[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]


 
                  IMPROVING AND STREAMLINING THE COAST
                      GUARD'S ACQUISITION PROGRAM

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

                                (112-25)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 13, 2011

                               __________

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             Committee on Transportation and Infrastructure


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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                    JOHN L. MICA, Florida, Chairman

DON YOUNG, Alaska                    NICK J. RAHALL II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         JERRY F. COSTELLO, Illinois
JOHN J. DUNCAN, Jr., Tennessee       ELEANOR HOLMES NORTON, District of 
FRANK A. LoBIONDO, New Jersey        Columbia
GARY G. MILLER, California           JERROLD NADLER, New York
TIMOTHY V. JOHNSON, Illinois         CORRINE BROWN, Florida
SAM GRAVES, Missouri                 BOB FILNER, California
BILL SHUSTER, Pennsylvania           EDDIE BERNICE JOHNSON, Texas
SHELLEY MOORE CAPITO, West Virginia  ELIJAH E. CUMMINGS, Maryland
JEAN SCHMIDT, Ohio                   LEONARD L. BOSWELL, Iowa
CANDICE S. MILLER, Michigan          TIM HOLDEN, Pennsylvania
DUNCAN HUNTER, California            RICK LARSEN, Washington
ANDY HARRIS, Maryland                MICHAEL E. CAPUANO, Massachusetts
ERIC A. ``RICK'' CRAWFORD, Arkansas  TIMOTHY H. BISHOP, New York
JAIME HERRERA BEUTLER, Washington    MICHAEL H. MICHAUD, Maine
FRANK C. GUINTA, New Hampshire       RUSS CARNAHAN, Missouri
RANDY HULTGREN, Illinois             GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
CHIP CRAVAACK, Minnesota             MAZIE K. HIRONO, Hawaii
BLAKE FARENTHOLD, Texas              JASON ALTMIRE, Pennsylvania
LARRY BUCSHON, Indiana               TIMOTHY J. WALZ, Minnesota
BILLY LONG, Missouri                 HEATH SHULER, North Carolina
BOB GIBBS, Ohio                      STEVE COHEN, Tennessee
PATRICK MEEHAN, Pennsylvania         LAURA RICHARDSON, California
RICHARD L. HANNA, New York           ALBIO SIRES, New Jersey
STEPHEN LEE FINCHER, Tennessee       DONNA F. EDWARDS, Maryland
JEFFREY M. LANDRY, Louisiana
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
VACANCY

                                 7_____

        Subcommittee on Coast Guard and Maritime Transportation

                FRANK A. LoBIONDO, New Jersey, Chairman
DON YOUNG, Alaska                    RICK LARSEN, Washington
HOWARD COBLE, North Carolina         ELIJAH E. CUMMINGS, Maryland
ANDY HARRIS, Maryland                CORRINE BROWN, Florida
FRANK C. GUINTA, New Hampshire       TIMOTHY H. BISHOP, New York
CHIP CRAVAACK, Minnesota             MAZIE K. HIRONO, Hawaii
BLAKE FARENTHOLD, Texas              MICHAEL H. MICHAUD, Maine
JEFFREY M. LANDRY, Louisiana,        NICK J. RAHALL II, West Virginia
  Vice Chair                           (Ex Officio)
JOHN L. MICA, Florida (Ex Officio)

                                  (ii)

  
                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................    iv

                               TESTIMONY

Currier, Vice Admiral John P., Deputy Commandant for Mission 
  Support, U.S. Coast Guard......................................     5
Hutton, John P., Director of Acquisition and Sourcing Management, 
  Government Accountability Office...............................     5

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Currier, Vice Admiral John P.....................................    20
Hutton, John P...................................................    31

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                  IMPROVING AND STREAMLINING THE COAST
                      GUARD'S ACQUISITION PROGRAM

