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





                           FY 2011 BUDGET FOR
                     THE COAST GUARD, THE MARITIME
                        ADMINISTRATION, AND THE
                      FEDERAL MARITIME COMMISSION

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

                                (111-90)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                           February 25, 2010

                               __________


                       Printed for the use of the
             Committee on Transportation and Infrastructure




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20402-0001









             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
LEONARD L. BOSWELL, Iowa             TODD RUSSELL PLATTS, Pennsylvania
TIM HOLDEN, Pennsylvania             SAM GRAVES, Missouri
BRIAN BAIRD, Washington              BILL SHUSTER, Pennsylvania
RICK LARSEN, Washington              JOHN BOOZMAN, Arkansas
MICHAEL E. CAPUANO, Massachusetts    SHELLEY MOORE CAPITO, West 
TIMOTHY H. BISHOP, New York          Virginia
MICHAEL H. MICHAUD, Maine            JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri              MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii              LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          JEAN SCHMIDT, Ohio
TIMOTHY J. WALZ, Minnesota           CANDICE S. MILLER, Michigan
HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma
MICHAEL A. ARCURI, New York          VERN BUCHANAN, Florida
HARRY E. MITCHELL, Arizona           ROBERT E. LATTA, Ohio
CHRISTOPHER P. CARNEY, Pennsylvania  BRETT GUTHRIE, Kentucky
JOHN J. HALL, New York               ANH ``JOSEPH'' CAO, Louisiana
STEVE KAGEN, Wisconsin               AARON SCHOCK, Illinois
STEVE COHEN, Tennessee               PETE OLSON, Texas
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
MICHAEL E. McMAHON, New York
THOMAS S. P. PERRIELLO, Virginia
DINA TITUS, Nevada
HARRY TEAGUE, New Mexico
JOHN GARAMENDI, California
VACANCY

                                  (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, Vice 
Chair
LAURA A. RICHARDSON, California
JAMES L. OBERSTAR, Minnesota
  (Ex Officio)

                                 (iii)














                                CONTENTS

                                                                   Page

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

                               TESTIMONY

Allen, Admiral Thad W., Commandant, United States Coast Guard....    10
Bowen, Master Chief Charles W., Master Chief Petty Officer of the 
  United States Coast Guard......................................    10
Caldwell, Stephen, Director, Homeland Security and Justice 
  Issues, Government Accountability Office.......................    33
Lidinsky, Jr., Richard A., Chairman, Federal Maritime Commission.    10
Matsuda, David, Acting Administrator, Maritime Administration....    10

       STATEMENT FOR THE RECORD SUBMITTED BY MEMBERS OF CONGRESS

Richardson, Hon. Laura, of California............................    40

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Allen, Admiral Thad W............................................    44
Bowen, Master Chief Charles W....................................    55
Caldwell, Stephen................................................    60
Lidinsky, Jr., Richard A.........................................   100
Matsuda, David...................................................   111

                       SUBMISSIONS FOR THE RECORD

Allen, Admiral Thad W., Commandant, United States Coast Guard, 
  response to request for information from Hon. Richardson, a 
  Representative in Congress from the State of California........    28
Matsuda, David, Acting Administrator, Maritime Administration, 
  response to questions from the Subcommittee....................   117

                         ADDITION TO THE RECORD

MITRE, Michael Hussey, After-Action Report, USNORTHCOM-
  USTRANSCOM-USCG- Maritime Industry Port Security Meeding, 
  Conducted at Headquarters USNORTHCOM, Colorado Springs, CO on 
  January 25, 2010...............................................   136


