[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
                        OVERVIEW OF COAST GUARD
                   ACQUISITION POLICIES AND PROGRAMS

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

                                (111-17)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 24, 2009

                               __________


                       Printed for the use of the
             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                 JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             VERNON J. EHLERS, Michigan
JERROLD NADLER, New York             FRANK A. LoBIONDO, New Jersey
CORRINE BROWN, Florida               JERRY MORAN, Kansas
BOB FILNER, California               GARY G. MILLER, California
EDDIE BERNICE JOHNSON, Texas         HENRY E. BROWN, Jr., South 
GENE TAYLOR, Mississippi             Carolina
ELIJAH E. CUMMINGS, Maryland         TIMOTHY V. JOHNSON, Illinois
ELLEN O. TAUSCHER, California        TODD RUSSELL PLATTS, Pennsylvania
LEONARD L. BOSWELL, Iowa             SAM GRAVES, Missouri
TIM HOLDEN, Pennsylvania             BILL SHUSTER, Pennsylvania
BRIAN BAIRD, Washington              JOHN BOOZMAN, Arkansas
RICK LARSEN, Washington              SHELLEY MOORE CAPITO, West 
MICHAEL E. CAPUANO, Massachusetts    Virginia
TIMOTHY H. BISHOP, New York          JIM GERLACH, Pennsylvania
MICHAEL H. MICHAUD, Maine            MARIO DIAZ-BALART, Florida
RUSS CARNAHAN, Missouri              CHARLES W. DENT, Pennsylvania
GRACE F. NAPOLITANO, California      CONNIE MACK, Florida
DANIEL LIPINSKI, Illinois            LYNN A WESTMORELAND, Georgia
MAZIE K. HIRONO, Hawaii              JEAN SCHMIDT, Ohio
JASON ALTMIRE, Pennsylvania          CANDICE S. MILLER, Michigan
TIMOTHY J. WALZ, Minnesota           MARY FALLIN, Oklahoma
HEATH SHULER, North Carolina         VERN BUCHANAN, Florida
MICHAEL A. ARCURI, New York          ROBERT E. LATTA, Ohio
HARRY E. MITCHELL, Arizona           BRETT GUTHRIE, Kentucky
CHRISTOPHER P. CARNEY, Pennsylvania  ANH ``JOSEPH'' CAO, Louisiana
JOHN J. HALL, New York               AARON SCHOCK, Illinois
STEVE KAGEN, Wisconsin               PETE OLSON, Texas
STEVE COHEN, Tennessee
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
DONNA F. EDWARDS, Maryland
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan
BETSY MARKEY, Colorado
PARKER GRIFFITH, Alabama
MICHAEL E. McMAHON, New York
THOMAS S. P. PERRIELLO, Virginia
DINA TITUS, Nevada
HARRY TEAGUE, New Mexico

                                  (ii)

  
?

        SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

                 ELIJAH E. CUMMINGS, Maryland, Chairman

CORRINE BROWN, Florida               FRANK A. LoBIONDO, New Jersey
RICK LARSEN, Washington              DON YOUNG, Alaska
GENE TAYLOR, Mississippi             HOWARD COBLE, North Carolina
BRIAN BAIRD, Washington              VERNON J. EHLERS, Michigan
TIMOTHY H. BISHOP, New York          TODD RUSSELL PLATTS, Pennsylvania
STEVE KAGEN, Wisconsin               PETE OLSON, Texas
MICHAEL E. McMAHON, New York
LAURA A. RICHARDSON, California
JAMES L. OBERSTAR, Minnesota
  (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    vi

                               TESTIMONY

Blore, Rear Admiral Gary, Assistant Commandant for Acquisition, 
  United States Coast Guard......................................     6
Hutton, John P., Director, Acquisition and Sourcing Management, 
  United States Government Accountability Office.................    47

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Brown, Hon. Henry E., Jr., of South Carolina.....................    63
Cummings, Hon. Elijah E., of Maryland............................    65

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Blore, Rear Admiral Gary.........................................    71
Hutton, John P...................................................    91

                       SUBMISSIONS FOR THE RECORD

Blore, Rear Admiral Gary, Assistant Commandant for Acquisition, 
  United States Coast Guard:

  Response to request for information............................    13
  Response to request for information............................    17
  Response to request for information............................    19
  Response to request for information............................    28
  Response to request for information............................    32
  Response to request for information............................    35
  Response to request for information............................    40
  Response to request for information............................    44

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  HEARING ON OVERVIEW OF COAST GUARD ACQUISITION POLICIES AND PROGRAMS

                              ----------                              


                        Tuesday, March 24, 2009

                  House of Representatives,
    Committee on Transportation and Infrastructure,
   Subcommittee on Coast Guard and Maritime Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2167, Rayburn House Office Building, the Honorable Elijah 
E. Cummings [Chairman of the Subcommittee] presiding.
    Mr. Cummings. This Committee is called to order.
    Today's hearing will enable us to conduct a comprehensive 
examination of the significant reforms the Coast Guard has made 
to its acquisition management policies and procedures.
    I note that this hearing is being conducted as one of 
several hearings that meet the oversight requirements under 
Clauses 2(n), (o) and (p) of Rule XI of the Rules of the House 
of Representatives.
    In the past, the Subcommittee and indeed the Full Committee 
on Transportation and Infrastructure have looked in great 
detail at the Coast Guard's $24 billion Deepwater acquisitions 
which comprise the largest single acquisition series the Coast 
Guard has undertaken in history.
    In the 110th Congress, the Subcommittee held two hearings 
directly on Deepwater and an additional hearing that focused in 
part on Deepwater. The Full Committee held an 11-hour 
investigative hearing to examine the failure of the effort to 
lengthen the 110-foot patrol boats to 123 feet, a project which 
was implemented through one of the first delivery orders issued 
under the Deepwater IDIQ.
    Without a doubt, the Deepwater program is a poster child 
illustrating how not to design, manage and contract a major 
acquisition effort.
    By the Coast Guard's own account, at the time the Service 
signed the first Deepwater contract, its acquisition management 
capability lagged behind its expanded operational requirements 
and was in no way equal to the rapid growth that occurred in 
its capital budget after 9/11. The Service lacked standardized 
acquisition processes. It lacked a collaborative and proven 
process to guide the generation of asset requirements, designs 
and acquisition strategies, and it had only limited acquisition 
management capability among its staff.
    Additionally, the Coast Guard intentionally removed 
Deepwater from those established acquisition management 
practices that it did have in place, further limiting the 
oversight that the Service was prepared to exercise when it 
initiated that program.
    In an effort to move ahead with what were and what 
unquestionably remain critical acquisitions to replace its 
aging assets, the Coast Guard decided to follow the lead of the 
Department of Defense and hire a private firm to serve as Lead 
Systems Integrator. Without adequate oversight, including 
mechanisms for requiring and measuring performance, the Lead 
Systems Integrator essentially took the Coast Guard for a ride.
    This same pattern also occurred on the Rescue 21 project, 
which is being built to improve the Service's ability to locate 
mariners in distress. On that project, a different private 
sector entity serving as Lead Systems Integrator took the Coast 
Guard for another ride that has resulted in substantial cost 
overruns and extended schedule delays.
    The original acquisition baseline for the Rescue 21 project 
was adopted on April 16, 1999. At that time, the system was 
projected to cost $250 million and the acquisition was 
projected to be completed in fiscal year 2006. The baseline for 
this project has now been revised 5 times and the estimated 
cost to complete the system by 2017 is nearly now $1.1 billion.
    In other words, we went from $250 million to $1.1 billion. 
Something is awfully wrong with that picture.
    Fortunately, I do believe that under the leadership of 
Commandant Thad Allen, the Coast Guard is retaking the wheel 
and developing the processes and systems that will enable it to 
effectively manage its own acquisition efforts.
    The purpose of our hearing today is to assess the Coast 
Guard's readiness to drive. I emphasize that we are not here to 
look backward. Investigations of the past now properly reside 
with the Federal entities that are apparently examining whether 
any laws were broken in the past procurements.
    The Coast Guard has responded to the extensive criticisms 
of the early Deepwater effort and the Rescue 21 program by 
creating a new Acquisitions Directorate, issuing and continuing 
to revise a Blueprint for Acquisition Reform, which guides the 
acquisition management systems it is building, and extracting 
Deepwater from the ICGS team and bringing the Lead Systems 
Integrator functions back in-house.
    Today's hearing is intended to enable us to understand 
whether these steps are adequate to correct what the Coast 
Guard has identified as its past acquisition management 
challenges and to prepare itself to manage what will likely be 
more than $1 billion in annual acquisition efforts for years to 
come. We also want to understand what challenges remain 
unresolved, what steps the Coast Guard is taking to resolve 
them, and whether the Coast Guard has the resources it needs to 
build the acquisition management systems it envisions.
    In a memorandum issued earlier this month announcing new 
efforts to improve the Federal Government's management of its 
contracting efforts, President Obama noted: ``It is essential 
that the Federal Government have the capacity to carry out 
robust and thorough management and oversight of its contracts 
in order to achieve programmatic goals, avoid significant 
overcharges and curb wasteful spending.''
    It is among the highest priorities of this Subcommittee to 
ensure that the Coast Guard meets this basic standard and that, 
as President Obama has said, it can perform its acquisition 
functions efficiently and effectively while ensuring that its 
actions result in the best value for the taxpayers.
    To that end, I have worked with the Chairman of the Full 
Committee, Chairman Oberstar, the Ranking Member of the Full 
Committee, Congressman Mica, and our distinguished Subcommittee 
Ranking Member, Congressman LoBiondo, to draft the Coast Guard 
Acquisition Reform Act of 2009, H.R. 1665, which would build on 
the reforms the Coast Guard has already implemented.
    Specifically, the legislation would bar the Coast Guard's 
use of a private sector Lead Systems Integrator by September 30 
of 2011. It would require the appointment of a Chief 
Acquisition Officer who, at the Commandant's choice, can be 
either a civilian or military officer but who must be a Level 
III certified program manager and have at least 10 years of 
professional experience in acquisition management. And, it 
would require the appointment of Level III certified program 
managers to manage the Coast Guard's largest acquisitions.
    Additionally, the legislation would formalize procedures 
intended to ensure that the Service effectively defines 
operational requirements before initiating acquisition efforts, 
that trade-offs among performance, cost, and schedule are 
understood and assessed for each acquisition and that all 
assets undergo thorough development and operational testing to 
ensure that they meet all contractual requirements and pose no 
safety risk to Coast Guard personnel.
    I emphasize that this legislation is intended to 
institutionalize best practices within the Coast Guard and to 
ensure that the Service develops and maintains the expertise 
within its workforce that it will need to effectively and 
efficiently implement all acquisition efforts it undertakes in 
the future.
    With that, I recognize the distinguished Ranking Member, 
Congressman LoBiondo, for his opening remarks and thank him and 
also his staff and Members for their work with me and Chairman 
Oberstar on H.R. 1665.
    Mr. LoBiondo.
    Mr. LoBiondo. Good morning. Thank you, Mr. Chairman, for 
calling this hearing to continue the Subcommittee's efforts to 
oversee the Coast Guard's acquisition programs and, in 
particular, the Deepwater program.
    In the time that has passed since the Subcommittee's last 
hearing on this topic in June of 2007, the Coast Guard has made 
substantial changes to its acquisition program. These changes 
are designed to enhance the Service's capabilities to manage a 
multi-billion dollar program including the responsibility of 
assuming lead system integration duties for all current and 
future acquisitions.
    The Coast Guard is operating the third oldest fleet in the 
world. That is right--the third oldest fleet in the world. 
Everyone agrees that we must replace and modernize the 
Service's aging vessels, aircraft and communications systems.
    Right now, the men and women of the Coast Guard are 
conducting operations at higher tempos than ever before aboard 
vessels that are incapable of supporting their critical 
missions. This is not sustainable, nor is it acceptable.
    I look forward to hearing from our witnesses about what 
more is needed to help the Coast Guard bring new and enhanced 
assets on board.
    The Subcommittee has the responsibility to oversee the 
Service's efforts to acquire the most appropriate assets in a 
timely manner and at the best value to the American taxpayer. 
Toward that end, Chairman Cummings introduced legislation today 
which follows on numerous discussions between the Majority, the 
Minority and the Service.
    And, Mr. Chairman, I especially want to thank you and your 
staff for your tremendous level of cooperation and reaching out 
to us on so many important issues involved with this 
legislation. I believe this bill will provide the authorities 
and the guidance necessary to support acquisition of these 
badly needed assets.
    Again, I welcome Admiral Blore for what might be his last 
hearing as Assistant Commandant of Acquisition.
    Admiral, you have done a great job to study the acquisition 
wheel over the past few years, and we wish you the best in your 
new position as District 13 Commander in Seattle.
    I also look forward to hearing from the GAO in their 
ongoing efforts to oversee the Coast Guard acquisitions.
    Thank you, Mr. Chairman.
    Mr. Cummings. Thank you very much.
    Before we hear from our first witness, I ask unanimous 
consent that Henry Brown, a Member of the Full Committee, may 
submit a statement for the record. And, without objection, so 
ordered.
    I also note that today is the 20th Anniversary of the Exxon 
Valdez disaster and, thus, of the Coast Guard's largest single 
pollution response.
    We will now hear from Mr. McMahon for an opening statement.
    Mr. McMahon. Thank you, Mr. Chairman.
    Ironically, as we mark the 20th Anniversary of the Exxon 
Valdez, we had a minor, relatively minor, spill in the waters 
off of Staten Island near the ferry landing. Hopefully, that 
will be contained. Maybe we can ask the Coast Guard about that 
later on.
    I want to thank you, Mr. Chairman, and Rear Admiral Blore 
and Mr. Hutton for your testimony this morning.
    Our Coast Guard is critically important for our Nation's 
ports' security and the safe rescue of so many at sea.
    Since the tragic day in September, 2001, our world has 
changed, not only in my home city of New York but for all of 
us. The lessons from that tragedy have forced us to address the 
growing threats to our Nation from land, air and sea, and, to 
handle this change, we have so often relied on the Coast Guard 
and the bravery of the men and women who are with the Coast 
Guard to watch our shores and protect the homeland.
    The hardworking men and women of the Coast Guard have also 
worked together with our law enforcement and harbor patrols to 
provide a coordinated response to emergencies at sea. Perhaps 
the latest and most noteworthy example of this coordinated 
response was the effort undertaken by all of you in the Coast 
Guard to assist U.S. Airways Flight 1549 after it was forced to 
make an emergency landing in the Hudson River in January. No 
doubt, the quick and coordinated response by the Coast Guard 
and regional ferry services saved many lives that day, and I 
commend you for your hard work in that emergency and in all 
that you do.
    So we all understand just how important the Coast Guard is 
to our national security and the safety of our rivers, harbors 
and oceans. But in acknowledging the critical role of Coast 
Guard, we must also recognize that we have a lot of work to do 
to make sure that our acquisition and procurement policies are 
in line with our high expectations of the Department.
    As most of you know, I am still relatively new to this 
Committee, so I have not personally witnessed the evolution of 
all the problems with the Deepwater program to upgrade our 
surface and air assets and the other procurement challenges 
facing the Coast Guard, but I do know that the American people 
deserve to have a Coast Guard that is provided the best and 
most up-to-date equipment that is paid for by money that is 
spent wisely and efficiently. With ships, planes and 
helicopters costing hundreds of millions of dollars, we need to 
keep a very, very close watch on how this money is being spent.
    I commend Chairman Cummings and the leadership of this 
Subcommittee in addressing these procurement problems head-on, 
and I also commend our witnesses for their role in working 
through these very challenging logistical problems on the 
ground in these agencies.
    The issues may not always generate attention-grabbing 
headlines, but this oversight is some of the most important 
work that we do here in this Committee. I know that my 
constituents have no tolerance for taxpayer money wasted 
because of bureaucratic inefficiency, outdated and duplicative 
procurement reviews or poor interdepartmental communication. So 
I am glad that we are here today addressing the important issue 
and providing key congressional oversight.
    Thank you, Mr. Chairman. I yield the remainder of my time.
    Mr. Cummings. Thank you very much.
    Mr. Coble, for an opening statement.
    Mr. Coble. Thank you, Mr. Chairman.
    I will be very brief. I have two other meetings, so I may 
be coming and going, but I appreciate you and Mr. LoBiondo 
calling this hearing.
    Mr. Chairman, it is my belief that it is important that we 
continue to exercise oversight of Deepwater. We do so to ensure 
that the men and women of the Coast Guard get the equipment 
that they so obviously deserve and need. Furthermore, I think 
we owe the taxpayers answers on how the Federal dollars are 
being utilized.
    I believe the men and women of the Coast Guard--Mr. 
Chairman, you heard me say it before--provide the taxpayers 
with a great return on our investment. We get more bang for the 
buck through the Coast Guard in my opinion than with any other 
Federal entity.
    Deepwater assets should complement their diligence and 
dedication. I would also like to reiterate that we cannot lose 
sight of the purpose of Deepwater, which is to provide the men 
and women of the Coast Guard with the tools to protect our 
Nation.
    I applaud the actions taken by Admiral Allen, the 
Commandant, and the entire Coast Guard family to move this 
acquisition program in the right direction, and I look forward, 
Mr. Chairman, to hearing an update on this important 
acquisition.
    And, with that, I yield back the balance of my time.
    Thank you, Mr. Coble.
    Let me just go back to something that you said, Mr. Coble, 
and you, Mr. McMahon. The Committee, as you well know, Mr. 
Coble, we basically have three objectives in dealing with and 
addressing the Deepwater program. We certainly wanted the Coast 
Guard to have the equipment that it needed to do its job, but 
there were two other things that we wanted too.
    We wanted to make sure that the people of this great 
Country got what they bargained for. I mean it is a simple 
concept, but we really meant that. And the other thing that we 
wanted to make sure was that whatever equipment we purchased 
did no harm to our own personnel.
    When you put those three things together, they were the 
guiding principles that have gotten us to the point that we are 
today. I think our entire Committee adopted those and the Coast 
Guard has too, and I think that is why we have made the 
progress that we have made so far.
    Let me just now welcome Admiral Gary Blore. Admiral Blore 
is the Assistant Commandant for Acquisition in the United 
States Coast Guard, and he is indeed largely responsible for 
many of the changes that have been made.
    I want to thank you, Admiral, for your sensitivity, for 
your cooperation in working with us, so that we could get to 
the point that we are today. You have been an extremely 
dedicated member of the Coast Guard. Certainly, in this 
responsibility, you took it on very seriously, and I know gave 
it your very best which is a whole lot.
    The jury is still out as we can tell from the GAO report, 
but I think that we are well on the road to where we have to 
go.
    Again, welcome, and we will now hear from you.
    Mr. Cummings. I am sorry, Ms. Richardson. Did you have an 
opening statement?
    Ms. Richardson. No, Mr. Chairman.
    Mr. Cummings. Very well.