                              ----------                              


                       WEDNESDAY, APRIL 13, 2011

                  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, Hon. Frank LoBiondo 
(Chairman of the subcommittee) presiding.
    Mr. LoBiondo. Good morning. The subcommittee will come to 
order.
    The subcommittee is meeting this morning to examine the 
status of the Coast Guard's acquisition programs. In 2002, the 
Coast Guard signed the contract to begin the acquisition of the 
program formally known as the Integrated Deepwater System. 
Deepwater was supposed to provide a complete recapitalization 
and modernization of the Service's larger aging assets as well 
as an outdated communications and information system over a 20-
year period. Well, at least that is what we were promised.
    Now, nearly a decade later, the Service has less to show 
for their investment of over $7 billion in taxpayer money than 
it should. Although there has been some added capability with a 
few recapitalized assets delivered to date, the fact remains we 
are not where we should be. In fact, I don't even think we are 
close. The program remains significantly over budget and 
several years behind schedule.
    In addition, serious questions remain about whether the 
assets being delivered meet expected capabilities. I will 
remind everyone, this was a big selling point with Deepwater, 
the capabilities aspect of this. The delays in the 
recapitalization program have put a tremendous strain on legacy 
assets which has resulted in increased operating costs, a 
rising number of operational failures, and large gaps in 
mission readiness and performance.
    One of the many examples of these problems is the National 
Security Cutter. To date, the Service has taken delivery of two 
National Security Cutters. Both vessels represent tremendous 
improvements over the 45-year-old vessels they are replacing. 
However, the program is currently 2 years behind schedule and 
38 percent over the revised 2007 budget. In addition, both 
vessels will require substantial retrofits to meet expected 
service lives. That one is really hard for me to understand and 
accept.
    Furthermore, both vessels were designed to carry two 
classes of stern-launched small boats, each with different size 
and capability to improve the cutter's range and effectiveness. 
That was viewed as a very good thing. The larger of the two 
boats did not perform as required and the smaller boat had to 
be modified to perform correctly. The Service recently 
solicited industry for a solution to replace both classes of 
small boats. Meanwhile, the two NSCs operate without expected 
capabilities. You just don't expect that from new assets, I am 
sorry.
    The NSC was also designed to carry up to four vertical 
takeoff unmanned aerial vehicles to extend the cutter's range 
and effectiveness, but neither vessel is outfitted with the 
VUAVs. In fact, the Coast Guard abandoned its original plans to 
acquire VUAVs.
    Finally, the NSC was intended to operate for 225 days at 
sea, but the Coast Guard has yet to implement the crewing plan 
to make that a reality.
    As the chart on the screen indicates, the NSC is not alone 
in suffering from setbacks. Using the Coast Guard's 2007 re-
baseline as a guide, of the Coast Guard's 17 large acquisition 
programs, 10 are over budget, 8 are behind schedule, 6 are both 
over budget and behind schedule. If we use the original 
Deepwater baseline as a guide, nearly all of these programs 
would be over budget and behind schedule.
    For the information of Members, the chart on the screen 
primarily uses the Service's 2007 re-baseline as a point of 
comparison.
    The Service recently completed another effort to review the 
types and numbers of assets needed to meet mission 
requirements. This subcommittee has repeatedly requested this 
document--I reiterate, has repeatedly requested this document--
because it has the potential to significantly increase costs 
and further delay asset deliveries. Unfortunately, the Service 
refused to provide it to us.
    Let that sink in for a minute.
    Meanwhile, delays in the Coast Guard's recapitalization 
program have placed significant strains on legacy assets. The 
continued reliance on these assets, which have surpassed their 
planned service lives, are failing at increasing rates, has 
undermined mission readiness and performance. The Service 
estimates a 23,000 mission hour gap exists in the maritime 
patrol aircraft fleet, a 33,000 hour mission gap in the major 
cutter fleet, and a 103,000 hour mission gap in the patrol boat 
fleet. Furthermore, the cost to maintain legacy assets 
continues to grow at the expense of investment in new assets in 
what Admiral Allen used to call a ``death spiral.''
    Finally, in order to pay for the Deepwater program, several 
sacrifices were made in the budgets of other critical 
acquisitions. As a result, the rehabilitation of dilapidated 
housing for our service men and women has been put off and 
needed investment in buoy tender and icebreaker fleets have 
been delayed. In fact, the Coast Guard has at least eight 
classes of assets where the need for an acquisition program can 
clearly be demonstrated, but no acquisition plan or budget even 
exists.
    The Coast Guard leadership we have here today was not here 
10 years ago and is not responsible for the past problems. We 
understand that. But I was here 10 years ago and I know what we 
were promised, and this is not it. And this is the biggest 
group of cheerleaders that you are going to have in the 
Congress of the United States that you are before here today, 
and all this that I am talking about that is going on is going 
to be absorbed by Members who are not paying the attention that 
we are, and it is not leading to a good thing.
    The Coast Guard has made great strides to turn the program 
around in recent years, and I commend them for that. But now it 
is time to deliver results for the taxpayer, and in particular 
for the men and women of the Coast Guard, who desperately need 
these assets to successfully conduct their missions.
    I hope, I sincerely hope our witnesses will explain what 
the Service intends to do to mitigate legacy asset failures and 
short side infrastructure backlogs while ensuring the upgraded 
assets and technology set to be delivered in the future meet 
the mission need requirements and come in on budget and on 
time.
    With that, I would like to yield to Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman, and thank you for 
convening this morning's hearing to continue the subcommittee's 
oversight of the U.S. Coast Guard's major acquisition programs 
and policies. I appreciate the opportunity to examine the 
status of the Coast Guard's acquisition activities and to 
assess current acquisition management challenges.