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


 
      HEARING ON FY 2011 BUDGET FOR THE COAST GUARD, THE MARITIME 
            ADMINISTRATION, AND FEDERAL MARITIME COMMISSION

                              ----------                              


                      Thursday, February 25, 2010

                   House of Representatives
          Subcommittee on Coast Guard and Maritime 
                                    Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
Room 2167, Rayburn House Office Building, the Honorable Elijah 
E. Cummings [Chairman of the Subcommittee] presiding.
    Mr. Cummings. The Subcommittee will come to order. Mr. 
LoBiondo is on his way, but Congress has a very busy schedule 
today, so I want to make sure we do this on time and move the 
process along.
    The Subcommittee convenes today to consider the fiscal year 
2011 budget requests for the Coast Guard, the Maritime 
Administration, and the Federal Maritime Commission.
    The Obama Administration has requested approximately $9.6 
billion in fiscal year 2011 for the Coast Guard, including the 
service's operating expenses, the acquisition budget, reserve 
training, pay for retirees, the Truman-Hobbs bridge program, 
and environmental compliance. This budget request is 
approximately $35 million, or 0.4 percent, below the enacted 
appropriation for the Coast Guard in fiscal year 2010.
    Just to put this budget request in some perspective, the 
base budget request for the Department of Defense, DOD, is 
$548.9 billion, an increase of more than three percent above 
the enacted budget for fiscal year 2010, and that figure does 
not include funding for overseas contingency operations.
    To achieve the budget reductions proposed in the Coast 
Guard's fiscal year 2011 budget, while generally preserving the 
budget for asset recapitalizations, the budget request proposes 
a number of cuts in the Coast Guard's operations. Specifically, 
the budget proposes to reduce the size of the Coast Guard's 
military workforce by 1,112 positions while increasing the 
number of civilian personnel by 339 positions, yielding a net 
reduction of 773 positions.
    The decrease in the number of military personnel results 
largely from the proposed decommissioning of assets. The budget 
proposes decommissioning five cutters, including four High 
Endurance Cutters. These decommissionings will result in the 
loss of approximately 5,000 cutter mission hours in fiscal year 
2011. The budget also proposes to remove several HH-65 
helicopters from service, close two seasonal air facilities, 
retire four Falcon jets, and decommission five Maritime Safety 
and Security Teams.
    There is no way to sugar coat what the impact of these 
proposed cuts would be: they will reduce the capacity of the 
Coast Guard to carry out its missions. The impact is clearly 
reflected in the Coast Guard's own performance measure 
estimates for fiscal year 2011. For example, the Coast Guard 
has lowered from 18.5 percent in fiscal year 2010 to 15.5 
percent in fiscal year 2011 the projected target removal rate 
for cocaine from non-commercial vessels in maritime transit. In 
plain English, according to the Coast Guard's own performance 
measures, reduced patrol hours will likely mean that fewer 
drugs will be interdicted at sea. Other performance indicators 
have also been lowered.
    I am deeply, deeply concerned by the proposed reductions in 
the Coast Guard's budget. The Coast Guard is a branch of our 
military and performs vital functions to secure our homeland 
from a variety of threats, including terrorism-related threats 
and illegal activities such as drug smuggling. The Coast Guard 
also regulates the safe operation of the maritime 
transportation system, aids those in distress at sea, and 
protects our marine environment.
    I firmly believe that the Coast Guard's budget needs to be 
equal to our Nation's requirements for the Coast Guard's 
services, and this budget simply does not meet that standard. 
Today, the Subcommittee will also examine a new report issued 
by the Government Accountability Office assessing the Coast 
Guard's personnel management systems.
    The training and expertise of Coast Guard personnel have 
obviously long been critical concerns to this Subcommittee, 
particularly as we have closely examined what appear to have 
been shortcomings in personnel training in such mission areas 
as marine safety, search and rescue, and acquisition 
management. Ensuring that the Coast Guard has in place the 
systems it needs to effectively track personnel qualifications 
and manage its assignment process will be critical to ensuring 
that the Coast Guard can staff its missions with fully 
qualified personnel. We look forward to the testimony of Mr. 
Stephen Caldwell from the GAO on our second panel.
    Before I briefly discuss the budgets for the Maritime 
Administration and the FMC, I also note that this is likely the 
last time that Admiral Allen will appear before this 
Subcommittee as Commandant to discuss an annual budget request, 
as his term expires in May of this year. I want to take this 
opportunity to thank the Commandant for his extraordinary 
leadership--and I do mean that--of the Coast Guard through what 
have been times of truly great challenge, including, most 
recently, leading the service's exemplary response to the 
crisis in Haiti. I have the utmost respect for the Commandant 
and I offer my deepest thanks to him for his lifetime of 
service to our Nation and for the close working relationship we 
have had over the past four years.
    And I just say to you, Commandant, on behalf of a grateful 
Congress and a grateful Nation, we thank you.
    Similarly, I thank Master Chief Petty Officer Bowen, who is 
also making what will likely be his last appearance before the 
Subcommittee, for his outstanding service.
    We are pleased to have Mr. David Matsuda, the Acting 
Administrator of the Maritime Administration with us today. Mr. 
Matsuda was nominated to this position by the President on 
December 7th, 2009. The Senate is considering Mr. Matsuda's 
nomination and we are hopeful that he will soon receive 
confirmation.
    The Maritime Administration's fiscal year 2011 budget 
request totals $352 million, a decrease of approximately $10.7 
million below the level appropriated in fiscal year 2010. The 
bulk of MARAD's appropriations fund MARAD's Operations and 
Training account. MARAD operates the United States Merchant 
Marine Academy at Kings Point, New York, and provides support 
for six State maritime academies with funds from this account.
    The fiscal year 2011 budget would provide just over $100 
million for the operation of the Merchant Marine Academy, 
including $30.9 million for badly needed infrastructure 
improvements. The Academy faces many challenges, including the 
recent resignation of its Superintendent. We are eager to hear 
how the Maritime Administration is addressing these challenges.
    The American Recovery and Reinvestment Act of 2009 provided 
$100 million to MARAD's Assistance to Small Shipyards Program. 
All of these funds have been obligated. In fiscal year 2010, 
Congress appropriated $15 million for MARAD's Assistance to 
Small Shipyards Program and MARAD is reviewing applications for 
this funding. In fiscal year 2011, despite what appears to be a 
significant demand for assistance among small shipyards, there 
is no request for funds for the Assistance to Small Shipyards 
Program.
    MARAD's Title XI program provides a Federal guarantee of 
private sector debt for ship construction in U.S. shipyards. 
Currently, MARAD is reviewing applications for loan guarantees 
for a number of projects that would cover approximately $2.6 
billion in loans for a variety of projects at shipyards on all 
coasts. However, the Fiscal Year 2011 budget request for Title 
XI is only $3.7 million, the amount of funding needed to 
administer the existing loan portfolio. I note that since 
Fiscal Year 2008 there have been five defaults under the Title 
XI loan guarantee program. We look forward to examining all of 
these issues in more detail today.
    The fiscal year 2011 budget request for the Federal 
Maritime Commission totals $25.4 million. After several years 
without a Chairman, the FMC finally has a new Chairman, Richard 
Lidinsky, whom we welcome to the Subcommittee. The FMC also has 
another new Commissioner, Mr. Michael Khouri.
    Chairman Lidinsky has announced a number of new initiatives 
at the FMC, including a staff reorganization, the creation of a 
new Maritime Environmental Advisory Committee to support the 
creation of green jobs in the maritime industry, and the 
commencement of a comprehensive study of the impact of the 
European Union's decision to eliminate immunity for shipping 
conferences.
    We look forward to hearing more about these initiatives and 
to understanding Chairman Lidinsky's vision for the role of the 
FMC in a maritime transportation industry that has been 
significantly challenged by the world economic crisis.
    With that, I yield to my distinguished Ranking Member, Mr. 
LoBiondo.
    Mr. LoBiondo. Thank you, Mr. Chairman, very much. I would 
like to ask unanimous consent that Mr. Mica, the Ranking Member 
of the full Committee, be allowed to sit in on this 
Subcommittee.
    Mr. Cummings. Without objection.
    Mr. LoBiondo. Thank you, Mr. Chairman.
    I thank the panel for being here, especially Admiral Allen 
and Master Chief Bowen for your incredible commitment, 
dedication, and service. I can't tell you how disheartened and 
saddened I am that what is probably one of your last hearings, 
or your last one on the budget, has to come at a time when you 
were put in the position that you are with this budget. Earlier 
this month we know the President transmitted his proposed 
budget for 2011 and the budget slightly increases amounts 
available to the Federal Maritime Commission, but its overall 
funding for the Maritime Administration and what I think are 
nothing short of reckless and unconscionable slashing of 
funding for the Coast Guard operation and acquisitions has to 
be brought before us.
    To say that I am troubled by what was proposed doesn't come 
close to covering it. We listened over the years as the Coast 
Guard was asked to do more with less and, Admiral Allen, on 
many occasions you pointed out--whether it was in the 1970s or 
the 1980s or the 1990s--that Congress would increase the 
mandates for the Coast Guard, you desperately needed more 
personnel, you desperately needed more operations and 
maintenance dollars, you desperately needed acquisition 
dollars, and all those requests were ignored for decades.
    The Coast Guard, through the incredible dedication of its 
men and women, managed to carry out its mission. Then we 
embarked upon Operation Deep Water. We all know the transition 
that the Coast Guard had to assume with Homeland Security, and 
at a time when the Coast Guard, I think, was deeply troubled, 
Admiral Allen, you were incredibly the right man at the right 
time to come in and get the Coast Guard sort of on the straight 
track here.
    With all this having been said, the President has said that 
this budget, his budget, reflects his priorities in tough 
economic times. But I don't know how any of us can support a 
budget for the Coast Guard which makes it a priority to cut our 
ability to safeguard American lives at sea and secure our ports 
and waterways from terrorist attacks. These reductions in force 
and capabilities can only be interpreted as undermining port 
security, and one of my big concerns over the time, as Chairman 
of this Subcommittee and my time on this Subcommittee, is that 
while aviation security has received almost a blank check over 
the years since September 11th, we have fought and scraped for 
port security dollars to keep up with the incredible threat and 
challenge that we have from terrorist operations at our ports. 
I don't understand how these actions can possibly be the 
priority of any administration.
    Under the President's budget, the Coast Guard will be 
forced to operate with less people board fewer assets, with 
less financial support. It is a recipe for disaster. The budget 
proposes to eliminate more than 1,100 jobs at a time when not 
only record numbers of Americans are out of work, but at a 
time, over the last couple of years, where we attempted to 
strengthen the numbers for the personnel of the Coast Guard, 
made modest increases, and now we are going to slide all the 
way back down the hill. It just doesn't make any sense to me.
    We are going to abolish five specially trained anti-
terrorist teams responsible for providing security at our 
largest ports, reduce the number of vessels capable of carrying 
out Coast Guard missions, close air stations in the Great 
Lakes, and permanently ground five newly re-engined enhanced 
helicopters, turning them into multi-million dollar supply 
closet items. Not the right way to go.
    Admiral Allen, on many occasions you have appeared before 
this Subcommittee and said the Coast Guard must do away with 
the attitude that it simply can do more with less. You were 
right, sir, when you said those things. Unfortunately, the 
message you have received from the Commander-in-Chief is that 
the Coast Guard must do even more with less. It is contrary to 
everything that many of us have worked for for decades. I think 
it is simply unacceptable.
    The budget does not reflect the priorities of the American 
people, nor does it provide the resources necessary for success 
of Coast Guard missions. Admiral Allen, you have characterized 
this budget as a necessary short-term sacrifice to place the 
Coast Guard on a better footing in the future. Yet, this budget 
not only fails to increase funding for the construction of new, 
more capable vessels and aircraft, it slashes several programs 
to the bare minimum number of airframes and hulls required to 
keep the production line open.
    So what exactly is the service sacrificing personnel and 
near-term mission success for? I share the Commandant's concern 
about the long-term needs of the Coast Guard, the fleet, and 
for that reason I have long advocated for the acceleration of 
the recapitalization efforts. During the previous 
administration, we were fortunate to have a very strong 
bipartisan effort from Members of this Subcommittee, Members of 
the Full Committee, and Members of Congress to understand the 
