[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
A REVIEW OF COAST GUARD
ACQUISITION PROGRAMS
AND POLICIES
=======================================================================
(111-95)
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
__________
March 11, 2010
__________
Printed for the use of the
Committee on Transportation and Infrastructure
----------
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COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE
JAMES L. OBERSTAR, Minnesota, Chairman
NICK J. RAHALL, II, West Virginia, JOHN L. MICA, Florida
Vice Chair DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of JOHN J. DUNCAN, Jr., Tennessee
Columbia VERNON J. EHLERS, Michigan
JERROLD NADLER, New York FRANK A. LoBIONDO, New Jersey
CORRINE BROWN, Florida JERRY MORAN, Kansas
BOB FILNER, California GARY G. MILLER, California
EDDIE BERNICE JOHNSON, Texas HENRY E. BROWN, Jr., South
GENE TAYLOR, Mississippi Carolina
ELIJAH E. CUMMINGS, Maryland TIMOTHY V. JOHNSON, Illinois
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
Rabago, Rear Admiral Ronald J., Assistant Commandant for
Acquisition & Chief Acquisition Officer, United States Coast
Guard.......................................................... 3
PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS
LoBiondo, Hon. Frank A., of New Jersey........................... 12
PREPARED STATEMENT SUBMITTED BY WITNESS
Rabago, Rear Admiral Ronald J.................................... 20
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
HEARING ON A REVIEW OF THE COAST GUARD ACQUISITION PROGRAMS AND
POLICIES
----------
Thursday, March 11, 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.
The Subcommittee convenes today to continue what has been
our ongoing examination of the Coast Guard's acquisition
programs and policies. As I have repeatedly said during my
tenure, I believe that one of our central responsibilities as a
Congress is to conduct effective oversight and effective
oversight requires diligent and continuing follow-up. This is
the fourth hearing the Subcommittee has convened on the Coast
Guard's acquisition efforts during my tenure as Subcommittee
Chairman, and I feel confident in saying it will not be the
last.
The Coast Guard's acquisition programs, particularly its
Deepwater Program, are procuring the fleet of ships and
aircraft on which the service will rely on for decades. In
fact, if history is any guide, the Coast Guard will rely on
these assets many years after they have reached the end of
their useful service lives.
There is absolutely no question that the Coast Guard needs
new assets. The extent of this need was most recently
illustrated during the service's response to the earthquake in
Haiti, when 10 of the Coast Guard's 12 responding ships
suffered what Admiral Allen termed in his testimony before our
Subcommittee last month as mission-affecting breakdowns.
Several had to return to port to undergo emergency repairs.
To ensure that the Coast Guard has assets that can meet its
mission needs for the decades during which they will be used,
and to ensure that the Coast Guard gets the full value for the
taxpayer funding it expends to purchase these assets, the
service must manage its ongoing acquisition efforts effectively
and efficiently. Obviously, in the past, the Coast Guard faced
significant challenges managing Deepwater.
However, as the Government Accountability Office stated
during the budget hearing we convened last month to consider
the Administration's fiscal year 2011 budget request for the
Coast Guard, we are now in a far better place, and I commend
Admiral Allen, Admiral Blore, and now Admiral Rabago, today's
witness, and their teams for their enormous work in modernizing
and strengthening the Coast Guard's acquisition and management
processes.
Today's hearing will enable us to examine where we are now
and to assess the Coast Guard's current acquisition management
challenges. Of particular concern, the Coast Guard has brought
the lead systems integration function in-house. We want to
review how the service's assumption of these responsibilities
is proceeding, including whether the Coast Guard has the
personnel it needs to effectively and efficiently carry out
these functions. Further, the Coast Guard is appropriately
treating the Deepwater procurements on an asset-by-asset basis,
rather than as a system of systems that the private sector
contractor team previously serving as the lead systems
integrator had envisioned.
The service is now developing individual acquisition
program baselines for these assets, and while I know that cost
estimates developed by the ICGS team were likely costs to
contract rather than true program baselines, nonetheless, the
costs of the individual assets appear to be rising as the
baselines are developed. As such, the total cost of the
acquisitions planned under Deepwater are uncertain, but it is
unlikely that the costs will fall below earlier projections. In
fact, it appears that, if implemented as currently planned, the
Deepwater acquisitions may equal or exceed $27 billion.
