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


 
                        FISCAL YEAR 2010 BUDGET 
                      REQUESTS OF THE COAST GUARD, 
                      MARITIME ADMINISTRATION, AND 
                      FEDERAL MARITIME COMMISSION 

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

                                (111-31)

                                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

                               __________

                              May 13, 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

Allen, Admiral Thad, W., Commandant, Acting Administrator, United 
  States Coast Guard; accompanied by Master Chief Petty Officer 
  Charles W. Bowen, United States Coast Guard....................     5
Brennan, Joseph E., Commissioner, Federal Maritime Commission....    31
Creel, Jr., Harold J., Commissioner, Federal Maritime Commission.    31
Dye, Rebecca F., Commissioner, Federal Maritime Commission.......    31
Rivait, David J., Associate Administrator for Budget and Programs 
  and Chief Financial Officer, Maritime Administration...........    38

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Cummings, Hon. Elijah E., of Maryland............................    42
LoBiondo, Frank A., of New Jersey................................    45

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Allen, Admiral Thad W............................................    47
Bowen, Master Chief Petty Officer Charles W......................    57
Brennan, Joseph E................................................    64
Dye, Rebecca F...................................................    71
Rivait, David J..................................................    78

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                      HEARING ON FISCAL YEAR 2010
                  BUDGET REQUESTS OF THE COAST GUARD,
                      MARITIME ADMINISTRATION, AND
                      FEDERAL MARITIME COMMISSION

                              ----------                              


                        Wednesday, May 13, 2009

                   House of Representatives
          Subcommittee on Coast Guard and Maritime 
                                    Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 2:00 p.m., in 
room 2167, Rayburn House Office Building, the Honorable Elijah 
E. Cummings [chairman of the subcommittee] presiding.
    Mr. Cummings. This hearing will now come to order.
    The Subcommittee convenes today to examine fiscal year 2010 
budget request for the Coast Guard Federal Maritime Commission 
and the Federal Maritime Administration. The President 
requested just under $9.5 billion in fiscal year 2010 to fund 
the United States Coast Guard. The request would provide an 
increase of approximately $371 million, 4.1 percent, over the 
service's enacted fiscal year 2009 budget.
    The President request $6.55 billion for the Coast Guard 
operating expenses in fiscal year 2010, an increase of more 
than $361 million, or 5.8 percent, over the fiscal year 2009 
level.
    The President has requested just under $1.4 billion to fund 
all planned Coast Guard capital acquisitions in fiscal year 
2010, an approximately $100.6 million decrease from fiscal year 
2009 appropriated level. Of this requested amount, $1.05 
billion is requested for the Deepwater program, an 
approximately $72 million increase from the enacted funding for 
year 2009.
    The budget requests only $344 million for non-Deepwater 
expenses, including only $10 million for the repair of shore-
side facilities and recapitalization of aids to navigation. The 
American Recovery and Reinvestment Act provided $98 million for 
the rehabilitation of Coast Guard shore and Cutter assets, of 
which the service has announced $88 million will go to shore 
facilities. However, the service has a backlog of shore 
facility repair needs exceeding $1 billion. And many Coast 
Guard personnel continue to work in trailers or in rapidly 
aging buildings. To be frank, some work is substandard 
conditions and I continue to believe that this backlog must be 
reduced to ensure that all Coast Guard personnel work in a safe 
and modern facility.
    The fiscal year 2010 budget request can accurately be 
described as austere. While it would fund the operation of new 
assets recently acquired by the Coast Guard, and would fund the 
addition of 74 new positions in the marine safety function, in 
addition to the 276 positions added in last year's budget, the 
President's request does not appear to fund any broad, new 
Coast Guard initiatives and even contains a slight reduction in 
the service's overall authorization of military positions. 
While we obviously strongly support the addition of new 
personnel to the Marine Safety program, other mission areas are 
also stretched and I continue to believe that the Coast Guard's 
resources, particularly in the area of personnel resources, 
must be more closely aligned with its mission.
    The President requests $24.5 million in fiscal year 2010 
for Federal Maritime Commission activities, which is an 
increase of approximately $1.7 million, 7.5 percent, over the 
total amount enacted in fiscal year 2009 for the Commission. 
The Commission is typically composed of five commissioners 
appointed to five-year terms by the President, with the advice 
and consent of the Senate. The Chairman's position has been 
vacant since 2006, one commissioner resigned in 2008. Next 
month a new commissioner will leave the Commission when his 
five-year term expires. His departure will leave only two 
commissioners to be responsible for the management of the 
agency.
    The effective administration of the Commission has been a 
major concern to the Subcommittee. The economic downturn in the 
world, the economy is reducing shipping volumes which may 
create a new regulatory issue for the Commission to consider. 
We look forward to examining these issues today.
    Regarding the U.S. Maritime Administration, the President 
has requested $345.5 million in fiscal year 2010 provided in 
fiscal year 2009. The largest increase occurs in the request 
for MARAD's operations and training budget, which would grow by 
$29.5 million. This account supports the U.S. Merchant Marine 
Academy, provides limited support for the State Maritime 
Schools, and funds MURAD's operations.
    I am pleased that the President has requested $124 million 
for the Maritime Security Program, which provides direct 
payments to United States flag ship operators engaged in 
foreign trade to ensure that these vessels are available to the 
Department of Defense in time of war or national emergency. I 
strongly support this funding as it is critical to the 
preservation of our U.S.-flagged ocean-going fleet.
    The President did not request funding for the Assistance to 
Small Shipyards program in fiscal year 2010. MURAD received $98 
million from the American Government Investment Act to make 
grants under this program. The agency has already received more 
than 400 grant applications totaling more than $1 billion. Such 
a large number of applications demonstrates a wide demand among 
small shipyards for modernization support.
    The President requested only enough funding for the Title 
XI Guaranteed Loan Program to enable MURAL to administer an 
outstanding loan guarantees. No funding was requested to 
support new loan guarantees was requested. Under this program 
loan guarantees are available to those purchasing ships from 
the United States shipbuilding industry and for the 
modernization of U.S. Shipyards. The U.S.-flagged ocean-going 
fleet is aging and the industry will likely need assistance if 
these vessels are to be replaced with new, modern vessels.
    We look forward to the opportunity today to examine all of 
these budget requests. We thank our witnesses for being with 
us. Admiral Allen, it is always a pleasure to see you, all of 
your command, and all of the other witnesses.
    With that, I yield to my distinguished Ranking Member, 
Congressman LoBiondo.
    Mr. LoBiondo. Good afternoon, Mr. Chairman. Thank you very 
much for calling this hearing. Admiral Allen, Master Chief, 
thank you for being here.
    This afternoon the Subcommittee is reviewing the 
President's request for the Coast Guard and Maritime 
Administration and the Federal Maritime Commission. As of 
today, there are only 170 days remaining in the current fiscal 
year, which gives us very little time to act on the requests. 
However, I appreciate the speed with which the Subcommittee is 
considering the budget given how late it was submitted to us.
    I have to start off by expressing my concern and 
frustration with the Coast Guard's continued refusal to provide 
the Subcommittee with a detailed explanation of how it plans to 
utilize the stimulus funding that was provided by the Congress 
earlier this year. The Subcommittee staff has requested this 
information more than three weeks ago and we have been informed 
that the Service is not authorized to make this information 
available. I am not exactly sure what that means, Mr. Chairman, 
but it means we are working without information that we need. I 
do not understand how keeping us in the dark fits in with this 
new way of doing things in an open and transparent manner. The 
Service, however, submitted a full justification for its fiscal 
year 2010 budget request.
    The Coast Guard's scope of responsibility seems to grow 
each and every year, and it is vital that Congress provide the 
Service with the resources necessary to support all of its 
missions. I have not been happy with the numbers in past years 
because of the increased requests, in fact demands, that have 
been put on the Coast Guard to do these additional missions.
    The request includes funding for the recapitalization of 
the Coast Guard's deteriorating assets. The assets are 
increasingly unreliable, often suffering major failures while 
in operation and having a significant impact on the Service's 
operational capabilities, not to mention the potential to put 
Coast Guard men and women in harm's way because of failure of 
equipment. However, I remain concerned that the Coast Guard's 
plans to replace these legacy assets cannot be carried out in a 
timely manner in the current funding level of roughly $1 
billion per year. For the foreseeable future the acquisition 
budget is fully committed to the National Security Cutter, Fast 
Response Cutter, maritime patrol aircraft, and sustainment of 
the Medium Endurance Cutters. Unfortunately, that leaves little 
room for the acquisition of offshore patrol cutters, unmanned 
aerial systems, inland river tenders, Polar icebreakers, and 
what I expect will be a frighteningly large and as yet 
unbudgeted amount to keep the High Endurance Cutters afloat.
    The Coast Guard needs to look at all of these planned 
acquisitions and determine what mix of assets the acquisition 
budget can support. And if more funding is needed, I humbly 
request, I plead with the Service to tell us what that request 
is, to tell us what we need to do. I hope our witnesses will 
speak to the Coast Guard's strategy to overcome these 
challenges.
    The Coast Guard has also proposed to terminate operation of 
the LORAN-C system, which provides positioning information to 
commercial, recreational, and government aircraft and vessels. 
I am extremely concerned this decision will leave us without 
any backup to the global positioning system. Has the Federal 
Government determined that no supplemental navigation system is 
necessary? If that is the case, I would like that to be 
explained. What happens if G.P.S. becomes temporarily or 
permanently unavailable? What is the backup? What do we do? I 
am getting questions from some ship captains from New Jersey 
asking what the plan is and I cannot answer them right now. 
Furthermore, although the Administration has touted a $36 
million savings they expect from shutting down LORAN-C, the 
Coast Guard has not developed an estimate of the cost 
associated with environmental cleanup at existing LORAN sites, 
nor has the Service determined what work would be necessary to 
the existing infrastructure to support E-LORAN or some other 
supplemental navigation system. I think these questions need to 
be addressed before any action to dismantle LORAN-C is taken.
    I am also perplexed by the Administration's request of zero 
dollars for construction and maintenance of the Coast Guard's 
shore-side facilities. The Coast Guard currently has a shore-
side backlog of over $1 billion. Coast Guard station housing, 
hangars, and other support buildings are deteriorating as we 
speak. Yet, no funding has been targeted for these projects. I 
hope the Service has a good answer for us on how they intend to 
manage this serious situation.
    We will also welcome witnesses from the Maritime 
Administration, the Federal Maritime Commission this afternoon. 
I am pleased to see the President including funding to enhance 
infrastructure at our ports to improve the security and 
efficiency of cargo as it moves among different modes of 
transportation. Our Nation's maritime highways are vastly 
underutilized as an asset and I look forward to hearing more 
from MURAD's efforts to increase the use of our inland rivers 
and coastal routes as an alternative to our overloaded roads 
and rails.
    I am also interested to hear more about the FMC's ongoing 
efforts to level the playing field internationally for U.S. 
shipping interests and monitoring activities which impact 
commerce at U.S. ports.
    We once again, Mr. Chairman, want to thank you for holding 
this hearing. I thank the witnesses for being here. I am 
looking forward to their testimony.
    Mr. Cummings. Thank you very much. Do other members have 
opening statements? Mr. Coble.
    Mr. Coble. I will not take five minutes, Mr. Chairman. I 
thank you for calling the hearing. I will just say to the 
Commandant and to the Master Chief that Americans continue to 
be appreciative for the outstanding service the men and women 
of the Coast Guard perform. I commend you two for a job well 
done. Thank you, Mr. Chairman. I yield back.
    Mr. Cummings. Thank you very much, Mr. Coble.
    Admiral Allen, I would appreciate it if you would address 
the stimulus question in your statement, if you do not mind, 
the question that was just raised. It concerns me, too. So we 
need to get that off the table.
    We now will hear from Admiral Thad Allen, the Commandant of 
the United States Coast Guard. He is joined by Master Chief 
Petty Officer Charles Bowen. I want to thank you for being with 
us also, Master Chief.
    Admiral?