urgent need to increase the pace of acquisitions in a shorter 
period of time.
    Lastly, I want to express my extremely strong opposition to 
the proposal to eliminate five Maritime Safety and Security 
Teams, including the team stationed at our Nation's second 
largest port, the Port of New York-New Jersey. For those who 
are not aware, these specially trained and equipped teams 
provide critical anti-terrorist capabilities. We should be 
increasing these teams, if anything, not decreasing them. It is 
the wrong direction to go to even consider that we can do with 
less of them. The Coast Guard already falls short in its 
requirement to escort high-interest vessels.
    The President's proposed cuts would only further endanger 
our homeland security. I don't say those words lightly. I don't 
see how we can interpret it in any other way than that. At a 
time when homeland security can't be further reduced--and, 
let's face it, across America, the further we get from 
September 11th, the more most Americans think this is something 
that is in ancient history, and it is not.
    I hope my colleagues will join with me on this Subcommittee 
and with you, Mr. Chairman, and with the full Committee in 
finding a way to keep these drastic budget cuts from happening.
    I am also concerned by some of the proposals made for the 
Maritime Administration. The President has failed to request 
any funding for Federal loan guarantees to support construction 
of new U.S.-built, U.S. flag vessels in our shipyards, 
something that we desperately need. This funding supports 
critically needed jobs for American shipbuilders and U.S. 
merchant mariners, yet no attention was given to this program.
    I hope my colleagues will work in a cooperative and 
bipartisan way to restore a robust investment in our domestic 
shipbuilding industry for many reasons, for the jobs and for 
the economic situation, and for the homeland security 
implications that that has.
    Lastly, the President has proposed a slight increase in the 
budget for the Federal Maritime Commission. This will provide 
the resources necessary for the Commission's expected workload, 
and I support the proposed funding level for that particular 
area.
    I want to thank all of our witnesses for appearing this 
morning and for their testimony. I would like to welcome 
Federal Maritime Commission Chairman Mr. Lidinsky. I welcome 
you; I wish you well in your first appearance at the 
Subcommittee. I hope we will have a long and cooperative 
arrangement, and I am sure that we will. As well as Maritime 
Administration David Matsuda, who previously worked for Senator 
Lautenberg, a very close friend and colleague of mine from New 
Jersey. I know I join with all of my colleagues in wishing the 
Senator a very speedy recovery.
    Once again, Admiral Allen, I would like to thank you and 
Master Chief Bowen for remarkable dedication, remarkable 
commitment to your Country, remarkable commitment to the men 
and women of the Coast Guard. And, as I mentioned earlier, I am 
really saddened that you are coming to the end of your term at 
such a critical time, and I am really short that it had to be 
the tone that it did in this particular hearing for this 
budget, but there is no way to sugar coat that.
    Having said that, Master Chief, I want to particularly 
commend you for your efforts to improve the quality of life 
issues for the men and women of the Coast Guard, something that 
you have done in a remarkable and dedicated way. Thank you for 
raising the alarm on the sad state of Coast Guard housing and, 
thanks to your leadership, although we have not come up with 
the right solution at this point, I think we are clearly 
focused in understanding that there is something we can't let 
go and that we are going to continue to work on for the men and 
women of the Coast Guard and as a follow-up to your commitment 
that you made at this point.
    Admiral Allen, I find it difficult to come up with the 
right words to express my appreciation for your remarkable 
service to our Country, whether it was at a time of Katrina, 
when you took over and clearly the Federal Government was 
floundering in its effort. You got nothing but the highest 
marks from everyone involved in bringing that situation under 
control.
    As I mentioned earlier, I think you took over the Coast 
Guard at an extremely difficult period in time, with many 
challenges and questions that were raised, and thanks to your 
unique quality and style of leadership, I think the service has 
fully regained its footing, and, sir, you are to be commended 
for that. That was no easy task. I thank you for your selfless 
efforts on behalf of the men and women of the Coast Guard. I 
appreciate your advice and appreciate your personal friendship 
over the years and, once again, your tremendous commitment to 
our Country.
    With that, I thank you very much and, Mr. Chairman, I thank 
you.
    Mr. Cummings. I thank you very much, Mr. LoBiondo.
    Let me just say this. Let's be real clear. I agree with the 
Ranking Member with regard to these cuts, and our staffs have 
already put together the draft proposal with regard to views 
and estimates and we are all in agreement on this on both 
sides.
    And I know it is a difficult thing, Admiral Allen, when you 
have to come and--I read your speech about the state of the 
Coast Guard--defend the budget, but I promise you I think you 
will have unanimous support from this Subcommittee and probably 
the Transportation Committee to restore these cuts so that the 
Coast Guard can do exactly the things that Mr. LoBiondo just 
stated. We will proceed very methodically but very effectively 
and efficiently. So I just want to make sure that is very clear 
and on the record.
    Mr. McMahon, and then we will go to our Ranking Member. Mr. 
McMahon.
    Mr. McMahon. Thank you, Chairman Cummings and Ranking 
Member LoBiondo, and, of course, a special New York welcome and 
thank you to our great Coast Guard Commandant Admiral Thad 
Allen and, of course, Master Chief Bowen and Mr. Matsuda and 
Mr. Lidinsky. We thank you all for coming and bringing your 
testimony to us this morning.
    I welcome this important review of the President's budget. 
Coast Guard Sector New York is headquartered at Fort Wadsworth, 
in my district in Staten Island, standing guard at the entrance 
to New York Harbor, and we salute the brave men and women that 
keep our shores safe every day.
    The President has made clear that his budget would fully 
protect spending on defense and homeland security, while making 
the key investments necessary to move us forward. But this 
commitment does not appear to be reflected in the Coast Guard 
and Maritime proposals before us today. In particular, I have 
very serious concerns about the proposed elimination of the 
Maritime Safety and Security Teams, or MSSTs, that provide our 
first line of defense in response to terrorist threats or 
incidents, and cannot begin to comprehend the decision to 
decommission the 90-person team based in New York City with the 
enormous, of course, beautiful harbor that it possesses.
    Our Nation's worst terrorist attack occurred in New York 
City, as you all know, on 9/11. Many of us lost loved ones, 
friends and neighbors, and the scars of that horrible day 
remain with all of us today. New York City remains the greatest 
target for terrorists wanting to do America harm. It is our 
Nation's preeminent financial center, the East Coast's largest 
shipping port, and our densest and most populous metropolitan 
area, with more than 20 million people in its environs. Any 
terrorist attack on New York wouldn't just affect New Yorkers, 
but it would have significant ramifications for every American, 
as we sadly learned already.
    The decision to decommission the New York-based MSST makes 
no sense whatsoever. The MSST keeps watch on our ports and 
patrols key landmarks, like the Statute of Liberty and Brooklyn 
Bridge, which we know have been targeted as well. If the team 
responsible for carrying on these missions is based outside of 
New York and significantly reduced in personnel head count, I 
have little confidence that the MSST will be able to respond in 
time, in the minutes that often allow us to prevent and disrupt 
terrorist incidents.
    Admiral Allen, on February 12th I, along with 10 other 
Members of the New York delegation, sent a letter to Secretary 
Napolitano, and cc'd it to you, urging a reconsideration of 
this misguided and ill-conceived decision.
    Mr. Chairman, thank you for agreeing to my request for a 
hearing on this key matter today, and I look forward to 
discussing this further.
    I also have some concerns about the MARAD project and the 
proposal to completely zero out funds for the small shipyard 
grant program. From what I understand from DOT, although the 
Recovery Act only provided about $100 million for this 
initiative, DOT received more than $1 billion in requests for 
funding.
    In New York Harbor, shipbuilding and repair capacity is so 
overstretched that we often need to send our ships to Norfolk 
to find places to repair our vessels, including some routine 
repairs to the Staten Island Ferry. And you should know that of 
the $117 million in Federal funds, New York Harbor did not get 
a single dime. And now, to add insult to injury, it just 
completely baffles me that Federal support for shipping and 
shipbuilding will be completely eliminated. We have a 
successful program that is creating jobs and building up our 
long-term shipping infrastructure. We should be increasing 
support, not decreasing funds for this key initiative.
    Mr. Chairman, as a Member and a Vice Chair of this 
Subcommittee, I look forward to working with you at this 
hearing and beyond to ask these and tougher questions. We need 
to be sure that the Committee views and estimates that we send 
to the Budget Committee and the appropriators reflect the best 
interests of our Nation's security and long-term infrastructure 
needs at our ports, and I thank you for your continued 
leadership on this matter. Thank you.
    Mr. Cummings. Thank you very much.
    The distinguished Ranking Member of the full Committee, Mr. 
Mica, is recognized.
    Mr. Mica. Well, thank you, and thank you for conducting 
this hearing, Mr. Cummings, and also Ranking Member LoBiondo, 
and allowing me a few minutes. I will try not to get into too 
much of the Subcommittee's business, but I wanted to take an 
opportunity to do two things today: first, to come and thank 
Master Chief Petty Officer Bowen for his long service to our 
Nation and great work in the United States Coast Guard, and 
then I have to take a minute to say a special thanks to Admiral 
Allen. Wow. What a great guy at a great time.
    You have already been praised by other Members, but I 
particularly want to thank you for working with me as the 
Ranking Member. I came on at a similar time and I still 
remember your first calls, the difficult challenges you had 
from the very first day you took your post and I took mine. And 
the manner in which this gentleman has handled probably some of 
the most difficult seas and waters the Coast Guard has ever had 
to navigate has been absolutely outstanding. He has a calm 
demeanor; he has a way about himself that he is determined to 
get the job done no matter what obstacles, political rhetoric 
or high challenges he has to face. He gets it done quietly and 
effectively. And he inherited, again, some things that have 
been alluded to here, the Deep Water issues, Katrina. It goes 
on and on, the things that he has had in his short tenure.
    But we are very proud of you. I am particularly grateful of 
the working relationship we have shared, and I wish you well. 
Well done, sir.
    My second objective is to come here and join with my other 
colleagues unanimously in protesting the budget that has been 
delivered.
    I guess you couldn't go out in a calm sea, Admiral Allen. 
Sorry they had to deal you this last card in the deck.
    This is absolutely outrageous that we would cut our first 
line of defense, domestic defense for both national security 
and for maritime safety at this time. It is beyond me.
    I woke up this morning, Mr. Cummings, and I heard--this is 
a good one for you. Homeland Security outside of Coast Guard 
has over 180,000 employees, not counting Coast Guard, and you 
know there is over--I guess as of this week--there was a report 
that was done this week--there are more contract employees on 
top of the 180,000 in Homeland Security. Here they are cutting 
Coast Guard 1,100 positions, one of our most vital, again, 
national defense and safety. We have this huge bureaucracy. 
TSA, they are increasing 2,000 positions. They already have 
over 60,000. It has grown from 16,500 screeners. They have 8700 
administrators in TSA across the Country, 3,200 administrators 
and people within the D.C. area making over $100,000 a year. 
And the Coast Guard people and the salaries, the sacrifices 
they and their families make, and here we are slashing them. 
There is something wrong with this picture.
    Now, I will work in a bipartisan manner to correct this. I 
appreciate the Chairman's methodical approach and his 
commitment today to correct this, Mr. LoBiondo and others. We 
will work together. We will change this. This is not the way to 
go at this time. So we are not going to get the Coast Guard, we 
are not going to cripple their assets. We are going to keep 
them sailing in smooth waters and protecting us like they have 
done for so many years.
    So thank you again, you two, for your great leadership, for 
your working with this Committee and all you have done. We are 
grateful and the Country is grateful, and we are going to roll 
up our sleeves and go from here.
    Mr. Chairman and Mr. Ranking Member, thank you. I yield 
back.
    Mr. Cummings. I want to thank you very much, Mr. Mica, for 
being here and for your support.
    We will now hear from our witnesses. Admiral Thad Allen is 
the Commandant of the United States Coast Guard. We will then 
hear from Master Chief Petty Officer Bowen, who is the Master 
Chief Petty Officer of the United States Coast Guard. We will 
then hear from Mr. David Matsuda, who is the Acting 
Administrator of the Maritime Administration; and then we will 
hear from Mr. Richard Lidinsky, who is the Chairman of the 
Federal Maritime Commission.
    Admiral Allen.