We look forward to a frank discussion of Deepwater's likely
costs as we seek to understand how cost increases during a time
of constrained budgets will shape the Coast Guard's acquisition
plans, including the tradeoffs that are made in the selection
of technologies for individual assets.
Before I close, I note that I authored legislation that has
already passed the House by a vote of 426 to nothing that would
put new statutory requirements in place to strengthen the Coast
Guard's acquisition management processes. This legislation
would require the appointment of a chief acquisition officer
who could be either a member of the military or civilian member
of the Senior Executive Service, but who must be a Level 3
program manager and who must have 10 years of professional
experience in acquisition management.
Additionally, the legislation would require that the Coast
Guard put in place systems to ensure that it effectively
defines operational requirements before initiating acquisition
efforts and to ensure all acquired assets undergo thorough
developmental and operational testing. This legislation would
also require the service to develop and maintain a career path
in acquisition management to ensure that it has the acquisition
professionals it needs to effectively manage its acquisitions.
This legislation, like so many other bills already passed
by the House, still awaits consideration in the Senate. I would
hope that they would move this bill before the end of the
current session.
Mr. Cummings. We will recognize Mr. LoBiondo when he
arrives; he is at a conference right now and he will be coming
in shortly.
With that, we will now hear from our first witness. Rear
Admiral Ronald J. Rabago is the Assistant Commandant for
Acquisition & Chief Acquisition Officer with the United States
Coast Guard.
Rear Admiral, welcome, and we look forward to hearing your
testimony.
TESTIMONY OF REAR ADMIRAL RONALD J. RABAGO, ASSISTANT
COMMANDANT FOR ACQUISITION & CHIEF ACQUISITION OFFICER, UNITED
STATES COAST GUARD
Admiral Rabago. Good morning, Mr. Chairman, distinguished
Members of the Subcommittee. As the Coast Guard's Assistant
Commandant for Acquisition, I appreciate the opportunity to
appear before you today to update you on the Coast Guard's
acquisition enterprise and our strategy going forward for our
critically needed recapitalization efforts.
It has been three years since our Commandant, Admiral Thad
Allen, outlined the beginnings of a comprehensive acquisition
reform effort, reforms this Subcommittee helped initiate and
shape. While there is still work to be done, we have made
tremendous progress transforming ourselves into an acquisition
organization that can deliver complex, interoperable,
multimillion dollar assets to our frontline forces that meet
clear documented requirements. We have institutionalized
consistent processes from our Major Systems Acquisition Manual,
and our multi-year strategic plan, the Blueprint for Continuous
Improvement, provides a guiding framework of actionable and
measurable goals.
The Department of Homeland Security's role in acquisition
management and oversight has also matured. We now benefit from
their careful review of all of our highest dollar programs at
each key decision milestone. The Coast Guard now relies on an
interactive framework of checks and balances inherent in the
roles of requirement sponsors and technical authorities. We
regularly employ mutually beneficial partnerships with third-
party entities such as the U.S. Navy.
I can definitively state that the Coast Guard is the lead
system integrator for all of our major acquisition projects. We
control the requirements, the technical baselines, the
integration of systems, asset interoperability, and sequence
delivery of new capability. We are responsibly phasing out our
existing contractual lead system integrated relationships. For
example, the current award term contract with integrated Coast
Guard systems expires in January 2011 and will not be renewed.
We hired 90 new acquisition professionals in fiscal year
2009, thereby reducing our civilian vacancy rate from nearly 24
percent to less than 11 percent. We are grateful to Congress
for its fiscal year 2010 appropriation that permits us to hire
100 additional acquisition professionals. We are already
recruiting to fill those positions. Furthermore, we are
committed to the quality and retention of our valued
acquisition workforce through professional development and
credentialing. We are in full compliance with our Department's
requirement for Level 3 program manager certification for our
15 highest dollar programs. Focusing on our people has made us
a better acquisition organization.