    The Coast Guard is a multimission agency with a diverse 
portfolio of operations, including vessel inspections, search 
and rescue, port security, and oil spill response. In short, 
our Nation's guardian of the sea protects our coasts, ensures 
safe and efficient maritime commerce, and supports hundreds of 
thousands of maritime jobs.
    So when the Coast Guard began recapitalizing in 1996, it 
set out a daunting task. The Coast Guard intended to replace or 
modernize its aging fleet of over 90 cutters and some 200 
aircraft, and it attempted to do so through an unproven 
procurement process using a single entity to fulfill its needs.
    By the time the Deepwater contract was executed with the 
integrated Coast Guard systems in June 2002, GAO and others had 
already raised concerns. As was made painfully clear during a 
course of subcommittee oversight hearings on this issue during 
the 110th and 111th Congresses, the Coast Guard's past 
oversight and management of its major system acquisition, 
especially of the $27 billion Deepwater program which was to 
procure these entirely new fleets of vessels and aircraft, was 
woefully insufficient and ineffective.
    Regrettably, the Service's inadequate oversight at the time 
led to substantial cost overruns, design flaws, delays in 
delivery of new assets, and perhaps worst of all, a diminution 
of the Coast Guard's operational capabilities at sea and in the 
air. The GAO reaffirmed this determination through multiple 
analyses. GAO has conducted no fewer than 15 audits and 
evaluations of the Deepwater program since 2001.
    So I look forward to hearing this morning from John Hutton, 
GAO's Director for Acquisitions and Management, as the GAO 
releases its latest update on the Coast Guard's progress in 
reforming this acquisition process.
    To provide the necessary course correction, the Congress 
included in title IV of last year's Coast Guard reauthorization 
legislation specific provisions to overhaul the Service's 
acquisition policies. New requirements were the appointment of 
a chief acquisition officer; imposition of a system of 
acquisition controls to ensure that operational requirements 
are well defined before initiating acquisition efforts; new 
requirements to ensure all required assets undergo thorough 
testing; and the development and maintenance of an acquisition 
and management career path within the Service. So I am very 
interested in hearing from Admiral Currier on the Coast Guard's 
progress in implementing these reforms.
    Mr. Chairman, acquisition policy is not just a function of 
the process. Our policies are also reflected in budgetary 
resources we devote to programs. At our budget oversight 
hearing on March 1st we heard a lot about doing more with less. 
However, I believe that we have established that the more 
likely outcome of fewer resources for the Coast Guard is that 
it will be doing less with less.
    While recent budget cuts have largely spared the Coast 
Guard, the massive cuts in discretionary spending in the budget 
resolution presented to the House and due on the floor Friday 
do not portend full funding of the Coast Guard's asset 
replacement program.
    The Coast Guard's acquisition, construction and improvement 
account average was $1.38 billion from fiscal year 2007 through 
the request for 2012. However, the Coast Guard's projected 
funding for fiscal years 2013 through 2016 average $1.9 billion 
annually, a $520 million annual increase. This level greatly 
exceeds any historical levels and will likely need to be 
adjusted down unless Congress makes other choices.
    We are past the time when we can discuss cuts in the 
abstract. Proposed cuts will have consequences. Can the Coast 
Guard respond to oil and other spills? Can it respond to a 
tsunami on the West Coast? Can it perform all the missions we 
placed upon it?
    So I look forward to working with Admiral Currier and the 
Coast Guard in assessing the real impacts of possible cuts.
    The subcommittee also, Mr. Chairman, I think should not 
overlook the critical importance of other ongoing Coast Guard 
acquisition programs, such as Rescue 21, the Service's 
sustainment programs for legacy assets that remain in service, 
and several unbudgeted acquisition needs, including the need, 
Mr. Chairman, not surprisingly hearing it from me, the need for 
polar icebreakers.
    It remains paramount that the subcommittee, the GAO and 
other observers continue to shine a light on the Coast Guard as 
we move forward to ensure that its acquisition programs are 
mission driven, cost-effective, and, most importantly, as you 
have pointed out so ably, Mr. Chairman, accountable.
    Mr. Chairman, the Coast Guard and the men and women who 
serve need the capabilities to address the myriad of demands we 
place upon them. But as you noted, we need to get this right. 
History demonstrates the Coast Guard will be relying on the 
assets it purchases today for many more years than anticipated. 
We also need to be practical and recognize that a course 
correction of this magnitude simply does not happen overnight.
    With that, Mr. Chairman, I yield back and look forward to 
our witnesses.
    Mr. LoBiondo. Thank you, Mr. Larsen.
    Ms. Hirono, do you have a statement?
    Ms. Hirono. Very briefly. Thank you, Mr. Chairman and 
Ranking Member Larsen.
    I join my colleagues in reiterating our support for the 
Coast Guard. In Hawaii, particularly District 14, is the 
largest area that the Coast Guard has responsibility for. I 
know that members of District 14 were involved in helping with 
tsunami disaster relief in Japan and you were involved in the 
Deepwater disaster. So we know the good works that you do. But 
this committee is also very aware of the acquisition problems 
that you have had, and I sat in on hearings of the full 
committee regarding your Deepwater project problems.
    So, as we look at the scarce resources and the cuts that 
are coming down the pike, I really want to reiterate my support 
for what you are doing. We need to be assured of the 
accountability and the effectiveness of the operations that you 
are undertaking with the resources that you have and the 
reforms you have made, what you are implementing and putting in 
place to make sure you are able to do as good a job as possible 
for all the demands made only your service.
    Thank you.
    Mr. LoBiondo. Thank you.
    Our witnesses today include Coast Guard Vice Admiral John 
Currier, the Deputy Commandant for Mission Support, and Mr. 
John P. Hutton, Director of Acquisition and Sourcing Management 
for the GAO.
    I also would like to thank Admirals Atkins, Taylor and 
Rabago, who lead the Coast Guard's Capabilities, Budget and 
Acquisition Directorates for attending today. I would like to 
welcome our witnesses and thank them for being here.
    Admiral Currier, please proceed.