 TESTIMONY OF ADMIRAL THAD W. ALLEN, COMMANDANT, UNITED STATES 
COAST GUARD; MASTER CHIEF CHARLES W. BOWEN, MASTER CHIEF PETTY 
OFFICER OF THE UNITED STATES COAST GUARD; DAVID MATSUDA, ACTING 
    ADMINISTRATOR, MARITIME ADMINISTRATION; AND RICHARD A. 
      LIDINSKY, JR., CHAIRMAN, FEDERAL MARITIME COMMISSION

    Admiral Allen. Good morning, Chairman and Ranking Member 
LoBiondo and the other Members present here today. Thank you 
for having us here to talk about the 2011 budget. I have a 
written statement for the record and I will summarize my 
comments here, if that is okay, sir.
    I am pleased to be joined by Master Chief Petty Officer 
Bowen, who has been a shipmate of mine since he first worked 
for me back in 1993, when I was Captain of the Port of Long 
Island Sound. He has been a great shipmate and I wholeheartedly 
agree with your characterization of his service, and it has 
been my honor to serve with him.
    I would like to thank the Subcommittee for their support 
for Coast Guard men and women. Mr. Chairman, you and I came on 
board about the same time. You have been steadfast. Mr. 
LoBiondo, you have always been there for us, and we appreciate 
the support for our troops in New York as well.
    As you noted, Mr. Chairman, on the 12th of February I 
delivered my fourth and final State of the Coast Guard Address, 
and I described our current state as ready and resilient, and I 
believe, as I stated then, it was clearly demonstrated 
following the devastating earthquake in Haiti. One hour after 
the earthquake struck, three Coast Guard cutters had orders to 
proceed to Haiti. Arriving on scene the next morning, our units 
controlled aircraft movements until the airport could reopen, 
they conducted the first surveys and assessments of the damage 
and provided medical care to the most critically injured. They 
even delivered a baby on the flight deck of a Coast Guard 
cutter. They also conducted evacuation of American citizens and 
medical evacuations to higher level care for hundreds of 
Haitian citizens.
    As the recovery operations ramped up, our personnel teamed 
with FEMA to provide an incident management team to support 
USAID and the Ambassador to Haiti. Our units conducted port 
assessments and assisted in the reopening of the Port of Port-
au-Prince. We also deployed a reserve port security unit to 
provide security in the port, and that unit has been relieved 
and is demobilizing as we meet here this morning. Finally, we 
continue to monitor departures from Haiti for any indication 
that a mass migration may occur.
    The Coast Guard was first on scene because of our 
operational forces and our command and control structure. We 
are agile and flexible. Our operational model is unique in this 
Country and in the world. In an era where a whole of government 
effort is being sought to deal with a variety of complex 
challenges, we are in fact a whole of government organization.
    Mr. Chairman, you stated several times we are the Nation's 
thin blue line at sea. But because we are so unique and multi-
missioned, there is continual discussion regarding our mission 
mix, our location in government. But I would like you to 
consider this. As we surged forces in Haiti, other Coast Guard 
personnel and assets were breaking ice on the Great Lakes and 
in New England, medical evacuating a heart attack victim 270 
miles off the coast of San Diego, conducting fishing vessel 
boardings in the Bering Sea, and detaining 12 foreign vessels 
around the Country for violating international safety and 
security standards.
    The genius of our organization continues to be our 
operational model that allows our field commanders to move 
resources where they are needed and our doctrine that 
emphasizes on-scene initiative. To sustain this performance for 
the Nation, we must provide our people with the capability to 
safely and effectively execute the mission. As we discuss the 
fiscal year 2011 budget, it is important to acknowledge the 
current fiscal environment and the requirement for us to make 
tough choices to make sure our personnel have new cutters and 
aircraft in the future.
    As has been noted, we are operating on a constrained fiscal 
environment and the President noted in his State of the Union 
address families across the Country are tightening their belts. 
The Federal Government should do the same. Obviously, that 
sentiment is reflected in our 2011 budget submission.
    In our discussions with the Secretary and Department 
leadership, we agreed to make the difficult tradeoff between 
balancing our current operational capacity with the need for 
new cutters, aircraft, boats, and sensors.
    Mr. Chairman, given the funding levels provided, we made 
the conscious decision to invest in our future. The budget 
contains nearly $1.4 billion to acquire new assets, while 
removing aging cutters and aircraft from service that are too 
costly to maintain. It includes $13.9 million for housing 
units. And we do appreciate the First Lady's personal interest 
in the welfare of our people and our housing programs. But to 
allow for recapitalization within a fixed top line, there is no 
other place to look but forestructure, both personnel and 
assets, to meet the funding limits established.
    We must continue to provide pay and entitlements to our 
people. They are first. We must take care of them. To that end, 
our operating expense request reflects pay raises, cost of 
living increases, and other cost increases that are absorbed 
within the current operating base. That means fewer people and 
fewer units.
    I won't go through the detail of the cuts; you have already 
described those in your opening statements, so I will save the 
time.
    As a result, we have less capacity in 2011 than we did in 
2010. We will use our existing resources to prosecute all of 
our missions by allocating them to the highest priority, just 
as we have always done. That includes accepting greater risk 
and managing our resources professionally and with proper 
stewardship, and we will continue to do that. Obviously, 
recapitalizing the fleet is my top priority. It has to be 
because our future readiness is at stake.
    Of the 12 cutters that responded to Haiti, 10 suffered 
severe mission-affecting casualties, 2 were forced to return to 
port for repairs and are still unable to operate, and 1 
proceeded to an emergency dry dock. Each passing year erodes 
our capability, putting our people at risk and endangering our 
ability to execute our statutory responsibility.
    Mr. Chairman, the state of the Coast Guard is ready and 
resilient, but I would characterize our fleet as fragile and 
approaching the limits of support due to the age of our large 
cutters. We must recapitalize our aging fleet to continue our 
service to the Nation. Our personnel deserve the best because 
that is what they provide to us. After the first day of rescue 
operations in Haiti, a young petty officer emailed this to his 
mother: Today I have truly been more thankful to be an 
American. As a country, we will stand together and put aside 
our different opinions on health care, war, the economy to help 
those in need.
    Mr. Chairman, I appreciate your offer of support, from the 
Ranking Member as well. Let me add, in closing remarks, I too 
have appreciated your friendship, mentorship, and leadership. 
It has been an honor to serve with you.
    Mr. Cummings. Thank you very much.
    Master Chief Petty Officer Bowen.
    Master Chief Bowen. Good morning, Mr. Chairman and 
distinguished Members of the Subcommittee. This is my fourth 
and last appearance before you due to my impending retirement. 
I would like to personally thank all of you for your efforts on 
behalf of Coast Guard people. During my career, I have been 
fortunate to serve alongside what I believe to be the most 
capable and dedicated workforce in the U.S. Government, and I 
am thankful today for the privilege of discussing their needs 
with you.
    In my written statement I went into great detail describing 
the heroic action of Coast Guard personnel over the last year. 
However, I am not sure that human words are capable of 
adequately describing how I really feel about the performance 
of our people. They are protectors, defenders, lifesavers. As 
showcased after the earthquake in Haiti, the Coast Guard brings 
hope alive. Just hours into the tragedy, a very young Coast 
Guardsman, very young, off Coast Guard Cutter MOHAWK, named 
Fireman Runner, said, a little boy about four years old came up 
to me and squeezed me so hard and just told me that he loved 
me, looked up and told me that he was the only one left; 
everyone else in his family had died. Today I saw people that 
should not have been alive. It was a bad horror movie.
    I was proud of Commander John Driscoll as he stood at the 
Killick Coast Guard base and responded to a reporter who 
questioned why Coast Guard with limited medical training was 
working on survivors with such extensive and terrible injuries. 
He simply responded with, there is no other choice; these 
people have no other hope.
    The Coast Guard workforce is resilient, but we are 
stretched thin. We continue to seek parity with Department of 
Defense services regarding military benefits and family 
programs. On June 16th, 2009, Ranking Member LoBiondo and 
Members of this Subcommittee who are part of the Coast Guard 
Caucus sponsored H.R. 2901, a measure that, if enacted, would 
go a long way toward improving support and conditions for our 
people. Most of the proposals contained in this bill are also 
found in H.R. 3619, the Coast Guard authorization bill that 
passed in the House in October 2009. Both measures would 
provide enhanced authority for child development service 
centers and chaplain services, allow for Coast Guard 
participation in the Armed Forces Retirement Home, and 
authorize the President to award the Coast Guard cross and 
silver star medals for extraordinary heroism and gallantry in 
action.
    Both measures seek to address a lapse in Coast Guard 
housing authority. Unfortunately, housing continues to be a 
major concern. Last week I visited the Coast Guard command base 
on Long Island, New York, an area that experiences major swings 
in the housing market depending on the economy and the season. 
Because of this, the Coast Guard owns approximately 100 homes 
on the island, homes that must be maintained, but we are 
falling behind. I visited one home at Station Eden's Neck that 
I remember as a beautiful house when I saw it back in 1994. 
Even today it was characterized by the folks there as a good 
house. On close inspection, I agreed that it was livable, but I 
noted terrible drafts at the windows; kitchens and bathrooms 
and fixtures that have not been updated in many, many years; 
cabinet doors that were warped and did not close properly.
    I am thankful that the 2011 budget provides $14 million to 
address these deficiencies. I consider this a down-payment on 
the $350 million Coast Guard-owned housing backlog. I strongly 
believe that without further relief, this quality of life issue 
will eventually impact negatively on both retention and 
readiness.
    The constant work and support of this Subcommittee 
continues to make a difference to better our Coast Guard, a 
Coast Guard that means so much to so many people. For that I am 
grateful and honored to have had the opportunity during the 
last four years to represent the interests of our workforce 
before you.
    Thank you.
    Mr. Cummings. Mr. Matsuda?
    Mr. Matsuda. Good morning, Chairman Cummings, Ranking 
Member LoBiondo, and Members of the Subcommittee. Thank you for 
inviting me here today to discuss President Obama's fiscal year 
2011 budget priorities and initiatives for the Maritime 
Administration.
    The President's budget request of $352 million for the 
agency will fund programs important for maritime 
transportation. These programs support the maritime sector's 
continuing contributions to our Country's economic 
competitiveness, environmental sustainability, and 
transportation system's safety, security, and readiness.
    But first, with the Subcommittee's permission, I would like 
to give you a quick update on the Maritime Administration's 
disaster aid relief efforts in Haiti.
    At the request of the Secretary of Defense, we activated a 
total of seven Maritime Administration ships, five from the 
ready reserve force and two additional high-speed ferries. 
Coast Guard, Defense Department, and Maritime Administration 
employees worked very well together to ready these inactive 
ships for duty. Three are being used today, the SS Cape May, 
the SS Cornhusker State, and the Huakai. In addition, we have 
helped promote the services of the many capable U.S. commercial 
ships, 17 of which have served in relief efforts. All are 
carrying food aid, supplies, and even passengers in ferry 
service, and all are crewed with dedicated and skilled U.S. 
mariners.
    With regard to the budget, Secretary Ray LaHood has made 
clear that one of his top priorities is to improve the profile 
and prestige of the U.S. Merchant Marine Academy in Kingspoint, 
New York. To that end, the President has requested $100 million 
for the U.S. Merchant Marine Academy in fiscal year 2011. This 
would represent a 35 percent increase above the fiscal year 
2010 enacted level. The increase would support capital 
improvements, operational funding for items like necessary 
computer and information technology upgrades and academic 
program enhancements, as well as compensation for previous 
overcharges of midshipmen fees.
    The Maritime Administration is also making improvements 
with regard to the school's financial accountability. We are 
aggressively implementing recommendations made by the 
Government Accountability Office in its most recent audit 
report. My plan is to successfully address all 47 GAO 
recommendations by the end of this fiscal year. Additionally, 
we will continue to strongly support training of Merchant 
Marine officers at the six State academies.
    Another priority for the Maritime Administration is job 
creation. The agency's Title XI loan guarantee program supports 
jobs through infrastructure investment and economic growth. 
When credit markets are tight, this program is especially vital 
for those trying to get financing for U.S. ship construction. 
With the current Title XI subsidy balance of $78 million, we 
will be able to issue commitments to worthy applicants in 2011.
    An additional source of port infrastructure funding comes 
from the Department's discretionary infrastructure grant 
program, also called the TIGER program. On February 17th, the 
Department announced $1.5 billion in TIGER grant awards for 
fiscal year 2010. Of this amount, more than $120 million will 
fund seven port and maritime related projects. These grants 
will support new marine highway services, add capacity to 
ports, and improve shoreside connections to inland markets.
    Security preparedness and response are also critical 
missions for the agency and command the largest share of the 
budget request. For example, the President's budget request 
includes $174 million for the 60 ships in the Maritime Security 
Program. This level of funding matches the authorized level. 
This important program guarantees military access to commercial 
U.S. flag ships, related logistic services, and a workforce of 
trained U.S. mariners. U.S. flag commercial ships have 
delivered over 430,000 containers [TEU] of equipment and 
supplies to support U.S. troops in Iraq and Afghanistan.
    Last, but not least, the Maritime Administration is 
committed to the proper disposal of obsolete ships in the 
National Defense Reserve fleet. In 2009, for the first time in 
three years, ships began to leave the Suisun Bay Reserve Fleet 
in California. Even more will leave this year. The President's 
budget request supports the environmentally responsible 
disposal of an additional 15 ships from the fleet in fiscal 
year 2011.
    Mr. Chairman, I look forward to working with the 
Subcommittee on advancing maritime transportation to our 
Country. I am happy to respond to any questions the 
Subcommittee might have. Thank you.
    Mr. Cummings. Thank you very much.
    Mr. Lidinsky.
    Mr. Lidinsky. Good morning, Mr. Chairman and Members of the 
Subcommittee. I appreciate this opportunity to present the 
President's fiscal year 2011 budget for the Federal Maritime 
Commission. With me today at this hearing are Commissioner 
Rebecca Dye and our newest commissioner, Mr. Michael Khouri.
    Mr. Chairman, I would like to add personally it is a great 
honor to appear before this Subcommittee, since this is where I 
began my maritime career many years ago under one of your 
illustrious predecessors also from Baltimore. So it is good to 
be back home.
    With the Committee's permission, I would like to summarize 
my testimony and request that the full written statement be 
included in the record.
    Mr. Cummings. Without objection.
    Mr. Lidinsky. Thank you.
    The President's budget for the Maritime Commission provides 
$25,498,000 for fiscal year 2011. This represents an increase 
for us of $1,363,000 over 2010 and funds 132 employees. We will 
add one new IT position to speed the Commission's data security 
efforts and reduce burdens on the businesses we regulate.
    During my confirmation hearings last July, I stated the 
Obama Administration's commitment to three main priorities for 
the Commission: first, the top priority should be our role in 
assisting the economic recovery for job growth, both within our 
commercial ocean transportation industry and among the 