 TESTIMONY OF ADMIRAL THAD W. ALLEN, COMMANDANT, UNITED STATES 
COAST GUARD, ACCOMPANIED BY MASTER CHIEF PETTY OFFICER CHARLES 
W. BOWEN, MASTER CHIEF PETTY OFFICER, UNITED STATES COAST GUARD

    Admiral Allen. Thank you, Mr. Chairman, Representative 
LoBiondo, and distinguished members of the Subcommittee. I am 
pleased to testify on the Coast Guard's budget request this 
year for fiscal year 2010. I have brief opening remarks and ask 
that you submit my written statement for the record.
    When I became Commandant in 2006, one of my primary 
objectives was to evolve the Coast Guard into a change-
sensitive organization to modernize command, control, and 
logistic support, to optimize workforce, and to improve 
business practices. Building upon the Coast Guard's culture and 
bias for action, we have made significant strides toward those 
goals. Modernization remains Job One in the coming year as it 
impacts almost everything the Coast Guard does. And as we have 
carried out our modernization efforts, the dedication, 
expertise, and professionalism of your Coast Guard has been 
constant. Despite our Nation's economic struggles and the 
numerous global threats we face, I believe the state of the 
Coast Guard remains strong. The Coast Guard has never been more 
relevant and never been in greater demand. The confluence of 
globalization, expanding maritime trade, energy exploration, 
and the tremendous value we provide throughout Government are 
stimulating unprecedented demand for our services. Going 
forward, we must ensure the Coast Guard has the resources, 
authorities, and competencies in place to continue to answer 
the call for our Nation.
    The 2010 budget provides much of what I need to manage 
safety and security risks in the maritime domain. As the Nation 
struggles with the current fiscal crisis, we are prepared to 
make difficult financial decisions to optimize our existing 
resources. However, we can no longer do more with less. As I 
told my folks at All Hands meetings and other fora where I 
meet, we will allocate or resources to buy down risk in the 
most vulnerable areas. But you cannot do more with less. You do 
the same with what you have got and you accept risk where you 
cannot act.
    As I reflect on my tenure of service, I am filled with 
pride and humbled to lead our remarkable workforce. Over the 
past year our men and women, active duty, reserve, and civilian 
and auxilliasts alike, performed with profound dignity, 
courage, and sacrifice, as their predecessors have for two 
centuries. They embody the highest ideals of public service. 
Master Chief Bowen and I are concerned about the welfare of our 
workforce. Retaining military and civilian employees and 
attracting the highest quality workforce is the key to our 
current and future success. I have embraced the goal of a 
geographically distributed workforce and a diverse workforce. I 
look forward to working with the Committee on several workforce 
management issues, including opportunities to expand hiring 
authorities to increase our competitiveness with other Federal 
agencies.
    I also welcome your interest in how we can improve our 
accession program to United States Coast Guard Academy. I 
believe we can establish a process that achieves our shared 
goal of improving diversity by recognizing the value the Coast 
Guard Academy brings to this Nation.
    Guidance I provided during our review of the Management 
Directive 715, reviewed last Fall, together with the recent 
recommendations of the Booze, Allen, Hamilton report are being 
implemented by our civil rights program. We have added six new 
positions and reorganized headquarters staff to ensure all of 
our people are in the most productive environment possible. And 
earlier this week I approved a new field structure consistent 
with the Booze, Allen, Hamilton recommendations.
    As I mentioned, globalization is drawing the world closer 
together. Force multiplying partnerships are increasingly 
critical to protecting U.S. Interests around the globe. For 
example, in the Pacific we are working closely with Canada, 
Japan, and the Peoples Republic of China to halt illegal, 
unreported, and unregulated fishing of tuna, a multinational 
problem that taxes the global economy over $10 billion 
annually.
    Further, the Coast Guard law enforcement detachments 
regularly deploy with U.S. Navy and allied vessels to counter 
piracy and enforce laws and treaties. In Europe, we maintain 
close ties with the shipbuilding industry to ensure new cruise 
ships are safe. And in the central command area of operations, 
our support to Operations Iraqi and Enduring Freedom safeguard 
regional economic interests, build partner capacity, and bridge 
divides between ministries of defense and interior throughout 
the region. At home the maritime transportation system remains 
the life blood of our national economy. In the United States it 
carries 78 percent of our international trade, including 66 
percent of all crude oil consumed, while generating and 
sustaining thousands of jobs. I expect these trends will 
increase in the next 15 years.
    Growth of the marine transportation system has increased 
demand for Coast Guard to conduct inspections, facilitate safe 
and efficient vessel movements, and ensure security in an 
increasingly complex port environment. Safety and security are 
inextricably linked here and we need to bolster national 
capability and competency. The President's budget requests $7.5 
million to add an additional 74 marine safety positions in 
support of Marine Safety Enhancement Plan. Included in this 
effort is the establishment of several marine safety centers of 
excellence, expertise that will ensure a collaborative national 
approach to complex specialized areas of industry such as on-
and off-shore LNG terminals which are expected to grow over 200 
percent in the next ten years. We expect to convene a cargo 
security conference this Fall, Mr. Chairman, consistent with 
our prior conversations.
    Persistent threats including the specter of transnational 
terrorism, increased sophistication and frequency in human 
smuggling and drug trafficking , and steadily declining fish 
docks continue to present operational challenges for Coast 
Guard men and women. We must understand the most effective way 
to protect our border. This would address threats long before 
they make landfall. This requires an awareness of the maritime 
domain coupled with the right mix of authorities, competencies, 
capabilities, and partnerships.
    The receding Arctic icecap is inviting more tourism, energy 
exploration, and maritime shipping in this pristine 
environment. There is water where there once was ice and the 
Coast Guard has a burgeoning mission there. The signing of the 
recent National Security Presidential Directive sets 
interagency policy for the Arctic. However, our national 
efforts would be significantly enhanced if we ratified the U.N. 
Convention on the Law of the Sea.
    We have significant issues with our High Endurance Cutters, 
as was mentioned. As we speak today, four of the twelve High 
Endurance Cutters, representing 33 percent of our long-range 
fleet, are in dry dock or tied up for unscheduled maintenance. 
We must do something to sustain this fleet. I have committed 
base resources to do it and we must keep our promise to our 
people.
    Regarding the stimulus package, Mr. Chairman, Mr. LoBiondo, 
we are under guidance right now that the amounts of funding 
cannot be released. We will do that as soon as we can. That is 
not a decision that is held or taken inside the Coast Guard.
    In closing, I am grateful to help address these serious 
issues. While there will be challenges as we move forward, we 
have the right structure, institutions, and strategic approach 
lighting our way. The fiscal year 2010 President's request 
supports my efforts to modernize, manage our workforce, and 
deliver the assets and systems needed to meet our future 
mission needs.
    I would add one thing since this is a MURAL hearing also, 
Mr. Chairman. On Monday the Acting Administrator Jim Caponiti 
and I met with General Duncan McNab, the head of the 
Transportation Command, and Vice Admiral Bill Gortney, 5th 
Fleet Commander from U.S. Central Command in Bahrain, with all 
U.S. Flag shippers off the Horn of Africa. I want to 
congratulate Mr. Caponiti on his collaboration and partnership 
as we issued a new Maritime Security Directive that raise 
security standards for U.S. Flag vessels operating in and 
around the Horn of Africa.
    I would be happy to take your questions.
    Mr. Cummings. Thank you very much.
    I am going to just ask a few questions. First of all, let 
me say that I have often said that I am the Coast Guard's 
biggest fan but also its biggest constructive critic. In the 
area of fan, I was just recently in Brazil and Mexico, Panama, 
and Colombia. I can tell you that the president of Colombia 
basically said to us, a delegation led by our Majority Leader 
Steny Hoyer, he said, I beg you to keep the Coast Guard 
involved with us. And it was extremely complimentary to hear a 
president of a country say those things. And we got the same 
thing from the head of the military in Mexico. So I just wanted 
to pass that along.
    I am going to yield to Mr. LoBiondo and then I will come 
back.
    Mr. LoBiondo. Thank you, Mr. Chairman. Admiral, I 
appreciate your comments concerning the details of the 
stimulus. I understand that your hands have been tied on this. 
Do you have any idea when we might get some details?
    Admiral Allen. Sir, I do not. But at the earliest 
opportunity we can provide it, we certainly intend to do that.
    Mr. LoBiondo. Mr. Chairman, I would hope that we could 
maybe talk to Mr. Oberstar and whoever is blocking the Coast 
Guard from giving us that information that we might be able to 
convince them that this Subcommittee is charged with overseeing 
all Coast Guard personnel and programs. I think it is 
unacceptable that the Coast Guard is being told that they 
cannot give us this information.
    Mr. Cummings. Will the gentleman yield?
    Mr. LoBiondo. Yes.
    Mr. Cummings. I will do everything in my power, because I 
would like to receive the information also.
    Mr. LoBiondo. Thank you, Mr. Chairman.
    Admiral Allen, I wanted to talk to you about LORAN-C for 
just a minute. I talked about it a little bit during my opening 
statement. Do you think the Administration has determined that 
there is no longer a need for the supplemental positioning 
system?
    Admiral Allen. Mr. LoBiondo, what the Administration has 
done in the budget proposal this year is separate the issue of 
the continued operation of LORAN-C from the issue of whether or 
not G.P.S. requires a backup and what that backup should be. A 
year ago there was some discussion that the current LORAN-C 
system could be migrated to E-LORAN which could serve as a 
backup to G.P.S. With the rapid deterioration of our LORAN-C 
system, including four stations that are currently operating on 
vacuum tube technology, the decision was to proceed with the 
decommissioning of the LORAN-C chain and then revalidate the 
requirements for a backup for GPA, whether it would be LORAN or 
something else, and that would be done at the Department of 
Homeland Security level. So we are proceeding with the 
decommissioning of LORAN-C consistent with that policy 
decision.
    Mr. LoBiondo. Understanding the system has challenges, can 
you comment on your views what would happen if G.P.S. 
information became unavailable on a temporary or longer term 
basis and LORAN-C was not available.
    Admiral Allen. Yes, sir. Speaking from just a maritime 
point of view, the Coast Guard sort of represents the 
stakeholders, loss of G.P.S. is a loss of one form of 
navigation. Navigation of a ship is the responsibility of the 
owner-operator or the master. There are other means by which 
they can determine their position whether it is visual lines of 
sighting, radar, and other sensors that are on the ship. The 
understanding is the loss of G.P.S. does not render the vessel 
unable to navigate. There are other means at their disposal if 
G.P.S. were not available. Some other input that I have 
received is there would be some degradation over time to the 
current locating position systems that are used out there. I am 
talking about the automated identification system and long 
range information and tracking which rely on G.P.S. to identify 
the position of the vessel and then transmit that to other 
vessels and other users in the area. At some point that would 
be degraded as well.
    Mr. LoBiondo. Admiral, could you talk a little bit about 
how the Coast Guard will address the rapidly decreasing 
readiness of the 378 foot High Endurance Cutters?
    Admiral Allen. Yes, sir. First of all, we prioritized our 
maintenance programs. These vessels, we are not really talking 
about deferred maintenance here or maintenance that we would 
like to do, we are talking about things like watertight 
integrity, fire safety, actually the ability to operate the 
vessels in a safe manner. We recently took the Dallas and the 
Gallatin out of service. We took the Dallas out of the water 
just this last week and found three penetrations in the hull 
that we did not know existed and we are likely to find more as 
we do a survey of the hull. These vessels had their service 
life extended in the late 1980's, early 1990's. It was intended 
to be for 15 years while we proceeded with the Deepwater 
program. The service life of these ships and the Deepwater 
program have not matched up. These are the only long-range 
vessels that we have that are capable of extended operations at 
our EZ and beyond. So we are talking about required presence in 
the Bering Sea or down off Colombia supporting our Colombian 
partners interdicting drugs. These become the primary platform 
because of their endurance or staying power and the 
capabilities they have out there. So this is a significant 
mission degrader. And it is important enough where I will 
reprioritize internally to keep these ships safe so our Coast 
Guardsmen can operate on them and also because the Country 
needs those hours out there, sir.
    Mr. LoBiondo. OK. Thank you, Admiral.
    Master Chief, I have some questions but my time is ready to 
expire. So, Mr. Chairman, maybe on round two.
    Mr. Cummings. Thank you very much.
    Mr. Taylor. Mr. Chairman. Commandant, thank you again for 
being with us. Thanks for what you do. And your driver after 
Katrina, Dwayne Diaz says hello.
    As you know, I was very disappointed in the Coast Guard's 
failure to enforce the Jones Act regulations on a vessel that 
was rebuilt in China recently. We supplied to the Coast Guard 
photographs that proved beyond a shadow of a doubt that what 
went on was not emergency repairs; it was literally the total 
rebuild of a ship. This was a vessel that was flying under the 
American Flag done in China. And nothing happened. I am 
curious, with the change in Administration, is it your 
intention to continue to ignore those laws or are we going to 
start enforcing that?
    Admiral Allen. Sir, it has never been our intention to 
ignore laws. I have been briefed many, many times on the Jones 
Act and every time I think I understand it I get more confused 
after some of these briefings. There are issues that the Coast 
Guard is responsible for and there are issues other agencies 
are responsible for. But based on the criteria that has been 
established, and unless we want to consider a statutory change 
to that, we have been applying those criteria the best way that 
we know how to make these determinations. It appears over the 
years it has been a very great sense of frustration for the 
Congress, and for you particularly, and for us trying to 
discern this. I would really appreciate some statutory 
clarification if we think that is the best way to go, sir.
    Mr. Taylor. I appreciate that. And Commandant, I want to 
mention to you, and I am not going to give you a name, but one 
of your admirals went so far as to say the Jones Act is an 
antiquated law that we feel like we do not need to enforce. 
Again, I want to remind you that is not subject to the 
interpretation of the individual Coast Guardsman. If it is the 
law, it is the law.
    Admiral Allen. Yes, sir.
    Mr. Taylor. Secondly, it has recently come to my attention, 
we had a shrimp boat sink off the Mississippi coast, another 
vessel hit it, unmarked, in speaking with the Group Commander 
in Mobile and basically was told it is not our responsibility 
to mark it, even though the Coast Guard rescued the crew of the 
sunken boat and knew it was there. Particularly since you were 
good enough to spend a lot of time down in that region and in 