As we continue to improve, one of the best measures of
success is timely and cost-effective delivery of critically-
needed assets and systems to the men and women executing Coast
Guard missions for our Nation. In May of last year, we took
final acceptance of the first National Security Cutter,
Bertholf, and she has already conducted successful operational
patrols while completing her remaining post-delivery work and
certifications.
Waesche just arrived to our Alameda, California home port
and is preparing for her commissioning in May. She enjoyed
numerous process improvements during construction and testing,
including receiving the authority to operate her classified
systems a year faster than Bertholf. Stratton, our third
National Security Cutter, is 37 percent complete and will be
launched this summer. We received a production proposal for the
fourth National Security Cutter that we are evaluating prior to
entering into formal negotiations with the shipbuilder.
We successfully completed a critical design review for the
sentinel class fast response cutters and now have four cutters
on contract. Construction of the lead ship is underway. We have
finalized the requirements for the offshore patrol cutter, and
in the coming year we intend to complete our acquisition
strategy, initial cost estimates, alternatives analysis, as we
prepare our request for proposal to industry.
Since October of last year, the HC-144A Maritime Patrol
Aircraft has been standing the watch at Mobile, Alabama, and
most recently performing missions in support of the earthquake
response over Haiti. Our new maritime distress and response,
Rescue 21, stands watch over 35,000 miles of our coastline and
has already saved the lives of numerous mariners.
As we move forward, some challenges remain. Stable budgets
and continued strong support by the Administration and Congress
are key to the Coast Guard's ability to efficiently
recapitalize our aging assets and systems. Accurate cost
estimates, stable requirements, and timely delivery of
capability to the field all depend on predicable funding
streams.
Our trained and experienced acquisition workforce is
central to our future success, and the Coast Guard must compete
on a level playing field with hour military counterparts for
acquisition talent here in Washington, D.C. and throughout the
Nation. Parity in hiring and compensation authorities will
enable us to compete fairly, especially as other agencies
increase the size of their acquisition workforce.
The Coast Guard's Acquisition Directorate's job is to
recapitalize the Coast guard, and I am committed to continue to
improve our processes and to always be a good steward of the
taxpayers' dollar. The Coast Guard men and women who serve our
Nation and the American public deserve nothing less.
Mr. Chairman, I would like to request that my full written
statement be submitted for the record. Thank you again for the
opportunity to come before you today to discuss Coast Guard
acquisition, and I look forward to your questions.
Mr. Cummings. Without objection, your full statement will
become a part of the record. I want to thank you for your
testimony.
I was just looking at your testimony and was listening to
you, and you were saying that in fiscal year 2010 the
appropriation allowed you to hire 100 additional acquisition
professionals. In fiscal year 2009 you say we hired 90 new
acquisition professionals, reducing our civilian vacancy rate
from nearly 24 percent at the end of fiscal year 2008 to less
than 10 percent by the end of 2009.
The new budget, the one the President proposes, 2011, does
that affect you in any way?
Admiral Rabago. Yes, it does. It does----
Mr. Cummings. I mean as laid out right now. We have made it
clear in this Subcommittee that we are going to fight to
restore funding so we can get our personnel level up and do all
the things that the Coast Guard needs to do. But assuming it
stays as it is, how would that affect your acquisition efforts?
Admiral Rabago. Sir, our acquisition program baselines you
spoke of earlier, sir, or our plans for executing our
acquisition projects efficiently, effectively, and laying out a
plan for the contracts that do that work, they are based on
funding budgets that are laid out, and the fiscal year 2011
budget is a change from what we saw previously, so what we have
to do is take a look at our acquisition program baselines,
update those based on the funding that we see in fiscal year
2011 plus what is in our capital investment plan for the out-
years all the way through to fiscal year 2015, and we are in
the process of doing that, sir.
Mr. Cummings. Has it been difficult to find the civilians
to go into those positions? It seems like you made some
significant hires. And where do you find these folks; who are
they?
Admiral Rabago. The first part of your question, sir, it is
difficult, but we have a very good human resource team and they
are able to bring in some tremendously qualified and very
capable people into our organization. That includes not only
our civilian professionals that we are hiring, but also our
military professionals that we bring in which round out our
acquisition organization.