businesses they serve; second, the Commission must focus on 
protecting our Country's shipping community and, above all, the 
American consumer from unfair practices from foreign 
governments, cargo carriers, or cruise lines; third, we will 
work with all sectors of our maritime family to help green our 
ports and the shipping industry.
    In the coming year, we will play a valuable supporting role 
as a trade and economic leader to help the Administration begin 
to implement the National Export Initiative and to redouble our 
exports over the next five years. Each of our commissioners is 
committed to working in a collegial, cooperative, and 
bipartisan manner to accomplish the Commission's mission.
    Let me also add that Commissioner Joe Brennan is back at 
the fort guarding our activities this morning, but he sends the 
Committee his regards.
    My vision of the FMC is to be a more proactive regulatory 
agency so that we do not just react to issues that are brought 
to us. Based on that, here are three goals that we have 
accomplished already. First, after receiving valuable insight 
and input from the Committee and others, we have announced an 
agency reorganization program that became effective on January 
31st of this year. We have reestablished the Office of Managing 
Director and have established the Office of Consumer Affairs 
and Dispute Resolutions as an independent office. In the near 
future, the Commission will present a revised budget that 
reflects this new organization, but we have the same funding 
level and the same number of FTEs.
    Just last week the Commission voted to initiate a 
rulemaking to relieve non-vessel operating common carriers from 
tariff rate publication requirements. This relief will result 
in significant cost savings and potentially new jobs in that 
sector of the industry. We are holding hearings next week to 
review the passenger vessel industry and their requirement to 
cover financial activities of cruise line passengers if there 
is an accident at sea or an operator fails to perform.
    In the environmental area, the FMC sees three key issues: 
First, the Commission voted back in August to end its 
opposition to the Clean Air and Trucks program at the Port of 
Los Angeles and, going forward, the Commission is committed to 
being a helpful partner for our ports on green issues. Second, 
we have an internal staff committee to help the Commission 
focus on green issues and become a clearinghouse for ports and 
other parts of the maritime industry interested in greening 
their activities. Third, the Commission recently reviewed a 
very significant proposal of the 16 carriers in the Trans-
Pacific discussion agreement which will allow them to institute 
slow steaming and have a great environmental impact from that 
activity.
    In October 2008, the European Union repealed its block 
exemption anti-trust immunity from competition rules on liner 
shipping conferences. The Commission is continuing work on a 
comprehensive study of the impacts of this repeal. We must be 
very careful to gauge the long-term impacts on our own trade.
    The Commission is also working on two new issues involving 
foreign governments. The first is to carefully monitor the 
activities of the People's Republic of China and their new 
requirements for the Shanghai Shipping Exchange, which could 
have indirect impact on our carriers and on our shippers. 
Second, we are watching increased diversion of U.S.-bound cargo 
to Canada, away from U.S. ports. Two years ago, the Canadian 
government opened a new container port in Prince Rupert, and in 
alliance with a Chinese carrier, have moved 265,000 containers 
through that port, many away from our West Coast ports this 
past year. We are consulting with ports and other U.S. 
entities, as well as Customs and Border Protection, to address 
any potential unfair practices and potential security impacts.
    Finally, but not least, I have found that the Commission 
staff, although small, is very dedicated to public service. 
Over 10 percent of our employees have 35 years or more of 
service at the Commission. We continue to implement personnel 
practices that earned our Commission recognition as the Most 
Improved Small Federal agency last year, and our 2009 Annual 
Employee Survey, along with results from 2008 and 2007, 
suggested FMC employees are now very satisfied with their jobs 
and related aspects of employment. More than 30 percent of the 
survey showed successive improvement each year, and I know that 
the Committee has been very interested in this issue, and we 
are committed to building a diverse skilled, and effective 
staff.
    Mr. Chairman and Members of the Committee, thank you for 
this opportunity to testify. It is an honor to be before you 
and I'm happy also to answer any questions you might have.
    Mr. Cummings. Thank you very much.
    Before we go into questions, I wanted to grant Mr. Ehlers 
an opportunity to provide his opening statement.
    Mr. Ehlers. Thank you very much, Mr. Chairman. I certainly 
appreciate this opportunity. Unfortunately, I am bouncing 
between two Committee meetings at the same time. I wanted to 
raise the issue of the helicopters on the Great Lakes, 
particularly on Lake Michigan, which is a very heavily used 
lake, and the helicopter has been a real godsend there. In 
fact, we have Grand Haven, Michigan, which every year holds a 
helicopter festival--I am sorry, a Coast Guard festival out of 
appreciation for the Coast Guard activities on Lake Michigan. 
It is a very well attended facility and we have hundreds of 
thousands of people who come from Chicago and other areas 
during the summer, and they all appreciate the Coast Guard's 
activity there.
    I guess my fatherly advice--since I am older than most of 
you--is don't even start the battle. You did it a few years ago 
and got soundly beaten by the Congress and the operation was 
restored. But aside from that, I would just plead for the need 
for the helicopters on the Great Lakes, particularly on Lake 
Michigan, which has a huge amount of traffic during the summer. 
This is, of course, a seasonal placement, but the idea of 
pulling five helicopters away from Travers City and Muskegon 
and Walkegon is just not sound judgment if you look at the 
number of lives saved and the number of lives assisted every 
year. I would very much encourage you to withdraw that part of 
your budget and maintain the helicopter presence on Lake 
Michigan in particular.
    So this is a statement, not a question, but I would hope 
that you would take that to heart. And restore that service. We 
are talking about, to me, a substantial number of lives that 
will be at risk without that service, so I beg of you, please 
restore that and end the battle early on and come out of it as 
heroes, instead of bloodied and beat upon the head during the 
next few months of this Congress.
    Thank you very much and thank you again, Mr. Chairman, for 
letting me make this statement.
    Mr. Cummings. Thank you.
    Admiral Allen, one of the things that you talked about was 
the recapitalization of the service to the Deepwater Program, 
and I think basically what you were saying is that is a 
priority, is that right?
    Admiral Allen. Yes, Mr. Chairman.
    Mr. Cummings. But at the same time, as far as operational 
performance, there will be a reduction, is that correct? In 
other words, is there a tradeoff here?
    Admiral Allen. Yes, sir. That is exactly what I mean.
    Mr. Cummings. Yes. And is that an appropriate tradeoff? 
And, if it is, would you explain that to us?
    Admiral Allen. Yes, sir. Within a constrained fiscal 
environment, you almost move away from traditional budgeting, 
where you take the prior year enacted, you would incrementally 
add on things like cost of living increases, pay raises, and so 
forth; you would look at what efficiencies you could achieve 
and what new things you might want to do; and it is an 
incremental or decremental changes to the prior year enacted 
level.
    When you are looking at severely constrained budget 
environments, you don't start with prior year enacted and 
increment or decrement that; you start with what is available 
in terms of funding and you make tradeoffs within that line, 
and that is what we did, sir.
    Mr. Cummings. Now, I read an article yesterday which pretty 
much stated that there would likely, if things were to go as 
they are right now budget-wise, be a reduction in 
counterterrorism with regard to the Coast Guard. Do you think 
that is a good idea?
    Admiral Allen. Well, sir, there is an overall reduction in 
capacity, and I understand the concern, especially with the 
Marine Safety and Security Teams. As I mentioned in my opening 
statement, the Coast Guard's operating model is we give all the 
resources to our field commanders and they allocate those to 
the highest need or risk in their areas. Counterterrorism 
operations, port and waterway safety and security, critical 
infrastructure protection are all part of that. So what is 
going to happen is, if you have lower level of operating 
assets, it puts a larger premium on how you do that risk 
calculation and where you do allocate the resources. And I 
would say there is less capability to do counterterrorism 
operations, but I would have to tell you that we manage that 
across the portfolio, so all the missions potentially could be 
impacted based on the decision the field commanders made on how 
to allocate those resources, sir.
    Mr. Cummings. Now, as you know, this Subcommittee and, 
indeed, this Committee have been deeply concerned about failing 
qualification standards for Coast Guard personnel. In response 
to the Congressional direction, the Coast Guard recently 
developed a workforce action plan. The Congressional direction 
instructed the Coast Guard to provide a workforce plan that 
would include a gap analysis of the mission areas that continue 
to need resources and the type of personnel necessary to 
address those needs, as well as strategy, including funding 
requirements and time line to address those needs.
    The GAO reported in the study of the Coast Guard personnel 
management systems released today, which we will hear about 
shortly, the workforce action plan developed by the Coast Guard 
did not provide the gap analysis and did not identify funding 
needs or set for a potential time line by which the gaps could 
be filled. How many total personnel does the Coast Guard need 
to carry out its assigned missions with fully qualified 
personnel and does the Coast Guard currently have that level of 
personnel, and has the Coast Guard completed a gap analysis?
    Admiral Allen. Yes, sir. I am assuming you are talking 
specifically about our operation centers----
    Mr. Cummings. That is right.
    Admiral Allen.--in regard to search and rescue mission. We 
have stood up an internal working group and we are moving to 
identify those gaps and the resources required. Generally, we 
are talking about communication watch standards that listens 
for mayday and distress calls, people who actually developed 
the search plans and the supervision over those. The current 
staffing varies at every sector in the Coast Guard. Some of 
those supervisors stand 12-hour watches, some stand 24-hour 
watches. The goal with our gap analysis is to create a standard 
staffing model and develop those shortfalls. That is in 
progress and we intend to provide that information as soon as 
we are completed, sir.
    Mr. Cummings. But, now, when you go across the board, do 
you have a gap analysis for the entire operation of the Coast 
Guard?
    Admiral Allen. Yes, sir. I just want to make sure I am 
being responsive to your question. The particular issue you 
raised I believe relates to sector command centers and how we 
manage the search and rescue mission. That is a discreet subset 
of the larger Coast Guard personnel system, if you will.
    Mr. Cummings. Okay.
    Admiral Allen. That is being addressed specifically in 
terms of gaps at each sector, and that is what we will come 
forward for the back gap analysis, sir.
    Mr. Cummings. I got you.
    Admiral Allen. Regarding the larger size of the Coast 
Guard, we have had many discussions about that and what we 
could do with additional people, sir.
    Mr. Cummings. This cut of military personnel, that is a 
real problem?
    Admiral Allen. Well, there are a couple of challenges 
associated with it. And, again, what we are talking about is 
trying to adjust forestructure to make sure we can continue to 
recapitalize, and that means assets and people. That is the 
only place you can go if you are going to pay your people, do 
cost of living increases and other costs associated without any 
increase in your top line.
    Mr. Cummings. It is rather disturbing because one of the 
things that we have been trying to do, and we have done this on 
a bipartisan basis, is try to increase the number of personnel 
overall, and we have a 773 reduction when you look at the 
situation that we are finding ourselves in with this budget.
    Mr. LoBiondo.
    Mr. LoBiondo. Thank you, Mr. Chairman.
    Admiral Allen, the Coast Guard recently completed a fleet 
mixture analysis to determine the numbers and types of vessel 
platforms that will be necessary to support the Coast Guard 
missions in the future. Mr. Mica and I requested this report a 
couple of weeks ago; however, the report has not been provided 
to the Subcommittee. I am forced to make a conclusion here that 
maybe you can shed some light on or prove me wrong, but given 
the timing of the budget recommendations and the lack of the 
report coming forward, I have to assume that the Administration 
is refusing to allow you to give us this report because it 
likely calls for acquisition of a number of assets that cannot 
be supported by this absurd budget by the Administration. Can 
you tell us when the Subcommittee might expect this report?
    Admiral Allen. Yes, sir. And, in fact, that discussion 
between the Administration has not occurred. We are finalizing 
the report and we are prepared to come up and brief you on it 
very shortly, sir.
    Mr. LoBiondo. Okay. I emphasize this because in your 
statement on the modernization of the fleet, you talk about 
the--and I think it is important for this to be on the record, 
Mr. Chairman--you talked about the recent experience in support 
of the Haiti operation and the response, and you noted that the 
Coast Guard operates one of the oldest fleets in the world, and 
of the 12 major cutters assigned to the Haiti relief operation, 
10 of the 12 cutters, or 83 percent, suffered severe mission-
affecting capabilities. I guess in layman's terms they broke 
down.
    Admiral Allen. Not quite broke down, but had major--say it 
could be a casualty of a subsystem, like a water evaporator. 
But mission-debilitating casualties, that is correct, sir.
    Mr. LoBiondo. Two were forced to return to port for 
emergency repairs; one proceeded to emergency dry dock. And you 
also stated that you had to divert air resources away from 
evacuation efforts to deliver repair parts.
    Admiral Allen. That is correct, sir.
    Mr. LoBiondo. So, Mr. Chairman, we are saying the same 
thing, but I think we are going to be forced to emphasize this 
repeatedly and emphatically so that everyone understands in 
real terms, in a real operation, in a real disaster, what these 
devastating cuts are going to mean.
    Further along the same line, Admiral Allen, the President, 
as we talked about, proposed to eliminate five Maritime Safety 
and Security Teams, one of them, as we noted, home-ported in 
New York City, another one in Anchorage, one in San Francisco, 
one in New Orleans, and one in Georgia. The impact would be 
just short of 400 military positions. Can you outline for us, 
in your view, what specific capabilities would be lost under 
this proposal if it were to be enacted?
    Admiral Allen. Yes, sir. Marine Safety and Security Teams 
have a combination of capabilities, but most notably is on-
water presence, the ability to conduct security patrols not 
only on the water, but around facilities on land. The teams are 
deployable. They are most notably used for surge operations. 
They don't have a standby search and rescue response 
capability; we employ them on specific missions both in the 
ports where they are stationed and elsewhere around the world; 
and these teams have been deployed anywhere in the world, from 
the Persian Gulf to Guantanamo Bay to surge operations in 
support of Democratic and Republican national conventions. They 
are our deployable specialized forces.
    Mr. LoBiondo. So they would act obviously as a deterrent, 
keep bad guys away.
    Admiral Allen. Yes, sir. When they are not deployed, they 
actually operate in the port where they are at, so if you take 
the Marine Safety and Security Team in New York Harbor, when 
they are not deployed, say, to Guantanamo Bay or in support of 
a surge operation someplace in the Country, they would augment 
local forces with presence on the water and deterrence.
    Mr. LoBiondo. I specifically highlight New York-New Jersey 
because obviously geographic reasons for me, but assuming this 
ridiculous proposal were to be advanced and enacted, what would 
it mean in the case of the Port of New York if there were to be 
terrorist activity? How do we make up the gap here? Who is 
going to pick up the slack?
    Admiral Allen. Yes, sir. First of all, the based resources 
in and around New York constitute between 600 and 700 personnel 
between military and civilians, and the station on Staten 
Island in New York is our largest search and rescue station, so 
there is a considerable amount of forces already there. Faced 