that time down there I am sure you got to know a lot of 
fishermen who realize that a lot of those guys lost their 
homes, that the boat became their home and then when they lose 
the boat they have got nothing. They do not have a thousand 
dollars to go mark where that boat sank. With that in mind, I 
would ask that the Coast Guard would be more flexible in the 
decision for marking these wrecks when they occur, particularly 
if they are in an area where a sizeable number of vessels 
transit. Now the vessel that hit it was going seven knots. A 
steel boat gets scratched up, the guy's pride gets hurt. If it 
had been a fiberglass boat going 30 miles an hour in the same 
circumstances, we probably would have been attending a funeral. 
So again, I realize the number of restraints that you have. You 
are being asked to do a lot of things. But I also think that as 
stewards of the taxpayers trust, we ought to be using common 
sense whenever we can. And I think the common sense rule would 
have been, hey, this fisherman does not have any money, he is 
not going to mark it, we as a Nation ought to remark it. I 
welcome your thoughts on that.
    Admiral Allen. Yes, sir. I am not familiar with the 
individual circumstances of the case. We have many, many cases 
where we will rescue somebody, cannot go in with a boat, 
usually we put out a broadcast. If it can be lit or marked, it 
is. The responsibility to do that depends on the circumstance. 
And I would be happy to look at the individual circumstances in 
this case and provide you an answer.
    Mr. Taylor. Again, I would hope as a policy FE if we know 
there is a wreck in a highly transited area and that the 
probability is that someone is going to hit it, then I think it 
would be prudent for us to have a policy, a common sense policy 
that says it ought to be marked with some sort of a device so 
the next guy will not hit it again.
    Admiral Allen. Yes, sir.
    Mr. Taylor. OK. Thank you, Mr. Chairman.
    Mr. Cummings. Thank you very much. Mr. Coble.
    Mr. Coble. Thank you, Mr. Chairman. Admiral, thank you for 
your testimony. In your testimony you indicated that this 
budget provides much of what you all need to accomplish the 
Coast Guard's many missions. Are you suggesting that there are 
additional resources not contained in this budget that you need 
to fulfill your duties?
    Admiral Allen. Mr. Coble, I would say, in general, there 
has never been a budget that is big enough. So we always have 
unmet needs. We also understand the current fiscal environment. 
Tough choices have to be made and Government has to take a 
position along with everybody else to be responsible in moving 
forward. Are there some things we would like to have in this 
budget? Sure. Can we proceed with the critical recapitalization 
issues that we need to take care of? Yes. Can I operate the 
Coast Guard with the operating funds? Yes. Am I going to have 
to make choices about how I maintain 378s versus some other 
part of the Coast Guard? I will probably have to do that. But I 
am prepared to make those choices and move forward at this 
funding level, sir.
    Mr. Coble. Now that you have the benefit of the podium, 
would you like to specify any of those resources that may be 
missing that you would like to be included?
    Admiral Allen. I can talk in general terms, sir, and not 
get involved in any particular budget year levels. First of 
all, our fleet is older, more expensive, and current services, 
or even inflated cost of living, current services is not enough 
funds to support the fleet the way it is right now. The real 
issue is we need to retire these expensive vessels and get them 
replaced with the new ones. In the meantime, we have to manage 
that gap. That is what I get paid to do and that is what we are 
doing. We make the tough decisions. We take care of the Dallas 
and the Gallatin because our people deserve that. Are there 
other places we would spend money if we were not spending it on 
that? Yes, there are. But the highest priority is safety of the 
vessels that we operate out there. That is my challenge. In 
general, the maintenance accounts for our vessels, we could 
always use more money there. In general, in our acquisition 
programs, buying more and sooner is cheaper under a fixed cost 
environment. You cut costs, you do not break production, you 
get the assets sooner, and you get them at a better price.
    Mr. Coble. I thank you, Admiral. I yield back, Mr. 
Chairman.
    Mr. Cummings. Thank you very much. Mr. Kagen.
    Mr. Kagen. Thank you, Mr. Chairman. Thank you for being 
here. I really appreciate the work that you are doing. I really 
appreciate the Coast Guard. I am going to be very helpful by 
pointing your attention to the backlog in medical reviews for 
mariners. You have a system now in place that has created such 
a backlog that people are having a hard time gaining full 
employment. I am just curious as to what you are going to do to 
remedy that, and hopefully appreciate that when a physician 
examines a patient that you might give that examination and 
determination more credence than somebody who has not.
    Admiral Allen. Sir, actually while we have had a backlog, I 
think in the long run we will improve service in the 
performance of the organization. The review of those medical 
records has taken place regionally at our regional exam centers 
with not a lot of consistency of the criteria being applied 
across those. In fact, a very legitimate point was raised about 
some of the medical records associated with the pilot of the 
Cosco Busan which were being managed locally and not centrally. 
We were in the process of centralizing all those records in 
fact when that event occurred. What we have now is a 
professional cadre of medical professionals in one place that 
are reviewing all the records for consistency. The issue that 
caused the backlog was a low estimation of how many records 
would actually be brought to the central location. We are 
pretty much through that backlog right now. We are targeting 
individuals that need to get their licenses and get working. We 
are cueing those up to the front. We have gone a long way 
towards reducing the backlog, and I would be glad to give you a 
detailed answer for the record. We have got the right fix in 
place with the right professional eyes looking at those 
records. It is a matter of just getting that backlog down and 
just managing the day to day, sir.
    Mr. Kagen. Thank you for your attention to that. I yield 
back.
    Mr. Cummings. We are going to break because we have three 
votes. But let me ask you this before I leave. What is 
happening with the pool down there in North Carolina?
    Admiral Allen. The rescue swimmer facility, sir?
    Mr. Cummings. Yes.
    Admiral Allen. Proceeding. I will give you the dates 
exactly, timing for it and everything. We will give you that.
    Mr. Cummings. The reason why I asked that question is 
because I think in this Country we have to be very careful. 
When Mr. Coble asked you about the budget, I think we have to 
be very careful to make sure we get what the Coast Guard needs. 
I will never forget visiting that pool, the rescue--what do you 
call it?
    Admiral Allen. The rescue swimmer facility, sir.
    Mr. Cummings. I will never forget it. And to know that our 
young men and women had to almost go to that facility 24 hours 
a day because it was not big enough. And I have said it over 
and over again, I am not knocking you, Admiral, because I know 
you have been fighting for it. But everywhere I would go I 
would talk about that pool because to me that leads to the 
culture of mediocrity.
    Admiral Allen. Yes, sir.
    Mr. Cummings. Where you have got people who are brave, 
courageous, wanting to be the best they can be, patriotic. I do 
not care who you are, your son or daughter go there, they come 
to one of our academies or to one of our services and they bare 
supposed to be trained or whatever, we want them to have the 
best, we want them to live in decent facilities, and we want 
them to feel good about themselves. That is taking nothing away 
from the Coast Guard. It is like I said, we are the ones who 
are going to fight. I know you are in kind of a difficult 
situation here. You have got the President's situation saying 
we have got to cut back, and I understand that, but you also 
have a duty to carry out the duties of the Coast Guard. So we 
understand the bind that you kind of get into. And some way we 
have got to find a point where we say OK, certain things maybe 
we can cut back on, but there are certain things we simply 
cannot. And I was just thinking of one of the things that we 
also have to do is we have to move more and more towards 
innovation. I heard you talk about the medical records. We have 
got to do those kind of things because I think those are the 
kinds of things that are going to make us more effective and 
efficient.
    So with that, we will resume in about half an hour. I sorry 
about that but it is unavoidable.
    [Recess.]
    Mr. Cummings. Welcome back. Mr. Bowen, please proceed.
    Master Chief Bowen. Good afternoon, Mr. Chairman, Mr. 
LoBiondo, distinguished Members of this Subcommittee. On behalf 
of the over 51,000 men and women who comprise active and 
reserve components of our service, I would like to thank you 
for your support and continued efforts to help us position 
America's Coast Guard to be ready to answer the call and 
execute the mission.
    The Coast Guard recently adopted a service-wide ethos along 
with our core values of honor, respect, and devotion to duty. 
The ethos provides a constant reminder to our people of the 
noble calling of this organization and the reasons why we serve 
and the critical importance of our mission. We call it the 
Guardian Ethos: I am America's maritime guardian. I serve the 
citizens of the United States. I will protect them. I will 
defend them. I will save them. I am their shield. For them, I 
am semper paratus. I live the Coast Guard core values. We are 
the United States Coast Guard.
    A few months ago I attended a memorial service out at Coast 
Guard Air Station Barbers Point for the crew of the Coast Guard 
helicopter 6505. That helicopter crashed off Honolulu, Hawaii 
September 4th of last year. All four crew members lost their 
lives. The crew members were Captain Thomas Nelson, Lieutenant 
Commander Andrew Wischmier, AMT2 Joshua Nichols, and ASTI Dave 
Skimin. As I talked to their families and listened to the words 
of those who knew them at the memorial service, I thought about 
the Guardian Ethos. Our members are now required to memorize 
those words in recruit training.
    At the time of the 6505 crash, Coast Guard Cutter AHI, out 
of Honolulu, got underway to search. There is nothing more 
devastating than searching for your own. Their newest guardian, 
almost straight from recruit training, started reciting the 
Guardian Ethos and then the rest of the crew joined in. And I 
thought about why the AHI did that, and I think the answer is 
that sometimes, particularly difficult times, we as human 
beings need to be reminded of our core purpose. The ethos is 
who we are, why we serve, and why the crew of the 6505 and 
countless others before them have sacrificed.
    Our people live and work in hard, difficult, often 
dangerous environments, and while they perform their duties 
their families need to be taken care of. Along these lines, I 
have been concerned for some time regarding the state of Coast 
Guard-owned housing. The vast majority of Coast Guard personnel 
reside in private sector housing. However, there are some 
locations where private sector housing is insufficient and it 
is necessary for the Coast Guard to provide quarters.
    As you know, we operate in many remote coastal regions 
where private housing is unaffordable for our members or even 
unavailable. Currently, the Coast Guard owns over 4,000 family 
homes and 227 unaccompanied personnel housing facilities, 
otherwise known as barracks. The average age of Coast Guard 
housing is 40-plus years and we have an excessive maintenance 
and recapitalization backlog. Housing competes with other high 
priority projects, including pier and hangar repairs, among 
others. We work very hard to allocate funding to the highest 
order needs and sometimes non-operational support requirements 
just do not fare as well. In my judgment, the use of public-
private venture authority, PPV, has almost completely 
transformed the military housing landscape for the DOD military 
services. Over 80 percent of the Army, Navy, Air Force and 
Marine housing inventory in the United States have been 
upgraded from largely substandard condition to new, modern 
upscale housing. The quality of life for military families has 
increased by leaps and bounds.
    We have, the Coast Guard, more than 12,000 members and 
families living in our aged housing, some of which in my view 
are still substandard. These houses are expensive to maintain 
and have frequent maintenance issues. For these members and 
their families the contrast in the quality of life is now 
inescapable. The Coast Guard's PPV housing authority lapsed a 
couple of years ago and prior to that lapse 2006 changes to PPV 
scoring methodologies challenged the Coast Guard's ability to 
execute large scale PPV partnerships. Providing the Coast Guard 
with this authority and giving the Coast Guard an additional 
tool and greater flexibility to tackle our housing challenges, 
PPV can make a huge difference in the lives of our people. With 
your support we will be successful.
    Mr. Cummings. Mr. Baird.
    Mr. Baird. Thank you, Mr. Chairman. I thank our witnesses 
and I thank you for your service to the Country. We are honored 
to have a number of your folks serve in our district at Cape 
May. You do a great job out there and save a lot of lives.
    Admiral Allen, you mentioned earlier right before the break 
about the choices you make with budget. We just heard some of 
the challenges. One of the issues in our district is the 
proposal to move a LNG tanker facility onto the Columbia River. 
One of the concerns I have had about that is that in order for 
it to be managed safely there would be a need for additional 
Coast Guard assets. Having served on this Committee for a 
while, I do not know where those assets would come from. How do 
you deal with that, sir, when you are asked to make reports 
about the safety of a vessel of some sort, how do you manage 
the issue of saying, well, theoretically, it could be done when 
you may not actually have the assets. I wonder if you could 
comment on that.
    Admiral Allen. Yes, sir. And I thank you for the question. 
Frankly, that question has arisen almost every place in the 
country where they are looking at either an offshore or inshore 
LNG facility, and the Chairman and I have actually had this 
discussion as well. Our role as a cooperating agency in the 
permitting process, in this case it would be the Federal Energy 
Regulatory Commission for inshore, I think you are probably 
talking the Bradwood facility in this case?
    Mr. Baird. Yes, sir.
    Admiral Allen. It is to make a determination regarding 
security and safety in the operation not only of tanker transit 
but in the facility itself and to make recommendations on the 
permitting process. That sends a waterway suitability 
assessment. Our job is to say it is either safe and secure or 
it is not. Sometimes we say it is not safe or secure but could 
be made safe or secure with the following measures that could 
be enacted, and that could be for the transportation higher 
security measures, or maybe perimeter security measures for the 
facility itself.
    We get in the horns of a dilemma here when you start 
talking about the sourcing of the security. OK? We want them to 
be safe and secure. I have said at other hearings if a 
condition of our waterway security assessment, our 
recommendation was that whatever recommendation we made had to 
be sourced by the Coast Guard, I would have no reason to ever 
approve another permit or recommend the approval of a permit. 
That said, I think we need to have a discussion about who bears 
the cost of security because that is really where we are going. 
Now once you decide it can be safely and securely operated, who 
should bear that cost? Personally, I think that ought to be 
passed on to the consumer in the price of goods. I think there 
is a role for the United States Government and the Coast Guard 
to establish standards, make sure they are complied with, and 
make sure that security and safety goals are met. But if we 
start having to earmark a portion of Coast Guard effort in a 
particular command area, they are going to have to start making 
trade-offs about which mission they are going to support or not 