TESTIMONY OF REAR ADMIRAL GARY BLORE, ASSISTANT COMMANDANT FOR 
             ACQUISITION, UNITED STATES COAST GUARD

    Admiral Blore. Good morning, Mr. Chairman and distinguished 
Members of the Subcommittee. I appreciate the opportunity to 
appear before you to discuss the Coast Guard's ongoing and much 
needed recapitalization projects.
    As the Coast Guard's Assistant Commandant for Acquisition, 
I am accountable to the Commandant, this Committee and the 
American taxpayer to ensure each of our major acquisition 
projects are developed, executed and successfully completed to 
meet mission requirements.
    In his recent State of the Coast Guard address, our 
Commandant spoke about the strength of our reformed acquisition 
organization and the Coast Guard's integrated approach to 
completing major projects. Admiral Allen pointed out that Coast 
Guard acquisition has been informed by our past actions, and we 
have made appropriate corrections, stating: Today we are in a 
new place, and it needs to be recognized
    Since 2006, the Coast Guard has taken a holistic look at 
mission support. One of the first areas was consolidation and 
reform of our acquisition directorate. This effort was part of 
a Service-wide restructuring of our business efforts in 
acquisition, engineering, logistics and human resources.
    Together with the other directorates and with congressional 
support, we will create a comprehensive mission support 
organization that will unify and standardize business 
practices.
    In the interest of time, let me highlight just a few of our 
projects.
    We have commissioned the first National Security Cutter, 
Bertholf, which recently completed successful combat system 
qualifications with the United States Navy.
    The second and third National Security Cutters, Waesche and 
Stratton, are under construction, and a fourth has long lead 
materials on order.
    Today, our new Response Boat-Medium is delivering 
capability to the field, including one of the vessels that 
responded to the ditching of U.S. Air Flight 1549 in the Hudson 
River in January. The contract for the next 30 response boats 
was signed last evening, bringing the total number of 
contracted boats to 66.
    We have delivered seven Ocean Sentry maritime patrol 
aircraft, have four more on contract and are converting all six 
C-130J aircraft with new sensor mission systems while we are 
doing dozens of helicopter upgrades.
    Rescue 21, our near-shore command and control and 
communications systems, now provides enhanced coverage along 
more than 27,000 nautical miles of coastline. That system is 
saving lives today.
    The most poignant example of the success of our reformed 
acquisition processes is the contract award for our Fast 
Response Cutter, Sentinel-class patrol boat. With a total 
potential contract value of more than $1 billion, it was a 
highly competitive process. Our award determination was 
deliberate, absolutely fair and resulted in a best value 
decision for the Government.
    A post-award protest was filed with the U.S. Government 
Accountability Office where our process and award determination 
were carefully and objectively reviewed. Our actions passed the 
review, and the protest was denied.
    Another post-award protest was then filed with the U.S. 
Court of Federal Claims where it was later withdrawn by the 
protester and dismissed with prejudice by the judge--again 
showing through an external and objective review the robust 
nature of today's Coast Guard acquisition process.
    I appreciate the support of this Committee, most recently 
described in its Views and Estimates letter for fiscal year 
2010. Additionally, we have received strong support from the 
GAO and our Department, including the Office of Inspector 
General.
    I believe our programs are well run today because we accept 
and are practicing eight fundamental cornerstones of a 
successful acquisition:
    We have instituted a system of checks and balances within 
the Coast Guard.
    We maintain Coast Guard final certification capabilities.
    We have a reliable standard reference for acquisition 
management.
    We have implemented a robust strategic Blueprint.
    We are committed to transparency.
    We avoid duplication of effort through robust partnerships 
with the United States Navy and the Department of Homeland 
Security.
    We embrace third party independent validation.
    And, we value departmental oversight through DHS approval 
of milestone decisions.
    One of my major challenges is building our staff of 
trained, certified and experienced acquisition professionals. I 
have excellent people. I just need more of them.
    Bringing in accredited acquisition professionals is as 
challenging to the Coast Guard as it is to other Federal 
Government agencies. The current demand is high, and in this 
area we need parity with DOD's expedited hiring authorities.
    There are many challenges ahead: engineering, technical, 
business and financial. However, I am confident that we have 
put in place an acquisition culture that will be able to meet 
and address those challenges successfully.
    Thank you for your continued support of the men and women 
who serve in the United States Coast Guard.
    Mr. Chairman, I ask that my oral statement be included in 
the congressional record, and I look forward to answering your 
question. Thank you.
    Mr. Cummings. So ordered.
    Thank you very much, Admiral. Let me just ask you a few 
questions, and then we will move on to our Ranking Member.
    In April, 2007, the Coast Guard announced a series of major 
changes to its acquisition processes. Among these was the 
announcement that the Coast Guard would assume the role as Lead 
Systems Integrator for all Deepwater assets and other major 
acquisitions as appropriate. What is the status of the Coast 
Guard's effort to serve as Lead Systems Integrator for 
Deepwater?
    Have all the lead systems integration functions for the 
Deepwater been brought completely within the Coast Guard?
    Admiral Blore. Thank you for the question, sir. Let me 
divide the answer in the two parts: the actual Lead Systems 
Integrator contract and what we are performing in the Coast 
Guard.
    The Congressional Research Service defines a Lead Systems 
Integrator as the entity responsible for requirements, testing, 
validation, logistics, post-delivery modification and 
maintenance.
    The Coast Guard is the Lead Systems Integrator for all of 
our major acquisitions. Notwithstanding that, we still have two 
commercial contracts that are called Commercial Lead Systems 
Integrator Contracts. We don't issue delivery task orders under 
those contracts for Lead Systems Integrator functions anymore, 
but they still exist.
    I know we have often said that we are moving towards ending 
the old Lead Systems Integrator relationship with Integrated 
Coast Guard Systems. I am pleased to notify the Committee that 
as of this morning we signed a bilateral agreement with ICGS, 
Integrated Coast Guard Systems, which says: ``The Government 
has determined that it is in the best interest not to award any 
future award terms after January 24th, 2011. Therefore, by this 
modification, the parties agree that for the purpose of 
ordering any new contractual requirements the rights and 
obligations of both parties will expire when this award term 
ends, January 24th, 2011.''
    So, as of January 24th, 2011, that contract won't exist 
anymore, but in the meantime we don't actually use it for LSI 
functions.
    Mr. Cummings. Now will the Coast Guard be fully prepared to 
perform all the lead systems integration functions by that 
date?
    Admiral Blore. We either will or we will know where our 
weaknesses lie, and, where our weaknesses lie, we will use our 
partnerships with the United States Navy.
    There are areas that we need assistance such as cost 
estimating, and independent Government cost estimates are a 
good example. We don't have a lot of people that do that, but 
Naval Sea Systems Command and Naval Air Systems Command assist 
us on that.
    Mr. Cummings. Tell me what we are doing to prepare either 
our own people in the Coast Guard or looking at civilians to do 
that?
    In other words, I assume there comes a point where you want 
to be able to rely on the Coast Guard or its civilian 
personnel. Is that the aim in the end, and, if so, what are we 
doing to make that happen?
    Admiral Blore. We have a variety of programs underway, sir, 
both civilian and military.
    It is not our aim to become like the Naval Sea Systems 
Command or Air Systems Command. We are not that large. It is 
our aim to have certain organic core capabilities within the 
Coast Guard and use our sister Service so that we don't 
duplicate their efforts where that is appropriate.
    We do have a certification program that we have really 
enhanced over the last two and a half years. I think we have 
issued over 240 certifications for both military and civilian 
personnel after documenting the appropriate experience and 
training.
    We will continue to promote a quasi career path for 
military personnel, and we will continue to hire civilians to 
the extent the marketplace will let us. The Congress has 
allowed us growth for the last two years within our acquisition 
core. I think as long as we can maintain growth for the next 
couple years, we will be in good stead, sir.
    Mr. Cummings. Just one other thing, as discussed, the 
Deepwater program acquisition baseline expects the program to 
cost $24 billion to complete. However, it appears that all of 
the projects considered to be a part of Deepwater, when 
combined with the acquisition activities that are part of 
Deepwater, such as program management costs, systems 
engineering and technology, obsolescence prevention programs, 
are currently--currently--estimated to cost more than $26 
billion, going from $24 billion to $26 billion.
    Of particular concern is the fact that the costs associated 
with Deepwater have risen as the costs of the individual 
acquisitions such as NSC. As you well are aware, that has 
risen.
    What will be the cost to complete the acquisitions that are 
part of the original Deepwater procurement and what will that 
ultimately be if you have an estimate?
    If these are not expected to grow beyond $24 billion, what 
planned acquisitions will not be undertaken or what changes 
will be made to currently planned acquisitions to get the cost 
down to that $24 billion, because it seems like we are 
definitely on a pattern to go far above the original 24?
    Admiral Blore. Mr. Chairman, as you know, I have committed 
to always have absolute full disclosure with our oversight 
Committee.
    As was mentioned earlier I think in your opening statement, 
we have started doing our acquisition program baselines which 
is the basic fundamental document for cost estimates over the 
next 20 or 24 years, asset by asset. We have seven of those new 
asset APBs approved. We have seven in process of approval. They 
are all up at the Department. And we have five that are still 
in the preacquisition phase. That should add up to our 19 major 
projects.
    If you add up the individual APBs that are approved with 
the old estimates from Deepwater, you are absolutely correct. 
It adds up to $26 billion. That is based on our independent 
cost estimates of today. We will update that annually.
    The other caution I would say in using that number is two-
fold. One, we are trying to estimate over 20 to 25 years the 
nature of the strength of the dollar exchange rates, labor 
rates, et cetera, and also the offshore patrol cutter, which is 
the single largest project we have, is still at its old 
estimates because that one is still in its preacquisition 
phase. That is a third of that total estimate, it represents.
    As of today, based on our best estimates, the entire 
Deepwater program as it was originally envisioned would add up 
to $26 billion including the necessary Government oversight, 
technology obsolescence replacement, all the things that should 
be part of a well-run acquisition program, but that is what it 
adds up to.
    Mr. Cummings. So you are just saying we are going to need 
more money?
    Admiral Blore. Unless the offshore patrol cutter comes in 
at a lower amount than we think or there is major changes in 
the economy. For example, when we did these estimates, the 
commodities market was about as high as it has gotten. It has 
actually come down since then. That would be the estimate for 
completion.
    So, you are right, we would have to make some hard 
decisions probably 15 or 16 years from now on how we would 
continue the projects if Congress decided not to appropriate 
more money.
    Mr. Cummings. Mr. LoBiondo.
    Mr. LoBiondo. Thank you, Mr. Chairman.
    Admiral, in 2007, the Coast Guard announced that it would 
assume the Lead Systems Integrator duties for the Deepwater 
program, and since that time the Service has established an 
acquisition directorate and has sought to bolster its 
acquisition personnel capabilities. Do you anticipate retaining 
the Lead Systems Integrator position as you make the transition 
to a more traditional asset by asset replacement project?
    Admiral Blore. Yes, sir, absolutely. We will not be using 
commercial Lead Systems Integrators in the future. We don't 
envision that.
    Mr. LoBiondo. Can you tell us a little bit about how you 
would coordinate systems like C4ISR which spread across 
different asset classes?
    Admiral Blore. Yes, sir. I think one of the things if you 
go back to the early Deepwater program in 2002, 2003 is we, I 
believe, my opinion, under-appreciated the capabilities that 
the Coast Guard had. While they weren't robust and we need to 
increase our bench strength, we have formalized our 
relationship with what we call our technical authorities, one 
of which is the Assistant Commandant for Information or Command 
and Control and Communications, C4ISR, and that technical 
authority has now assumed that role as kind of the systems 
integrator, the Government personnel, for the C4ISR overlay.
    So, although we are doing asset by asset acquisitions, we 
are looking at it from a systems approach to make sure they are 
all integrated, but we use our technical authorities for that 
now as opposed to using a commercial Lead Systems Integrator.
    Mr. LoBiondo. Thank you.
    Can you give us any update on where the Government stands 
on the investigation of the failure of the 123s, the 
conversion?
    Admiral Blore. Yes, sir. The Department of Justice asked 
for an extension in a Federal court to continue their 
investigation. The judge did not grant the extension which 
meant the Department of Justice either had to intervene at that 
point or not intervene.
    The Department of Justice chose to continue to do the 
investigation. The judge's decision just allowed certain rights 
to be extended to the party that originally filed the assertion 
of fraud. So the Department of Justice investigation continues.
    We are still fully cooperating with the Department of 
Justice. I still believe that the opportunity of any funds 
recovered to the Government has a much higher probability of 
going the Department of Justice route. Notwithstanding, it may 
be longer than other means, but I believe it will be the most 
successful means. So the Department of Justice continues their 
investigation.
    Mr. LoBiondo. But if the Department of Justice declines to 
move forward, would the Coast Guard move forward to recoup for 
the taxpayers?
    Admiral Blore. Yes, sir. Thank you. We have not given up 
any of our rights under contract administration to pursue 
recovery.
    I think the Department of Justice authorities are more 
robust which is why we choose to use the Department of Justice. 
But if they elect not to continue, since we revoked acceptance 
of the 123 patrol boats, then we will re-engage our contracting 
officers and seek recovery under administrative procedures.
    Mr. LoBiondo. Okay. Thank you.
    One last area_I know we are talking about acquisition a 