 TESTIMONY OF VICE ADMIRAL JOHN P. CURRIER, DEPUTY COMMANDANT 
  FOR MISSION SUPPORT, U.S. COAST GUARD; AND JOHN P. HUTTON, 
  DIRECTOR OF ACQUISITION AND SOURCING MANAGEMENT, GOVERNMENT 
                     ACCOUNTABILITY OFFICE

    Admiral Currier. Thank you, Mr. Chairman.
    Chairman LoBiondo, Ranking Member Larsen and members of the 
subcommittee, I thank you for the opportunity to update you 
today on Coast Guard acquisition programs and the outlook of 
our ongoing and much needed recapitalization portfolio. I have 
prepared a full written statement and ask for its inclusion in 
the record, sir.
    Mr. LoBiondo. Without objection, so ordered.
    Admiral Currier. Thank you.
    In recent years, the Coast Guard has made noteworthy 
improvements in the acquisition program. The creation of the 
Deputy Commandant for Mission Support, assumption of systems 
integrator responsibilities for all major acquisition programs, 
creation of a disciplined capabilities development and the 
strengthened oversight by Coast Guard technical authorities 
better positions the Service to manage its acquisitions with 
greater efficiency and be prepared to make tough trade-offs 
when it is due in the challenging fiscal environment that we 
face today.
    These changes would not have been possible without the 
leadership and effective oversight of this subcommittee through 
the enactment of the Coast Guard authorization bill of 2010. 
This act, built on several initiatives that we had started in 
the Coast Guard and sought to implement, provided us with 
critical new authorities to strengthen our acquisition 
workforce.
    In my new role as Deputy Commandant for Mission Support, 
formerly Chief of Staff, I would also like to take this 
opportunity to personally thank you for your contributions, 
continued support and oversight.
    The Commandant and the administration consider 
recapitalization one of our service's highest priorities. The 
administration recognizes the urgent need by proposing the 
largest AC&I request in Coast Guard history. However, the 
deteriorating state of our legacy cutters, aircraft, boats and 
shore facilities are impacting the ability of our men and women 
in the field to achieve mission success.
    We find ourselves in a state of block obsolescence, with 
many of our assets, including aircraft and vessels, 
simultaneously reaching the end of their service lives. Our 
aging legacy fleet is both increasingly unreliable and 
increasingly expensive to maintain effectively. We need to 
replace these ships and aircraft as soon as possible. Our 
acquisition program is designed to provide these necessary 
assets and capabilities at the best value to the American 
taxpayer.
    Despite the opportunities and challenges that we continue 
to face, the Coast Guard is achieving mission success right now 
with our newly delivered assets, our capabilities and our 
infrastructure. The National Security Cutters Bertholf and 
Waesche are operational today. Bertholf recently interdicted 
more than 12,500 kilograms of cocaine. Her commanding officer 
reported that Bertholf easily prosecuted and tracked multiple 
targets, including go-fast boats, using the cutter's full 
electronic suite of sensors and communications gear. They were 
able to coordinate small boat, maritime patrol aircraft and 
helicopter end game tactics to achieve mission success.
    Air Station Miami, the HC-144 maritime patrol aircraft, or 
MPA, successfully identified and helped interdict two vessels 
attempting to smuggle drugs into the U.S. and accomplished one 
search and rescue mission in a single 14-hour patrol, something 
that we would never have been able to oh do with our previous 
assets.
    A response boat medium stationed in San Juan was recently 
credited with intercepting 95 bales of cocaine. These boats are 
providing thousands of hours of effective search and rescue and 
port security operations around the Nation.
    Our Rescue 21 program has resulted in over 200 lives saved 
in 28,000 rescue missions due to its enhanced capabilities.
    We are planning to launch the Fast Response Cutter this 
month. The project is on budget, and the fiscal year budget 
request contains a request for six more of these vessels in a 
fixed price environment.
    Our general transition to fixed price contract structures 
represent itself growing maturity in the stability of our 
acquisition programs the Coast Guard has awarded directly to 
prime contractors for the National Security Cutter, maritime 
patrol aircraft and other assets in our relationship with ICGS 
as it ends and we closely integrate our technical authorities 
at all stages of the acquisition and sustainment process.
    All of our acquisition project managers are certified 
currently at the highest levels of DHS certification levels. 
These actions have enabled the Coast Guard to generate more 
predictable costs and stabilized requirements at decreased risk 
to the government.
    We are faced with many challenges, managing a multiyear, 
multibillion-dollar acquisition portfolio in today's 
constrained fiscal environment. At the same time, our legacy 
asset fleet is expensive to maintain and less reliable to 
operate.
    Our program of record represents a mix of assets necessary 
to carry out our statutory missions. We are replacing a larger 
number of legacy assets with fewer, more capable aircraft and 
cutters. We have put in place a program of rigorous and ongoing 
analysis of Coast Guard mission requirements to define our 
acquisition needs. We are constantly making trade-offs to 
better balance our performance and will continue to do so in 
the future.
    The fiscal year 2012 budget request and the capital 
investment plan represent our service priorities and reflect 
our commitment to the Department and the administration 
rebuilding the Coast Guard.
    We are acquiring an enduring versatile capability in this 
fleet that will protect American lives, property and resources 
over the next several decades. The Coast Guard is 5 years into 
a long journey to rebuild its acquisition enterprise, integrate 
mission support, introduce rigor into requirements generation, 
and strengthen our capabilities in contracting to create a 
regime where costs are predictable, program risk is identified 
and schedules are met.
    I can attest today that we have begun to demonstrate marked 
return on investments as we recapitalize the Coast Guard. I 
look forward to further discussing these endeavors and stand 
ready to answer any questions you may have.
    Thank you, Mr. Chairman.
    Mr. LoBiondo. Thank you, Admiral.
    Mr. Hutton, please.
    Mr. Hutton. Thank you, Chairman.
    Chairman LoBiondo, Ranking Member Larsen and members of the 
subcommittee, thank you for inviting me to discuss the Coast 
Guard's efforts to improve its management of its major 
acquisition programs.
    Drawing from our new report that we released today, I will 
highlight some of the Coast Guard's recent efforts to improve 
its acquisition management as well as some of the program 
challenges. Then, based on some ongoing work, I will provide an 
update on the Coast Guard's efforts to address a recommendation 
we made last year for them to complete an analysis that 
clarifies the quantities, mix, and costs of Deepwater assets 
considering the fiscal constraints.
    The Coast Guard continues to take steps to improve its 
acquisition management. Specifically, the Coast Guard has 
updated its policies and processes, increased its in-house 
acquisition workforce capacity, leveraged DOD agreements to 
support its major acquisition programs, and to further leverage 
DOD expertise, we recommend in today's report that the Coast 
Guard take some additional steps to help better ensure that its 
program staffs have ready access to the 80-plus interagency 
agreements and other arrangements with DOD.
    Now, while the steps the Coast Guard continues to take are 
positive, most major programs experience some challenges in 
program execution, resources and/or schedule. The report we are 
issuing today covers these challenges in more detail. However, 
I would like to focus on one particular challenge, and that is 
unrealistic budget planning, which has contributed to program 
breaches and will likely lead to future breaches.
    When a current 5-year capital investment plan reflects 
funding levels that are significantly lower than initially 
planned, that program is prone to fall behind. In fact, several 
major acquisition programs reported a baseline breach due at 
least in part to funding profile changes resulting from the 
2011 capital investment plan. More breaches may occur if the 
Coast Guard continues to conduct long-term planning based on 
funding levels that are much higher than past appropriated or 
requested levels.
    For example, the Coast Guard plans on $2.35 billion in 
acquisition funding in fiscal year 2015. That is an amount that 
will include construction of three major surface assets, the 