support that day. That takes away the inherent flexibility 
which I believe is the genius of our organization to allow 
field commanders to manage risk and allocate resources to the 
highest need.
    I did not give you a real clear answer there, sir, but it 
is that complex of an issue.
    Mr. Baird. And that is the problem and I respect the 
position you are in. My concern is if you are asked to make a 
decision could this be safe and you decide yes, and therefore 
people go and say, OK, we can site it, but the yes was 
contingent upon the funding to provide the crew and the 
equipment to do the escort. Once they have sited it, presumably 
you have got to dedicate the equipment and crew to that 
mission. And what other missions get sacrificed at what other 
cost. That is our concern on this particular situation.
    Admiral Allen. Yes, sir. Mr. Chairman, could I provide a 
more extended answer.
    Mr. Cummings. Please do.
    Admiral Allen. Could I compare and contrast, because I was 
at an extraordinary meeting on Monday regarding the protection 
of U.S. Flag ships operating off the Horn of Africa. Over there 
there are a number of ways you can protect a ship. But if you 
get to the point where you need a security team, whether armed 
or unarmed, it becomes a question of cost and sourcing. And if 
you look at the area we are talking about other, some people 
say it is the size of four Texas', and with only 15 ships in 
that coalition task force you cannot be assured that we can put 
either a ship alongside or an armed team on every vessel. For 
that reason, I issued a maritime security directive on Monday 
under my authority as the Maritime Transportation Security Act 
competent authority to require anti-piracy plans in addition to 
the vessel security plans that are required for vessels 
operating in that area. It would have to be approved by the 
Coast Guard up to and including security teams that could be 
armed or unarmed. Now the inference there is that is the cost 
of doing business and that could be passed on in the price of 
goods. And whether they are under charter or transcommerce, 
somebody else, there are ways to deal with the cost of that. 
But I think the larger issue is how do we clear the cost of 
security, who bears it, and who sets the standards.
    Mr. Baird. I fully concur with that approach, both in the 
Horn of Africa and on the Columbia River. I thank you again for 
your service and your answers. Thank you, Mr. Chairman.
    Mr. Cummings. Thank you. Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman. Admiral Allen, I want 
to thank you for your strong leadership on Arctic issues. My 
understanding is that there is currently a staff level 
agreement on the MOA with the National Science Foundation. Can 
you give us an update on the status of that MOA.
    Admiral Allen. Yes, sir. We provided guidance in the 
appropriations report for the conference last year on two 
things. One was to look at where the base money for ice 
breaking resided, and two, to revise the MOA to make sure 
National Science Foundation and Coast Guard were in alignment. 
I recently met with Arden Bement, myself, and at that point 
Acting Deputy Secretary Rambeers from Homeland Security. Mr. 
Bement and myself are in agreement that the MOU as constructed 
right now works for both of us. It is a useable document. One 
we can move forward on. He also agreed that were the fund 
transfer to take place between the National Science Foundation 
and the Coast Guard, the National Science Foundation had no 
objection to that and that was an appropriate thing to do.
    Mr. Larsen. OK. I understand the Polar Sea will be underway 
later this summer on an NSF science expedition. Were you all 
able to secure an opportunity for polar sea crew training to 
occur in combination with this expedition?
    Admiral Allen. We will do some crew training. Not as much 
as we would like. That is where we are currently constrained by 
the base money residing in National Science Foundation but the 
Coast Guard owning the vessel and the crew. There is a certain 
amount of time you have to be underway to remain competent and 
proficient and those number of days have dwindled each year, 
and it is a concern.
    Mr. Larsen. So is it dwindling this upcoming year compared 
to last year then?
    Admiral Allen. Yes, sir. I can give you a trend analysis. 
We also had some engineering issues with the Polar Sea this 
year that precluded her getting underway. But another thing is 
when you do not operate vessels you are going to have more 
engineering problems when you get underway because ships are 
like people, they atrophy.
    Mr. Larsen. Right. Right. So did I hear you then say on 
this particular expedition this summer that you will have some 
crew for training?
    Admiral Allen. Yes, sir. We had to adjust the schedule due 
to some mechanical issues on the vessel, but I can give you an 
exact number of days for the record.
    Mr. Larsen. Please do.
    Mr. Larsen. Can you give a status on the Polar Star 
sustainment efforts and estimate of the amount of work the Star 
will need to become operational. I understand the 2010 budget 
does not include any money for sustainment.
    Admiral Allen. Yes, sir. We structured the contract for the 
Polar Star so we had a series of options that can allow us to 
do work with operations and maintenance money but keep separate 
acquisition and construction money by contract line item 
numbers and give us a menu of things we could do based on the 
funding level we received. The current funding level for the 
Polar Star is about $30.2 million which was provided to us in 
2009. That is enough work to get us through fiscal year 2009 
and 2010. But the entire amount of money to make Polar Star 
operational is $62.8 million. So we have about a $32 million 
shortfall right now. We will continue to work inside the 
Administration, as we have with the new Arctic policy. But as 
it stands right now, the work can continue but there is a 
decision coming up on the other piece of funding
    Mr. Larsen. For 2011 budget decisions?
    Admiral Allen. Yes, sir. We would have a discussion inside 
the Administration, sir.
    Mr. Larsen. Right. OK. Chief, with regards to housing, the 
housing issue, and potential or discussion about PPV using the 
Defense model, have you look far into that? I know there is 
some testimony and some other comments that the DOD model is 
seen as the cat's meow. But where I come from we have had some 
problems with it but we have worked through those problems and 
it seems to be working pretty well now. To get something 
started like that with the Coast Guard, what would that take?
    Master Chief Bowen. In the past the Coast Guard had the 
authorities but when we were preparing to execute, which was 
around 2006-2007 time frame, there is a scoring methodology by 
CBO that requires the entire cost of the private loan or the 
private person that is in partnership with the Government to be 
carried on the agency's budget.
    In our case, at that time for several properties in Alaska 
and Cape May it would have been about $200 million. Coast Guard 
could not afford to do that. Defense had a huge project 
cancelled several years ago and they were able to keep $8 
billion in their budget as a line item, as a hedge against 
anything going wrong with their PPV acquisition. There are a 
lot of ways to do this. The first thing is we will be proposing 
legislation that will give us our authorities back. We have to 
have that so we ask for your support there.
    We could also partner with PPV with DOD. We did that 
successfully in Hawaii. But to do that, we actually had to 
transfer our properties, 318 family homes in Hawaii, to the 
Army. Now we have an agreement where we inhabit a inhabit a 
certain amount of the new, renewed homes. There is some risk, 
of course, involved with that in case the Army has some kind of 
a surge requirement in Hawaii in the future. So, there is some 
trepidation about going that way again.
    But there are a lot of ways to do this. I have traveled all 
over the Coast Guard. I have looked at these houses. In fifteen 
years, it is like these ships, they are going to be falling in. 
We have reduced the inventory to the point where they are only 
there where we need them. But where we need them, we really 
need them and we need to maintain them.
    I can show you a house in Petaluma, California, a long way 
from any public housing, where when it rains there is two 
inches of water on the lawn and it sits there for a month. It 
is just mud. The piping is substandard. It is always clogging 
up. It is just old, costs a lot to maintain, and this needs to 
be fixed.
    Thank you.
    Mr. Cummings. Let me make sure I am clear on what you are 
saying before we go to Ms. Richardson. You are saying you would 
like to have more money. I am hearing you. You know, I am 
trying to say this in a nice way. We hear you. The last thing I 
want is somebody living in a house that is going to fall in on 
them and I know you don't. At some point, though, somebody has 
to say to Homeland Security, to the Congress, and yes to the 
President that we just want decent housing. I understand the 
whole idea that you have got to kind of stay within certain 
boundaries. But it makes absolutely no sense, none, to have 
substandard housing for our people while at the same time we 
are honoring them saying that they're the greatest in the 
world, they have got a job to do. What I'm saying to is just 
say it. Do you want it or not? When I ask you just now, you act 
like you don't know what I am talking about. Help me.
    Admiral Allen. This is where I do my job.
    Mr. Cummings. Yes, please do your job. I'm not trying to be 
so hard. I want to know.
    Admiral Allen. Two things that are required to make this 
program successful. If it is successful, it shifts a good deal 
of the burden of investment in housing from the Government to 
the private sector. One is the authority to have public/private 
ventures. The second one under current CBO scoring standards is 
to have an amount of money set aside in budget that is 
basically an indemnifying the project in case something goes 
wrong up front so they know who is bearing the risk.
    So we don't need money for construction and appropriations. 
We need authorization to enter into the ventures which requires 
and then deal with the issue on CBO scoring up front and how we 
can make that amount available to enter the venture, sir.
    Mr. Cummings. Have you all ever made that known to us?
    Admiral Allen. Sir, this has come and gone over the years. 
I have been dealing with this for about 10 or 15 years clear 
back to when I was a budget officer. The issue is always been 
whether or not we can develop enough money out of our base 
budget to hold that up to go ahead with the venture. What you 
are doing is keeping money that could be used for something 
else and abeyance and you can do this. It is a trade-off for 
money that you don't get anything for. It's a very difficult 
dilemma for us.
    Mr. Cummings. Chief, I hope you didn't misunderstand me. I 
wasn't trying to be smart. You gave some very compelling 
statements and that's kind of what got me. I just want to make 
sure because I know how you are. You are a very compassionate, 
strong leader and you want the best for the men and women in 
the Corps. So we just need to know what you need.
    I am convinced that while you have been fighting this 
battle for a long time, Admiral, maybe we need to join hands, 
all of us, and say, OK, we are going to stop it right here and 
try to get it done, whatever it is that we need to get done 
based upon what you just said.
    Admiral Allen. Yes, sir. I would be happy to participate.
    Mr. Cummings. All right. Ms. Richardson?
    Ms. Richardson. Thank you, Mr. Chairman. Actually, your 
question rolled right into the question that I had for the 
Master Chief. That question was, as I understand it, the Coast 
Guard has a backlog exceeding $1 billion in unmet repair needs 
throughout its aging shore facilities including its personnel 
housing, air stations, sector offices, small boat stations, and 
at the Coast Guard Academy. In many instances, the Coast Guard 
personnel are living and working in buildings that are 
substandard. Can you describe the extent of the need, which I 
think you just did, and can you indicate the number and the 
total cost of projects that could go to construction now if you 
had the funding?
    So if I understood you, Admiral, you are saying the problem 
isn't that you have the funding, it is in the right category 
and getting proper authorization?
    Admiral Allen. Its authorizing legislation and then dealing 
with the issue on CBO scoring of the money up front. Those are 
the two things.
    Ms. Richardson. Could you provide to this Committee, to our 
Chairman, explicit language clarifying that? Also include what 
particular sections of the categories that I listed, whether it 
is housing, air stations, sector offices, small boat stations, 
or the Academy, that would fall in that category that could 
have the exchanges if you had this occur.
    Admiral Allen. We can do that, ma'am.
    Ms. Richardson. OK, thank you. My next two questions are 
for the Admiral about a towing vessel regulation. Admiral 
Watson indicated in an appearance before this Subcommittee that 
the notice of proposed rulemaking to initiate the rulemaking to 
bring towing vessels under inspection would be out in the 
spring. The spring is here; what is the status?
    Admiral Allen. The status is that we have drafted the 
notice of proposed rulemaking and we are finalizing some 
details and questions associated with the Department right now.
    Ms. Richardson. So, what can we anticipate because the 
spring is here?
    Admiral Allen. As soon as we resolve the questions and the 
issues between the Coast Guard and the Department we would hope 
it would move forward, ma'am. We are right in the process right 
now. I could tell you next week but if its not next week then I 
would hate to commit because we don't have the paper in the 
Coast Guard right now.
    Ms. Richardson. Well with all due respect, this is I 
believe May 12th and so the spring is here. So can we 
anticipate it in the next thirty days?
    Admiral Allen. I will be glad to carry that message back. 
Thank you, ma'am.
    Ms. Richardson. OK, can you follow up?
    Mr. Cummings. Would the gentlewoman yield?
    Ms. Richardson. Sure, Mr. Chairman.
    Mr. Cummings. Admiral, how long do think it is going to 
take? Let me say it to the gentlewoman. The Admiral is 
reluctant to give a specific date because he knows that I am 
going to hold him to it. So I'm just curious. The gentlewoman 
was just trying an estimate.
    Admiral Allen. No, I understand.
    Mr. Cummings. Because Admiral, you will be gone in 2010.
    [Laughter.]
    Admiral Allen. Sir, technically it is not a date you will 
be holding me to. Technically it is a date you are holding 
myself, the Department, and OMB to.
    Mr. Cummings. OK. I don't want you to go, but I'm just 
saying.
    Admiral Allen. Speaking collectively for the Government, I 
can control one part of it but I couldn't tell you a date 
because I don't control the entire process. That's the issue.
    Mr. Cummings. All right. Well, how soon do you think you 
can get us a date?
    Admiral Allen. Well, I think I just told you in 30 days and 
I am happy for the task.
    Mr. Cummings. OK, we will give you 45.
    Admiral Allen. Sir.
    Mr. Cummings. OK, we will get it in 45. I yield back to the 
lady.
    Ms. Richardson. To build upon the Chairman's request, the 
request would be either one, either giving us a date or giving 
us a timeline of how you're going to get to a date.
    Admiral Allen. Yes, ma'am.
    Ms. Richardson. My last question is a general budget issue 
because this is a budget hearing. The proposal before us is 
relatively plain. The funding is providing for operation of new 
assets that you have and acquiring them for a few ongoing 
initiatives such as the effort to strengthen the Marine Safety 
Program, which we obviously strongly support. However, few 
brand new capabilities are being provided.
    What level of additional personnel would you like to see 
the Coast Guard attain to better align your personnel resources 
with your mission objectives? Are there new initiatives or 
capabilities that you believe the Services currently need that 
are not funded in this budget? Finally, your budget request of 
41.403 military positions would actually be a decrease of 24 
positions below the enacted 2009 budget. Why is this?
    Admiral Allen. Let me answer the last one first. Ma'am, 
there are puts and takes related to decommissioning vessels and 