lot, and there is a lot of competition, and it is tough to get 
experienced people. Do you have the authorities necessary to 
offer the salaries and incentives to attract the qualified 
personnel to the Coast Guard for this area?
    Admiral Blore. We generally have most of what we need, sir, 
and we would be pleased to provide something for the record to 
this Committee that the issue is having a level playing field. 
When the market is so tight for acquisition professionals, one 
slight advantage on the part of another agency in having, for 
example, direct hire authority, can be hurtful to our 
interests. So we don't ask for anything different than anybody 
else has, but largely parity with the Department of Defense 
which is normally who we are competing with in the job market.
    But if you allow us, we can certainly provide for the 
record what the disparity is right now between the Department 
of Defense and Department of Homeland Security.
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    Mr. LoBiondo. Mr. Chairman, with your permission, I think 
that information would be helpful for the Committee to 
determine if the Coast Guard can compete in the marketplace.
    Mr. Cummings. I was just thinking to myself, with all these 
people losing their jobs, it seems like we would be able to 
find some people who we would at least be able to train. I know 
acquisitions. I mean this is kind of unique. But when we have 
600 and some thousand people losing their jobs every month and 
many of them highly skilled people, that question mark came 
into my mind.
    Not necessarily folk, Mr. LoBiondo, like I said, who know 
this particular type of acquisition process, but certainly some 
folk who would be easy to train.
    Mr. LoBiondo. Well, I certainly agree with you, but I also 
think what we may be hearing the Admiral say today and prior is 
that the Navy or other branches of the military have monetary 
incentives and an ability to attract top-flight people that the 
Coast Guard doesn't. They are not looking for something that 
the Navy doesn't have. They are just looking to be on an equal 
playing field.
    Is that correct, Admiral?
    Admiral Blore. That is absolutely correct.
    Mr. Chairman, we have a Department of Homeland Security 
intern program. We are trying to exploit that. It takes about 4 
years to grow a fully qualified contracting officer, and it can 
be as long as 10 years to get a Level III program manager for 
acquisition.
    But we have a DHS intern program. We have a Coast Guard 
intern program. We are also looking to introduce a military 
retiree to contracting officer program because we have a lot of 
excellent military personnel that post-retirement will consider 
Federal service, and we would like to try to retain those. I 
believe we are exploiting to about the maximum extent for the 
size of our organization internships, but we certainly need to 
hire experienced personnel in the meantime as we grow those new 
personnel.
    Mr. Cummings. Mr. LoBiondo, now what was your inquiry? You 
were asking me something.
    Mr. LoBiondo. Just that the Admiral provide us with a 
parity report so that we can decide. I think it would be 
worthwhile to make sure that the Coast Guard has the same 
incentive capabilities as, so to speak, their other competitors 
in the other branches of the military, so we can put them on a 
level playing field.
    Mr. Cummings. Would you be able to get us something to that 
effect?
    Admiral Blore. Yes, sir, Mr. Chairman.
    Mr. Cummings. How soon?
    Admiral Blore. Within two days.
    Mr. Cummings. All right. Thank you.
    And one of the things I just wanted to say to Mr. LoBiondo, 
the bill, 1665, has an expedited hiring authority provided with 
regard to acquisition personnel. There may be some other things 
we can do too, and if you have any other recommendations, by 
the way, with regard to the legislation, we might want to hear 
what they are.
    Okay, Mr. LoBiondo?
    Mr. LoBiondo. Thank you, Mr. Chairman.
    Mr. Cummings. Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman.
    Admiral Blore, just to go back to a question about C4ISR, 
can you quickly review the current status of the acquisition 
strategy?
    Admiral Blore. Yes, sir. You have to kind of take a look at 
it at two parts as the acquisition organization comes together.
    There was an original commercial Lead Systems Integrator-
developed C4ISR program for the Deepwater assets. One of the 
concerns of the Coast Guard from the very beginning is they 
only did the Deepwater assets. They didn't actually look at the 
larger Coast Guard. And then we had the other projects that 
were coming together.
    Our current C4ISR strategy, which we work very closely with 
our technical authority, the Assistant Commandant for C4ISR and 
his staff, is basically doing an integrated Coast Guard C4ISR 
strategy.
    So we don't care if it came from the legacy Deepwater 
program or if it is Response Boat-Medium which was not a 
Deepwater program. All their electronics will operate together. 
They will all use common protocols. They will all understand 
each other's data rates. And that is how we do it today is 
really through our own system integrator C4ISR.
    Mr. Larsen. In a little bit, we are going to be hearing 
from Mr. Hutton from GAO, and the GAO report notes that while 
the asset-based approach is beneficial, certain cross-cutting 
aspects of Deepwater--such as C4ISR and the overall numbers of 
each asset needed to meet requirements--still require a system-
level approach. The Coast Guard is not fully positioned to 
manage these aspects.
    Do you have a comment on that?
    Admiral Blore. Well, yes, sir. I respectfully disagree that 
we are not quite there yet. I think we are there yet.
    We don't have a lot of depth. I would certainly agree with 
Mr. Hutton on that. But we continue to grow that. We continue 
to partner with other agencies where we need the help.
    We are very aware of the idea that a systems approach for 
an organization that is trying to recapitalize so many assets 
at once is very important. We just don't agree that a systems 
approach has to be done as a systems acquisition.
    We think you can take a systems approach, define the 
requirements, and then it is much more manageable, and the 
Coast Guard can have much better control and Government 
oversight to purchase the things, asset by asset.
    But we will continue to use a systems approach, and we 
don't have a lot of bench strength, but we have enough for 
today. As I mentioned, in intern programs and other ways, we 
are growing it for tomorrow.
    Mr. Larsen. Switch gears a little bit. On Deepwater, the 
delays in the program have caused the Coast Guard to rely more 
heavily on an aging cutter fleet. Have you all completed an 
analysis of the maintenance and life cycle or life extension 
costs required to keep those cutters operational and does the 
Coast Guard have any other strategies other than intensive 
maintenance to keep those legacy assets operational?
    Admiral Blore. We have done life cycle cost estimates, and, 
with your permission, sir, I can provide those for the record. 
A lot of them come from our technical authority for 
engineering.
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    Admiral Blore. Along with extensive maintenance and 
increased maintenance, we have the mission effectiveness 
program primarily for the surface fleet. That takes our medium 
endurance cutters, I think 17 of those and 20 of our Island-
class patrol boats. It takes them through a very comprehensive 
rejuvenation at our yard in Baltimore and will give those 
cutters many more years of service.
    We absolutely need that program. It has been a very 
effective program for us because that is the only way you can 
make the two ends meet to allow for the new assets to come 
online while the old assets are extended or older assets.
    But it is the combination of that mission effectiveness 
program with increased maintenance in the fleet.
    Mr. Larsen. Okay. Mr. Chairman, those are all the questions 
I will have. I will yield back the balance of my time and look 
forward to meeting with Admiral Blore in a few minutes.
    Mr. Cummings. Thank you very much.
    Mr. Platts.
    Mr. Platts. Mr. Chairman, I have no questions. I just thank 
the Admiral for his service and his testimony and information 
he shared with the Committee in writing and here today as well.
    Thank you.
    Mr. Cummings. Mr. Taylor.
    Mr. Taylor. Thank you, Mr. Chairman.
    Thank you for being with us, Admiral.
    Admiral, I have to start with a concern. It sounds to me 
like you are going to break the deal on Deepwater after the 
program is over, and it sounds to me like you are putting 
together an acquisition force that probably won't be used for 
another generation.
    Why is there such a reluctance on the part of the Coast 
Guard to use the Navy Superintendent of Shipbuilding? They buy 
ships every year.
    The Coast Guard has a major acquisition once a generation, 
and you are going to put together this force just in time for 
it not to be needed for other than small acquisitions. I think 
that bears explaining.
    Admiral Blore. Yes, sir, and I appreciate the question. 
First off, there is no reluctance on our part to use the United 
States Navy, and again we can provide for the record or now if 
you would prefer the number of relationships we have with Navy 
organizations.
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    We do use the Superintendent, the Superintendent of 
Shipping. All our project resident offices that are in the 
fleet--for example, for the Sentinel patrol boat in New 
Orleans--have, generally, representatives from the 
Superintendent of Shipping with them, especially that bring 
particular expertise that we don't again have a lot of bench 
strength on. So we have no reluctance to use them.
    I think I would submit that with the possible exception of 
the National Security Cutter, which is the closest thing that 
we have that looks like a naval combatant, that the Coast Guard 
does have unique requirements, that we understand those 
requirements best, and we are best served by a combination with 
the Navy as opposed to going to the Navy for those assets. 
Especially as you get smaller into patrol boats, I would submit 
we have more expertise on patrol boats than the Navy has. We 
operate many more patrol boats than they do.
    So we view it as a good team effort, and we think our 
acquisition organization is going to be here for the next 20 or 
25 years because we haven't talked about the 225-foot buoy 
tenders, that in about 5 or 6 years we need to think about 
their replacement--the 175-foot buoy tenders, the inland buoy 
tenders. There are many other Coast Guard projects as we now 
take a long-range view of the next 30, 40, 50 years that we 
hope the Committee would support to recapitalize the Coast 
Guard.
    Mr. Taylor. Going back to the 123s, who made the decision 
after the vessels had already been built at Bollinger, had been 
returned to Bollinger for some changes that were hopefully 
going to prevent the hogging and sagging? And walk me through 
where I am wrong on this because it has been hard to get 
information from your organization.
    Apparently, after the modifications at Bollinger, they went 
back out to sea. They continued to have hogging and sagging 
problems. So they were brought to another shipyard instead of 
being returned for warranty work. At the other shipyard, I am 
told, at least four of the vessels had the outer plating 
replaced.
    My question is this: If you, as an individual, had 
purchased a car, had problems with it, brought it back and the 
dealer didn't fix it, I seriously doubt you would have gone to 
a second mechanic and said, fix it, while the vehicle was still 
under warranty. But that is apparently what you did for at 
least four of the 123s.
    Who made that call, why and what account did that money, 
that additional money that it took to have that work done, come 
out of?
    Admiral Blore. Yes, sir. I understand the question.
    There were two modifications made to the 123s after they 
came out of Bollinger. Modification 1 was done to all 8 of the 
conversions. Modification 2 was done to 4.
    The reason that they were done outside of Bollinger was 
really the reality of the situation at the time. The original 
program was going to be 46 conversions. So, as they came into 
Bollinger and were converted, they were exhausted from 
Bollinger and others were coming in behind them.
    So I think most of the decisions to do the mods outside of 
Bollinger were, frankly, just expediency. We didn't want to 
interrupt the line. This was before we decided to stop at 
number eight. And, in fact, number eight is a good example 
because all the modifications for number eight were done at 
Bollinger because there was nothing else coming up the line, so 
there was no particular reason to do it at another yard.
    The first modification which was done to all eight was a 
bilateral agreement between the Coast Guard and Bollinger. The 
Coast Guard contributed roughly about $225,000 per hull, and 
Bollinger provided about the equivalent of that.
    The second modification was done to four of the cutters in 
a hope to still fix the problem which the first modification 
didn't. That was a unilateral decision by the Coast Guard, and 
it also cost roughly $225,000 per cutter and also failed to 
correct the problem.
    Mr. Taylor. Going back to the basic premise, it is my 
understanding that vessel had about a one-year warranty from 
the day of acceptance. So you were still under warranty. Why 
would you spend money, taxpayer money, that should have been 
paid for by Bollinger Shipbuilding?
    If you had a problem, why didn't you bring it back and say, 
fix it?
    I don't buy the capacity argument, Admiral, no more than I 
think it was more than $200,000 per vessel although I have not 
seen any hard numbers, and I would welcome those numbers.
    But secondly is, okay, it is $200,000 times 4. That is 
sneaking up on a million dollars that should have come out of 
Bollinger's pocket instead of the taxpayers' pocket.
    Mr. Cummings. The gentleman's time is up, but we would like 
to hear a response.
    Admiral Blore. Yes, sir. I will provide the exact numbers 
for the record and when they were done and at which yard they 
were done. I will review the production capability of Bollinger 
at the time.
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    Again, this predates me, but I am responsible for it. We 
will get you the facts.
    Mr. Taylor. Okay. But I would like a name of who made that 
decision.
    Admiral Blore. Yes, sir.
    Mr. Taylor. Thank you, Mr. Chairman.
    Mr. Cummings. Thank you very much.
    Mr. Olson.
    Mr. Olson. Thank you very much, Mr. Chairman.
    Admiral Blore, thank you very much for coming here and 
testifying today. I greatly appreciate your service to our 
Country, and, as a former naval aviator, I especially 
appreciate those gold wings that you have on your left lapel 
there.
    My question has to do with back home in my home district, 
Ellington Field. The Coast Guard is considering, I understand, 
purchasing about 10 acres out there and moving their facility, 
the majority of their facility from the Houston ship channel 
over the Ellington, and I just wanted to get an update if you 
can. Please give us an update on that plan to purchase the land 
and what we can do to help.
    Admiral Blore. Yes, sir. Unfortunately, I can't, and it is 
not because I won't share the information. It is just not 
something that is directly under my purview.
    I know that there are plans underway for various units down 
there, post-hurricane damage and relocations, and we will be 
happy to provide something for the record. I will need to go 
into one of my other assistant commandant's directorates and 
get the information, but I understand the question about 
Ellington.
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    [GRAPHIC] [TIFF OMITTED] T8329.032
    