National Security Cutter, the Offshore Patrol Cutter and the 
Fast Response Cutter. But the Coast Guard has not received more 
than $1.5 billion for its acquisitions in any recent year, and 
with the rapidly building fiscal pressures facing our 
government, this unrealistic budget planning exacerbates the 
challenges the Coast Guard programs face.
    To its credit, the Coast Guard has acknowledged that it 
needs to establish some priorities among their major programs 
and make these trade-offs between programs to ensure that the 
budget planning fits with historical budget constraints. The 
key will be whether and how the Coast Guard makes such trade-
offs.
    This is a key moment in time, and it is important that the 
Coast Guard does not push trade-off decisions to tomorrow. 
This, of course, brings me to my last point, the Coast Guard's 
Deepwater fleet mix analysis, which began in October 2008, and 
our July 2010 recommendation that the Coast Guard assess their 
costs, capabilities and quantity trade-offs within the 
Deepwater program in light of the program cost increases.
    Last July, we reported that the Coast Guard initiated a 
second phase of its fleet mix analysis because the first phase, 
which was completed in December 2009, was not cost constrained. 
Since that time, we received and have been reviewing the phase 
one analysis and continue to do so.
    The first phase assessed asset capabilities and mission 
demands to identify a fleet mix that would help meet the Coast 
Guard's long-term mission performance goals. The result was 
what the Coast Guard termed an objective fleet that was about 
twice the size of the current Deepwater program of record, and 
the analysis indicated, and this is a Coast Guard analysis, an 
estimated acquisition cost of as much as $65 billion. The 
analysis also assessed other fleet mixes that fell between the 
program of record as indicated in the current 2007 DHS-approved 
baseline and the objective fleet, but did not consider any 
fleet mixes smaller than the baseline program.
    While the second phase of the analysis includes cost 
constraints, they appear to be unrealistic given the level of 
past appropriations and the current fiscal challenges facing 
our Nation. The upper bound is about $1.7 billion per year. 
That is more than Congress has enacted for the entire Coast 
Guard's acquisition portfolio in recent years. More 
importantly, we understand that the Coast Guard does not plan 
to assess any fleet mixes smaller than the program of record, a 
step that would help them better prepare for and make any 
tradeoff decisions, given our Nation's fiscally constrained 
environment.
    Mr. Chairman, this concludes my prepared statement. I would 
be happy to respond to any questions you have.
    Mr. LoBiondo. OK. I thank you.
    Mr. Hutton, if any of us are oblivious to the pressures, 
the budget pressures and the fiscal crisis we are in, I don't 
know where you have been, so most of the people in here 
understand it. But what do you consider the greatest risk if 
the Coast Guard doesn't get their act together?
    Mr. Hutton. Well, first of all, as we have noted, I think 
one of the important things is that you want to have a program 
that the acquisition directorate can execute. To do that, you 
have to make sure that your planned resources are going to 
marry up with the acquisition strategy. If you don't have that, 
you are going to have situations where every year you start 
changing your programs to compensate for this unrealistic 
planning. I think that is a big part of trying to address this 
issue. I think it is a good thing that they are doing their 
fleet mix analyses. It is a continuous effort, I believe, on 
their part.
    What we have been talking about here though is in the 
current fiscal constraints, it seems reasonable that you would 
also consider some of the trade-offs and scenarios if you don't 
get the money you need, so you can start looking ahead and 
thinking how you will react.
    As Admiral Currier mentioned, he said it is very expensive 
to keep the legacy fleet operating, and you have to constantly 
make those trades between sustaining the old and acquiring the 
new. And I think the budget and the connection with the 
acquisition strategy is a key component of that.
    Mr. LoBiondo. Thank you.
    Admiral Currier, Chairman Mica and I requested the fleet 
mix analysis 14 months ago and we still haven't received it. At 
our hearing last month, Admiral Papp promised us he would 
provide a timetable on when we would receive the document. We 
have not received the timetable.
    When will we receive the cost constrained fleet mix 
analysis?
    Admiral Currier. Thank you for that question, Mr. Chairman.
    The phase one of the fleet mix analysis that was just 
mentioned by Mr. Hutton, which is basically a survey from a 
threshold to an objective of what our fleet could be, and 
supports, by the way, the program of record, has been submitted 
to the Department for review. Phase two of that will be 
completed this summer. Phase two is the overlay that gives the 
costed aspects of the fleet so that we can develop a more 
complete picture of what our needs might be.
    But I want to reiterate, fleet mix analysis number one, 
much of the data of which is in the GAO report that was 
delivered today, shows a threshold which is the program of 
record out to an objective which expands the Coast Guard asset 
base to more completely satisfy the 11 statutory missions that 
we are charged with.
    Specifically to your point, fleet mix analysis one is in 
review at the Department. We are using all of our capabilities 
to ensure that it is expeditiously reviewed and that it is 
provided to you, sir. I am unable to do that directly at this 
time.
    Fleet mission analysis two, phase two costed, will be 
completed this summer and submitted this summer to the 
Department for review as a complete package.
    Mr. LoBiondo. Well, thank you, and I appreciate that. But 
here is a little tip: When a request is made and 14 months go 
by and we really don't hear anything, this is not a good thing. 
And when the Commandant makes a statement and we still don't 
have what the Commandant told us we would get, that is a 
problem. So there needs to be at the very least an improved 
level of communications so that we can understand what you are 
doing or why we are not getting something. We are trying not to 
be unreasonable here, but from our perspective, we are your 
biggest cheerleaders, it appears we are being ignored.
    A couple more questions before I turn it over to Mr. 
Larsen. Assuming the fiscal year 2011 appropriations become 
available as we expect they will be at the end of this week, 
when will the Coast Guard sign a contract for NSC number 5?
    Admiral Currier. Sir, if the appropriation is approved and 
we receive the money, we could award the contract for NSC 5, 
the production contract for NSC 5, in the fourth quarter this 
summer, the fourth quarter of the fiscal year this summer, late 
in the summer. We have the proposal in hand and we have already 
started close review.
    Mr. LoBiondo. Thank you. The NSC was designed and built to 
carry out as many as four vertical takeoff and unmanned aerial 
vehicles. We talked about that. It was expected to extend the 
range and effectiveness. We talked about that. A variety of 
other things it was designed to replace and enhance the 
capabilities.
    How do you justify the cost of the National Security Cutter 
if, according to the Inspector General, it is only providing a 
similar level of capability as the vessel it is replacing?
    Admiral Currier. Thank you for that question, sir.
    Plain talk, National Security Cutter is much more capable 
in its current state than the High Endurance Cutter ever was. 
Its ability to carry an H-60 aircraft plus H-65s, its ability 
to carry two H-65 aircraft when required, its electronics 
detection suite, its radars, all of its detection and 
electronics suite, make this ship much more effective, much 
more effective than the current assets that we have.
    We won't achieve full potential of this ship until we get 
unmanned aerial vehicles in a proper regime of maritime patrol 
overhead to maximize the capabilities of the ship. But 
currently, as it sits in the water, it is significantly more 
capable than the High Endurance Cutters that we have today.
    Mr. LoBiondo. Thank you, Admiral.
    Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman. Rather than jump to a 
different issue, I will just stick with the theme on this 
particular issue, the security cutter, and the unmanned 
vertical aerial vehicles.
    What is the status of the effort to develop one and how is 
the Coast Guard collaborating with the DOD to adapt already 
proven technology for the Coast Guard's own use?
    Admiral Currier. Sir, I will give you just a bit of history 
on this thing. The unmanned aerial vehicle, we originally 
entered an endeavor through our commercial systems integrator 