with the need to reduce the number of Marine Safety and 
Security Teams, we took into account the existing footprint 
already in New York. But if you are talking about that 
capability and where would it come from, the next closest team, 
presuming the proposal is enacted, would be Boston, sir.
    Mr. LoBiondo. Well, just in winding up the last few 
seconds, I appreciate that, Admiral Allen, and, again, 
understanding the difficult position you are put in. But just 
think about what we are saying to the people of New York in 
terms of how we are considering the homeland security issue at 
the place where the site of the attack took place on September 
11th. We are saying that it is okay for the Administration to 
decide that the security priorities of New York can be better 
covered by Boston. It is just absurd.
    Thank you.
    Mr. Cummings. Mr. McMahon.
    Mr. McMahon. Thank you, Mr. Chairman. I would just like to 
follow up a little bit on Congressman LoBiondo, the Ranking 
Member's questions about the MSST, which, as I mentioned in my 
opening statement, is of grave, grave concern for us in New 
York.
    Admiral Allen, as you know, Congress created the MSST 
program to perform both port security and harbor missions, and 
to protect our harbors in the event of a terrorist incident. 
Could you just review again where is the logic in 
decommissioning the team responsible for providing protection 
for our largest city and our Nation's greatest terrorist 
target? This decision isn't just worrisome for me as a New 
Yorker, but also as an American; it makes me question our 
priorities. Even the GAO testimony states that this 
decommissioning will decrease operational capability and 
performance in the ports, waterways, and coastal security 
mission.
    Almost a decade after the 9/11 attacks, how can we even 
think of turning our back on the security needs of New York 
City and, in particular, the ports? The single largest cost 
reduction in the Coast Guard budget is the $18.2 million to be 
cut from the MSST program, with almost half of these 
reductions, about 90 FTEs, coming from the decommissioning of 
the team based in New York, in my district. Could you just tell 
us what it means exactly for New York Harbor, what is the logic 
behind it? And, in effect, isn't this leaving the harbor 
unprotected?
    Admiral Allen. Yes, sir. Thank you for the question. Let me 
go back to the rationale and the tradeoffs and the decisions we 
made, because I think it is very important that we have the 
conversation and understand that. We have around the Coast 
Guard right now Coast Guard surface unit stations that are 
ready to respond to search and rescue, law enforcement, and 
other taskings. They are ready to respond 7 by 24, basically 
firehouse type operations. Then we have separate forces that 
deploy for surge operations that are mission specific.
    In New York we have a station on Staten Island and other 
stations in the area that respond to search and rescue 7 by 24, 
365. That is not the mission of the Maritime Safety and 
Security Team that is headquartered in the New York area; they 
are there for surge operations to be deployed other places. 
When you are looking at tradeoffs within a fixed line budget, 
you can't go to the 7 by 24, 365 response effort because that 
is safety of life, and that is our first and highest priority. 
So if you are looking at where you have forestructure that you 
can use to trade off, which we have to to meet the top line, 
the MSSTs became the logical place to do that given the funding 
constraints we are facing.
    Mr. McMahon. But what capability, then, is lost in this 
case from New York Harbor?
    Admiral Allen. Yes, sir. What you have is a unit that has 
on-the-water capability in terms of operating small boats, 
doing waterside security, doing security at selected waterfront 
facilities on land. That capability is available in New York, 
but is also deployable anyplace we might need it for surge 
operations. So the team in New York, when they are not 
deployed, would be available to the local commanders for doing 
those types of operations. So if you are looking at the 
incremental change, what would be available in New York after 
this team would be gone, it would be that time that they are 
not deployed, that they are available to local commanders for 
on-scene security duties which would enhance deterrents and 
increase security.
    Mr. McMahon. But is my understanding correct that they are 
being eliminated from New York but moved somewhere else or 
remaining in other places?
    Admiral Allen. No. We have 12 of these teams. What we did 
was, knowing that we had to reduce the forestructure to meet 
the funding limits, we made sure that there was regional 
coverage and we took into account--and you can disagree or not 
with this--given the extensive amount of personnel and units we 
have assigned to the New York area, which is our largest 
operating command in the Coast Guard, we did take note that 
there are already almost 700 people in New York, excluding the 
Marine Safety and Security Team. And when you are making these 
hard choices, you have to take into account the resources that 
are already there, and that is what we did, sir.
    Mr. McMahon. So where is the regional deployment center now 
for----
    Admiral Allen. As I told Mr. LoBiondo, the closest Marine 
Safety and Security Team would be Boston, sir.
    Mr. McMahon. Certainly, I don't think it could be argued 
that that would be too far away to really have an impact if an 
occurrence were to take place in New York, where that surge 
would most likely be needed.
    Admiral Allen. Sir, if an event were to occur in New York 
Harbor, Boston is further than New York, you are absolutely 
right, but the MSST that is in New York may or may not be there 
all the time because they are deployed. It is when they are 
available in the harbor, in a non-deployed status, that they 
can used by the local commander. And what I would be happy to 
do for the record is give you the amount of days they were 
available to the local commander versus deployed I think would 
frame the issue better for you, sir.
    Mr. McMahon. I appreciate that, Admiral. Lastly, if you 
could, in kind of civilian terms, when I go back home to my 
district and say that we have spoken about this, what do I say 
to people to reassure them that they are not less safe, that 
our harbor is not less safe, and that New York has now lost a 
significant part of its deterrent and response to terrorist 
threats in our harbor, which we know remains the number one 
target in our Country?
    Admiral Allen. Well, following passage of the Maritime 
Transportation Security Act that authorized the MSSTs, we 
located a deployable specialized force in New York for the 
purpose of providing regional support around the Country and be 
able to deploy these forces, whether they are to the Middle 
East or Guantanamo, wherever we might need them, knowing that 
we would have capacity that could be used to help the local 
commander in New York when they were not deployed. The search 
and rescue coverage and all the other missions of the Coast 
Guard are maintained with the additional 600 people that are 
currently in New York, and they are not being diminished, sir.
    Mr. McMahon. Thank you, Admiral.
    Let me just thank you for the extra time, Mr. Chairman. I 
will just conclude by saying that I will join with the 
leadership of this Committee on both sides of the aisle to do 
everything we can to make sure that these cuts do not become 
reality and affect the safety of the people whom we represent 
certainly in the New York-New Jersey area. Thank you.
    Mr. Cummings. Mr. Young.
    Mr. Young. Thank you, Mr. Chairman.
    Again, Admiral Allen, thank you for all you have done for 
the Coast Guard. You have been a great leader. We will miss you 
when you leave and I hope, wherever you go, you are as 
successful as you have been in the Coast Guard. And I do 
apologize for this Congress, as we call it--not the House--for 
never really authorizing you. Four years we have not passed a 
bill out of the Senate, and I say shame on them. And I am still 
going to hammer them.
    Mr. Chairman, Members of the Committee, one thing, the 
Admiral is doing what he has to do. It is up to us to rewrite 
this President's budget, which is a disaster. I have said this 
to--I don't know where they come from and why it happens, but 
they cut the Coast Guard. The Coast Guard is the most active 
unit we have, I believe, in the armed forces today. Some people 
would disagree with that, but you are constantly on call and on 
duty, and we haven't funded them. So it is our responsibility, 
this Congress, to step up to the plate and fund, I think, one 
of the finest agencies we have in the United States armed 
services.
    But, Admiral, I have to suggest another thing. We have a 
Coast Guard cutter called the Acushnet in Ketchikan that is, 
again, supposed to decommissioned in 2011. It still is an old 
ship, we all know that, but it does a great duty, and I don't 
think there is a replacement vessel now that can take its place 
between 2011 and probably 2013. I am just asking you can we 
delay that decommissioning until we have a replacement vessel, 
because it does serve a great purpose?
    Admiral Allen. Yes, sir, I understand there is a concern 
about the Acushnet, and I understand it is important to the 
local community in Ketchikan, which I note, as we have 
discussed before, is where I went to grade school.
    Mr. Young. That is why you are such a good admiral, by the 
way, but go ahead. Talk about kissing up to somebody.
    Admiral Allen. The Acushnet and I are approximately the 
same age, sir, and I am retiring.
    Mr. Young. But you are in good shape.
    Admiral Allen. And I am retiring, sir.
    Mr. Young. That is not our fault. But go ahead.
    Admiral Allen. This is another issue just like the Maritime 
Safety and Security Teams. Given a fixed funding, the age of 
the cutters, the amount of money it takes to keep them running 
and the need to build new cutters, something has to give 
against a fixed top line, and these are very tough choices. 
Nobody likes to vacate a port, especially one in the State of 
Alaska that has been the source of such support for us--and we 
thank you for what you have done over the years--but faced with 
being able to accommodate pay raises and cost of living 
increases, there is no place to go except forestructure, and 
that is the number of assets or the number of people, sir.
    Mr. Young. Okay, let's say this Committee does what it 
should do and we get enough money to meet those demands. I am 
just asking until 2013, because by that time, hopefully, we are 
on schedule to have a vessel to replace the Acushnet. But there 
will be a period of time between 2011 and 2013, approximately 
two and a half, three years, we won't have a vessel to cover 
that, and with the C-130s as old as they are in Kodiak, we are 
talking about coastline--you can take three times the coastline 
of the East Coast and it still doesn't equal the coastline and 
the activities we have in Alaska. I am just saying this vessel 
is crude, it is supplied, it is stationed, it is ready to go; 
it is just old. And I argue, regardless what you say, there is 
going to be a gap there that will hurt us. So if we raise some 
more money to get into this budget, I hope you will consider 
the fact that we don't quite decommission that vessel as soon 
as expected.
    Admiral Allen. Yes, sir. In the sake of complete 
transparency and clarity here, though, let me be perfectly 
clear about the cutter decommissionings. We are proposing to 
decommission four high endurance cutters and the Acushnet, 
which is a medium endurance cutter, in Ketchikan. We have two 
new cutters that are coming online, the Bertholf and the 
Waesche; we have a third cutter that is 35 percent done and we 
are in negotiations right now--about to enter into negotiations 
to award the contract for the fourth national security cutter. 
So we have two cutters in operation, one that is 35 percent, 
one to be put on contract. We are removing the vessels they are 
replacing from service this year. So we will go through a gap 
with fewer hulls until the new ones are built, and that is an 
artifact of the funding levels that we are required to live in, 
sir.
    Mr. Young. And I go back to say if the money is there, 
don't decommission it, because we have that gap, and I don't 
want that to occur. I am talking about the length we have and 
vessels to still do the job.
    Admiral Allen. Yes, sir. I roger the message, sir.
    Mr. Young. Okay, lastly, Mr. Chairman and Admiral, we have 
three icebreakers under the Coast Guard, two are still on dry 
dock, one is still operating, the Healy; and, of course, the 
Administration came down with no money for icebreakers. The 
Chairman and I have discussed this; the Chairman of the full 
Committee have also discussed it. In fact, this is in our 
arctic bill. Has the Coast Guard ever considered leasing 
icebreakers to do the job at a much lesser cost than actually 
building a new one? Because I don't see this Administration 
coming down with any money for it, and I think there could be 
money for leasing.
    Admiral Allen. Yes, sir. As you know, right now we have 
three icebreakers, the Coast Guard Cutter Healy, which is an 
ice strength and research vessel operating for about seven or 
eight years now, a very capable ship. The two heavy-duty 
icebreakers, Polar Sea and Polar Star are near the end of their 
service life. The Polar Sea has been extended. We do have money 
to bring the Polar Star back into service and we are making 
those repairs at this time. The current gaps that we have are 
money to operate the Polar Star and the fact that the money 
right now resides in the National Science Foundation and not in 
the Coast Guard base.
    Now, separate from that is the issue of the future of the 
Polar Sea and the Polar Star in terms of replacing that 
capability. You can build new icebreakers; you can lease them. 
You have a lot of options in how you might move forward, sir. 
But that has to be preceded by a policy decision that we have 
to replace that capability, and that has not happened yet, sir.
    Mr. Young. Has the Coast Guard looked at that policy 
decision? Would that be made by the Coast Guard or somebody 
else?
    Admiral Allen. Sir, once we have a policy decision that the 
capability of the Polar Sea and the Polar Star needs to be 
replaced, we will do an alternatives analysis that will look at 
everything, including leasing, sir.
    Mr. Young. I thank you.
    Thank you, Mr. Chairman.
    Mr. Cummings. Thank you.
    Ms. Richardson.
    Ms. Richardson. Thank you, Mr. Chairman.
    Mr. Matsuda, it is good to see you again, and thank you so 
much. I had an opportunity for you to come into my district. I 
found you to be very engaging and wanting to understand what 
was happening in the largest port complex in the United States, 
and we thank you for seeing that personally.
    Given what you have learned about the Port of Los Angeles 
and Long Beach during your visit, what do you see as the 
biggest challenges facing our port security, given the 2011 
budget for the Maritime Administration?
    Mr. Matsuda. Thank you, Congresswoman. First of all, I 
certainly appreciated being able to view the port with you. I 
actually went back last week and visited a couple more of our 
ships that are based there. I was most impressed and the 
message I heard loud and clear from the port officials and the 
community was the need to focus on a more national supply chain 
and goods movement policy that effectively links the ports 
along with the inland infrastructure, like the rail and trucks 
and the highways that connect to the port, to be able to make 
sure that goods moved there flow through there freely and 
smoothly and as efficiently as possible.
    As you know, we don't have as strong a role in security as 
some of our fellow agencies like the Coast Guard here, but we 
work very closely with them, and we think that one way to help 
in that regard is to make sure that there is a smooth flow of 
movements through the port itself.
    Ms. Richardson. Well, in light of that, we had a situation 
where we had a labor lockout in the ports, and when the ports 
were closed, it cost our economy $1 billion a day. And that is 
billion with a B. So although you are absolutely right in terms 
of the security aspect, what happens on the port security side 
if we have a reason that we have to shut down the ports, it 
would dramatically impact on your particular end. So in light 
of that, have you thought of any initiatives that MARAD would 
be undertaking in the coming year to support the expansion of 
short sea shipping? The full year 2011 budget request reduces 
funding for MARAD operations and programs from $59.7 million to 
$49.3 million, a 17.5 percent reduction. Why is this reduction 
proposed?
    Mr. Matsuda. Well, first of all, MARAD has undertaken 
discussions with officials at Department of Defense and 
NORTHCOM. We have talked about what would happen if a port were 
to go out of service, an entire port, because that is something 
that not a lot of folks in the industry are looking at. Many of 
them are concerned with a single terminal or a single part of a 
port being out of service. So we are looking at that. Perhaps 
we can do some modeling and get some more information about 
what would actually happen, what we would need to be doing as a 
Country to be prepared.
    As far as the marine highway program, this remains an 
extremely high priority for the Administration. One thing I 