    Mr. Olson. Thank you very much for that. Again, anything we 
can do to help, if that makes the Coast Guard operations in the 
Greater Houston Area more efficient, we are going to be happy 
to do that.
    I just want to commend the Coast Guard on the job you all 
did during Hurricane Ike when it came through our region, a 
fantastic job.
    I know the Coast Guard, in talking to the captain down 
there, they had a unique challenge that he hadn't anticipated. 
But about 2:00 in the morning, he got a call that the USS 
Texas, a battleship from actually the World War I era, tried to 
do something she hadn't done in about 60 years which was float 
and get underway. An incredible challenge, the Coast Guard rose 
to it with the local private sectors and kept her right there 
on the pier and potentially prevented the Houston ship channel 
from being shut down for an extended period.
    But with the hurricane season ramping up here, the 2009 
season, is there anything we can do in the acquisitions process 
to make sure that the Coast Guard is prepared for hurricanes 
strikes, disaster relief and recovery?
    Admiral Blore. No, sir. I think the Committee, as evidenced 
by the bill, is working on permitizing some of the authorities 
we have in acquisition. I think that your support in 
authorizing appropriate funding levels, so that we can 
recapitalize the Coast Guard, is all we can expect and of 
course your continued oversight and help with our acquisition 
programs.
    Mr. Olson. Mr. Chairman, that is all my questions. I yield 
back my time.
    Thank you very much, Admiral.
    Mr. Cummings. Thank you very much.
    Mr. Kagen.
    Mr. Kagen. Thank you, Mr. Chairman.
    Thank you, Rear Admiral, for being here this morning to 
answer our questions. I appreciate the work that you are doing, 
and I appreciate your service.
    I represent and have the honor of representing the 
Marinette Marine Shipyards. First off, let me just ask you if 
you have ever doubted the quality of their work?
    Admiral Blore. No, sir.
    Mr. Kagen. So their work is pretty high quality.
    Have you ever in the Coast Guard any questions whatsoever 
about the pricing of their work or their quality?
    Admiral Blore. No, sir. Within the Coast Guard, Marinette 
has an excellent reputation for the buoy tenders that they 
constructed for us.
    And, of course, we have an ongoing project with them right 
now, Response Boat-Medium, and the second line is just starting 
to form up and open in Green Bay with the original line still 
out at Kvichak in Washington. But we look forward to that, and 
Response Boat-Medium has been a great boat.
    Mr. Kagen. Isn't it true that following the unhappy 
experience, some would say the debacle of the Deepwater 
experience, that the Coast Guard has been working very hard to 
address cost overruns and oversight? Isn't that true?
    Admiral Blore. Yes, sir.
    Mr. Kagen. Given these facts, perhaps you would explain to 
this Committee why it is and on what basis the Coast Guard 
awarded the FRC--the Fast Response Cutter--contract to the 
highest bidder?
    Admiral Blore. It was a best value competition. So we 
considered, and again the request for proposal, which we can 
provide for the Committee, set the specific requirements of how 
we were going to fairly adjudicate the award. It was based on 
technical expertise, management ability, and price was the 
third and least important of the considerations.
    So we certainly did look at price compared to what the 
capability of what was being delivered would be, but it was not 
based solely on what would be the cheapest product that the 
Coast Guard could buy.
    Mr. Kagen. So there is a distinction then on manageability 
of the project? Is that right?
    Admiral Blore. Yes, sir.
    Mr. Kagen. Perhaps you cannot use my time but provide for 
me in writing the differences in manageability as you would 
call it.
    Any other distinguishing factors that made that award go 
somewhere else?
    Admiral Blore. No, sir.
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    Mr. Kagen. I appreciate that. I am looking forward to 
seeing that in writing. I thank you very much for being here 
today.
    I yield back my time, unless, of course, Congressman Taylor 
would like my two minutes.
    I yield back my time.
    Mr. Cummings. Thank you very much.
    Ms. Richardson.
    Ms. Richardson. Thank you, Mr. Chairman.
    Sir, according to what I have read in our statement, the 
mission of your particular Department is to provide the 
improvement of aids to navigation, shore facilities, vessels 
and aircraft, including equipment related thereto, and the 
maintenance and the rehabilitation, lease and operations of 
facilities and equipment.
    My question is: Since September 11th, the Coast Guard has 
taken on significant new homeland security missions such as 
port security in addition to your traditional missions. When I 
look at the summary of the acquisitions, it is only in Command 
21 that there is a real reference, in my opinion, to those 
activities. How would you view how you are approaching the port 
requirements that you have as well?
    Admiral Blore. Well, first, I don't take credit for things 
that I actually don't do.
    I think the definition you read would fit more our mission 
support organization. It includes acquisition, our engineering 
and logistics directorate, our C4ISR directorate and human 
resources. Those are all involved in the activities that you 
just said.
    Also, the Coast Guard has been involved in security since 
the 1790s. So sometimes we even use the terms, traditional, 
nontraditional missions, but we have been doing security for a 
long time.
    The focus on security was not as great as it has become 
since 9/11. But all the projects we do are multi-mission in the 
sense that they can do maritime security, maritime safety and 
national defense, and we make sure that the appropriateness of 
that fits into each asset.
    For example, a buoy tender probably has much more maritime 
safety capability than maritime security, but we do build in 
some maritime security capabilities, and the opposite might be 
true of a cutter that is typically used in law enforcement. But 
all the major assets we are working on are capable of all three 
of those broad mission areas.
    Ms. Richardson. So, if that in fact is the case, if there 
is a fire on a cruise ship that is carrying a couple thousand 
people or a cargo ship that is coming in, do you have a dual 
responsibility with that?
    Admiral Blore. As far as fighting the fire or as far as 
taking the people off?
    Ms. Richardson. Taking the people off.
    Admiral Blore. It is. It would be our responsibility along 
with other agencies to take the people off, and we would 
mobilize any assets that we had available to do that.
    Ms. Richardson. Have you made any evaluations of the larger 
ships now that are being utilized, whether it be from a cargo 
or a passenger perspective, and determined what adjustments you 
may need to make in terms of acquisitions?
    Admiral Blore. Yes, ma'am, I believe so. If I could provide 
that for the record, it is a different directorate that does 
our maritime inspection and marine safety activities.
    I know I am privy to discussions we have had in larger 
meetings. It is not an area of my expertise, but I can 
certainly provide for you what we have done as far as 
contingency planning and regulations for cruise ships and other 
carriers like that.
    [Information follows:]