that we previously had a contract relationship with. We didn't 
see this as coming to fruition. It was leading science, it was 
expensive and it was high risk.
    We changed our philosophy, our approach to this, and went 
with DOD. The Coast Guard is a midsized Federal agency and is 
very capable, but it has no business leading science in 
something as complex as unmanned aerial vehicles, particularly 
rotary wing.
    We have partnered closely with the Naval Air Systems 
Command. As a matter of fact, I had a discussion yesterday with 
its Commander, talking about our partnership on unmanned aerial 
vehicles. We are closely watching their Fire Scout Program. We 
think when they bring that home, that will satisfy many of our 
mission requirements and be a great fit for the National 
Security Cutter.
    But, as I said before, to manage costs, manage risks with 
this leading of science type enterprise, we chose to change 
directions and closely ally with Navy through Naval Air 
Systems.
    Mr. Larsen. I don't mind that you changed direction to 
partner with the Navy. I am just interested in the status. As 
you have noted, having the capability of the National Security 
Cutter to the extent that we want it likely would include 
having the ability to have the unmanned aerial vehicle. So 
getting to that point is important. I need to move on.
    This issue with regards to the ACI account and the 
projected budget, what you have projected, versus what 
historically you have received, that is troubling to me because 
it tells me that a man's reach should exceed his grasp. Robert 
Frost, right? But you have never been able to grab it in the 
budget. So how is the Coast Guard going to approach that?
    Admiral Currier. Well, sir, first of all, we are caught in 
a difficult position, recapitalizing the entire asset base of 
the Service, our major assets in the Service. We are looking at 
a two to three decade recapitalization process, the life cycles 
of these assets. They are all coming due at the same time. And 
as the Chairman mentioned, you don't need to hear from me what 
an austere fiscal environment this is.
    But our requirements are our requirements. We have to 
budget to the minimum level that we feel we can achieve that 
will allow us to continue this recapitalization, because if we 
don't do it in an expeditious manner, one of the maxims of 
acquisition is delays equal cost. So if we are not aggressive 
about pushing forward with this recapitalization, we can only 
expect more expensive legacy assets and more expensive new 
assets because of the delays that were incurred.
    I understand the tensions here. I understand that we are 
asking more than we have gotten before. But I believe, sir, 
that we have proved our value to the Nation, and it is really 
up to Congress and the will of the people if they are willing 
to make that investment in their Coast Guard. I think it is 
justified.
    Mr. Larsen. Does the fleet analysis include an analysis of 
your sustainment budgets as well and how those fit into your 
legacy assets to be sure those can continue while you get to 
the point where you are actually putting new assets online?
    Admiral Currier. Sir, I believe the fleet mix analysis is 
forward looking. I think it defines requirements for fleet mix 
of the future. There may be some mention in the phase two of 
this, in the costed portion of the cost of legacy assets and 
the offset of the new assets. But its focus is forward looking.
    Mr. Larsen. Well, let me ask then retrospectively how you 
are thinking about your sustainment budget to the extent you 
discuss block obsolescence. Does that sustainment budget, 
sustainment approach you are taking, does it anticipate that 
you are going to be shedding assets? You are prioritizing 
within your legacy assets as well, I assume, putting 
sustainment dollars into things that you think can stretch out.
    Admiral Currier. Absolutely. Yes, sir. And to be truthful, 
as we bring these major new assets on board, it is unrealistic 
for us to expect to maintain a constant level of service 
because of the requirement to retire legacy assets. This would 
be just like buying a new car and holding the old car so that 
you never miss anything. It just doesn't work that way.
    We are going to have gaps in operational capability, full 
well knowing that we are going from a fleet of 44 major cutters 
to 33 major cutters. But we feel that with the asset base as 
laid down and as designed to be employed, that we will be 
better off. We will actually enhance our capabilities into the 
future. There will be a dip in operational effectiveness and 
capability and operational hours though as we transition.
    Mr. Larsen. Mr. Chairman, I will have more questions.
    Mr. LoBiondo. Thank you. Ms. Hirono.
    Ms. Hirono. Thank you. Admiral, I am very gratified that 
the 14th District will be receiving four new helicopters to 
replace aging ones. That is really good news. On the other 
hand, I am sure that there are a lot of other places that are 
waiting, clearly from your testimony, for replacing aging 
assets.
    So I am wondering, in your testimony you noted that you 
have established a senior level governance body known as an 
Executive Oversight Council. Is this the entity that determined 
that the 14th District should get the four helicopters? Is this 
council working to use your assets in the best way possible?
    Admiral Currier. Well, ma'am, thank you for that question. 
I think I will answer it in two quick very brief ways.
    First of all, our operational force layout is determined by 
our operational commanders in concert with that Executive 
Oversight Council through our Capabilities Directorate headed 
by Admiral Atkins here today. So that is an operational 
question of where the assets go.
    How the assets are recapitalized is certainly the purview 
of the Executive Oversight Committee, and that body I am 
particularly proud of. For the first time, it integrates the 
supporters, the acquirers, the requirers and the resource 
people into a body where discussions are held on capabilities, 
costs and technical achievability, a great step forward for the 
Coast Guard.
    So thanks for the question. Hopefully that provides you an 
answer.
    Ms. Hirono. Well, it is pretty clear that the retiring of 
the legacy assets and replacement of these assets with new 
assets, that the new assets have to be able to do a lot more, 
the technology involved has to be vastly improved. So who 
oversees your contractors or whoever is coming up with the 
designs for you to approve so that your capacity and capability 
is increased even as you have fewer numerical assets?
    Admiral Currier. Well, the design is--first of all, our 
requirements are mandated. We come up with the requirements. We 
go out to industry for design. They have to meet those 
requirements. That is where the technology refresh happens. The 
governance of that process is this Executive Oversight Council. 
But it is a normal acquisition process on how we upgrade. It 
meets our concept of operations, our requirements, the 
attributes we get from industry when we put out a proposal, and 
all of that is governed through the headquarters Executive 
Oversight Council.
    Ms. Hirono. Is that oversight council working a lot better 
than the times that you have regarding your Deepwater project 
and all of the overruns and problems you have with that? Is 
this council doing what it needs to do to prevent the kind of 
problems you have with your Deepwater project?
    Admiral Currier. Yes, it is, Congresswoman. I was part of 
acquisitions back in 2006 and was one of the architects of what 
is now our transformation into the new acquisition enterprise, 
which, by the way, just isn't acquisition. It integrates 
support, technical authority, resources and requirers on one 
group for the first time. I think this is a model for 
government. I think we are on the cusp at this time of showing 
true return on investment through the processes that we have 
put in place as we continue the recapitalization of the Coast 
Guard.
    Ms. Hirono. One last question. Mr. Hutton, you have heard 
the Admiral talk about this council and some of the processes 
that they have put in place to enable them to do a much better 
job. Are you in agreement that these are important and 
significant steps?
    Mr. Hutton. Specific to the council, I would agree that 
that is the first time, as the Admiral stated, where they are 
trying to bring the logistics and the requirements people 
together and the acquisition people and the resource people, 
and if the thorny issues are brought up to that council in a 
transparent way and are discussed, then you have the 
opportunity to make good decisions. But it always comes down to 
the decisions you make.
    And I think it is also, whether it be for the fleet mix 
analysis, whether it be for the resource discussion, it is hard 
sometimes for us, and we have ongoing work right now, to really 