The military, of course, we bring in from our technical
authorities, our sponsor, our field offices that have
experience operating and working in the Coast Guard; and, of
course, our civilian counterparts, they come from a variety of
places, they come from other agencies, they come sometimes from
the private sector. All of those, though, rounded out together,
have given us a really high quality acquisition workforce.
Mr. Cummings. And what about training? You know, one of the
things that we were concerned about is that we grow and train
people inside the military, the Coast Guard, and a concern,
too, was that because of the rotational requirements or rules,
that a lot of times people are not able to stay long enough to
be seasoned, and then they move on to something else. How do
you deal with that?
Admiral Rabago. That is an area that we have really tackled
very aggressively. In the last five years we have increased the
number of certified acquisition professionals from around 30 up
to 630. Many of those individuals are not directly in the
Acquisition Directorate; they reside in our technical authority
areas, they work in our sponsor shop, they work in a resource
shop, they work in a variety of places in the Coast Guard.
And that really represents the future of bringing in and
rotating military personnel that have acquisition experience
into the Acquisition Directorate and then back out again into
the technical authorities. So that really becomes our center of
gravity in the sense of having professionals not just in
acquisition, but really throughout the Coast Guard that are
learning the skills necessary to be successful acquirers.
Mr. Cummings. Now, is the acquisitions, is that something
that is attractive to people in the military? In other words, I
know that there are various fields that people are
automatically attracted to, but is acquisition something that
folks seem to be excited about?
Admiral Rabago. Yes, sir. We find, especially in the last
two or three years, that we have been able to have a great deal
of interest in our military professionals wanting to join the
team and be part of acquisition, not necessarily in the
Acquisition Directorate, but also in the technical authorities.
They want to be part of recapitalizing the Coast Guard and they
are excited about that.
Mr. Cummings. Now, the Coast Guard has, as you stated in
your testimony, assumed responsibility for acquisition efforts
that comprises the Deepwater program. The service is now
developing individual acquisition program baselines with these
assets, and while I know that the core system is developed by
ICGS team or likely cost to contract, rather than true program
baselines, nonetheless, the cost of individual assets appear to
be rising as the baselines are developed, such the total cost
of the acquisitions planned under Deepwater are uncertain. But
it is unlikely that the costs will go below what was projected
when we held our last hearing to examine the Deepwater programs
back in March 2009.
What do you estimate the cost of the procurements currently
envisioned under Deepwater to be and will the costs exceed the
$27 billion?
Admiral Rabago. Yes, sir. As part of our process, you
mentioned disaggregating the original integrated Deepwater
system, APB, which had all of the system-of-systems strategy in
terms of how the individual assets were to be procured. We have
moved away from that at direction of GAO, at direction of this
Subcommittee, as well as our Department, into individual
acquisition program baselines, which are really a plan that
talk about cost schedule and performance of the asset. Managing
them all in a single acquisition program baseline, we could not
do that effectively, and that is why we are doing them
individually.
As we go through and do the individual acquisition program
baselines, we subject those projects to the full rigor of our
major systems acquisition manual, all of the requirements that
are in our Coast Guard policy for acquisition, but also
concurring with our departmental policy, and make sure that we
have accurate cost estimates, that we have a plan that is based
on the budgets that we project, we have contracts in place that
will deliver the capability to the Coast Guard in a timely and
effectively fashion.
And when you put that level of accuracy on there, the
dollars are going to be different from what was done originally
by the ICGS contract. These are accurate, much more improved in
terms of the quality and the fidelity of the information in
those acquisition program baselines by asset is much better,
and therefore we are confident that those then represent the
true cost, true schedule, and true performance characteristics
of the assets that we are acquiring.
Mr. Cummings. Mr. Coble.
Mr. Coble. Thank you, Mr. Chairman. I am sorry I am belated
today; I am running between different meetings.
Good to have you with us, Admiral. Admiral, the Coast Guard
recently completed a fleet mixture analysis to determine the
number and types of vessel platforms that will be necessary to
support the Coast Guard missions in the future. Ranking Members
Mica and LoBiondo requested this report I think last month.
When can we expect that report to be submitted to the
Subcommittee, Admiral?