aircraft before new ones come on. So that number can change 
from year to year.
    That said, we do know we have a workload coming that we 
should be planning on that will require increases in the Coast 
Guard. One of them is just what you mentioned. That is 
enforcement of the towing vessel regulations. That will require 
new inspections at frequent periods and a workforce ready to do 
that.
    So as we start looking at some of these rules coming 
online, I can tell you if you are looking at demand that will 
not be met, the first one I would give you it tow boat 
inspections, ma'am.
    Ms. Richardson. OK. So how are you going to achieve that if 
you are requesting a decrease in positions?
    Admiral Allen. Well, we are in a little bit of a chicken 
and egg thing here. Until we get the regulation out and we know 
what the requirements are, we can't go for the workforce to 
support it. But I would anticipate coming in and saying this is 
the increment I need in my workforce to support enforcement of 
the towing vessel regulations.
    Ms. Richardson. So for on the record, what do you think you 
are going to need?
    Admiral Allen. I would be glad to answer that for the 
record, ma'am. Off the top of my head, I would have to go back 
and talk to my experts on that.
    Ms. Richardson. Can we get that in 45 days?
    Admiral Allen. Yes, ma'am.
    Ms. Richardson. Thank you, sir. That is all.
    Mr. Cummings. Thank you very much. I still have a few 
questions, Admiral. I want to just talk about acquisitions. We 
have a hearing on acquisitions on March 24th to examine the 
progress that the Service has made under your leadership in 
modernizing its acquisition management capability, including 
creating a new Acquisition Directorate and issuing and revising 
the blueprint for acquisition reform. That said, there are 
several issues of concern that I want to just ask you about.
    Admiral Blore testified that all of the projects considered 
to be a part of Deep Water, when combined with acquisition 
activities that are also part of Deep Water such as program 
management cost; systems engineering; and technology 
obsolescence preventions programs, are currently estimated to 
cost more than $26 billion to complete. The figure represents 
an increase of $2 billion above the May 2007 baseline cost 
estimate of $24 billion.
    What do you estimate the full cost of the procurements 
contained in Deep Water Program will be? What measures are you 
implementing to effectively control the cost?
    The reason why I am asking this, of course, is that the 
President has made it clear that he is trying to reduce costs. 
Deep Water, at the rate we are going, is going to be $2 billion 
above that. It is possible, I don't know whether it is 
probable, but it is possible that if it keeps going up at the 
rate it is going that at the end of the Deep Water acquisition 
period we won't have the kind of equipment we were bargaining 
for.
    As a matter of fact, I met with a team of manufacturers 
today and I said to them, you guys have got to get innovative. 
You have got to change the way you do business. All this cost 
overrun stuff, you have got to be a lot more careful. You come 
in, hypothetically, with a contract for $4 million and then we 
end up spending $7 million. I think this President is basically 
saying we have got to get a new culture. So I am just curious 
where do you see Deep Water going?
    By the way, I congratulate you on the efforts that you have 
made within the Coast Guard to move more and more towards much 
more effective and efficient acquisition process. But go ahead.
    Admiral Allen. Yes, sir. First of all let me state a 
general principle. Let me walk you through a couple of line 
items that support that. The way to control cost is to do these 
acquisitions better based on a particular asset with open 
competition. Move into fixed price as soon as you can, removing 
the risk from the Government.
    What we have been doing over the last 18 to 24 months in 
assuming the lead systems integrator role from Integrated Deep 
Water Systems is to take each asset, separate it from the 
system, rebaseline that asset, and where it isn't already under 
construction to openly compete it. So the reason that the 
change in the estimate occurred was we have taken every single 
asset in Deep Water--the national security cutter, the coastal 
patrol boat--and we have issued a new acquisition baseline 
validating the cost and the performance.
    So to date, I can give you them really quickly. These are 
the projects that we have rebaselined so far as we move to be 
the lead systems integrator: the national security cutter, the 
coastal patrol boat which is just about done, the Medium 
Endurance Cutter Mission Effectiveness Program, the Patrol Boat 
Mission Effectiveness Program, response boat medium, the 
maritime patrol aircraft, and Rescue 21.
    We are in the process of taking each asset apart and 
pulling it through a knot hole new acquisition baseline for the 
following: the fast response cutter, the H-65 sustainment, and 
the H-65J conversion.
    In other words, we are taking every asset and doing an 
evaluation on it. If there is still a decision to be made, we 
are not going to execute that decision through Integrated Coast 
Guard Systems. We will openly compete it, reduce the risk, and 
get to fixed price. So while there has been adjustment related 
to the early cost growth in Deep Water, some of that related to 
the national security cutter, the best way to control cost and 
reduce cost in the future is an asset by asset open 
competition, fixed price, disciplined acquisition process. That 
is where we are going, sir.
    Mr. Cummings. Now, with the national security cutter, are 
we at that point yet where we level off the course when it 
began to go down a little bit? Are you following what I am 
saying?
    Admiral Allen. Yes sir, we are.
    Mr. Cummings. Now that we have got the blueprints, we have 
been working out all the little kinks. I am just wondering at 
what point do we get to the point where we begin to see, not 
savings, but at least leveling off.
    Admiral Allen. Yes, sir. With hulls four and five, we are 
there, sir.
    Mr. Cummings. Say that again.
    Admiral Allen. With hulls four and five, we are there.
    Mr. Cummings. OK.
    Admiral Allen. That is why it is critical if we can not to 
break production between awarding the base contract for 
construction of the fourth cutter and keeping the long lead 
time materials in the works for cutter number five going off at 
the same time so they overlap in the workforces employed, sir.
    Mr. Cummings. OK. Mr. Hutton with GAO testified at our 
hearing a few weeks ago before the Appropriations Committee, 
Subcommittee on Homeland Security that in September 2008 after 
conducting a full and open competition the Coast Guard awarded 
a $88.2 million contract for the design and construction of a 
lead fast response cutter. However, the Coast Guard does not 
have an approved operational requirements document or test plan 
for this asset.
    Recognizing the risks that are inherent in this approach, 
the Coast Guard developed a basic requirement document and an 
acquisition strategy based on procuring a proven design. These 
documents were reviewed and approved by the Coast Guard's 
Capabilities Directorate, the Engineering and Logistics 
Directorate, and the Chief of Staff before the procurement 
began. According to a Coast Guard official, the Coast Guard 
intends to have an approved operational requirement document 
before procuring additional ships.
    While I understand the urgent need to recapitalize the 
Coast Guard's fleet, I am curious why the Coast Guard would 
deviate from the MSAM process on this procurement, one of the 
first that it is initiating and managing in house, totally 
independent of the ICGS contract team.
    Admiral Allen. Yes, sir.
    Mr. Cummings. What was that about?
    Admiral Allen. That is a fair question. There were two 
competing dynamics here. One was the loss of patrol boat hours 
from the 123s that were taken out of service and our need to 
accelerate a replacement patrol boat. To mitigate risk, we put 
out the solicitation for proposals for the fast response 
cutter. We indicated there had to be a parent craft that was 
already in service operating for a certain number of years some 
place in the world where it was a demonstrated, proven design. 
That would stabilize the requirements by the fact that a parent 
craft had been operated. That was the risk mitigator shortening 
the process we normally would have followed with an operational 
requirements document. It was done because of the loss of the 
patrol boat hours.
    I would say that after they awarded that contract there was 
a protest to GAO. That was denied. The Contract Court of 
Appeals also heard the case and dismissed it with prejudice. In 
our mind, that validates the procurement strategy. We believe 
these are stable requirements. We will issue the operational 
requirements document but for this particular case the need to 
get this cutter built and into the hands of our people and the 
stability that comes with a proven parent craft design, which 
was a requirement, mitigates that risk, sir.
    Mr. Cummings. I am concerned and this Subcommittee is 
concerned about the Coast Guard's equal employment opportunity 
services. Did you have any comments about that, generally?
    Admiral Allen. Yes, sir.
    Mr. Cummings. I know you got that report, didn't you?
    Admiral Allen. Yes, sir.
    Mr. Cummings. It was not very flattering to the Coast 
Guard.
    Admiral Allen. Yes, sir.
    Mr. Cummings. Do you take any responsibility for that?
    Admiral Allen. I am totally responsible. I am the 
Commandant, sir. As I told you in the past, I am responsible to 
take care of this as well.
    Mr. Cummings. I am going to let you talk. I just want to 
hear what you have to say.
    Admiral Allen. Yes, sir.
    Mr. Cummings. You can also tell us about what is going to 
be happening with the Academy. We have been looking at the 
numbers and it seems like, as far as African Americans are 
concerned, we are going backwards.
    Admiral Allen. Yes, sir. First of all, in regards to equal 
opportunity and civil rights, we have for about six months been 
looking at a number of issues related to that. That predates 
the Booz Allen Hamilton report, which was issued after the 
first of the year. I had personal concerns when I reviewed the 
Management Directive's 7/15 report last fall, which is our 
annual report that is due on equal opportunity.
    There were some issues raised in there that caused me some 
concern that we probably weren't doing enough robust barrier 
analysis to entry into our workforce by our civilians. More 
troubling, we actually stated in our report that we weren't 
resourcing our Civil Rights Office.
    The report was to me to sign leaving the Coast Guard. I 
thought at one point about sending back and changing the report 
but I think you and I would both agree that was disingenuous. 
So in December of 2008 I signed the report and I gave a 
direction to my Vice Commandant, the Chief of Civil Rights, and 
the Chief of Personnel to address resource shortfalls, 
organizational issues, and to come up with a plan to move this 
program forward. The points that were raised in that review are 
actually verified and ratified by the Booz Allen Hamilton 
study.
    So we have taken that for action. We have moved out 
aggressively. I have approved a reorganization of the Office of 
Civil Rights and the field organization structure. At the 
hearing you held recently, we said that by the end of May we 
would fill six positions. We have done that, sir. We have 
provided about $750,000 to the Office of Civil Rights this year 
to start doing manpower studies. Ms. Dickerson has been out 
visiting the district office, socializing the field changes 
that she has proposed. The restructuring of the Civil Rights 
Office is exactly in line with Coast Guard modernization and 
how we intend to do support services across the Coast Guard.
    So we are moving out very, very strongly on all points. We 
accepted the report. We saw where we need to make changes and 
we are making the changes, sir.
    Mr. Cummings. I have just two other things. We learned 
during our hearing that you just referred to that the Office Of 
Civil Rights had repeatedly requested additional personnel 
specifically as documented in the Coast Guard's own MD715 
report. I guess that is what you are referring to?
    Admiral Allen. Yes, sir.
    Mr. Cummings. The Office of Civil Rights had requested 
additional funding in fiscal year 2008 for six additional 
personnel to meet the field personnel resource level 
recommended in the 2001 review of the Coast Guard civil rights 
program. The funding request was not funded in 2008 and was 
resubmitted in fiscal year 2009. Why was the recommendation 
that was made in 2001 left unfulfilled for so long? That is a 
long time.
    Admiral Allen. Yes, sir. I would just say this: Again, I 
wasn't in the position to go back and change that report 
because it was submitted to me and I forwarded it on.
    Mr. Cummings. You act like that is a big deal. I mean, I 
wouldn't want you to change the report.
    Admiral Allen. Exactly, sir. But what I was going to say 
is----
    Mr. Cummings. We are just seeking the truth.
    Admiral Allen. We did provide resources over the last 
several years that may not have been identified in the report. 
That is what I saying.
    Mr. Cummings. Oh, I see.
    Admiral Allen. Yes, sir. In fiscal year 2004, we actually 
added two GS-14 billets to both the Atlantic and the 
headquarters EEO staff. Over the years, the problem is being 
successful in an actual budget process for two or three 
positions. That is very difficult to do, moving that out 
through the Administration and OMB. So we have actually 
reprogrammed some base resources over the years.
    I would like to give you an answer for the record on where 
we have done that. In addition to the six that we have just 
provided, the entire strength before we provided the six was 45 
EEO specialists and 14 support personnel. We have now added six 
to that so we are up to a total of 66 personnel in the civil 
rights program in the Coast Guard right now. I would like to 
lay that out for you if I could for the record, sir.
    Mr. Cummings. All right. During our last year we saw from 
data provided by the Coast Guard--and this is just going back 
to the Academy--that nine African Americans had been offered 
admission to the Coast Guard Academy, Class of 2013. How many 
of the nine individuals who were offered admission came from 
the preparatory school and how many of the nine were direct 
offers to individuals who had not previously attended the Coast 
Guard preparatory school? And as of today, how many of the 
African Americans have accepted the offer for admission?
    Admiral Allen. Yes sir. Of the nine, four were direct or at 
large, and four were Coast Guard Scholars coming from the 
preparatory schools. As it stands right now, we have four 
acceptances but the window has not closed and we are working 
the kids as we speak, sir.
    Mr. Cummings. And with regard to women, how are we doing 
with regard to women in the Academy? I understand we are doing 
pretty good there.
    Admiral Allen. Yes sir. I would have to go check, I think 
we are somewhere around 28 percent.
    Mr. Cummings. I see. All right.
    Mr. LoBiondo?
    Mr. LoBiondo. Thank you Mr. Chairman. Admiral Allen, can 
you talk a little bit about the current state of Coast Guard's 
shore side support infrastructure? I talked about that a little 
bit in the opening statement, my concerns for how you are going 
to deal with that.
    Admiral Allen. Yes sir. Are you talking about shore 
infrastructure, buildings, and facilities?
    Mr. LoBiondo. Yes sir.
    Admiral Allen. As the Master Chief has stated, many of our 
facilities are very, very old, 40 or 50 years old. Some of them 
are actually historical buildings now based on the fact of when 
they were built. Some of our SAR stations were actually built 
in the 1930's during the WPA era. When I became Commandant, our 
shore funding was around, I believe, $20 million a year. There 
was a time right after we were awarded the deep water contract, 
because of funding constraints, where the shore account was not 
funded at all. In other words, there was zero money.
    A couple of years earlier in the 2000 decade, I made it an 
internal goal of mine to raise the recurring amount for shore 
facilities to $100 million before I left as Commandant. I would 
certainly like to see it rise higher than that.
    If I could just make one clarification, there does not 