    [GRAPHIC] [TIFF OMITTED] T8329.036
    
    Ms. Richardson. Okay. I would appreciate that information, 
and I am sure the Committee as well.
    My final question, and I have only two minutes here, the 
question on Rescue 21. The cost of the Rescue 21 system has 
been revised 5 times since it was adopted in 1999. The cost of 
the system has quadrupled, rising from $250 million to $1 
billion.
    In an analysis of the Rescue 21 conducted in 2006 by the 
GAO, they found that key factors contributed to this cost, much 
of which was management issues.
    At the time of the 2006 report, the GAO wrote that there 
have been reductions in the promised improvements to limit the 
communications gaps. Originally, Rescue 21 was intended to 
limit communication gaps to 2 percent. Now that target is less 
than 10 percent. What is the current target and are you certain 
that it will be achieved?
    Admiral Blore. The current target is 90 percent which would 
be the corollary of 10 percent. You are absolutely correct in 
stating that that requirement was changed. It was actually 
changed in 2001, so it was very early in the Rescue 21 program, 
but let me say exactly what that means.
    That means in any coverage area there could be up to a 10 
percent possibility in a particular area that you wouldn't 
receive the signal on the first time. That signal is based on a 
1 watt signal at 20 miles at 2 meters over the water.
    Any handheld unit has both a one and a five watt setting. 
Any fixed unit in a boat transmits at least 25 watts. So that 
10 percent is based on 1 watt at 2 meters. I think that 
requirement is actually much more robust than it sounds because 
almost anybody is going to be transmitting at a higher wattage 
with the potential for a higher antenna.
    But that is the standard, 10 percent based on 1 watt at 2 
meters at 20 nautical miles.
    Ms. Richardson. Well, then why did you originally move 
forward with the project to do it at 2 percent?
    Admiral Blore. Part of it was doing cost realism for what 
our requirements were. We could do 2 percent. We can do 1 
percent. It just costs a lot more money in the sense of how 
many towers you have to put up, how high the towers have to be.
    I think in the last five years we have cost realism on how 
difficult it is to put towers up in communities, the limits on 
heights of towers and the cost of towers, making them higher.
    We felt this was a very reasonable standard, given that it 
was based on 1 watt at 2 meters at 20 miles. We have documented 
cases now, for example, of picking up Rescue 21 signals at 200 
nautical miles.
    Ms. Richardson. Thank you, Mr. Chairman.
    Mr. Cummings. Thank you very much.
    Just one real quick question: One of the GAO's strongest 
concerns was that the personnel challenges that the Coast Guard 
specifically faces is the lack of an acquisition career path 
for military personnel, and you all like to have generalists. 
Is that right?
    Admiral Blore. We like to have a mix.
    Mr. Cummings. You like to have what?
    Admiral Blore. We like to have a mix, sir. We generally 
bring in military personnel with operational experience and 
civilians that have spent most of their careers in acquisition 
or engineering. So we like to mix the two together because we 
think that is the best combination.
    Mr. Cummings. So what is being done to create a career 
path, though, within the Service because that was one of their 
major concerns?
    Admiral Blore. Yes, sir, and it is one of ours, and we 
appreciate the GAO's recommendation.
    We do have the newest version of the human capital plan 
out. One of the next steps on that--I will not call it a 
military career path in the same way the Navy means it--is we 
have a quasi career path that we will introduce that will 
basically have a career guide if you are starting.
    I have ensigns and lieutenants that come up to me and say, 
I am excited about acquisition. How do I get involved?
    So we will explain to them what they need to do as a 
lieutenant, what kind of tours they need to ask for, what 
certification levels they need to go to, what they need to ask 
for maybe later on in their career as a lieutenant commander so 
that we can use them as a commander or captain, as a deputy 
project manager or a project manager.
    We have about 19 commanders and captains now that are Level 
III certified, the highest level with the right experience, and 
this will grow that workforce so that we have more of them. We 
are also doing it in conjunction with our engineering 
communities. So my sister directorates are doing the same kind 
of quasi career path for their personnel so that when engineers 
are out in on engineering tour they get their acquisition 
certification while they are out there.
    Mr. Cummings. Very well. Thank you very much. Thank you.
    Mr. Taylor, just a follow-up quickly.
    Mr. Taylor. Admiral, who in the Coast Guard, give me a name 
of your most qualified person in uniform to tell me what a ship 
should cost, what the National Security Cutter should cost, 
what the new PC should cost?
    Admiral Blore. Well, I would probably go with the leader of 
our acquisition execution subdirectorate who now works for me, 
Admiral Ron Rabago. He is an naval engineer, commanded the yard 
in Baltimore, has a lot of hands-on experience with ship 
construction.
    Mr. Taylor. What is that name again, sir?
    Admiral Blore. It is Ron, and the last name is Rabago, and 
he has been directed to be my replacement this June. I would be 
more than happy to arrange a visit by him. He has gotten his 
fingers dirty working in naval engineering, so I think he 
really understands it.
    Mr. Taylor. Okay. Very quickly, how many hours would you 
estimate the Coast Guard trains you before they let you fly an 
aircraft?
    Admiral Blore. We to go Navy training, and it lasts a year. 
We get about 90 hours stick time back when I went through in T-
28s, and then we would go to Coast Guard training and get about 
another 60 or 70 hours in helicopters if you are going the 
helicopter route.
    Mr. Taylor. I am just curious. How much time do you think 
that captain got or that admiral got as far as training for 
actual acquisition before he was placed in that position?
    Admiral Blore. Yes, sir. I would be more than happy to 
provide that for the record and have him come up and meet with 
you. I think he has had extensive training.
    We define acquisition as the Defense Acquisition University 
does, which it is composed of 13 professions which includes 
naval engineering, logistics, RDT&E, test and evaluation. Those 
are all part of acquisition.
    And he has extensive experience. Again, we would be pleased 
to provide that for the record, and I hope that we could 
arrange a visit.
    [Information follows:]

    [GRAPHIC] [TIFF OMITTED] T8329.037
    
    [GRAPHIC] [TIFF OMITTED] T8329.038
    
    [GRAPHIC] [TIFF OMITTED] T8329.039
    
    Mr. Taylor. Thank you very much, sir. I would welcome that 
visit.
    Mr. Cummings. Thank you very much.
    Admiral Blore, thank you very much. We wish you the very, 
very best.
    We will now welcome Mr. John P. Hutton, Director, 
Acquisition and Sourcing Management, United States Government 
Accountability Office.
    Welcome, Mr. Hutton, and we will hear from you now.