Admiral Rabago. Sir, our Operational Directorate is
overseeing that effort; it is in its final review at the Coast
Guard and is expected to be briefed to the Department shortly
and then out to the committees after that point, sir.
Mr. Coble. Does the analysis take into account limitations
resulting from budget constraints or, rather, does it only make
recommendations on the capabilities and qualities of assets
that would compose an optimal fleet mixture?
Admiral Rabago. It takes into account the missions that the
Coast Guard assets are to work on, it builds off the
alternatives analysis that was done with the Deepwater Program,
and it takes a look at the missions that the Coast Guard is
executing, again, with those assets; and it is looking across
the board at all those assets and how the Coast Guard would
execute with the ships and planes that are there. So it is a
very comprehensive review and that is why it is taking the time
for the Coast Guard to complete its final evaluation of it.
Mr. Coble. I thank you for that. Admiral, does the report
offer alternatives that the Coast Guard is considering?
Admiral Rabago. I have not seen that, sir. I will make sure
I get back to the record for you on that, sir.
Mr. Coble. If you would do that, I would appreciate it.
Thank you, Admiral.
Thank you, Mr. Chairman.
Mr. Cummings. Thank you, Mr. Coble.
Let's go back, Admiral, to my question a little earlier.
And if you can't tell me, tell me that you can't tell me, but,
again, do you expect the cost of Deepwater to exceed the $27
billion?
Admiral Rabago. Sir, with the additional four acquisition
program baselines that we have done since the hearing in 2009,
the estimate at this point is approximately $27.4 billion, and
that is, again, with those four additional baselines that now
have more fidelity and accuracy in our cost estimating. We
still have four APBs that we are pouring out of the original
IDS APB, and once that is done, then we will then have the full
cost of the Deepwater capability as originally envisioned.
Mr. Cummings. Now, the budget proposes that the funding for
the next NSC's combined funding for long-lead materials and
construction in a single year's appropriation, what is the
likely impact on production if funding for long-lead materials
is not available before the production of funding?
Admiral Rabago. There is an impact. Long-lead materials are
bought in--what we have previously done--approximately one year
prior to the award of a production contract. That is because
the materials and the systems that are purchased with that
money sometimes have as much as two years from the day of order
to the day of delivery to the shipyard, so it is important that
you sequence the arrival of that equipment--like engines and
other important components of the ship--in time to meet the
construction schedule for the ship itself. If it is not ordered
in advance, you have to make adjustments to the way you build
the ship, which could produce inefficiencies and increase cost.
Mr. Cummings. I notice that we have some guests in the
room. Welcome to our hearing. So that you will know what we are
talking about, this is the Coast Guard Subcommittee of the
Transportation Committee, and a few years ago some legislation
was put forth to acquire some $25 billion worth of assets over
the course of 25 years, and what happened is that the Coast
Guard, because we needed strong acquisitions personnel and
because of the way the contract was structured, we literally
were not getting the products that we needed for our Coast
Guard.
So we have now sort of revamped that so that we are more
effective and efficient in acquiring boats and planes, and the
Admiral here from the Coast Guard is just telling us what we
have been able to accomplish with regard to that program and
revamping it so that we can more effectively and efficiently
acquire assets for our United States Coast Guard.
The Coast Guard is approximately 42,000 personnel. It is a
small agency, but they do a lot of very, very important things.
So I just wanted you to know what we are doing here today,
and we thank you and we are glad to have you with us.
Admiral, when you look at where we are, do you think the--
do you have any comments on the fiscal year 2011 budget? I know
you are sort in a--you have to go along with what Homeland
Security is saying, but any comments so that we can--because I
don't want us to go backwards. We have made a lot of progress.
I am extremely impressed with what has happened, although the
Senate has not moved on our legislation. But I am extremely
impressed with what the Coast Guard has done and I don't want
to see us go backwards. So do you have anything that you would
want us to consider as we move forward in trying to make sure
that the Coast Guard has all the money that it needs to do its
job?
Admiral Rabago. Sir, we appreciate the support of the
Subcommittee and you, sir, as Chairman. Our fiscal year 2011
budget is--we are in the process now, as I said before, of
evaluating its impact and also the plan that came with it in
terms of what the out-year funding is predicted to be, and we
are adjusting and adapting our projects through a re-look at
our acquisition program baselines to make sure that we account
for the planned budget and funding stream.