would point out is that in the discretionary grant program, the 
TIGER program that the Department recently announced awards 
for, we funded I believe it is somewhere upwards of $50 million 
in marine highway projects, and that is far and away above any 
funding levels the agency has ever received from line item 
marine highway initiatives. So that is something that we look 
forward to--we believe these projects stand up on their own 
merit and really do produce the types of benefits that we know 
they will; to the environment in terms of energy usage, 
reducing congestion around the port itself on the land side. So 
we will continue to push this.
    Ms. Richardson. I agree with your assessment as a whole; 
however, you are speaking to a person who represents, in 
conjunction with Congressman Rohrabacher, the largest port in 
the United States and, however, we were left out on that list. 
So it is a little sore spot with me of how we manage to provide 
this and, yet, we didn't even do it for the most critical area 
in the Nation. But thank you, sir.
    Admiral Allen, several of my colleagues have talked about 
their particular port areas and you have heard the area that I 
represent, and I am just curious. Do you see any impacts in the 
western region with the decommissioning of these four high 
endurance cutters or anything else that is being proposed 
currently in the Coast Guard budget?
    Admiral Allen. Nothing immediately in the L.A.-Long Beach 
area, ma'am, but I would support your comments on the value, 
the size, and the criticality of that port to the United 
States. In fact, if I could just add on to Mr. Matsuda's 
comments, several weeks ago he and I traveled out to U.S. 
Northern Command. We met with General Renuart and General 
Duncan McNabb, who is head of the Transportation Command, and 
we spent an entire afternoon with industry leaders--we are 
talking about COs of ships, port operators and so forth--to 
talk about port resiliency. Specifically, how you could 
reestablish port operations after a catastrophic event, whether 
it was natural or manmade. This is going to be an ongoing 
effort and a partnership between MARAD, the Coast Guard, and 
NORTHCOM, and this is part of a larger effort that has been 
going on for several years that we call Maritime Transportation 
Recovery, and there is a national plan to do that. And we have 
a way to actually orchestrate work with industry and 
stakeholders and the local port to prioritize how we do 
assessments, reopen the port, and queuing of traffic as it 
needs to come in and out, and we are committed to that process 
and I can tell you working very, very closely with Mr. Matsuda.
    Ms. Richardson. Thank you, sir.
    So if the Chairman would be in agreement, I would like to 
ask if you could forward to this Committee a copy of maybe the 
summarizing notes from the Maritime Transportation Recovery 
meeting that you had. I would be very curious to learn more 
about it.
    Admiral Allen. Be happy to do that.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Ms. Richardson. Mr. Chairman, can I ask one final question? 
I know I have passed my time.
    Mr. Cummings. Yes, very quickly.
    Ms. Richardson. Yes?
    Mr. Cummings. Yes, one.
    Ms. Richardson. Thank you, sir.
    I am just curious, Admiral, how involved were you with the 
actual Administration in forming this budget? Were you sought 
to say you have to cut four percent and you can pick where you 
want to cut it, or were you basically told this is where it is 
going to happen?
    Admiral Allen. No, the budget that is proposed reflects 
some very hard decisions and tradeoffs that I personally 
discussed with the Secretary and her staff and presented as a 
way to meet the requirements of a fixed top line.
    Ms. Richardson. So were they your ideas or theirs?
    Admiral Allen. The tradeoffs that were made that are 
reflected in this budget to meet that funding level reflect my 
recommendations, hard choices that I made and proposed given 
the funding reality we were dealing with, ma'am.
    Ms. Richardson. Thank you, sir.
    And you have been very kind, Mr. Chairman. Thank you.
    Mr. Cummings. Thank you.
    Mr. Taylor.
    Mr. Taylor. Thank you, Mr. Chairman.
    Let me begin by thanking Admiral Allen and Chief Petty 
Officer Bowen for their many years of service, and particularly 
for the great job you did in the command positions that you 
have held for the past three years. I certainly have enjoyed 
working with you and I still consider, as an ex-enlisted guy, 
one of the highlights of my life getting to travel down to 
Gulfport, Mississippi with you, so thank you very much for 
doing that.
    Admiral, I will start with you. Yesterday I gave the C&O a 
hard time, saying that he was retiring ships faster than I 
could build them or put them in the budget. Given the 
replacement of your large high endurance cutters, medium 
endurance cutters, are you building them as fast as Congress 
can fund the replacements? I am sorry, are you retiring them 
faster than Congress can fund the replacements? As I told the 
C&O, I put a ship in the budget; best case scenario, three 
years later it is commissioned. Worst case scenario, six years 
later it is commissioned. But with the stroke of a pen he has 
retired one. So is your budget recommendation on at least a 
one-for-one capabilities basis replacing those vessels that are 
being decommissioned this year?
    Admiral Allen. Sir, we are retiring them faster than we are 
replacing them. I mentioned earlier, but let me just restate it 
for your information. We have delivered two national security 
cutters, the Waesche and the Bertholf; the Stratton is 35 
percent done. We are about ready to enter negotiations with 
Northrop Grumman right now to put the fourth under contract. We 
are decommissioning four vessels this year that represent those 
four ships. Two have been delivered, one 35 percent, one yet to 
put on contract subject to proposal negotiations. So there will 
be a bathtub effect where there will be lost cutter days and 
cutters out of service, sir.
    Mr. Taylor. Where are you on the court case involving the 
stretch 110s to the 123s involving biology ship building and 
Northrop Grumman?
    Admiral Allen. Yes, sir, that is under the purview of the 
Department of Justice. A suit has been filed and they are 
controlling all the process associated with that. I will say, 
since this is my last hearing and there has been a lot of 
interest expressed in that, let me just go on record personally 
on where I stand on this, because I think it is important from 
an integrity standpoint.
    Mr. Taylor. Certainly. I think it is very important.
    Admiral Allen. Yes, sir. You and I are in violent agreement 
that we need to recover the value of the Government's money 
that was spent on that. While the court case is going on and 
being adjudicated, the Department of Justice has the control 
over what is going on, and at one point the vessels were tied 
up because there were potential evidentiary requirements for 
those vessels. We have since negotiated with the Department of 
Justice to take equipment off those vessels and put them back 
into service where it can be used, so we are realizing some 
value; and that changes every day, but I can give the Committee 
a report on what we have realized in terms of parts and 
equipment coming off of that.
    I was ready to proceed with any manner, whether it was 
third party adjudication or whatever, to go after the value of 
those ships. Frankly, with the lawsuit being filed, we are all 
on the sidelines until that is done because we do not control 
that process, sir. And I can tell you your frustration is 
matched by mine on this.
    Mr. Taylor. Have the Coast Guard's attorneys or the Justice 
Department's attorneys given you any time line as to when this 
might be resolved, or at least go to trial?
    Admiral Allen. I have no time line right now, but I am more 
than happy to consult with Justice and give you an answer for 
the record, sir.
    Mr. Taylor. Thank you, sir.
    Admiral Allen. Yes, sir.
    Mr. Taylor. Mr. Matsuda, thank you. Let me start by 
thanking you for returning my phone call the other day. I will 
start by saying that I think your predecessor made a tragic 
mistake when he replaced Joe Stewart at the United States 
Merchant Marine Academy, and it is my understanding that there 
is an opening at the Merchant Marine Academy. If Admiral 
Stewart is available, I would sure hope you would interview 
him. If he has decided that he does not wish to return, then I 
would highly recommend--and I have looked, under your advice, 
at the qualifications for the job. I would highly encourage you 
to interview General Steven Blum, formerly the Chief of the 
National Guard Bureau, now the Deputy Commander at the Northern 
Command. I realize he lacks the maritime experience that is 
spelled out in some places, but in every other category I have 
known him to be just an outstanding officer in the United 
States military. I think he would serve that Academy well, so I 
am going to ask that you strongly consider him.
    Secondly, in this environment--every day we are called upon 
to explain where every dollar goes, but in this environment we 
are called upon even more so. Quite honestly--and I don't mean 
to pick on you, because you have inherited this agency, but 
when it comes to the Maritime Administration, over the past few 
years, it is pretty hard to explain what your agency does. And 
I am somebody who follows this more than most. I know you run 
the Merchant Marine Academy.
    One of the things I would hope you would be doing is 
promoting the interest of the United States Merchant Marine. 
One of the ways we can do that is to encourage people to build 
ships, repair ships, and operate ships under the American flag. 
In the case of building and repairing ships, during the Clinton 
years--now, the so-called Title XI program has a thousand 
fathers. I am one of the uncles. I took great pride when we 
passed, during the Clinton years, the national shipbuilding 
initiative that we invigorated both in statute and with some 
dollars. One of the very first things the Bush Administration 
did was starve it back to death.
    I cannot encourage you enough, in this environment, where 
we need the ships, where people need to work, to take a very 
aggressive approach towards the national shipbuilding 
initiative, the Title XI program. It is a loan guarantee 
program. We are not giving anybody anything, and we get an 
incredible 20 to 1 return on our investment. For every dollar 
that we make available in loan guarantees, $20 are made 
available to the yards to build ships, or to the operators to 
buy a ship or repair a ship. I would encourage you to strongly 
go forward on that in this environment, where we are looking at 
better than 10 percent unemployment and where all of the yards 
need work.
    Secondly--and, again, this does involve the Commandant--
could I ask for an extension, Mr. Chairman? Sir?
    Mr. Cummings. Yes.
    Mr. Taylor. Thank you.
    This does involve the Commandant, but it also involves you. 
There have been instances where people have brought to me 
photographs of ships that have been rebuilt in Chinese 
shipyards that are operating under the Maritime Security 
Program, which is reserved for American flag, American owned, 
Jones Act vessels; and Jones Act vessels are supposed to be 
rebuilt in American yards. Now, the Commandant has explained to 
me--and I accept his explanation--his frustration in that he 
considers, or the people he sends to these yards, ambiguous 
language as far as what exactly is the law, and he has 
recommended to this Committee language to clear that up.
    I would certainly encourage you, in the time that he 
remains, to work with him to submit to this Committee that 
language or better language, if you have come up with a better 
way of doing it. We need to make it abundantly clear in this 
environment, where Americans need work, that if you are going 
to enjoy the privileges of the Jones Act, that you need to 
abide by the Jones Act.
    Mr. Cummings. Mr. Coble.
    Mr. Taylor. Thank you, Mr. Chairman.
    Mr. Cummings. Mr. Coble.
    Mr. Coble. Thank you, Mr. Chairman. I apologize to you and 
to the panel for my belated arrival; I have a judiciary hearing 
going on now.
    But it is good to see all of you again. Thank you for being 
here.
    Let me talk to the Commandant and the Master Chief 
regarding the housing situation. I know you all have some 
proposals to modernize the housing initiative. Tell me, 
gentlemen--we talked about it before, but what are the benefits 
of this proposal? Also, what do you envision, Admiral or Master 
Chief, as the obstacles to the implementation thereof?
    Admiral Allen. Sir, what I would like to do is make a 
comment and let the Master Chief follow up, if I could.
    We have had problems over the years with family housing 
because of the size of the Coast Guard, our budget, and some of 
the limitations placed on how we actually acquire housing. In 
the Department of Defense, there are a couple of things they do 
that are hard for us to get to. One is a public-private 
venture, where you basically have a firm come in, building the 
housing, and they get the allowance for quarters. There is an 
offset there and over a 30-year period their investment is paid 
off. Under the scoring requirements, however, the amount of 
that guarantee has to be squared up front in a budget, and that 
has been an insurmountable obstacle for us, even if we were to 
get the authorization.
    Separate from that is the ability to sell property, take 
the proceeds from the sale of assets and move that into a fund 
that could basically sell fund housing to be self-generating 
and remove property off the books and gain value for property 
we don't need anymore that can be converted to housing for our 
people.
    I will let the Master Chief follow up.
    Master Chief Bowen. Yes, sir. We have several properties 
that could be put up for sale right away, several more behind 
that that could be ready in two to five years for a substantial 
amount of money towards improving Coast Guard housing. It is 
not the final solution to this problem, but it would really 
help.
    Mr. Coble. Thank you both.
    Mr. Chairman, thank you, and thank you all for being with 
us. Mr. Chairman, good to see you again.
    Mr. Cummings. Mr. Lidinsky, many U.S. exporters are 
complaining that there is not enough space available on vessels 
to carry all goods waiting for export in a timely fashion, 
particularly given the President's emphasis on expanding U.S. 
exports at a time when many vessels have been tied up to reduce 
capacity. What is the Commission doing to ensure that the 
shipping conferences are not unreasonably limiting capacity to 
drive up rates and what more can be done to ensure that the 
U.S. exporters have the containers and shipping capacity 
necessary to meet those needs?
    Mr. Lidinsky. Thank you, Mr. Chairman. As the Committee 
knows, in this very severe period of economic turndown and 2009 
having been the worst year for the maritime industry in 
decades, capacity has been cut back. We have stressed in our 
meetings with the carriers, with their talking agreements, that 
they must be able to serve our exports as well as imports. 
Beyond that, at this point, we urge them to work as partners 
with shippers to identify where potential shipments might be 
coming from, so that the key will be the location of containers 
at the right points inland. We have no problem along the 
coastal areas; primarily it is the inland points; and we had 
discussions internally yesterday about how we can identify for 
the Department of Agriculture, and for other shipper groups, 
how we might increase export container levels.
    Mr. Cummings. Just two other things. To Mr. Matsuda, you 
wrote in your testimony that providing support and oversight to 
restore the Academy programs and controls is an agency 
management imperative. What measures are being taken to correct 
the situation at the Academy? Number two, some within Kings 
Point, the community, have expressed concern that the Academy 
may not be able to maintain its accreditation. The shock of the 
Academy of losing its accreditation cannot be overstated. I 
just want to know where we are on that.
    Mr. Matsuda. Thank you, sir. As I mentioned, the Secretary 
has made Kings Point a priority, and I share his vision of what 
he sees for the school to be one of the crown jewels of the 
service academies. Starting at the top, we are doing everything 
we can to find the right superintendent to take the helm of 
this important institution. I thank Congressman Taylor earlier 
for plugging this vacancy. We are conducting a nationwide 
search; it is a Federal career Civil Service position and we 
are doing everything we can to find the very best. We are also 
taking a very close look at how the Maritime Administration 
oversees the Academy. I found personally that better 
communication and listening to the Academy officials, to the 
broader Academy community--including the alumni association, 
parents, the midshipmen themselves--has proven extremely 
valuable and very productive in making sure that everyone 
understands what is going on.
    Mr. Cummings. All right. I am going to be submitting 
questions to all of you. I want to thank all of you for your 
testimony. And, again, Admiral Allen, Mr. Bowen, we wish you 
the very, very, very best. May God bless you. Thank you.
    We will call up our next panelist, Steven Caldwell. Mr. 
Steven Caldwell. We will hear from you for five minutes.