figure out where we might see a disconnect, are they decisions 
driven within the Coast Guard, at the department level, or 
through discussions between the OMB and DHS and things like 
that.
    But with respect to the EOC, it has met at least 40 times I 
think over the last 15 months. They are dealing with issues 
such as OPC, some of the real emerging issues, and I think 
there is a lot of promise for that.
    Ms. Hirono. Thank you, Mr. Chairman. I yield back.
    Mr. LoBiondo. Admiral, just a little heads up. We are 
probably going to schedule a hearing in September on the cost 
constrained fleet mix analysis. So that is a little bit of a 
heads up there.
    Admiral, on the cutter boats, the NSC was built to carry 
two classes of stern-launched small boats, each with a 
different size and capability to improve their range and 
effectiveness. The larger of the two, the long-range 
interceptor, did not perform as required, and the smaller boat, 
the over-the-horizon, had to be modified to perform correctly. 
The Service recently solicited industry for a solution to 
replace both classes of small boats. Meanwhile, the NSC cannot 
operate at full capability, especially without the long-range 
interceptor.
    When does the Coast Guard anticipate going to full 
production for both classes of cutter boats and when will the 
NSC be outfitted with these boats?
    Admiral Currier. Thank you, sir, for that question.
    I think that this actually is a success story of not only 
modernization, but our setup with our integrated Acquisition 
Directorate. Whereas we had three classes of cutters produced 
by three different manufacturers or builders, we were going to 
have likely three different kinds of small boats, or more.
    What we have done is we have consolidated requirements and 
we have come up with a plan to only acquire a 7-meter cutter 
boat and an 11-meter cutter boat. The 11-meter cutter boat will 
be the long-range interceptor that is on the National Security 
Cutter. The 7-meter cutter boat will fit the National Security 
Cutter, the Offshore Patrol Cutter, and the Fast Response 
Cutter. We think this makes perfect sense from a logistics 
perspective on commonality of parts and support.
    In the interim, with the National Security Cutters that are 
currently underway, they have a complement of boats. We have a 
Mark 4 interceptor boat, a short range boat that is on board 
there, that is very similar to what we use in our 270-foot 
cutters, and we have an additional interceptor boat that came 
from the 123, the 123-foot cutters that, as you know, have been 
decommissioned.
    So both National Security Cutters that are underway have a 
complement of boats, but they are not the complement of boats 
that we will provide to them once we achieve the standard 
cutter boats in the 7- and 11-meter class. The 7-meter class 
will be tested this summer, we look for a contract award late 
this fiscal year, and the 11-meter small boat will be tested, 
further tested in the fall of this year. So we are very close 
to achieving commonality in cutter boats across the classes.
    Mr. LoBiondo. Thank you. Only 3 of the Service's fleet of 
10, 378-foot High Endurance Cutters, is currently operational. 
The fleet is only achieving 75 percent of their targeted days 
away from home port and at the same time its operating costs 
are more than 300 percent over budget. The Service originally 
spent more than $4 million to complete emergency repairs to two 
of these vessels and the Coast Guard has not budgeted for an 
HEC sustainment program for the next 5 years.
    Two years ago, the Coast Guard assured this subcommittee it 
was conducting a condition survey of the HEC fleet. Can you 
tell me if I am wrong in that no survey was ever conducted? Was 
a survey ever conducted?
    Admiral Currier. Yes, sir, a survey was conducted.
    Mr. LoBiondo. It was conducted.
    Admiral Currier. Yes, sir. If I could just explain that one 
second. There are various levels of engineering survey that 
have taken place. A basic engineering survey of the HEC fleet 
took place to start to determine which cutters would be taken 
out of service first. An engineering study with more fidelity 
is currently ongoing.
    But our strategy with the HEC is this: We are going to 
maintain that cutter to the minimal level that it is safe to 
operate. The cost curves on the HEC, as you have pointed out, 
are going exponential on us. This is a 40-year-old ship, it is 
very complex, and we have used it hard. We are going to 
maintain this ship until we replace it with our NSCs, but we 
are going to do it to a level that it is safe to operate and 
effective to operate, but no more than that. I think that is 
the best answer for the taxpayer.
    Mr. LoBiondo. I appreciate that. That is kind of good news 
and bad news. It is good news you did the survey. It is bad 
news, because we have a communications problem. We need to find 
out. I would like you to check into this and see when that was 
given to the committee and how it might have been communicated 
to the committee, because we are sort of operating in the dark 
that we have ever received it.
    Admiral Currier. Yes, sir, will do.
    Mr. LoBiondo. One other question before I turn it back over 
to Mr. Larsen. On the maritime patrol aircraft, to date the 
Coast Guard has taken delivery of 11 HC-144 maritime patrol 
aircraft and 12 mission system pallets. The Service plans to 
acquire a total of 36 aircraft. The program is currently 30 
percent over budget and 5 years behind schedule. In addition, 
even though the Service has taken delivery of a third of its 
planned buy, the Service has not yet begun operational testing 
and evaluation of the maritime patrol aircraft.
    Can you tell us why the Service has acquired nearly half of 
its planned maritime patrol aircraft and has still not begun an 
operational test and evaluation phase, or are we wrong and you 
have conducted it?
    Admiral Currier. Well, sir, the maritime patrol aircraft 
was originally initiated, the contracting was initiated through 
our lead systems integrator that we have replaced. Organically 
we are the lead systems integrator. There was a shift in 
contracting. There was a shift. Now we buy directly from the 
manufacturer with a direct contract.
    That shift caused a price increase in that how we consider 
costing that aircraft as we got more fidelity with actuals and 
we added other things in, like the logistics tail that hadn't 
been adequately considered by the previous LSI, it drove a cost 
increase. We are not seeing per se a unit cost increase in the 
price of the aircraft. We have just recosted it to adequately 
treat logistics. I think that is an explainable cost bump in 
what you have seen in our projections in the outyears.
    As far as operational test and evaluation, from the first 
aircraft we received we started operational assessment. Now, we 
have been in limited rate production and we went to the 
Department with a production decision and it was decided that 
we needed to complete a fuller OT&E prior to getting to the 
decision level three or full rate production decisions. So we 
have been in limited rate production, but we have had an 
ongoing operational assessment for the whole life of this 
asset. I think we have shown how effective it is. Deepwater 
Horizon, the case I described in Miami in my opening statement.
    So our plan is this: We are in limited rate production. We 
will complete a formal OT&E, operational test and evaluation 
period, this summer, and then we will go back for a full 
production decision in the fall, an ADE-3 we call it, and will 
be in full production status.
    I don't anticipate a problem in OT&E because of the scope 
of the operational assessment that has taken place to the 
delivery and implementation of the first airframes.
    Mr. LoBiondo. Well, I hope you are right, because if you 
switch seats and you are on the subcommittee up here and you 
are hearing that there is no test, no formal test and 
evaluation, and you have bought a whole lot of assets, and 
something isn't right down the line, we had a situation in the 
past that didn't go so well with assets that were purchased and 
then there is litigation and all kinds of stuff. I mean, I hope 
you are right.
    Admiral Currier. Sir, the operational test that has gone 
on, I can attest to you that the fidelity of the operational 
assessment from an operational perspective shows this aircraft 
with great promise. And throughout the entire scope of this 
assessment, there have been changes and upgrades and 
modifications to the mission pallet system at the expense of 
the contractor that have brought this thing to a mature state. 
What will be further testing in formal OT&E are the logistics, 
maintenance and all the peripheral things that go with it as a 
system. I don't anticipate a problem there.
    Mr. LoBiondo. Mr. Larsen.
    Mr. Larsen. Mr. Hutton, you have had the opportunity to 
reassess Coast Guard's performance in assuming responsibility 