Steady budgets for the Coast Guard, steady stream of
funding is very important in terms of an acquisition program
baseline. If you are going to be acquiring an asset for many
years, it is very important that you set forth contracts that
anticipate funding at certain levels and at certain times. So
we watch that very closely. We are always appreciative when the
funding in the budget is stable as we move forward; it allows
us to plan better and to be more efficient in delivering the
capability to the Coast guard.
Mr. Cummings. Now, tell me what are the main challenges
that you have encountered in assuming the lead systems
integration responsibilities, and I guess specific challenges
you have not yet met in performing those tasks? Because, again,
going from the lead systems integration, that is quite a shift
difference that we made, with the two contractors pretty much
being in charge now the Coast Guard taking on its own
responsibilities. You can go ahead and answer the question.
Admiral Rabago. Yes, sir. The task of being a lead system
integrator is a challenging task; it is one the Coast Guard is
embracing and we are making great progress with that. We
understand what it is. We are grateful for the appropriations
that have provided the additional acquisition professionals to
our organization; it has enabled us to manage it. And, again,
not just in our Acquisition Directorate, but with our technical
authorities, our sponsor, and the other entities in the Coast
Guard that are required, including our ability to deliver these
assets and put them out for the Coast Guard to use.
As the lead system integrator, it is two parts for us. One
is a transition from the commercial contract that is in place.
That is progressing well and winnowing down, and, as I said, we
will not renew that contract when it expires in 2011 for the
ICGS and the Deepwater contract.
Mr. Cummings. Now, some--no, you go ahead. I am sorry.
Admiral Rabago. The other part of it is what we are doing
within the Coast Guard. One is a human resource issue, which is
the certification, the qualification and experience of our
acquisition professionals, again, within the Directorate and
without; and then also putting the policies, the processes, the
discipline, the internal controls necessary to manage complex
acquisition that run over multiple years and also, as a system
integrator, to make all of those assets and all of those
projects work together effectively so that we deliver
capability that is integrated and interoperable for our Coast
Guard forces.
Mr. Cummings. Now, one of the things that had come up
earlier, we had wanted to make sure that we were using the Navy
because the Navy had such a sophisticated acquisitions body to
address acquisitions, and we got the impression at one point
that the Coast Guard had a lot of pride, and we understand
that, but we also want it to be effective and efficient. So we
were wondering how has the relationship been with the Navy.
Admiral Rabago. The relationship with the Navy is
excellent, sir. We utilize their expertise in a number of
different areas. We also contribute to their expertise with
some of the work that we do. We are at the table with them when
it comes to looking at rates at shipyards where we both have
Navy work and Coast Guard work going on; we use some of their
expertise for some of the testing and evaluation and capability
that they have. We put a Coast Guard flavor on it to make sure,
though, that the assets being tested are suitable for Coast
Guard missions.
And the Navy has worked very well with us to do exactly
that. So we have literally dozens of connection points to the
U.S. Navy and other agencies, including within our own
Department, other components like Customs and Border
Protection. We look for great partnerships in a multitude of
areas to make sure that we are informed, because even with our
growth of acquisition expertise and personnel, we can leverage
expertise and resources and capacity in the other agencies, and
we are doing exactly that, sir.
Mr. Cummings. Now, some cost estimates for the offshore
patrol cutter seem to indicate that these vessels could cost as
much as the NSCs. Are the OPCs envisioned to be just slightly
smaller versions of the NSC? Further, without completion of the
fleet mix analysis, which will presumably lay out detailed
mission requirements for the OPC, is the Coast Guard in a
position to move forward on the design of the OPC?
Admiral Rabago. Yes, sir. We have just complete the
requirements. The requirements are at the Department for their
approval. The OPC, as laid out, is going to be a very capable
ship. It is not an NSC. It will provide great capability that
is set forth. We spent a lot of time on the requirements to
make sure they were right. The sponsor has given me a good set
of requirements and I, as an acquirer, can use those
requirements and go off and design and continue to work
collaboratively with the sponsor and the technical authorities
to produce a great ship that is going to be able to perform
Coast Guard missions.