TESTIMONY OF JOHN P. HUTTON, DIRECTOR, ACQUISITION AND SOURCING 
   MANAGEMENT, UNITED STATES GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Hutton. Thank you, Mr. Chairman, other Members of the 
Subcommittee.
    I am pleased to be here today to discuss Coast Guard's 
acquisitions, specifically its Deepwater program, the largest 
acquisition in the Coast Guard's history. Deepwater represents 
almost 60 percent of the Coast Guard's 2009 budget for 
acquisition, construction and infrastructure.
    To carry out this acquisition, the Coast Guard awarded a 
contract in June, 2002, to Integrated Coast Guard Systems, a 
joint venture formed by two contractors as a systems 
integrator. The systems integrator was responsible for 
designing, constructing, deploying, supporting and integrating 
the assets.
    Five years later, after experiencing serious performance 
and management problems and with assets in various stages of 
development, the Coast Guard Commandant acknowledged that they 
relied too heavily on contractors to do the work of the 
Government. The Commandant announced several major changes to 
the acquisition approach to Deepwater.
    Today, drawing primarily on our June, 2008 report, I would 
like to highlight several Coast Guard initiatives that are 
designed to improve the acquisition, including increased 
accountability for Deepwater outcomes, but notwithstanding 
these initiatives the Coast Guard continues to face risks and 
challenges in moving forward with its Deepwater program.
    I should also mention that we have related ongoing work for 
the Appropriations Committees and expect to issue a report 
later this year.
    First, the Coast Guard has developed a Blueprint for 
Acquisition Reform that sets forth objectives and specific 
tasks aimed at improving acquisition processes and results 
across the Coast Guard. One key effort was the July, 2007 
consolidation of the Coast Guard's acquisition responsibilities 
including the Deepwater program under a single acquisition 
directorate. We believe this effort has increased 
accountability for Deepwater whereas in the past Deepwater 
assets were managed independently of other Coast Guard 
acquisitions.
    Second, the Coast Guard is now managing Deepwater on an 
asset-based approach rather than as a systems of systems 
approach and this approach has resulted in increased Government 
control and visibility over its acquisitions. For example, cost 
and schedule information is now captured at the asset level, 
resulting in the ability to track and report cost breaches.
    Also, the Coast Guard has begun to follow a more 
disciplined acquisition approach found in its Major Systems 
Acquisition Manual. This process requires documentation and 
approval of program activities at key points in a program's 
life cycle. Previously, the Coast Guard authorized the 
Deepwater program to deviate from this structured acquisition 
process, stating that the requirements of the process were not 
appropriate for the systems of systems approach. The 
consequences of not following the structured approach in the 
past are now becoming apparent for some assets already in 
production such as increased costs to the National Security 
Cutter.
    While certain cross-cutting aspects of Deepwater--such as 
C4ISR and the number of each asset needed to meet 
requirements--still require a systems level approach, the Coast 
Guard is not fully positioned to manage these aspects, but it 
is engaged in efforts to get there.
    We also reported in June, 2008, that DHS approval of 
Deepwater acquisition decisions was not technically required. 
The Department had deferred decisions on specific assets to the 
Coast Guard in 2003. In response to our recommendation last 
year, the Undersecretary for Management rescinded that 
delegation of Deepwater acquisition decision authority in 
September, 2008, and the Deepwater program is now subject to 
the Department's new acquisition review process.
    If implemented as intended--and I underscore that--if 
implemented as intended, the new process can help ensure that 
the Department's largest acquisitions, including Deepwater, are 
effectively overseen and managed.
    Third, like many Federal agencies that acquire major 
systems, the Coast Guard faces challenges in recruiting and 
retaining a sufficient Government acquisition workforce. Again, 
this is important because one of the reasons the Coast Guard 
originally contracted for a systems integrator was the 
recognition that it lacked the experience and depth in its 
workforce to manage the acquisition itself.
    The Coast Guard's 2008 Acquisition Human Capital Strategic 
Plan identifies a number of workforce challenges that pose the 
greatest threats to acquisition success, including the shortage 
of civilian acquisition staff. The Coast Guard has taken steps 
to hire more acquisition professionals, including increased use 
of recruitment incentives, relocation bonuses, utilizing direct 
hire authority and rehiring Government annuitants.
    But the shortage of Government acquisition workforce 
personnel means that the Coast Guard is reliant on contractors 
to supplement the Government staff often in key positions such 
as cost estimators, contract specialists and program management 
support. While support contractors can provide a variety of 
essential services, their use must be carefully overseen to 
ensure they do not perform inherently governmental roles.
    In closing, in response to the significant problems in the 
Deepwater program, the Coast Guard leadership has made a major 
change in course in its management and oversight by 
reorganizing its acquisition directorate, moving away from the 
use of a contractor as Lead Systems Integrator and putting in 
place a structured, more disciplined acquisition approach for 
Deepwater assets.
    While these initiatives are having a positive impact, the 
extent and duration of this impact depends on positive 
decisions that continue to increase and improve Government 
management and oversight.
    Mr. Chairman, this concludes my prepared statement. I would 
be happy to respond to any questions that you or other Members 
of the Subcommittee may have.
    Mr. Cummings. Thank you very much.
    GAO stated in a recent report on Deepwater, and you 
reiterated this point in your written testimony, that one of 
the challenges that the Coast Guard faces in building its 
acquisitions directorate is the lack of an acquisition career 
path for military officers.
    You also wrote in your testimony that the Service's three-
year rotation policy for military members ``limits continuity 
in key project roles and can have a serious impact on the 
acquisition expertise'' but that the Coast Guard is seeking to 
improve the base of acquisition knowledge throughout the Coast 
Guard by exposing more officers to acquisition as they follow 
their regulation rotations.
    Can you comment on what the impact of the lack of an 
acquisition career path is on the Coast Guard's ability to 
attract the most capable officers to acquisition management and 
to retain them in the Service and is exposure through a three-
year rotation adequate to build senior level acquisition 
expertise within the Coast Guard?
    Mr. Hutton. Thank you, Mr. Chairman. I will take that from 
a couple different angles.
    First, it is clear that the Coast Guard does not have 
sufficient numbers of military officers or acquisition programs 
to sustain a full-time acquisition career path, but you do 
point out one interesting point about the three-year rotations.
    In our work on the defense side, particularly for roles 
such as program managers, when compared against best practices 
in the private sector, we found that the private sector has 
program managers that pretty much stay throughout the life of 
the program. DOD, typically, I believe, wants to have their 
program managers in there a minimum of four years. But what is 
important is that the folks that do take those positions have 
had experience in a variety of acquisition activities and that 
they also are supported by a sufficient number of trained 
acquisition professionals as well, whether it be civilian or 
military.
    Mr. Cummings. I made a comment, and I just was wondering 
what your reaction to it was when I said that with our 
unemployment rate being what it is, it seems like we would be 
able to find civilians who are already in acquisitions. And, by 
the way, we are not buying a lot of things these days. So it 
seems to me that they may be in other areas, but it seems like 
we would be able to find people who had the basics, things to 
look for, things to be aware of and be able to train them 
within a reasonable amount of time to do this kind of work.
    Two, I want to go back to something Mr. Taylor was alluding 
to. That is when he asked a question, and I will paraphrase as 
best I can. Are we training, does it seem like we are preparing 
folk or sort of overdoing it?
    In other words, from what you could see with regard to 
using the Navy, and I don't know how much you go into that, 
whether it would be better to not worry so much about creating 
a very strong acquisitions department and just kind of rely on 
others, like the Navy and others to help us out here because we 
won't have this kind of acquisition but once in a century, as 
he said. I think that is what he said.
    Mr. Taylor. A generation.
    Mr. Cummings. A generation.
    Mr. Hutton. Sure. I think in our work generally, looking at 
acquisition workforce, we have a report that is coming out soon 
on the DOD acquisition workforce that I think will be 
interesting and instructive as we talk about these issues.
    But one of the things we have looked at in terms of, say, 
the shortage of acquisition professionals across the Federal 
Government is that there is this reliance on contractors to 
help support that. In looking at it in that vein, I think one 
of the things that we are noticing is that the Government still 
needs a basic capacity too. I think the Admiral might have 
mentioned organic capacity.
    But you need a basic capacity in the Government for the 
variety of acquisition specialties so that you can assure 
yourself that you are getting good outcomes, whether you are 
building an acquisition force, trying to bring more Government 
employees in, whether you are perhaps relying on contractors 
because you don't have any short-term alternative. But, for me, 
the question then becomes what are you doing if you want to use 
Government people to build towards that total civilian 
acquisition support?
    Mr. Cummings. On that note, I was reading your report, and 
on Page 8 you had talked about one of the problems with regard 
to piggy-backing on what you just said, one of the problems 
with why you want to have your own people. You talked about 
conflicts of interest--when you contract out, that is--
conflicts of interest, improper use of personal service 
contracts.
    Mr. Hutton. That is correct.
    Mr. Cummings. Increased costs are also potential concerns 
with reliance on contractors. Those are other things that you 
are concerned about?
    Mr. Hutton. Mr. Chairman, you are hitting the issues that 
are real key if you are going to be using contractors for 
certain types of acquisition support activities.
    Just to use an example, in some work we did over at DOD, we 
found that they were using contractors for contract specialist 
support. The issue there was when you have a blended workforce 
and you have the contractors working side by side with 
Government employees, you do want to keep it separate. You 
don't want the Government, if it is not a personal service 
contract, telling a contractor what to do. Their own people 
ought to be telling them what to do to perform under the 
contract.
    But in that work, we did find that one of the issues was, 
and there is no magic number for this, whether the Government 
has sufficient capacity to oversee and ensure that they are 
getting products that are in the Government's best interest, 
and that requires trained personnel.
    I believe the DAU may have put out a notional 25 percent 
for contract specialists, meaning that you want to keep a 
Government contractor ratio no lower than, say, Government, 75 
percent and contractor provided contract specialists, 25 
percent. That is just a number they put out. I don't have the 
right number.
    But I think what is key to this is when the Government 
decides to use contractors for those types of activities, they 
have to know what they are asking the contractor to do. They 
have to understand it.
    They have to have people that are going to be taking that 
input from the contractor and understand that: I am getting 
this from a contractor, I am not getting it from a Government 
employee. So, therefore, I have to be sure that I protect the 
Government's interest when I think about the information and 
make decisions on that.
    So it is very important that the Government has a basic 
inherent capacity in the acquisition workforce.
    There are several organizations that might prefer to have 
just Government only. However, they may feel at a particular 
time they can't grow their workforce fast enough to do that. 
So, to complete the mission, they might have to use 
contractors.
    Mr. Cummings. This is the last question. One of the things 
that bother me tremendously is when we see a contract, and then 
we see the cost overruns. It seems like President Obama is 
trying to get to this.
    But these cost overruns, I mean you get to a point where I 
am sure there are situations in Government where the cost 
overruns can actually be more than the original contract which 
is crazy. I mean we are approaching that in some instances. I 
think I just mentioned one where it started off at $250 million 
and ended up to be $1.1 billion.
    I am just trying to figure out. Just help us through what 
do we need to do? I mean how does that relate to what we are 
talking about right now with regard to acquisitions?
    Mr. Hutton. Sure. I appreciate that question.
    Mr. Cummings. Because we need to get the most bang for our 
buck. This was a $24 billion program, and you just heard the 
Admiral say we are up now to $26 billion at the rate we are 
going, but that probably really means about at least 34--
probably, at least, I mean when you take it all the way out.
    I just don't want us to be in a situation where we are 
lying to ourselves.
    Go ahead.
    Mr. Hutton. Well, thank you. You remarked about the 
President's memorandum on contracting, and I think the 
President mentioned a lot of issues that our work is focused on 
and talked about over a decade and beyond. It all has to do 
with the way Government goes about contracting for things.
    If I take it to the Deepwater as an example, I think 
oftentimes--and also DOD--it gets back to requirements. Do we 
know what we are buying, do we have a good understanding of 
what we are buying, and do we basically try to hold to that 
requirement as best we can so that you can then carry through?
    There are situations in contracting where the Government 
may not have a clear understanding of what they are buying. 
They might feel because of the urgency of the mission they go 
and, say, for example, allow the contractor to proceed with 
certain ceilings. Well, in those situations, the risk is on the 
Government, and the faster the Government can lock into the 
requirements the better it is for protecting the taxpayers' 
interests.
    More specifically about Deepwater, I think one of the major 
changes that you are seeing here from what was perhaps two 
years ago is that the Coast Guard is now committed and is 
planning on adhering to their Major Systems Acquisition Manual, 