for the acquisition, this movement we made from an outside LSI 
to internal, them having an acquisition workforce to support 
that.
    What is your assessment of the Coast Guard's progress on 
that, as well within the context of your testimony that states 
that support contractors make up 25 percent of the Coast 
Guard's acquisition workforce? Can you kind of relate those two 
and give us an assessment of the progress of the workforce?
    Mr. Hutton. Absolutely. Overall, I would say since the 2007 
and 2008 timeframe as the Coast Guard started assuming the lead 
system integrator responsibilities, the Acquisition Directorate 
in particular has been very responsive to our recommendations. 
They have brought their acquisition management process pretty 
much in line with the departmental process, which is good. They 
have been responsive when we have made recommendations. You 
asked a question earlier about the low-rate initial production. 
We had a recommendation that said there ought to be a decision 
event there because you don't want to be buying too many before 
you do the operational testing. That is now in there.
    So on the process side, I think they have been very good. 
It is always about execution, however. On the personnel side, 
it has been a challenge. But it is a governmentwide challenge. 
As many of us probably know----
    Mr. Larsen. Do you mean to say when you say it is a 
governmentwide challenge, just finding enough people to fill 
acquisition spots?
    Mr. Hutton. I think governmentwide. Having the full 
complement of acquisition workforce people is an issue that a 
lot of Federal agencies are dealing with, particularly when you 
get into some of the real technical skills like system 
engineers and cost estimators. We could always talk more about 
what is going on I think at the departmental level as well as 
at the Coast Guard.
    But I would say my general assessment is they are building 
their acquisition workforce. When we keep going back in and 
looking, they are closing the gap between what they say they 
need and what they have. Of course, one aspect of that is they 
may know what they need, but then do they have the budgeted 
billets for that. That would be for the Coast Guard to 
request--they could probably talk about that more than I. But 
that is certainly a facet.
    Using contractors, we have observed that, yes, they use 
contractors. Others like DOD use contractors for certain 
technical things. The issue, however, is what are you asking 
contractors to do? Is it a reoccurring long-term activity that 
you would rather have a government person do it? Well, maybe 
you need them in the short term, but what is your plan to 
eventually have a government person do that work? What kind of 
oversight are you providing the contractor?
    If they are doing certain acquisition-related activities, 
those are things that closely support an inherently 
governmental decision. It is very critical then you understand 
what you are asking contractors to do and what enhanced 
oversight you might be providing.
    We have observed in the past that the Coast Guard was using 
contractors, and we started asking more about the oversight. We 
were getting good indications that they understand the risks 
and that they are trying to make sure that the taxpayers' 
interests are protected and they are not losing control and 
accountability for decisionmaking.
    So we see on the personnel side that the gap is narrowing. 
But I don't foresee a situation where they won't be using 
contractors, because in some circumstances, particularly if it 
is a short-term need, that might be the proper solution.
    Mr. Larsen. And has the Coast Guard made improvements in 
its developmental and operational testing?
    Mr. Hutton. A great question. That was another 
recommendation. We had some issues, I think it was covered in 
last year's report, maybe the year before, where we were 
starting to talk with the Coast Guard about what is exactly an 
independent test authority. At the time, I think some Coast 
Guard sentiment was that if it is part of the Capabilities 
Directorate, that is independent enough. We felt well, it 
should be more independent than that. And as we noted in our 
report today, they now start to leverage the Navy as the 
independent test authority, and we think that is prudent.
    Mr. Larsen. Admiral, to the issue of Rescue 21, and we have 
talked about some of these other assets and other platforms, 
but to the issue of Rescue 21 noted in the Chairman's chart, we 
had 37 sectors for planned and delivered to 26 sectors. Can you 
discuss your plan to deploy Rescue 21 to these other areas, 
Great Lakes, Hawaii, any place where it is not deployed, as 
well as the Gulf of Alaska and Alaska as a whole?
    Admiral Currier. Yes, sir. Certainly. Thanks for that 
question.
    Our contract on Rescue 21 is completed in fiscal year 2012. 
The deployment to the Western Rivers, Puerto Rico, Hawaii, the 
places that you mentioned, absent the Gulf of Alaska, will be 
completed by 2012.
    Actually, I might have misspoken a little. Let me correct 
the record here. The places that are planned in the original 
contract will be completed by the end of fiscal 2012. Western 
Rivers, because it doesn't require the full suite and 
capabilities of Rescue 21 on our river, will be recapitalized 
organically by the Coast Guard as they switch from analog to 
digital radios. So the effect of reliability and those good 
things from Rescue 21 will be achieved in Western Rivers, but 
the Coast Guard could do it much more less expensively 
organically.
    I was involved in Rescue 21 early, and this was one of the 
triggers that caused us to reform ourselves acquisition-wise, 
because we were dealing with this contract early on. We decided 
at that time when we reviewed the prime contractor's look at 
Alaska, that they had no clue on what the cost and risk was 
involved in going there. Their cost estimates were 
unrealistically low.
    We looked at it. We are experts in the area, we are the 
ones who have maintained the infrastructure up there for years, 
and felt that we could do it again organically as we switch and 
add incrementally to the capability up there, but do it better 
from a government organization perspective than through our 
prime contractor.
    So, when those decisions were made, they were tough 
decisions, and I believe the subcommittee has been advised of 
those in the past. I stand by them. I think they make good 
business sense. But for the original contract, we will finish 
in fiscal year 2012.
    Mr. Larsen. So you finish in fiscal year 2012, but, again, 
is there a timeframe then for Alaska, or not?
    Admiral Currier. Sir, at this time, as I said, this isn't a 
complete conversion of Alaska from legacy systems to Rescue 21. 
It is an incremental change. As equipment fails, we will 
service the site. We likely will upgrade the site at that time. 
So this is going to be a longer term.
    Mr. Larsen. And will the approach you take to that, like 
you take to the Western Rivers, will that be organic, or is 
that going to be built into your acquisition, your ACI?
    Admiral Currier. We are looking at that closely now. But 
the current plan is to maintain the system that is there, do 
incremental improvements under our maintenance funding scheme, 
with some minor AC&I for planning purposes as we go forward 
with this.
    To be perfectly honest, we don't have a rock solid plan at 
this point for Alaska. We can maintain Alaska to the current 
capabilities with our current funding base. But if we look to 
recapitalize Alaska or add sites beyond the operational 
requirement that was originally established, we will have to 
look at an acquisition program that is AC&I funded. Currently, 
we have no plans to do that.
    Mr. Larsen. Mr. Hutton, I asked the Admiral earlier about 
sustainment budgets for the Coast Guard, sustainment for the 
legacy assets. And has GAO looked at the sustainment budget for 
the Coast Guard and whether or not it is adequate, how it fits 
into supporting the Coast Guard mission, how it fits into 
supporting the movement to new assets? And do you have an 
assessment of it?
    Mr. Hutton. While I am responsible for the acquisition 
side, I have a colleague that often looks at the operational 
issues. I believe they did some work last year. I don't have 
all the details. But we would be happy to close the loop with 
you on that and see how we could fill in the details.
    Mr. Larsen. Thanks. Thank you, Mr. Chairman.
    Mr. LoBiondo. Admiral Currier, Mr. Hutton, I would like to 
thank you very much for being here today. This was informative.
    Admiral Currier, I have got good news. We are going to be 
spending a lot more time together in the future. It is only bad 
news if we can't meet some of these benchmarks. So thank you 
all very much. The meeting is adjourned.
    [Whereupon, at 11:05 a.m., the subcommittee was adjourned.]
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