appear to be shore money in the 2010 request but a good deal of 
the $98 million provided for in the stimulus package will go 
there once we are allowed to release the details. So I am 
convinced that as far as establishing the $100 million goal 
that we are substantially there for 2010.
    We are also the recipient of several hundred million 
dollars for hurricane repair money as a result of what happened 
in the Gulf. Sometimes a storm helps you. If you have got an 
old fallen down station, if it gets hit by a hurricane then you 
have emergency supplemental funding and you can build that 
station. Frankly, we have done that pretty much all over the 
Gulf Coast right now.
    So I would tell you, going through 2010, I am OK with where 
we are at. I am not OK that we have solved the problem long 
term and that we have got a wedge or a base in there that is 
enough to sustain us. The floor ought to be $100 million a 
year.
    Mr. LoBiondo. I have just one more quick one before I go to 
the Master Chief. What percentage of Coast Guard owned housing 
would you say is in need of major repair?
    Admiral Allen. I would almost refer that to our civil 
engineers and give you a really detailed answer for the record, 
sir. The Master Chief and I go out and we see them. If I were 
to give you just an intuitive answer, if you will let me 
correct it in case I am wrong, I would say it is probably in 
thirds. We have a third that is really good; we have a third 
that is kind of right in the middle, it is kind of OK; and we 
have a third that you would really have to think twice about 
whether or not that is where you would want to put your people.
    Mr. LoBiondo. Master Chief, I think that----
    Mr. Cummings. Would the gentleman yield?
    Mr. LoBiondo. Certainly.
    Mr. Cummings. We can do better than that. I know it is 
upsetting to you all, but this is the United States of America. 
This is not some Third World country where we can't provide our 
members of the Corps with housing so they can have a decent 
night's sleep and have a place to go to just rest. That is just 
unacceptable. Really, it is just unacceptable. I think anybody 
who will sit around and stand for that without fighting, there 
is a problem. We are going to fight.
    I think, I'm sure I speak for both sides, everybody is very 
complementary of these folks but we have got to make sure that 
we provide them with that housing. That is why I am so glad 
that you said the things that both of you all have said. It 
means a lot to me.
    Thank you for yielding.
    Mr. LoBiondo. Mr. Chairman, to further engage that fighting 
spirit about which I am very happy to hear, maybe the Master 
Chief can provide you with some photos that would give a clear 
indication of just how terrible some of this is. Master Chief, 
would that be a possibility?
    Master Chief Bowen. Sir, that has already been provided. It 
is in the package for each Member.
    Mr. LoBiondo. OK. I think Mr. Coble is going to have a 
question in one area of housing.
    But I wanted to ask you, Master Chief, the housing is very 
critical but in addition to the housing authorities, what other 
authorities does the Coast Guard currently lack with parity 
with the Department of Defense? Some of it maybe has to be 
dealt with by statute and some of it maybe doesn't. We are 
going to maybe need to know that. If that is not something that 
you can answer today, maybe you can come back to us with a list 
on what we can do because we are just short of money on what we 
need statutory changes on to get ourselves parity with DOD.
    Admiral Allen. With trepidation, I speak for the Master 
Chief here. I would give you one kind of thematic issue, sir, 
to deal with. It is something I deal with and something the 
Master Chief deals with. This is not an act of commission. I am 
going to say that right now because we love our DOD partners. 
We fight and work together everywhere.
    But in many cases when you are looking at Defense 
Authorization, when they are talking about issues like family 
programs or access say to child development centers and things 
like that, if the language is not exact and precise about all 
of the Armed Forces, which include the Coast Guard, which is in 
DHS, we sometimes run into a barrier where there is an 
unimplied but all of a sudden a legal constraint because the 
terminology and legislation say Department of Defense rather 
than Armed Forces. Sometimes this is one of those things where 
if there is just better visibility and understanding, it takes 
care of itself. Master Chief?
    Mr. LoBiondo. Well, before we go to the Master Chief let me 
just make sure I understand. So what you were saying is if in 
the Defense Authorization Bill, which is going to being taken 
up soon, if we are more precise with our language, this will 
enable the Coast Guard to participate in a fuller way. Is that 
what I am hearing you say?
    Admiral Allen. Yes, sir. In cases where there is an 
entitlement or a family program, there are times where we have 
gone to bases and approached them and they will say, we 
understand but you are not Department of Defense and that is 
what the law says.
    Mr. LoBiondo. This is very timely then.
    Admiral Allen. I would ask the Master Chief to comment as 
well.
    Mr. LoBiondo. OK. Master Chief?
    Master Chief Bowen. Recently Admiral Allen's spouse and my 
wife met with Mrs. Obama and she asked those very same 
questions. We provided her with a paper that definitely shows 
that there is a gap in family program services between what the 
Coast Guard gets and what the Department of Defense family 
services are. That is just wrong. My wife hounds me up and down 
about it.
    For instance, I will just throw this out, the Department of 
Defense is able because they have the money to engage in what 
is called Military One Source which is a referral for many 
different support services for military families. The Coast 
Guard has a referral service. It is called EAP. My wife calls 
it the economy model. This is one of the differences: With EAP, 
you can get six referral visits to, say, get counseling for a 
number of issues. With Military One Source you get 12, which 
enables you to really get with a counselor and get to the meat 
of the problem.
    In this type of thing, we definitely need equity and we 
need to move closer to equity. One of the things is language. 
Another thing is we just need to work very hard to get funding 
for our work/life programs.
    Mr. LoBiondo. So there is a list you can provide us of the 
authorities that we should look at changing?
    Master Chief Bowen. Well, there is a paper that was given 
to the White House regarding the parity issue. But I don't know 
that it is specific enough for what you are asking.
    Mr. LoBiondo. OK. Well, very directly with the Defense 
Authorization Bill coming up we need to know what we maybe can 
fix this year by language so we don't miss this opportunity 
with the Defense Authorization Bill this year. I would be 
willing to take that as a personal mission, being on that 
Committee.
    Admiral Allen. Yes, sir. We would be happy to create what I 
will call the art of the possible this year. We will also give 
you a copy of the paper that our spouses provided to the First 
Lady.
    Mr. LoBiondo. OK. Thank you Mr. Chairman.
    Mr. Cummings. Thank you. Mr. Taylor?
    Mr. Taylor. Thank you Mr. Chairman. Commandant, Chief, 
thank you for sticking around. Master Chief, that was a great 
statement you made a few minutes back.
    Chief, I am curious in your travels. I also serve on the 
Armed Services Committee. We are blessed with both Coast Guards 
and a large contingency of Navy in my district. Several of the 
Navy commanders have brought to my attention the high cost of 
wind insurance for those people who live on the local economy. 
Seeing as how the Coast Guard is in coastal America and that 
the insurance industry has pulled out of costal America, do you 
hear much of that from your folks who live on the local 
economy?
    Master Chief Bowen. Sir, I think it is a rising problem, 
certainly. Say in Florida, many insurers have actually pulled 
out of there. It is not something that is brought up to me 
every day, but I am aware that it is rising problem because we 
have to move our people there and they have to live there. So 
they need to have affordable insurance.
    Mr. Taylor. Commandant, the other day a professional 
maritime operator stopped me and posed what I thought was a 
very smart question. That is why do we this late in the game 
still have two sets of rules for inland waters and western 
rivers with two sets of lights and two different 
documentations? Again, I didn't have a good answer for him, 
quite honestly. So I am asking you, the expert.
    Admiral Allen. I think the first time I had that question 
was when I was trying to learn the rules of the road as a 
Cadet. Can I go back and think about that? I am not sure that 
isn't a good point.
    Mr. Taylor. Would you have someone consider that? Because 
again, I also had to memorize those rules many, many years ago. 
I just wonder if it wouldn't make sense just to go to inland 
waters for everything. Could you can get back to me on that, 
again just in the name of standardization?
    Admiral Allen. Yes, sir. The only comment I would make is 
we do have a nexus now with the International Navigation Rules 
and the International Regime as well. But I would be happy to 
get back and give you some ideas on that, sir.
    Mr. Taylor. All right. The third thing goes to the failed 
123 Program. The more I learn about it, I have to admit that as 
a taxpayer, the angrier I get. I will just say that up front.
    Number one, it was a performance specification. Then when 
the performance specification didn't work, we pay apparently--
and please correct me--we paid the contractor again to weld 
some plate along the gunnels to try to stiffen the hulls. This 
was to the tune of about $130,000 per boat times $8 million. 
Then we apparently we took it to a second yard and had many of 
these vessels replated, which I am certain with my limited 
legal knowledge, I strongly suspect is going to void the 
warranty at the first yard. That is just my opinion.
    What is being done? Number one, that contract had to have 
been horribly flawed for our Nation to have to pay that 
contractor in the first place to make the changes to a 
performance specification ship that didn't perform. You would 
think that under normal circumstances that would have been 
their cost to fix it and their cost to continue fixing it until 
the ship worked. You would think someone in the acquisition 
community would have said, don't take it to a second shipyard 
because we may void our warranty.
    What changes have been made? That is water under the 
bridge. What changes have been made so that you can assure me 
that this isn't going to happen again?
    Admiral Allen. Yes, sir. We have had this discussion 
before, sir. I think one of the frustrations you had, let me 
talk about water under the bridge just for a little bit, I 
think there has been general frustration in the Congress and 
with everybody related Deep Water about what I would call a 
single point of accountability. So you go back and find out 
when the decision was made, who is accountable, why didn't they 
perform, how you are going to hold them accountable, and what 
you are going to do about it. It was so diffuse and the 
contract structure was so vague about those types of 
responsibilities that I am not sure we are ever going to be 
able to figure that out.
    One thing we do know, if you have a technical authority 
established independent from the program people who are 
acquiring the vessel who are the ones who have to certify that 
the performance specification has been met in all technical 
ways, whether you are talking about hull and engineering, you 
are talking about the sensors, you are talking about even the 
personnel accommodations associated with that, if there is a 
separate technical authority that is warranted to protect those 
interests then you get performance out of the acquisition.
    The new acquisition structure we have formed places a 
technical authority in a position to make sure the requirements 
are met. Those are dictated to the program manager that has to 
execute them to technical specifications.
    Many times, in fact more often than not, we will pull in 
partners to help us, whether it is the folks up at Carderock 
with the Navy or the American Bureau of Shipping. We use a lot 
of partnerships to ensure that the technical requirements are 
met.
    I believe that the modernized Coast Guard with the product 
line management scheme that we have set up, the Service Forces 
Logistics Center that we have now in Curtis Bay, is the right 
organizational model that could have helped people or succeeded 
at the start. I have held for a long, long time that if you are 
going to award a contract to Integrated Coast Guard Systems you 
had better damn well have an integrated Coast Guard. We did 
not.
    Mr. Taylor. As far as your legal staff, I really am amazed 
that that contract was allowed to become law without someone 
raising a flag that, hey, if they screw up building this thing, 
they ought to pay. As far as the legal end of it, is that part 
of--again, going forward--is that part of your contracting 
psyche changed so that the next time we build a cutter?
    Admiral Allen. Absolutely, sir. The other thing is, as I 
mentioned earlier, it is getting out of a cost plus contract 
environment to fixed price where the risk is assumed by the 
contractor, sir.
    Mr. Taylor. And going forward, that could be the case?
    Admiral Allen. Yes, sir.
    Mr. Taylor. OK.
    Mr. Cummings. The gentleman's time is expired.
    Mr. Taylor. Thank you, Mr. Chairman.
    Mr. Cummings. Thank you. Mr. Coble?
    Mr. Coble. Thank you, Mr. Chairman.
    Master Chief, the distinguished gentleman from Washington 
started the question on housing. The Chairman and the Ranking 
Member picked up on it. I want to continue it because I believe 
that second only to safety, I know of no more issue any more 
pressing or important than housing. Good housing is a direct 
contributor to high morale.
    In your statement you indicated your concern, and I share 
that concern, about the state of Coast Guard owned housing. The 
average age is in excess of four decades and not unlike many 
cutters in the Coast Guard fleet, getting older.
    We have a good number of DOD bases in my State of North 
Carolina and, as you know, in your State. But the Department Of 
Defense has been very successful in using public/private 
venture housing authority to improve the quality of their 
housing facilities.
    While I know you all have many demands on your budget and 
that you may not currently have the resources to commit, would 
reauthorization of public/private venture housing authority for 
the Coast Guard be an important first step towards improving 
the state of your housing and the quality of life for your 
shipmates and their families?
    Master Chief Bowen. Yes, sir. I thank you for the question. 
It absolutely would. I would like to continue with saying that 
public/private venture is now a proven way using mostly private 
money to renew these houses. And that is, Mr. Chairman, the 
reason why I probably looked a little taken aback when you made 
your statement. It is because I didn't ask for money.
    That is the beauty of this. It doesn't take a huge amount 
of Government money. As long as there aren't failures, and 
there haven't been, most of it is private money. It can be 
done. They are over 80 percent complete, all houses in the 
continental United States and DOD.
    Mr. Coble. Thank you, Master Chief.
    I will put this question, Mr. Chairman, to the Commandant 
and/or the Master Chief. And maybe it has already been 
answered. You all fielded a lot of questions today. But could 
you all provide background information on your efforts to 
privatize family housing and your requirements for achieving 
parity with the Department of Defense? Could you all do that?
    Master Chief Bowen. Yes, sir. We could.
    Mr. Coble. Thank you, Admiral. Thank you, Master Chief. I 
yield back, Mr. Chairman.
    Mr. Cummings. Thank you very much. Mr. Larsen, you don't 
have anything? Very well.
    Thank you all very much. We really appreciate it.
    We will now call the Commissioners of the Federal Maritime 
Commission: Commissioner Joseph E. Brennan, Commissioner Harold 
Creel, and Commissioner Rebecca Dye. Thank you all for being 
here. It is my understanding that you will be speaking for the 
Commission.
    Mr. Brennan, Ms. Dye, and Mr. Creole if you have anything 
to say, you are welcome to. Mr. Brennan?