Mr. Cummings. Now, do you still expect to procure Aden NSCs
and will the cost come in at or under the $4.7 billion
acquisition program baseline currently in place? Further, are
there differences between the assumptions made in the APB for
the NSC and the funding assumptions in your long-range capital
plan? If so, what are they and what will be done to reconcile
them? One of the things that I noticed with the NSCs is that it
seems as if the costs were steadily rising, far above what we
had anticipated, because they were trying to work out the
little problems and whatever, but those problems seem to be
quite costly. What do you anticipate with regard to cost
overruns?
Admiral Rabago. Yes, sir. We do plan for eight NSCs. That
is what is in our APB. We will continue with that. We are
evaluating what the fiscal year 2011 capital investment plan,
the out-year plan, and how it lays out the funding and the
funding in fiscal year 2011, how that will affect our APB. It
is a different funding strategy than what is in our acquisition
program baseline, so, again, our APB is a plan. We now need to
go back and take a look at what the realities of the current
budget is against that plan and come back, and I could then
tell you what the changes in cost, if any, will be.
I am sorry, sir.
Mr. Cummings. No, you go ahead.
Admiral Rabago. As far as the ships in terms of cost
management, the Department has been working closely with us. We
have actually taken a close look at cost. One of the biggest
drivers for cost is changing requirements. The National
Security Cutter has very stable requirements. We intend to
build the same ship all the way through to the eighth ship, and
we are doing that on the current set of ships, on the ships
that are under construction right now, and we intend to
continue to manage the cost.
There were a number of cost increases due to material
increases and other things that have been put in. Some of those
are reflected in our current acquisition program baseline;
others are inflation and other factors that we will look at
when we reevaluate what the fiscal year 2011 budget, how it
affects our acquisition program baseline.
Mr. Cummings. Do you think we have pretty much perfected
the NSCs now?
Admiral Rabago. Yes, sir. We are ready to continue to build
those ships out. When it comes time to--once you have a stable
set of requirements, you have your manufacturing processes
figured out in the shipyard, the most efficient and effective
thing to do is to build the ships as quickly as you can. The
costs only rise as you stretch the program.
Mr. Cummings. Now, the boats that couldn't float, the ones
that end up in the Coast Guard yard there in Baltimore, I
understood they took some of the--they were able to use some
parts of those, is that right?
Admiral Rabago. Yes, sir. Those are the 123s, sir, and
those eight vessels are the subject currently of a Department
of Justice investigation. We are supporting that investigation,
preserving the evidence, but at the same time we have worked
closely with them to be able to start to remove critical
components off of those vessels to support our in-service 110-
foot vessels which are out, of course, executing Coast Guard
missions.
We have taken engines and reduction gears off of two
vessels. We intend to take the same equipment off of three more
so we can put them into our repairable pipeline and repair
those engines and get them out in service back for the Coast
Guard.
Mr. Cummings. Again, we are going to call the hearing to an
end, but I want to thank you very much for your--hold on a
second.
It is my understanding that Mr. LoBiondo has a statement.
We will make that statement a part of the record, without
objection.
Mr. Cummings. I want to thank you very much, and, again, I
reiterate what I said a little bit earlier. I was very, very
pleased--and I think I speak for Mr. LoBiondo also--at the
progress that we have made with regard to acquisitions. It has
simply been phenomenal and we are very proud of what you all
have been able to achieve, and I think that the American
people, when we compare where Deepwater was a few years ago and
where it is now, it is light years, and I just want to
congratulate you and all of those in the Coast Guard who have
been a part of making that happen.
The other thing I would say is I want to thank the Coast
Guard for your response in Haiti. All the reports that have
come back said that the Coast Guard performed at the top of its
game, no doubt about it, just as they did in Katrina. And I
just want to make it clear to all the Coast Guard's men and
women that we in this Congress are very grateful for all that
they have done and all they are doing.
With that, this hearing is at its end.
Admiral Rabago. Thank you, sir.
[Whereupon, at 10:40 a.m., the Subcommittee was adjourned.]
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