which is a very disciplined process that requires clear 
documentation from the standpoint of operational requirements, 
acquisition program baselines and the whole nine yards.
    Also, if they adhere to that process and they also have 
sufficient DHS overview of the Coast Guard activities, then I 
think the Government is in a better place than they were, say, 
three years ago.
    Three years ago, the Coast Guard bought a solution. They 
had a dollar value, but I don't think for each individual asset 
under that solution they could probably really give you much 
insight into the costs and schedule of each of those assets.
    Now that they have taken the Program in-house and are 
trying to apply this more disciplined approach, I think you are 
finding that there is some discovery going on and better 
understanding, better granularity into what they are actually 
buying.
    Mr. Cummings. Thank you very much.
    Mr. LoBiondo.
    Mr. LoBiondo. Thank you, Mr. Chairman.
    I wanted to keep going on this cost overrun issue just a 
little bit. As the Chairman said and as we have talked about, 
the Coast Guard has experienced quite a few cost overruns. In 
your mind, is there a single, most dominating contributing 
factor to these cost overruns or is it asset by asset, 
situation by situation?
    Mr. Hutton. I think to date it is still a little early 
because they are, as I mentioned, starting to adhere to a more 
disciplined process where they are getting visibility on an 
asset basis versus a systems basis.
    For example, to get a cost breach for a $24 billion 
program, there is a lot of stuff that could be happening in the 
program and you really wouldn't understand it because it was 
all basically sitting on the Lead Systems Integrator side. By 
looking at it on an asset by asset basis, to look at a 10, 20 
percent cost breach, it is going to be much more visible, much 
more apparent sooner than it would have otherwise. So I think 
that is important from the standpoint of, again, using a very 
disciplined process.
    Mr. LoBiondo. With where we are going now?
    Mr. Hutton. I forgot the other part of your question, sir. 
I think for the NSC increases I believe it is in part because 
there are economic factors for materials and things like that. 
I think some of it had to do with a little bit of the 
understanding the implications of some of the requirements 
changes early on and things of that nature.
    But I think as they start looking at it on an asset by 
asset basis, they are going to be able to provide you all with 
more insights as to where they see those individual assets as 
it relates to cost-schedule performance.
    Mr. LoBiondo. So you feel that if they are diligent with 
this new approach, that could prove to be very beneficial?
    Mr. Hutton. Yes. I do think if they weren't applying that 
approach, I don't think some of these specifics that you might 
be hearing about today, particularly I think the Admiral or 
maybe the Chairman mentioned these acquisition program 
baselines. It is my understanding they didn't have those on the 
individual assets per se.
    They are working towards getting those acquisition program 
baselines. So what that is doing is just giving more visibility 
on an asset, insights into what they are buying and what is the 
cost and schedule implications. I think that is a good thing.
    But I do want to stress as part of your oversight, I know 
the Coast Guard programs are a big part of it. But we issued a 
report last November, and we looked at the entire DHS process 
for their acquisitions, the review of acquisitions. We looked 
at over 40, 50 systems, and we found that while they had a 
process they weren't executing the process.
    We know that some programs might have prepared an 
acquisition program baseline. It would go up to the DHS, and it 
would either take a long time to get approved or it would never 
get approved. So there wasn't the discipline in executing that 
broader DHS process.
    They made modifications to their process, and they made 
some improvements. But my question is, and I think it is a good 
oversight question for this Committee: When the Coast Guard 
prepares these documentations that we have been talking about 
and they have to provide them to DHS, does DHS have the 
resources to ensure that they are giving those Coast Guard 
programs good scrubs and getting the timely response back to 
the Coast Guard to keep these acquisitions on track?
    I personally think looking at the broader DHS acquisition 
review process is a piece of this because that is going to give 
you some added insight into what is going on at the component 
level.
    Mr. LoBiondo. That is good. Thanks.
    Under Deepwater, the Lead Systems Integrator has selected 
command and control systems that include proprietary software 
under the control of one of the prime contractors. How do you 
think this impacts the Coast Guard's ability to modify and add 
new components to the systems installed aboard Deepwater 
assets?
    Mr. Hutton. I think you are hitting on a very important 
issue here. We were talking about C4ISR earlier, and I think 
Mr. Larsen had raised the question about where the Coast Guard 
was versus where we were.
    We are currently looking at the C4ISR as an update to our 
work last year, but what I wanted to say was that the Coast 
Guard, they are still looking at and analyzing what they bought 
from the Lead Systems Integrator to date for a C4ISR solution. 
So I don't think they are quite there yet. They are looking at 
it.
    But when you bring into the issue of data proprietary 
rights, I think that is a very key issue, and I don't recall 
the current status, but we are looking at that issue as part of 
our ongoing work right now.
    Mr. LoBiondo. Thank you, Mr. Chairman.
    Mr. Cummings. Thank you very much.
    Mr. Taylor.
    Mr. Taylor. Thank you, Mr. Chairman.
    Mr. Hutton, I am curious. Who in the GAO can tell us what 
either an LCS or National Security Cutter should cost? Do you 
have a name?
    Mr. Hutton. Well, sir, we can tell you what the Coast Guard 
says their current estimate of what it costs. GAO doesn't have 
an independent estimate of that.
    I believe the Coast Guard is using third party entities to 
help do some of this independent cost estimating, but we don't 
have a GAO estimate on that.
    Mr. Taylor. I am just curious. How do you determine someone 
else isn't getting a bargain if you don't really know what 
something should cost?
    Mr. Hutton. Well, we take a look at the approach.
    Mr. Taylor. You are looking at processes.
    Mr. Hutton. Yes.
    Mr. Taylor. I very much agree with you about the conflict 
of interest. The private sector's job is to make money. Ours is 
just the opposite. Ours is to get the best value for the 
taxpayer, and so I appreciate that.
    Mr. Hutton. Yes, sir.
    Mr. Taylor. Again, I am trying to understand. I am 
frustrated both with the 123 program and the LCS program. So 
all this is very real.
    Does anyone in the GAO go to either to the Coast Guard or 
the Navy and say: The price of aluminum is half of what is was 
two years ago. The price of steel is half of what it was two 
years ago. The price of titanium is down a third from two years 
ago. What are you guys doing to get a better deal for the 
taxpayer?
    Is that your function?
    Mr. Hutton. Those are very detail-specific questions. That 
is drilling down into a particular asset. We have not been at 
that level for this program.
    I know that the IG previously had done some work looking at 
the NSC as a particular platform. We did look at the overall 
process and the Government's ability to manage the acquisition, 
but I don't have that detail, sir.
    Mr. Taylor. Okay. So, unless you are tasked by either 
Congress or the Administration, you don't voluntarily look over 
another agency's shoulder and say, you can do better? Is that 
correct?
    Mr. Hutton. Generally, I think that is our protocols.
    But I might add, Mr. Taylor, for example, on the Fast 
Response boat that they just awarded a contract, it is my 
understanding that is a fixed price contract. With competition, 
the principles are that hopefully the Government is getting a 
good price.
    But, the NSC and the previous ships were handled by the 
systems integrator, and I think that was one of the issues we 
were pointing out early on was the extent to which the 
Government could ensure that there is sufficient competition on 
these assets. So, by bringing it in-house and doing their own, 
I think there is an opportunity to rely on market forces to a 
greater extent than they may have in the past.
    Mr. Taylor. Did your team visit Bollinger Shipbuilding?
    Mr. Hutton. For this current work that we are doing right 
now, no, sir.
    Mr. Taylor. I am told that there are unused equipment 
packages for the 123s that were not converted still sitting 
there. I don't know it for a fact because I haven't set foot on 
Bollinger's property. But who in your organization could 
determine that that is the case and who in your organization 
would say let's find another good use for them because the 
taxpayers have already paid for them?
    Is that your job or do you have to be tasked to do that?
    Mr. Hutton. Sir, that is something that we could look at as 
part of our work right now and ask that very question that you 
are asking, but I don't believe we have an answer to that right 
now.
    Mr. Taylor. Okay. But I want to go back to this because it 
troubles me that it seems like every time the price of 
materials go up someone who is representing someone who does 
business with the Government pays a visit on my office and 
says, we need more money.
    I am particularly troubled when the price of aluminum 
tanks, the price of steel tanks, the price of titanium tanks. 
Every vendor in America is looking for work. No one is walking 
through my door, saying, we can make you a better deal.
    I am trying to find the agency in the Government that ought 
to be tracking those things and telling Congress you ought to 
be getting a better deal. Are you that agency or do we have to 
task someone else to do that?
    Mr. Hutton. Well, I believe that agencies can perhaps 
solicit some support from, say, an institution like the Defense 
Contract Management Agency. I know that they may have people in 
the plants or they may look at some of those issues that you 
are referring to.
    Mr. Taylor. But it is not you?
    Mr. Hutton. We have not, in our current work, been at that 
level, sir.
    Mr. Taylor. All right. Thank you, Mr. Chairman.
    Mr. Cummings. Thank you.
    Mr. Olson.
    Mr. Olson. Thank you very much, Mr. Chairman.
    Mr. Hutton, thank you for coming today to testify and for 
providing us with some of your insights to the problems and the 
solutions to the Coast Guard's acquisition process.
    I would like to talk about the use of contract personnel in 
the acquisition process. In your report, you highlighted 
several positive steps the Coast Guard has taken to increase 
the transparency and the accountability of the acquisitions 
process and particularly the use of contract personnel, and you 
do remain concerned with that if I understood a comment you 
made earlier.
    Right now, the Coast Guard has about 25 percent contract 
personnel, and you mentioned earlier about 25 percent may be a 
good limit for that.
    So my question is what are the risks associated using 
contract personnel to support Federal acquisitions and what can 
the Coast Guard continue to do to reduce those risks?
    Mr. Hutton. I think the greatest risk is if the Government 
is having a contractor supporting an acquisition and they 
haven't paused for a moment to understand that, hey, we are 
using a contractor, say, to write a statement of work. There is 
an implication to that, I think, in terms of a Government 
interest.
    That brings it back to the question of it is not that you 
can't use contractors. I mean it is not forbidden, but it puts 
a higher, in my mind, premium on the Government's capacity to 
understand what the implications are, so that when they look at 
contractor input, they are thinking about it as a taxpayer and 
thinking about and understanding what they have so that they 
can make the best decision basically to protect the taxpayers' 
interest. So I think that is one of the key instances.
    I think if they feel like in the short term they have to 
use a contractor, my immediate thought would be, okay, but if 
you don't want to be in this situation two years from now, you 
want to be in a different place, what are you doing to get 
there? Have you developed a strategy?
    What specific skills do you need? Where do you think you 
are going to get them? How are you going to grow them?
    I mean there are a lot of human capital aspects to it.
    So it is not so much perhaps that. I mean I don't know. 
Right now, where the Government is I am not sure how they would 
accomplish a lot of their missions without, say, for example, 
some support of the contractors.
    But what would worry me is if they weren't considering the 
inherent risks. Having the skilled people in the chain from the 
Government side is going to ensure that the taxpayers' 
interests are protected.
    Mr. Olson. Thank you for that answer. Are there any 
additional oversight mechanisms that you would suggest to 
ensure that contractors are not inappropriately performing 
inherently Government roles?
    Mr. Hutton. No. I think it just takes it back to who has 
the requirement and how are they fulfilling that requirement.
    And, if they are using a contractor, I think at that level 
that is where the deepest understanding should be as to what 
are the potential ramifications and how are we going to 
mitigate any risks that we might have talked about earlier, 
whether it be conflicts or whether it is going to cost more or 
is it going to cost less.
    Well, we have to get the mission done and if it costs more, 
then maybe that is not where we want to be long-term. So what 
is our strategy to move from there?
    So I kind of see it as that decision point is really the 
important part.
    Mr. Olson. Thank you very much, sir.
    I have no further questions, Mr. Chairman. I yield back my 
time.
    Mr. Cummings. Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman.
    Mr. Hutton, back to C4ISR. You heard Admiral Blore read 
your report. Can you review your response to what the Admiral 
testified to?
    Mr. Hutton. Sure. I think that, as we said in our June, 
2008 report, and you think about it right now. I think the 
Coast Guard is still trying to determine and analyze what it is 
that they are originally getting from the Lead Systems 
Integrator, what is all involved in that.
    I do think it is a very positive step not only in the area 
of C4ISR but also engineering that the Coast Guard now has 
technical authority over those issues. Previously, they didn't. 
If someone in the Coast Guard perhaps had some questions to 
raise about the C4ISR under the previous scenario, I am not 
sure the person had much authority to do anything. By 
instilling the authority, the technical authority in those 
types of functions is a big step.
    And, of course, like anything else, that is only part of 
it. It is in the execution.
    But I do think that they are still in some discovery of 
understanding what it is they are getting. They have to think 
about how they are going to connect all these different assets. 
They have to think about the space requirements on the assets 
for these types of systems.
    Mr. Larsen. Do you think this approach to an asset by asset 
approach for the platform combined with call it an umbrella 
approach to the C4ISR acquisition is a better approach because 