TESTIMONY OF JOSEPH E. BRENNAN, COMMISSIONER, FEDERAL MARITIME 
    COMMISSION; HAROLD J. CREEL, JR., COMMISSIONER, FEDERAL 
MARITIME COMMISSION; AND REBECCA F. DYE, COMMISSIONER, FEDERAL 
                      MARITIME COMMISSION

    Mr. Brennan. Mr. Chairman and Members of the Subcommittee, 
thank you for the opportunity to present the President's budget 
for the Federal Maritime Commission. Two other Commissioners 
are here today, Rebecca Dye and the former and esteemed long 
term Chairman who will soon be leaving the Commission, Harold 
Creel. He is well known to many on this Committee.
    The FMC is an independent regulatory agency with 120 
employees. The main responsibilities of the Commission are to 
first, enforce the commercial conduct in the transport of 
containers internationally; second, to stop unreasonable price 
fixing agreements of ocean carriers of marine terminal 
operators; third to ensure that passenger vessels have adequate 
financial resources to repay passenger deposits when a voyage 
is canceled and to pay judgments for personal injury or death 
of a passenger; and fourth, to take action against foreign 
practices that are unfavorable to American shipping.
    For the fiscal year 2010 the President's budget provides 
for $24.6 million for the Commission. This represents an 
increase of about $1.8 million. Most of our spending relates to 
mandatory and non-discretionary expenses such as salary and 
rent. The requested increase is due to two main expenses, pay 
increases in benefits and funds to keep the Commission up to 
date in information technology.
    Now with regard to the state of the shipping industry, I 
have a few key figures. Last year about 15 million containers 
came in and out of the Country. About 2,200 container vessels 
called at U.S. ports. The number one U.S. export by volume, 
very sadly, continues to be waste paper. In fiscal year 2008, 
the volume of U.S. container exports grew by 15 percent and 
imports decreased by 6 percent.
    However, the demand for cargo fell sharply last fall and 
continued to decline this year. In February of this year 2009, 
the total volume of U.S. container exports dropped an alarming 
33 percent over February of 2008 while imports fell 25 percent. 
With the decrease in demand, there is a surplus of vessel space 
and freight rates have fallen. I would say several hundred 
container ships lie idle now.
    In the fall of 2008, the European Union repealed most anti-
trust immunity for container operations in the European trades. 
The Commission will study the impact of Europe's action and 
will share that study in a report to the Congress.
    Over the past year, the Commission has continued to watch 
and study international container transport as it relates to 
the Shipping Act. We have focused on the competitive impact of 
carrier or terminal operator agreements having rate making 
authority or high market share.
    The last time we were here, questions were raised about 
employee satisfaction at the Federal Maritime Commission. I am 
pleased to report that in the 2008 Federal Human Capital 
Survey, the responses of FMC employees were again more positive 
than the Federal average. For over 95 percent of the questions 
asked, 71 out of 74, the responses of the Federal Maritime 
Commission employees were more positive than the Federal 
average. The 2008 Survey shows that FNC employees like the work 
they do and improved the Commission's performance in 
recruitment, employee development, and employee retention.
    The Independent Partnership for Public Service has invited 
the FMC to receive an award on May 20th of this year at the 
release of the 2009 Best Places to Work in the Federal 
Government, kind of a long way since a year ago.
    The Survey results and the Best Places to Work award I 
think confirm that the Commission is moving in the right 
direction.
    Mr. Chairman and Members of the Subcommittee, thank you for 
supporting the important work of the Federal Maritime 
Commission. I respectfully request on behalf of the Commission 
favorable funding consideration for 2010. Now I and my fellow 
Commissioners are ready to try to answer any questions you 
might have.
    Mr. Cummings. Mr. Creel?
    Mr. Creel. Thank you, Mr. Chairman. I ask just a moment, if 
I may. Mr. Chairman and Members of the Subcommittee, I am 
pleased to appear before you today with my colleagues to 
discuss the President's fiscal year 2010 budget for the Federal 
Maritime Commission.
    This will likely be the last time I appear before you as a 
Commissioner since I will be leaving the Commission next month 
to pursue new ventures in the private sector. It has been and 
honor for me to serve on the Commission since 1994 and to serve 
as Chairman from 1996 to 2002. I am pleased to say I was the 
longest serving Chairman in the history of the agency, beating 
out my good friend, Helen Bentley's record by a matter of a few 
days. As you can imagine this is a thorn in Helen's side and 
she hits me with her cane every time that I remind her of it.
    Mr. Chairman, I would take this opportunity to thank you 
and the Subcommittee for your support and guidance over the 
years. I also want to impart to you my belief in the importance 
of the mission of the Federal Maritime Commission, and that is 
regulation of the ocean borne transportation and the foreign 
commerce of the United States.
    As an independent agency, the Commission is in the unique 
position of ensuring that our Country's international trade is 
fair and unfettered by noncompetitive conditions or the unfair 
shipping practices of foreign countries. After all, the vast 
majority of goods coming into this country come to this Country 
on a ship. Most Americans don't even realize that. One reason 
the consumers are not aware of that is because the industry 
works. While occasionally there may be hiccups in the system 
that cause delays, generally goods flow into the Country freely 
and unencumbered. Therefore the American consumer has little 
reason to inquire about how goods are delivered.
    I want to take the opportunity to thank my fellow 
Commissioners for many years we have worked together. You 
should know that the staff at the FMC is an extremely well 
qualified and dedicated bunch who are proud of the work they do 
in the service of the Country.
    Mr. Chairman, I wish you, all the Members of the 
Subcommittee, and the Federal Maritime Commission fair winds 
and smooth sailing. Thank you, sir.
    Mr. Cummings. Thank you very much. Ms. Dye?
    Ms. Dye. Thank you Mr. Chairman. I heard you mention 
earlier the benefits of constructive criticism. I want to tell 
you that we have taken your suggestions from the last hearings 
to heart. I believe we have improved working conditions and 
operational efficiency of the Federal Maritime Commission to 
the benefit of the folks at the Commission and the American 
consumer.
    Thank you for having me here today. I want to compliment 
Commissioner Creel. I know that I speak for everybody at the 
Federal Maritime Commission that it is tough for us to tell him 
goodbye. He has been an excellent Commissioner and Chairman 
before my term. We appreciate his service. Thank you again.
    Mr. Cummings. Thank you very much. I just want to thank all 
of you for what you do. We thank you.
    Mr. Creel, since you are leaving, I want to thank you. I 
may not have a chance to do this again in a public forum like 
this. I want to thank you for all that you have given.
    This kind of service to the public is not always easy. I 
think that you folks are exposed to the public, while they 
could do some other job and nobody would ever have an idea of 
what they are doing. But the fact is that you are giving a lot 
and we do appreciate you very much.
    I just want to ask a few questions. But first I am going to 
yield to my colleague Mr. LoBiondo.
    Mr. LoBiondo. Thank you Mr. Chairman. I too want to join 
with you in thanking Commissioners for your work. I had a 
chance to work with Commissioner Dye on the Subcommittee before 
she moved over. Mr. Creel, I worked with you for a long time. I 
wish you all the best. I thank you for your service. It is a 
great record that you have accomplished. Mr. Brennan, I look 
forward to continuing to work with you.
    I had one question that you sort of addressed. That had to 
do with the price fixing. I think you indicated that you are 
going to be studying what has happened with the Europeans to 
determine if that makes sense for us to proceed in that way 
here? Is that what I understood you to say?
    Mr. Brennan. Yes, the staff is working on that to analyze 
what will the effect be, will it result in less service, 
increased cost, or just what. So we are very conscious of that. 
I think Commissioner Dye recently went to England to make some 
observations.
    Mr. LoBiondo. Commissioner Dye, do you have anything that 
you would like to add? Because without studying it, it seems 
like it is not necessary. That is the reaction that I have. I 
would hope that we don't have some long drawn out study that 
comes back and tells us that yes we can do this and find out we 
maybe could have been saving money or encouraging more goods 
transported.
    Ms. Dye. Yes sir, I understand. I did have the benefit of 
speaking in London to the Europeans about the recent changes in 
their system, their elimination of the competition exemption 
and how we could harmonize the two systems to make sure that 
international ocean shipping proceeds unaffected. The 
Commission has analyzed all of our existing agreements to make 
sure that there are no problems between the two existing 
systems.
    Of course we deregulated substantially in 1998. So we like 
to say we were actually ahead of the Europeans. A shipper 
recently said to me while the Americans have allowed the 
Europeans to kick in the door, we loosened it substantially and 
they took it to the next step.
    Of course we will be analyzing the benefits of the system 
here. We won't take years. But we will have to get some 
experience with the European system before we have good hard 
data to analyze. Thank you.
    Mr. Creel. Could I just add to that? One thing that sort of 
clouds the issue at the moment is this economic downturn and 
determining whether what the Europeans have done has resulted 
in benefits to the consumer or not. Across the board the 
numbers are down tremendously as Commissioner Brown just said. 
It is not a market that we have seen in a long time and so I 
think we have to be considerate of that in doing our study.
    But we are just at the point now where we are laying out 
the parameters. We will have two years, the first year of 
experience under the European regime and then the second year 
to be able to make up a realistic judgment as to the effect of 
that.
    Mr. LoBiondo. Thank you. Thank you, Mr. Chairman.
    Mr. Cummings. Thank you. I want to go back to this 2008 
Federal Human Capital Survey showing a 20 percent increase in 
satisfaction with the practices and policies of the FMC senior 
leaders, an 11 percent increase in job satisfaction, and a 17 
percent increase in satisfaction with employee training. That 
is simply astounding
    One of the things that happens is that when people get used 
to voting negatively, it is hard to get out of it. In other 
words, there is a presumption that things are going to stay the 
same so people have a tendency to vote the same way no matter 
how much you do. First of all, I congratulate you all because I 
know you all worked so hard on that. I'm just wondering what do 
you attribute these increases to? Anybody want to go first? Ms. 
Dye, I see you smiling.
    Ms. Dye. We all worked very hard Mr. Chairman. For myself, 
I think that we have a greater openness at the Commission in 
our decision making process. We have worked hard together to 
reach the best decisions for the Commission and their staff. 
The most important thing that I was pleased to see is that we 
began regular open meetings.
    Our decision making process is open and everybody is heard 
before we reach a decision. Of course not everybody's opinion 
is accepted but everybody's opinion is heard at those times. 
And we all get the benefit of those. If I had to point to one 
most important change I would say that is it.
    We also filled a lot of personnel positions. We got staff 
back up as quickly as we could. We filled a couple of important 
positions with excellent folks.
    Right off the top of my head I would have to say those are 
the things that I would point to first. Thank you.
    Mr. Cummings. Mr. Creel?
    Mr. Creel. Yes, sir. I think that as Commissioner Dye says 
we have been open.
    As you said, you can continue along your way doing the same 
thing in the same way and think that you are getting the word 
out that we value the work of the staff. But sometimes that is 
not the message that is being received. I think that it takes 
an initiative to make them realize that and to be proactive in 
that.
    We have done that, whether it is through the SES Candidate 
Development Program at the very top, or whether it is our 
Emerging Leaders Program at sort of mid-level, or the term of 
ours is upward mobility for the GS-9 and below. I use upward 
mobility broader than that in speaking.
    Upward mobility has been one thing that I have been very 
concerned about because we are a very small agency. It is 
difficult to give people encouragement that they can move up. 
But we have seen that in the last year and we have made a 
concerted effort. You can't make jobs out of something that is 
not there but you can be cognizant of it whenever there is a 
job opening. And we have seen that over the last year. We have 
had folks moving into positions who have been with the 
Commission for a long time and tapped out at a certain level. 
They then been able to move up into a more professional level. 
And that is very rewarding, not only to that person but I think 
to others who see that.
    Mr. Cummings. We will get to you in a moment, Mr. Brennan.
    What you just talked about Mr. Creel is something called 
hope, really. When people feel that they can move forward, even 
if they don't move forward, if they see somebody in their 
sphere moving forward I think the natural inclination may be 
some envy. But then they back off and they look and say, you 
know what, it is probably a good decision that Mary moved up. 
But you know what, I'm going to be the next one.
    But if they never see that, then the question is do I stay 
where I am or do I move on?
    Mr. Creel. That is when you lose some of your best.
    Mr. Cummings. Right. Then they say, I only have one life to 
live. This is no dress rehearsal. This is that life. So since 
this is that life, I am moving on.
    Mr. Creel. Excuse me, sir, but I would just point out here 
that the response to one of the questions was that ``promotions 
in my work unit are based on merit.'' We went up 24.2 percent 
in that category.
    Mr. Cummings. Say that one more time.
    Mr. Creel. ``Promotions in my work unit are based on 
merit,'' there we are 24.2 percent increased.
    Mr. Cummings. What you just said is very powerful. People 
want to know if they put out the effort somebody is watching 
with a possibility, not necessarily the probability, but the 
possibility that it may yield a promotion.
    But if I remember your testimony before, you all talked 
about how you had a lot of very dedicated employees who really 
wanted to be there but at the same time seemed like they were 
hitting a brick wall.
    Mr. Creel. If I could, I would just lead with another one 
that is even better than that. ``How satisfied are you with the 
recognition you received for doing a good job?'' We are up on 
that as well.
    Mr. Cummings. Yes. It is nice to hear some good news.
    Mr. Brennan. I would say that one of the things that 
contributed to the increased morale is the meetings every other 
week. Virtually the entire agency is there--it is a small one--
for the first part of the meeting. Then some parts are closed 
and they go out. But they feel like they are more part of a 
team.
    But I would say, you mentioned hope. If I were starting 
over in Government and could roll the clock back 40 years, I 
think the FMC is a great place to work because I think there is 
upward mobility. Of 120 people, there are five SESs. Some of 
them come in at the lowest level. Also in a small agency, if 
you do a good job, you are quickly recognized and you can move 
ahead. I think it is a terrific agency to work at. That is my 
view.
    Mr. Cummings. You know, I am going to be giving some 
graduation speeches. As a matter of fact, on Friday I am 
speaking at the University of Maryland Law School. I am going 
to pull some stuff from this report because I think it has a 
lot to do with how these folks will go out being leaders. They 
need to remember the people who they may be supervising or what 
have you. It is very significant.
    Mr. Larsen?
    Mr. Larsen. Thank you, Mr. Chairman. Commissioner Dye, as 
you are looking at the implications of the EU's decision, or 
whomever can answer this best, obviously you are going to know 
a little bit more about this than I will, considering impacts 
on the East Coast of the U.S. versus the West Coast of the 
U.S., I am just checking now to see if there are any impacts on 
the West Coast as well as you are moving forward in looking at 
this.
    The second question has to do with today's state of the 
economy. The ports of my district in Washington State are 
seeing it like any other point with 20 to 30 percent decreases 
in activity coming in and going out. That is reflected in trade 
numbers all over the world as well.
    One of the concerns I have as we look at the potential 
global economic recovery, as we hit a bottom and come out of 
that, especially on the West Coast what is the impact that 
State owned or State operated carriers have? Do they have a 
different advantage over private common carriers? As well, does 
this global economic recession give folks an opportunity to 
establish barriers to access to protect themselves better as we 
recover? Do you have some thoughts on that?
    Ms. Dye. Thank you, Mr. Larsen. It is interesting that you 
would ask about controlled carriers because we have just had 
this conversation before I came over today. Obviously, during a 
time of economic uproar, it is our responsibility to keep on 
top of those developments. We started last fall to have regular 
briefings from the staff on the effects of the downturn on all 
of our stakeholders across the board.
    One of the things that we have been watching with 
controlled carriers is contract prices. We haven't seen any 
evidence yet that any controlled carrier has actually used 
unfair advantage against American or for that matter any other 
interests. In fact, those carriers have seen a decrease in 
their revenues as well.
    Mr. Larsen. Is that something then you will continue to 
evaluate as you move forward?
    Ms. Dye. Yes, of course.
    Mr. Larsen. That is really just a couple of thoughts I had, 
Mr. Chairman. I appreciate it.
    Ms. Dye. Thank you.
    Mr. Cummings. Again, I want to thank you all very much. Mr. 
Brennan and Ms. Dye, continue on. I am sure that you will be 
joined by others soon. To Mr. Creel, again, I thank you very 
much. You are now dismissed.
    We will now call up Mr. David Rivait who is the Associate 
Administrator for Budget and Programs and Chief Financial 
Officer of the Maritime Administration. You have a whole room 
to yourself.
    Mr. Rivait. I am feeling a little lonely down here, Mr. 
Chairman.
    Mr. Cummings. You may proceed.