TESTIMONY OF STEPHEN CALDWELL, DIRECTOR, HOMELAND SECURITY AND 
        JUSTICE ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Caldwell. Chairman Cummings, Representative LoBiondo, 
and Representative Taylor, I am glad to be here today to talk 
about the Coast Guard. Let me briefly summarize the two topics 
I will address. I will be talking about the 2011 budget request 
from the Coast Guard, as well as selected management challenges 
that the Coast Guard faces.
    Mr. Cummings. Sorry, I didn't give you your proper 
introduction. Stephen Caldwell is the Director of Homeland 
Security and Justice Issues with the United States Government 
Accountability Office. Thank you, Mr. Caldwell.
    Mr. Caldwell. Thank you.
    We are also releasing our report on Coast Guard workforce 
planning and the variety of initiatives that they have 
underway.
    Admiral Allen has left the hearing, but I did want to 
mention something about Haiti, which--some of the other Coast 
Guard folks here can pass on. One of the first groups evacuated 
from Haiti by the Coast Guard, was a group of two GAO people 
that were there looking at development assistance. So I just 
wanted to personally thank the Coast Guard for their efforts to 
get our people back home.
    Regarding the budget, many of the details have already been 
discussed here in terms of the major themes and the tradeoffs 
that Admiral Allen has proposed. I can address those more fully 
under Q&A. So I will move on to some of the key management 
challenges, including some workforce issues related to the 
report releasing today.
    While my written statement includes some issues on the 
Deepwater acquisition program, I am not going to discuss those 
much in my oral comments. I would like to mainly discuss the 
Commandant's reorganization and command realignment, as well as 
the workforce planning issues. Both of these management 
initiatives can improve Coast Guard mission performance by 
providing more detailed information on the requirements that 
the Coast Guard faces. But it is important for us to recognize 
that a good estimate of the resource requirements will not 
necessarily mean that those resources will be available: this 
budget makes that very clear. Allow me to provide a couple of 
examples of that.
    First, regarding the command realignment, despite the Coast 
Guard not receiving statutory permission for all of the changes 
that it has proposed, most of those changes are well underway 
in terms of Coast Guard implementation in terms of, the 
Deployable Operation Group, the DOG--the MSRT is one of the 
units under the DOG--the DOG has achieved some of the intended 
benefits of providing standardized training tactics and 
procedures across the Coast Guard. The purpose of the DOG was 
to better leverage existing assets. What it has really shown is 
that having a dedicated management cadre within the DOG has 
highlighted some of the resource challenges and gaps that they 
face. One example of those would be helicopter training for 
vertical insertion, which is one of their key homeland security 
missions at the high end of the threat spectrum. But it is 
pretty hard to--while you are identifying that requirement--and 
we have just recently done some work on that--that doesn't mean 
that the resources will be there. As Admiral Allen has 
mentioned, two of the helicopters that support vertical 
insertion training for the MSRT in the Norfolk area are being 
withdrawn to move to the Great Lakes.
    In terms of the workforce planning, a number of initiatives 
are well underway to create new plans and analytic tools to 
have the Coast Guard come up with better estimates of what it 
needs in terms of personnel, as well as their qualifications 
are and whether they are achieving workforce goals. Admiral 
Allen mentioned the sector staffing model as one of the key new 
tools for workforce planning. It is intended to create detailed 
baseline staffing data comparable across the Coast Guard's 35 
diverse sectors. But, again, having the high fidelity model to 
come up with those requirements is not going to mean that the 
Coast Guard has those assets, particularly in this budget, 
where you have military billets decreasing by 1,000 positions.
    On the positive side, these new tools do allow Coast Guard 
tradeoffs to be highlighted in a situation where you are going 
to make difficult resource allocation decisions as the budget 
tightens.
    In closing, thank you very much. I would be happy to 
respond to any questions. I know the House of Representatives 
has a lot going on today. Thank you.
    Mr. Cummings. Thank you very much, Mr. Caldwell. The Coast 
Guard has proposed a significant reorganization of its top 
leadership, including promoting the Vice Admiral to four stars, 
eliminating the Pacific Atlantic area commands, and creating 
several new three star commands. Multiple sources, including 
the GAO, have commented on the lack of performance metrics 
necessary to enable assessments to be made of the specific 
efficiencies this reorganization will achieve. You wrote in 
your testimony that the Coast Guard has taken steps to identify 
applicable business metrics which are intended to be used to 
evaluate the performance and effectiveness of a modernized 
Coast Guard. What are the metrics that the Coast Guard has 
developed or is developing and what is the status of that 
development, and are they adequate to enable comprehensive 
assessments of the proposed reorganization to be made? Because, 
after all, we are all concerned about effectiveness and 
efficiency.
    Mr. Caldwell. Mr. Chairman, last year we did a report on 
the Coast Guard's reorganization and where it stood. As we 
wrote that report we thought about whether we should make some 
recommendations to the Coast Guard on development of 
performance metrics at that time and they had enough underway 
that we did not do so. But I still want to emphasize how 
important the continued development and use of those metrics 
are. One of the things that is more difficult and where the 
Coast Guard is making less progress is what you referred to as 
efficiency measures. They have a lot of measures in terms of 
the outputs, what they are doing, where they are in their 
reorganization process. But looking at either the impact of 
those actions on the outputs is something that has always been 
hard for the Coast Guard to do. And where they are even weaker 
is in developing efficiency measures and determining whether 
they are able to do the same mission with less people.
    Mr. Cummings. You wrote in your new report on the Coast 
Guard personnel about a lack of a gap analysis in the workforce 
action plan the service recently developed. Do you believe that 
the Coast Guard fully understands its personnel needs and its 
existing gaps, and simply doesn't--or does it just simply not 
want to share information or what? How do you see all of this?
    Mr. Caldwell. When you asked the question earlier, Admiral 
Allen responded about the sector staffing model, but really it 
is a bigger issue than that. The Appropriations Committee had 
asked that a gap analysis be done across all personnel and all 
requirements, and that has not been done. I do recognize the 
awkward situation for Admiral Allen in terms of the limitations 
he has in presenting the budget he would want as opposed to the 
budget he gets from OMB.
    Mr. Cummings. One of the things that we saw with regard to 
personnel qualifications was Deepwater. There were some issues 
as to whether or not we had the type of personnel with the 
necessary experience to do acquisitions in a way that would be 
fair to the people of the United States, and be effective and 
efficient, of course. From what you can see, are we in a better 
position now than we were, say, when Deepwater was first put 
together?
    Mr. Caldwell. Mr. Chairman, we are definitely in a better 
position, and this budget continues progress that the Coast 
Guard has made. If you notice, one thing the Coast Guard's 
budget supports is a DHS-wide initiative to get more civilian 
government people in acquisition positions so that you don't 
have contractors watching over the contractors. Part of the 
loss in military billets this year is because they are 
increasing civilian billets, and when you get civilians in 
there that are trained to do acquisition work, you are going to 
be in a better position than putting military people there with 
a relatively short rotation. This is the case unless, of 
course, the military personnel are engineers and they are 
properly qualified to do acquisition work.
    Mr. Cummings. So the civilians, because they stay in a 
position--the likelihood that they will stay in a position 
longer, acquired experience, I take it, you see that as 
something that is definitely beneficial, as opposed to our 
military people being shuffled from one place to another and 
never getting as much experience, in many instances, is that a 
fair statement?
    Mr. Caldwell. If the military people have detailed 
technical training and experience, you don't have that 
difference, but generally not all of them do. Some of them do. 
Admiral Rabago is a professional engineer with years of 
experience, but not all the other military staff involved in 
the acquisition division have that.
    The other thing I wanted to mention is that the Coast Guard 
is making progress in terms of closing the vacancy gap, as we 
reported last year. They went from about 27 percent of their 
slots in acquisition being vacant down to about 16 percent; and 
with this budget the Coast Guard hopes to continue making 
progress to fill those vacancies.
    Mr. Cummings. Mr. LoBiondo?
    Mr. LoBiondo. Thank you, Mr. Chairman.
    Mr. Caldwell, thank you for your service. Thank you for 
being here today. As you note in your testimony, the Coast 
Guard has portrayed the fiscal year 2011 budget request as a 
tradeoff between current operations and future acquisition 
efforts. Do you believe that the requested funding level for 
acquisitions provided the resources necessary to address 
declining asset readiness by replacing them promptly?
    Mr. Caldwell. The Coast Guard has been in a bind in making 
that tradeoff. We did a report on the National Security Cutter 
and the legacy HECs last year, and at that time the Coast Guard 
wasn't committing to what they were going to do about the HECs. 
It was going to require more and more money to keep lengthening 
the HEC length of service and to keep them active. As the 
Admiral said, they needed to use that HEC money for other 
things so that they can get these other deepwater ships out 
quickly. It will create a short-term gap in terms of those 
major cutters, operations and missions.
    Mr. LoBiondo. Can you offer us your ideas, feelings, 
opinion that if the 10 percent reduction in acquisition funding 
goes through, is that an appropriate tradeoff for the loss of 
more than 1,000 Coast Guard personnel?
    Mr. Caldwell. I don't have an overall position on that. It 
is kind of curious because as part of that tradeoff, you know, 
it is not a straight tradeoff between funding between AC&I and 
the operational expenses because the AC&I funding is actually 
going down. To find more money for AC&I they are pulling the 
funds from those other positions. Those positions come from a 
wide spectrum of Coast Guard. But a lot of those positions, 
maybe up to 700 of those positions, are coming from those high 
endurance cutters. As you decommission those cutters, you do 
have a period where you don't need those people for the new 
cutters yet. So while you are losing that capability, that is 
where those people are coming from.
    Mr. LoBiondo. And in July, I think it was, you testified 
that the Coats Guard's latest estimate on Deepwater assets were 
something like $2.7 billion more than anticipated and that the 
schedule would slip. At current funding levels, can the Coast 
Guard complete the Deepwater program as designed in 20 years?
    Mr. Caldwell. I think ``current'' is the operative word. We 
only appropriate the money one year at a time. What is of great 
interest to GAO, as it is to you, Mr. LoBiondo, is the fleet 
mix analysis. What assumptions did the Coast Guard use for the 
numbers of ships they would need, what requirements they would 
need for the OPC. The OPC is the biggest unknown in this. You 
have a funding trail laid out from the NSCs; you have a more 
clear funding trail laid out for the FRCs. The OPCs are 
starting to ramp up this year in terms of funding for pre-
design, pre-contract work. If the money is not there in the 
long run, that may affect that mid-level cutter--the OPC.
    Mr. LoBiondo. Thank you, Mr. Caldwell.
    Thank you, Mr. Chairman.
    Mr. Cummings. I might remind the Ranking Member we had to 
postpone a hearing on Deepwater because of the snow, but we are 
going to examine all those issues with regard to Deepwater very 
shortly, when we reschedule.
    Mr. Taylor.
    Mr. Taylor. Thank you, Mr. Chairman.
    Mr. Caldwell, I am curious, since you have had a chance to 
look into this. I remain dumfounded that the Coast Guard 
acquisition team and the Navy acquisition team continue to 
resist combining their forces, given the 110/123 problems, 
given the Navy's problems with the LCS program. We continue to 
have two apparently understaffed programs, both making tragic 
expensive mistakes, and yet they resist combining their 
resources to hopefully have one team that does this better. 
Have you given it any thought? Have you made any 
recommendations along those lines?
    Mr. Caldwell. We have given it some thought in terms of the 
Coast Guard increasing its use of Navy expertise. This has 
happened with the NSCs as well as some of the other Coast Guard 
assets where they have gone to the Navy, which has given them 
expertise in reviewing the acquisition plans and reviewing some 
of the logistical plans for bringing the first-in-class cutters 
onboard.
    In terms of the overall issue of whether they should be 
combined, we have not looked at that, sir.
    Mr. Taylor. Have you seen--is there anything that convinces 
you that the mistake that was made on the 110/123, have you 
seen anything, either administratively or legislatively, that 
would keep us from making that mistake again? And if you 
haven't and you see something that needs to be done, what 
recommendation would that be?
    Mr. Caldwell. We have made recommendations that will help 
prevent that kind of thing from happening. There is always 
pressure from Congress to get this money spent and get these 
assets out there. GAO usually takes a go slow approach. If we 
are going to get these assets that are out there, let's make 
sure they are working, let's look at certain milestones that 
are being met before we commit to initial production and full 
production and those kinds of things. So those are some of the 
things that we recommend.
    Mr. Taylor. Towards that end, have you made any specific 
recommendations to this Committee of how we could do this 
better going forward?
    Mr. Caldwell. Let me answer that for the record, and we can 
send you the specific recommendations we made to the Coast 
Guard in our reports over the last couple of years.
    Mr. Taylor. Okay. And, again, I mentioned this in my town 
meetings, that we paid someone $80 million, who in turn ruined 
eight ships and then got paid several more million dollars to 
fix what he should have done right the first time; and then the 
Coast Guard takes it to a second vendor without telling the 
first vendor, which, in my opinion, probably voided the 
contract. I mean, it is just--and, by the way, we still, as a 
Nation, have not been compensated for the ruining of the eight 
ships and the loss of their use.
    So it is a very real scenario that never should have 
happened the first time, and, again, we made the mistake once. 
We have to take the steps to keep this from happening again, 
and I would hope, in the course of this Justice investigation, 
which I am sure you have a hand in, that there are going to be 
some recommendations. Please do not be shy about forwarding 
them to me or this Committee, whatever you are the most 
comfortable with, because that is just absolutely something 
that we shouldn't have done the first time and we sure as heck 
can't do a second time.
    Thank you, Mr. Chairman.
    Mr. Cummings. Thank you.
    Just one last question. One of the things you reported in 
your testimony was about the deficiencies with regard to 
financial reporting, noting that the DHS Office of Inspector 
General reported a lack of documentation within the Coast Guard 
of key processes, risk assessments, and internal controls. 
Since finances are such a significant issue, why is the Coast 
Guard continuing to have such problems in financial reporting, 
and do you believe that its transition to a new financial 
accounting system will enable it to resolve those deficiencies?
    Mr. Caldwell. That is our hope. We have been jointly 
working with the IG on this issue. The IG has generally been 
doing work at the Coast Guard level; GAO has been doing work at 
the departmental level. Admiral Allen was ready to move ahead 
with certain Coast Guard improvements in the financial 
management system. The Department, I think, over-ruled him in 
terms of getting some Department-wide improvements in place. 
The problems at the Coast Guard were also happening at TSA and 
at least one of the other components. It will be still some 
time before the Department can come up with a clean financial 
audit opinion.
    Mr. Cummings. Okay.
    All right, anything else?
    [No response.]
    Mr. Cummings. Thank you very much.
    Mr. Caldwell. Thank you.
    Mr. Cummings. This hearing is now adjourned.
    [Whereupon, at 12:03 p.m., the Subcommittee was adjourned.]

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