that is the end state they are headed for? Do you think that is 
appropriate?
    Mr. Hutton. Yes. I think the assets are, hopefully, if you 
have a firmly defined operational requirement and you are 
taking that back to a mission need and you have all these 
different assets. That connection is important, but what is 
bridging across is this connection of the command, control and 
communication computers, the C4ISR type things. So you have to 
kind of look at that holistically.
    So I think they are thinking about it in a way that I think 
is a good approach. I think it is not an easy solution, and 
they have to work it hard, but I think they are potentially in 
a better place than they were before.
    Mr. Larsen. I am intrigued by Page 5, the headline there: 
``Consequences of prior Deepwater acquisition approach may be 
costly.'' I think the Committee has concluded it is costly, but 
I understand GAO's approach.
    Actually, it is the first sentence ends with basically the 
problems of the past are likely to pose continued problems such 
as increased costs. Has GAO done kind of an out-year assessment 
of what the legacy costs of the legacy problems of the 
Deepwater program are going to be?
    Mr. Hutton. I kind of view that as almost the question the 
Admiral was getting. Right now, we are looking at $26 billion, 
I think was the figure tossed out here. Is that what it is 
going to be?
    Mr. Larsen. Right.
    Mr. Hutton. And I think you have asked that similar 
question in a different way.
    From my point of view, say, three years ago, I don't think 
that the Coast Guard would have as much insight into what it is 
going to cost for the different assets than they do now only 
because they are committed to apply their new disciplined 
approach which requires them to do these basic documents.
    Some of the assets that are out there that they are buying 
right now, they are still planning on going back and doing some 
of these documents because I think it is important to 
understand for that particular asset how it is going to fit in 
the mix in the future.
    So I think that right now we have some ongoing work looking 
at where some of the different assets are. We plan to report 
out in the summertime. But I think you will find that it is 
really about discovery because they are applying this new 
disciplined approach, and they are going to get more insights 
as they move along.
    Mr. Larsen. I ask that question not to dig up the sins of 
the past because over the last couple years we know that the 
Coast Guard is making the changes that some folks have implored 
them to make to the Deepwater acquisition program, but I also 
think if we can get some level of estimate on the costs of 
those mistakes it might help us move on in the future as well 
and provide some discipline, maybe some lessons for other 
agencies.
    Finally, I will make this quick here. In 2008, you 
recommended that DHS rescind the Coast Guard's acquisition 
decision authority. It has since taken place. But now, of 
course, that means that Homeland Security has decision 
authority as opposed to the Coast Guard.
    In a recent report, you criticized Homeland Security's 
ability to oversee major acquisition programs. Is DHS itself 
adequately equipped to oversee the Coast Guard's acquisition 
programs?
    Mr. Hutton. That is at the crux of what I was speaking to 
earlier, sir, when I talked about the fact that in the past, 
whether you are the Coast Guard or any other component, the DHS 
at the departmental level did not have a well-executed review 
board process for investments across. I mean we have billions 
of dollars of investments across DHS.
    We felt that it was important, and we recognized we had the 
ongoing work that there was a lack of execution of this 
acquisition review process. But we felt it was important that 
there be someone outside of the component that is looking at 
the questions, looking at the cost estimates, looking at the 
plans and really asking the real hard questions perhaps from 
outside the component to apply perhaps some additional 
pressures and insight to do the right thing.
    My only concern right now, while the DHS has come out with 
a new directorate and I think it is improved. I think they are 
providing more consistent guidance across the components. It 
has given them more insights as to what we want to see in an 
acquisition program, basically, what we want to see in a test 
and evaluation master plan, things like that. I think that is 
all good.
    My little worry is that if these components have to provide 
these documentations and get it through the DHS for 
departmental review, does the Department have the capacity to 
execute their process? In the past, that was what the problem 
was. They weren't executing their process. They didn't have 
sufficient staff.
    Right now, it is my understanding that they believe they 
need to be around 56 staff to help manage and run this 
acquisition review process, and I don't believe at the moment 
they have even half that. So I just think that.
    Again, as I mentioned to the Chairman earlier, I think this 
is one particular area that as part of your oversight of Coast 
Guard it would be interesting to know: How is that working in 
the Coast Guard? When you are preparing these acquisition 
program baselines, are you getting them returned in a 
reasonable amount of time or are they delaying you? Are you 
getting that kind of support?
    Mr. Larsen. All right. Well, thank you, Mr. Chairman.
    I apologize if that was asked before. I guess the lesson 
there is that in the future, when we are looking at this, let's 
be sure we are asking the right agency the right question.
    If this doesn't work, it may not be the Coast Guard's 
fault. It may be DHS's fault. We just need to be sure we are 
pointing the finger in the right place and getting the right 
answers from the right folks.
    Mr. Cummings. Ms. Richardson.
    Ms. Richardson. Thank you, Mr. Chairman.
    I am catching a cold, sitting, waiting here.
    Mr. Hutton, let me just briefly ask you a question.
    Mr. Chairman, I would find it really interesting. I have 
only been here less than two years. I think it would be 
particularly helpful when we are operating I think in more of 
an oversight perspective to have, for example, the Rear Admiral 
stay to hear these comments, so we could maybe one day get at 
making some headway instead of he testifies, you testify.
    I am sure he has staff here, but I think there should be an 
ownership, particularly if we are in response to a problem that 
occurred. The Admiral, out of all due respect to him and his 
schedule, we all have busy schedules. I think it might be kind 
of intriguing to actually have people stay and hear the 
testimony.
    Mr. Cummings. I think so. As a matter of fact, it is 
amazing you said that. I have thought about the same thing.
    Ms. Richardson. Yes, because with these comments.
    To further build upon that, Mr. Hutton, is there anything 
that you heard in the testimony that the Rear Admiral presented 
that you would like to share a different perspective that you 
think this Committee should know?
    Mr. Hutton. No, ma'am. I think that the Admiral highlighted 
a lot of the things that we independently believe are good 
steps as well.
    I have been mentioning this adherence to their new 
disciplined process. I think that is a huge thing. They weren't 
doing that before. They were doing it for the other systems but 
not the Deepwater.
    I think their consolidation of the acquisition function is 
a big step because now they are going to be able to leverage 
their resources across all their acquisitions. They have a 
chief acquisition official that is going to be able to provide 
that oversight across the Coast Guard. I think that is a good 
thing.
    I think their use of third party independent analyses is 
another good thing. That is a way to augment perhaps some 
specialties that you need to help provide the proper oversight, 
although we do mention in our statement that human capital is a 
big area.
    So I think, for example, even their Blueprint. The Admiral 
mentioned the Blueprint for Acquisition Reform. What I thought 
was key about that is they use heavily GAO's framework for 
agencies' abilities to assess their own acquisition workforce, 
and we think that is a good thing.
    They looked at their organizational alignment and the 
leadership. They looked at their human capital needs. They 
looked at their policies and processes, and they looked at the 
knowledge and information they need to manage their 
acquisitions.
    I just think that the structured approach they took is in 
line with a lot of what we see are some of the best approaches 
for an agency to independently assess itself are all positive 
things. So I think they are taking steps.
    The thing that I think we need to keep watching for is the 
execution and the continued leadership and the continued 
pressing to do the right thing.
    I do think at the moment they have made great strides. Yes, 
they are getting more insights into their acquisitions, but I 
do think that definitely it is a change in course, and they are 
heading in the right direction.
    Mr. Cummings. One other question, the Commandant is quoted 
in the Coast Guard's Blueprint for Acquisition Reform as 
stating that ``The Coast Guard must become the model for mid-
size Federal agency acquisition process, workforce and 
capability.``
    I want you to comment on how the Coast Guard's acquisition 
processes, workforce and current capabilities compare to the 
mid-size agencies. Are there any best practices from other mid-
size agencies that are not currently being implemented by the 
Coast Guard's acquisition directorate and are there specific 
actions recommended in the Blueprint that the Coast Guard is 
not yet implementing?
    Mr. Hutton. That is a great question. It is hard for me to 
compare the Coast Guard's acquisition structure, say, to 
another mid-size organization. I just don't have that kind of 
insight across the Government like that.
    As I mentioned to Ms. Richardson, the fact that they used 
the framework that we have put out there for agencies to make 
an assessment about their acquisition function is a good thing.
    When you asked about the key steps remaining, in my mind, 
one is to continue to build and maintain that acquisition 
workforce. I think that is part of the human capital piece of 
the framework that I mentioned.
    I think that they need to continue bringing all their 
assets into compliance with the Major Systems Acquisition 
Manual.
    I do think--and this is a departmental level issue as 
well--making sure that they are aligning the budget to the 
acquisition process. That is another key piece.
    And I think their Blueprint also mentioned that they would 
be conducting internal control reviews, and I just think that 
is a good practice as well.
    Mr. Cummings. Well, thank you very much.
    I take it there are other reports forthcoming?
    Mr. Hutton. Yes, sir. We expect sometime this summer to 
issue a report that is going to, basically, our June, 2008 
report. We have jumped off from the issues that we developed in 
that report, and we are just taking them further down the road 
as the program evolves, and we hope to provide some additional 
information I think will be very useful to this Committee in 
conducting its oversight.
    Mr. Cummings. Your comments about DHS should concern all of 
us because it seems as if you don't have folk, if they are 
supposed to be sort of overseeing these types of things, and 
they are not doing it. That is a major problem, isn't it?
    Mr. Hutton. Yes, sir. I do point out that even in the last 
year and a half you have seen some positive steps in terms of 
trying to get that departmental review process on firmer 
footing. I mean this new directive isn't a small piece.
    I mean it required a lot of interaction across all the 
components. The components have different language. They are in 
different places, different experiences. They buy different 
things. But I do think that was a huge step in coming out with 
this directive.
    My only worry, again--and this is just because I am an 
accountability organization--is are they going to have the 
capacity to execute that new process because the capacity I 
think was one of the reasons why the other acquisition review 
process didn't work. To me, in my mind, that is the key.
    Mr. Cummings. I just don't want us as a Committee to sit 
here and to hear this kind of testimony. I mean it seems that 
we would almost have to get something. I am sure they already 
know this, what you are saying.
    Mr. Hutton. Well, we issued a report in November that laid 
this out. We will be happy to get that report to whomever you 
would like on the Committee.
    Again, the Department has come out with that directive. It 
is not a small deal. But I am just kind of looking forward 
because they had a process before, but it wasn't being 
executed.
    So my question is let's make sure that we can position 
ourselves at the departmental level to execute this process the 
way it is designed.
    Mr. Cummings. You are saying that the plan is great. I mean 
it is nice. It is okay.
    Mr. Hutton. Yes. I think that what they have done is a good 
thing in terms of this new directive, and I think it is 
providing better guidance to the components. So it is a more 
systematic process.
    My only little concern, and I think it is just a matter of 
time because this just came out just before the holidays. I 
think it was in November.
    Mr. Cummings. November, yes.
    Mr. Hutton. Does DHS right now have the people they need to 
manage that process and, if not, do they have a plan to get 
there and is that a good plan? That would be my area of 
interest.
    Mr. Cummings. Well, one of the things I have often said is 
that a lot of times we kind of fool ourselves in Government, 
and we say, when the rubber meets the road everything is going 
to be fine. Then when it comes time for the rubber to meet the 
road, we discover there is no road.
    And so, I just want to make sure. In other words, I am 
thinking about maybe getting a letter off to the President or 
somebody, Ms. Napolitano, just reiterating some of the things 
that you have said here today and that it sounds like we have a 
good plan, but we are concerned about making sure that there 
are requisite personnel to carry out the plan.
    Mr. Hutton. Yes, sir.
    Mr. Cummings. The plan means nothing if you are not 
carrying it out.
    Did you have anything on that, Mr. LoBiondo?
    Mr. LoBiondo. No. I think you are right on the mark. If DHS 
doesn't have the personnel or isn't interested in keeping an 
eye on this, then the Coast Guard has a big problem.
    Mr. Hutton. From my standpoint, sir, being an objective, 
nonpartisan organization, I am just looking at it from the 
standpoint of the taxpayer.
    Mr. Cummings. Right.
    Mr. Hutton. We do think the report laid out some problems 
over the last several years in terms of the departmental 
oversight. We do acknowledge that they came out with a new 
directive which we aren't basically raising real concerns 
about. We think it follows a lot of the good best practices and 
things like that.
    But just looking forward, we can't say today. It is just 
like a word of caution that I just wanted to put out there for 
this Committee to think about because I think that is an 
important piece of work we issued in November.
    Mr. Cummings. Very well.
    Thank you very much.
    Mr. Hutton. Thank you.
    Mr. Cummings. This hearing is now adjourned.
    [Whereupon, at 11:55 a.m., the Subcommittee was adjourned.]

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