   TESTIMONY OF DAVID J. RIVAIT, ASSOCIATE ADMINISTRATOR FOR 
   BUDGET AND PROGRAMS AND CHIEF FINANCIAL OFFICER, MARITIME 
                         ADMINISTRATION

    Mr. Rivait. Mr. Chairman, Mr. LoBiondo, Mr. Larsen it is a 
pleasure being here today. My name is Dave Rivait. I am 
MariAd's Associate Administrator and Chief Financial Officer. I 
am here to present the Maritime Administration's 2010 budget 
request that we received from annual transportation 
appropriations.
    In 2010, the President is requesting $345.5 million for the 
Maritime Administration, an increase of 3.6 percent over the 
2009 enacted level. That is excluding those funds we received 
from supplemental appropriations for the Economic Recovery Act.
    In 2010, the Maritime Administration has three principle 
initiatives that are highlighted in more detail in my written 
testimony. Let me just briefly summarize them here. First, a 
$15 million increase is included for a Secure and Efficient 
Ports Initiative which is part of a larger initiative that is 
also funded within the Department of Homeland Security. Second, 
the budget includes a program increase of $12 million to 
enhance programs at the U.S. Merchant Marine Academy in New 
York. Third, our request includes an increase of $1.1 million 
to enhance our support to the six State maritime academies 
across the Country. Let me just give you a bit more detail on 
each of those three items.
    First, in the Secure and Efficient Ports Initiative, the 
$15 million program that I mentioned is going to be managed 
through our Office of the Associate Administrator for 
Intermodal Systems Development. As I said, it is in partnership 
with the Department of Homeland Security, which includes $10 
million in their budget for this program. The principle focus 
of this effort is in considering major port improvements around 
the Country. This Initiative is going to help identify 
strategies for integrating security considerations into 
projects improving port capacity and efficiency.
    The main way we are going to do this through these new 
monies is to provide Federal assistance for studies and joint 
planning that will assist in preparing for the larger 
infrastructure expenditures that would be forthcoming for some 
of these major port improvements. These sorts of study efforts 
would focus on some of the program areas that are of keen 
interest to the Maritime Administration, particularly the 
consideration of links for coastal and inland ports to highways 
and rail as well as increased use of the marine highway system.
    That could have an important security nexus by, for 
example, moving hazardous materials and hazardous freight away 
from surface modes and onto what are now underutilized marine 
corridors.
    The second major initiative in the budget is additional 
funding for the U.S. Merchant Marine Academy, an increase of 
$12 million, bringing the total funding for the Academy in 2010 
to $74.4 million. This includes an additional $4.8 million to 
support the operations of the school as well as an additional 
$7.2 million to enhance the school's capital improvement 
program. That brings total funding to $15.4 million.
    I wanted to briefly mention as part of my presentation on 
the Academy that the school has experienced some significant 
financial management and internal control weaknesses that we 
identified last year and brought to the attention of the 
Congress. These matters as well as others are now the subject 
of a GAO audit that has been ongoing since July. We expect 
results from that audit to be delivered to the Secretary and to 
Congress within the next many weeks. I would be happy and 
prepared to discuss those additional issues with the Committee.
    Finally, the last major initiative that is included in the 
budget, as I had mentioned previously, is an increase of $1.1 
million so support the State maritime academies, bringing total 
funding to $15.6 million. This increase will principally 
support first an increase to student incentive payments. This 
is direct assistance to cadets attending these schools. The 
last Congress enacted legislation that allowed an increase in 
the annual payment that we could make to each of these 
students. So this additional funding is in part to help support 
that.
    In addition, there is additional money included in the 
budget for school ship maintenance and repair. Each of these 
six State maritime academies have a Federal ship that is owned 
by the Maritime Administration that we make available to these 
academies. This funding will help support the adequate 
maintenance and repair of those ships for the safety of the 
cadets.
    Those are my brief oral comments. I have a longer written 
statement I would like to submit for the record. I am ready to 
answer your questions.
    Mr. Cummings. Thank you very much. Mr. Taylor wanted us to 
ask you--he had to leave to go to another hearing--but he 
wanted to ask how much Title 11 funds do you currently have in 
hand? How much do you expect to expend this year?
    Mr. Rivait. Mr. Chairman, I don't have a good answer for 
you in terms of our plans for spending this year. Perhaps we 
can get a response quickly for the record.
    But I can tell you that we do have a balance available. 
Last year we received through the Department of Defense 
resources that were designed to support the Title 11 program, 
$48 million. Of that balance, we have only utilized $3 million 
of the $48 million as supporting loan guarantees. So there is 
still a balance of $45 million that remains available to 
support additional loan guarantees.
    Mr. Cummings. Is that why the Administration did not 
request in increase in this program in fiscal year 2010?
    Mr. Rivait. I think that is one of the principal increases 
apart from some of the tough trade offs that were made in the 
budget. It was also the case that we did have resources that 
would support additional loan guarantees from the prior action.
    Mr. Cummings. Mr. LoBiondo?
    Mr. LoBiondo. Mr. Chairman, I really don't have any 
questions. Mr. Rivait, I want to thank you for your 
presentation. I want to thank you for your service and keeping 
things moving forward. Thank you, Mr. Chairman.
    Mr. Cummings. Mr. Larsen?
    Mr. Larsen. Thank you, Mr. Chairman. Can you talk a little 
bit about the assistance to small shipyards program? It is a 
little bit in your testimony. Discuss the timeline for the 
fiscal year 2009 money as well as the timeline for the ARRA era 
money.
    Mr. Rivait. Sure. I can tell you the Secretary places a 
very high priority for all of the economic assistance money 
getting obligated and out as quickly as possible. For the $100 
million, $2 million of which is being reserved for 
administrative expenses so $98 million in the shipyard loans 
from the supplemental appropriation, there were 451 
applications. Many of these our Associate Administrators who 
have briefed us on this indicate are quite strong. They are in 
the process now of plowing through those. We expect to 
essentially make awards all at once sometime around the middle 
to third week in August.
    The $17.5 million that was appropriated for the program 
essentially through regular appropriations, applications for 
that program were actually due earlier this week. I believe the 
number was 75 applications for that $17.5 million. We are on a 
timeline that is actually to make awards for that program I 
think a bit earlier than the August timeframe. But I would say 
to call it late July. That is the time period we are on right 
now.
    Mr. Larsen. Just to clarify, it was the stimulus package 
for the $100 million?
    Mr. Rivait. Yes.
    Mr. Larsen. Right, OK. Can you talk as well about piracy? 
We are having a hearing next week. Thanks to the leadership of 
the Chairman, the Subcommittee is continuing to not just 
monitor piracy but also to consider the roles that you all, the 
Coast Guard, and the Navy as well are playing in that. Could 
you update us in MariAd's continued role in the training and 
best practices development for industry?
    Mr. Rivait. Well, I can say that I am not the piracy expert 
for our agency.
    Mr. Larsen. OK, let me ask how much money are you spending 
on developing practices?
    [Laughter.]
    Mr. Rivait. Well, we are spending no more than we usually 
would. It is part of our base resources, what we are 
accomplishing this through.
    But MariAd has been very involved with industry and other 
government partners in the international community in both 
developing and disseminating best practices. I think one of the 
areas that we have been actively involved with is working with 
the Naval Investigative Service on anti-piracy assistance 
teams. These actually assist shipping companies in examining 
the capacities of individual vessels in order to make 
recommendations that would make them less vulnerable and often 
times would not cost a lot of money.
    Mr. Larsen. Thank you very much. Thank you very much, Mr. 
Chairman.
    Mr. Cummings. I have just two quick things. Do you know how 
many U.S. flag vessels transit the Horn of Africa region on an 
annual basis?
    Mr. Rivait. I have seen different numbers. But in the Gulf 
of Aden there may be on any given day 50 to 60 ships that are 
transiting the region. So that would be something on the order 
of around 20,000 or a bit more per year. I can say that on any 
given day, of those 50 or so ships one of them is likely to be 
a U.S. flag vessel.
    Mr. Cummings. What impact is the increase in piracy in the 
Horn of Africa having on insurance and related costs charged to 
U.S. flag vessels?
    Mr. Rivait. Mr. Chairman, I don't have the specifics for 
you in terms of what the difference would be other than to 
represent that I know there has been an impact on insurance 
that shipping companies are paying in order to travel through 
that region. But we can provide those greater details for the 
Committee.
    Mr. Cummings. I appreciate it. We will be submitting some 
other questions also.
    Thank you very much. This hearing is ended.
    [Whereupon, at 5:10 p.m., the subcommittee was adjourned.]

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