[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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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.
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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.
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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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