65 Helicopter Re-Engining:

   84 re-engined operational HH-65s delivered (as of 16 May 
        2007).

   All HH-65 equipped units are now operating the HH-65C.

   Cost, Schedule, and Performance requirements were met.

    Medium-Range Surveillance Aircraft (CASA CN-235):

   The first 8 CASA CN-235s have been placed on contract along 
        with the first three mission pallets. Aircraft 4 & 5 were 
        awarded in Jan. 2007. Aircraft 6, 7, and 8 were awarded in 
        April 2007.

   The first aircraft arrived at the Coast Guard Aircraft 
        Repair and Supply center (AR&SC) in Dec. 2006. The second 
        aircraft arrived in Feb. 2007. Mission pallets will be 
        integrated on the aircraft at AR&SC.

   The contract calls for delivery of the third aircraft no 
        later than Aug. 2007 but a May 2007 delivery is anticipated. 
        Aircraft 4 & 5 have an expected delivery date in the second 
        quarter of CY09.

   Official readiness status at the first air station with CASA 
        CN-235s is projected to occur in January 2009 or earlier.

    HC-130J Missionization:

   Program originally outside of Deepwater and the estimate for 
        Missionization was over $300M with available funding being only 
        $120M.

   Project transferred to Deepwater.

   Deepwater developed new missionization approach using 
        architecture/equipment designs that existed in Deepwater.

   Now projected to be completed within the $120M baseline.

    National Security Cutter:

   Delivery scheduled despite impacts of hurricanes and recent 
        labor strike.

   Post 9/11 additional capabilities.

    Legacy C4ISR Upgrades Afloat and Ashore:

   Four shore-side command centers upgraded; significantly 
        enhancing operational effectiveness and Maritime Domain 
        Awareness.

   Initial Upgrades of secure Internet, commercial satellite 
        communications, and automatic vessel identification equipment 
        have been completed on all 39 legacy cutters (378, HECs, 270, 
        and 210, MECs).

   Successfully demonstrated core capabilities of Increment 1 
        at the Maritime Domain Awareness Center.

   2 Communications Area Master Stations delivered. Sector San 
        Juan and District 7 command centers completed upgrades and are 
        being certified for delivery.

    Shore Facilities Constructed to Support Assets:

   Maritime Patrol Aircraft (MPA) Hangar at Aviation Training 
        Center, Mobile, Alabama has been completed and will be used for 
        the MPAs that will be assigned there for training and 
        operations.

   Training Facility (referred to as Building 500) has been 
        completed in Petaluma, California for National Security Cutter 
        (NSC) electronic equipment training.

    Question 10. Your budget request asks for $130 million for the 
Deployable Operations Group (DOG). What problem is this designed to fix 
and how does it intend to fix it? Will the establishment of the DOG 
lead to the consolidation or relocation of any operational assets?
    Answer. The $132.7 million is a base re-allocation, not a request 
for new funding. The Deployable Operations Group (DOG) will resolve 
challenges within the Coast Guard's Deployable, Specialized Forces 
(DSF) pertaining to training, equipment, interoperability, and 
coordination by unifying under a single command. The DOG will oversee, 
coordinate, and integrate adaptive deployable force packages from the 
following Coast Guard specialized teams: Maritime Security Response 
Team, Maritime Safety and Security Teams, Port Security Units, National 
Strike Force, and the Tactical Law Enforcement Teams.
    The coordination and integration of DSF's under the DOG will 
provide increased standardization of training, tactics, and equipment 
providing increased opportunities for cross-training and more effective 
and efficient interoperability. Additionally, the DOG will focus on 
contingency planning and cooperation with interagency partners to 
develop multi-agency force packages. The establishment of the DOG does 
not include the consolidation or relocation of any operational assets.

    Question 11. I understand that the Coast Guard plans to reorganize 
several major commands. What is the purpose and ultimate goal of this 
reorganization?
    Answer. The Coast Guard has embarked on an extensive transformation 
effort to shape the service into a more agile, capable, and responsive 
agency in the areas of mission support and mission execution. Lessons-
learned from Hurricane Katrina, and Deepwater program prompted this 
cause for action, and the end result will be an agency that is better 
prepared to meet the Nation's maritime safety and security needs into 
the future.

    Question 12. Why does the Coast Guard want authority to de-link its 
Vice Admirals from specific assignments? How would this authority 
compare to that of other armed forces?
    Answer. The Coast Guard's vice admiral legislative provision will 
proactively eliminate the redundancy and inefficiencies inherent in its 
legacy, geographic-focused command structure. Currently, the Coast 
Guard's Area Commands each have a staff for command and control, force 
readiness and training and exercise planning--creating redundancy. 
Similarly, the separate Maintenance and Logistics Command staffs for 
vessel maintenance and personnel support functions result in additional 
redundancy and too many support systems that are not fully integrated. 
The legislative initiative will provide the necessary flexibility for 
the Coast Guard to re-organize these command staffs along functional 
lines to eliminate redundancy and improve efficiency and mission 
effectiveness. The proposed vice admiral positions will have specific 
functional responsibilities, which will be described in detail upon 
nomination of each officer.
    The Coast Guard now operates in an evolving, dynamic multi-mission 
environment that requires both increased alignment with the other armed 
forces and interagency partners and greater organizational flexibility 
than the existing, geocentric command structure provides. The 
geographically-driven area of responsibility leadership model is out of 
alignment with that of our interagency partners and does not reflect 
the reality of current Coast Guard missions and functions. The 
limitations of the existing command structure became apparent, for 
example, as the Coast Guard flowed forces from each Area Command during 
the response to Hurricanes Katrina and Rita in 2005.
    The Coast Guard's legislative proposal would provide for temporary 
appointment of vice admirals to ``positions of importance and 
responsibility,'' similar to like appointments in the other armed 
services, to provide organizational flexibility, while preserving 
executive command and congressional oversight. This proposal would 
allow the Coast Guard to move toward a more functionally-driven 
leadership structure and provide the flexibility, with appropriate 
congressional oversight, to adapt the structure in the future as 
mission demands and circumstances may require.
    The proposed authority would align the Coast Guard leadership 
structure more closely with that of the other armed forces. 
Specifically, the amendments to 14 U.S.C. Sec. 47 would fix the grade 
of the Vice Commandant at admiral, aligning with the grade of the 
deputy service chief with that of each of the other services. See, 
e.g., 10 U.S.C. Sec. Sec. 5035, 5044. Further, the proposed amendments 
to 14 U.S.C. Sec. 50 would establish a leadership structure parallel to 
the Deputy Commandants of the Marine Corps, and fixing the number of 
vice admirals at no more than four. See 10 U.S.C. Sec. 5045. Each 
position will be held by officers who, like the existing Chief of Staff 
and Area Commanders, will have the grade of vice admiral, while so 
serving, and perform such duties as the Commandant prescribes. See 14 
U.S.C. Sec. Sec. 50(a) and 50a(a).
    Background:

    10 U.S.C. Sec. 601 provides, in pertinent part:

Sec. 601. Positions of importance and responsibility: generals and 
        lieutenant generals; admirals and vice admirals

    ``(a) The President may designate positions of importance and 
responsibility to carry the grade of general or admiral or lieutenant 
general or vice admiral. . . .''
          * * * * * * *
    10 U.S.C. Sec. 5045 provides, in pertinent part:
Sec. 5045. Deputy Commandants.

    ``There are in the Headquarters, Marine Corps, not more than six 
Deputy Commandants, detailed by the Secretary of the Navy from officers 
on the active-duty list of the Marine Corps.''
          * * * * * * *
    Coast Guard proposed text, regarding vice admiral positions:
Sec. 50. Vice admirals

    ``(a)(1) The President may designate no more than four positions of 
importance and responsibility that shall be held by officers who----

        (A) while so serving, shall have the grade of vice admiral, 
        with the pay and allowances of that grade; and

        (B) shall perform such duties as the Commandant may 
        prescribe.''

    Question 13. The Coast Guard has stated that its FY08 budget 
request is a ``current services'' budget. Please explain what that 
means and how that request would or would not cover the cost of the 
Coast Guard responding to a major operational requirement, such as a 
mass migration from Cuba or Haiti.
    Answer. A ``current services'' budget means that the Fiscal Year 
2008 President's budget request will ensure the Coast Guard is able to 
maintain current operational performance levels while continuing vital 
recapitalization projects and aligning strategically for enhanced 
mission effectiveness. The Coast Guard does not budget for incidents of 
national significance since it is speculative when incidents might 
occur. The Coast Guard requested additional funding in all four 
supplemental appropriations following Hurricane Katrina, of which the 
Coast Guard received funding in Katrina Supplemental #3 (P.L. 109-148) 
and #4 (P.L. 109-234)

                                  
