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


 
                CREATING AMERICAN JOBS AND ASSURING THE
                    SAFETY AND SECURITY OF AMERICA'S
                WATERWAYS: A REVIEW OF THE COAST GUARD'S
                    5-YEAR CAPITAL IMPROVEMENT PLAN

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

                                (112-86)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 16, 2012

                               __________

                       Printed for the use of the
             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
JEFFREY M. LANDRY, Louisiana         DONNA F. EDWARDS, Maryland
STEVE SOUTHERLAND II, Florida
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN, 
    Tennessee
                                ------                                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)


                                CONTENTS

                                                                   Page

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

                               TESTIMONY

Vice Admiral John P. Currier, Deputy Commandant for Mission 
  Support, United States Coast Guard.............................     4

                PREPARED STATEMENT SUBMITTED BY WITNESS

Vice Admiral John P. Currier.....................................    15

                       SUBMISSION FOR THE RECORD

Vice Admiral John P. Currier, Deputy Commandant for Mission 
  Support, United States Coast Guard, responses to questions from 
  Hon. Rick Larsen, a Representative in Congress from the State 
  of Washington..................................................    23

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                  CREATING AMERICAN JOBS AND ASSURING
                  THE SAFETY AND SECURITY OF AMERICA'S
                    WATERWAYS: A REVIEW OF THE COAST
                         GUARD'S 5-YEAR CAPITAL
                            IMPROVEMENT PLAN

                              ----------                              


                        WEDNESDAY, MAY 16, 2012

                  House of Representatives,
                    Subcommittee on Coast Guard and
                           Maritime Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, 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 today to review the Coast 
Guard's major acquisition programs and its 5-year capital 
improvement plan. The Coast Guard's acquisition programs have 
suffered through some very, very dark days. And this 
subcommittee has been vigilant to ensure that the Service has 
the capability, capacity, and motivation to reform its 
acquisition process.
    I want to applaud the improvements made by both Admiral 
Papp and his predecessor, Admiral Allen. They both made 
acquisition reform a priority and focused on the end result: 
building new assets in a timely, cost-effective manner.
    However, I fear--and sometimes it seems, like it does now--
that for every two steps forward, we may be taking one step 
back. I can't tell you how concerned that I am--and I believe I 
speak for the committee--about the recent discovery that the 
Coast Guard Cutter Stratton, the third newest National Security 
Cutter, is in need of an emergency drydock to fix a leaky hull 
plating.
    I know there is an investigation into what caused this 
steel to fail. But again, I can't tell you how extremely 
troubling it is to see the newest ship in the fleet, and the 
most expensive cutter in Coast Guard history, needing emergency 
repairs. I just sort of can't get my brain around this one.
    I am also very upset to hear there is a shortage of spares 
for the Maritime Patrol Aircraft. Due to what appears to be 
very poor planning and budgetary short-sightedness, the brand 
new fleet of MPAs will face flight hour restrictions for the 
foreseeable future, further exasperating the MPA's patrol hour 
gap. Again, I just hope we can get some answers to this, 
because nothing is making sense.
    The failure to adequately budget for critical spare parts 
points to larger problems with the budget request and the 
sustainability of the capital improvement plan. The 
administration's decision to cut the Service's acquisition 
budget by 19 percent over the current year has left it 
scrambling to reprioritize limited funding, forcing the 
termination of critical acquisition programs and the reduction 
in vital capabilities for certain assets.
    Trying to squeeze a $2.5 billion annual need into a $1.2 
billion annual program is just not going to work. Trade-offs 
will undermine the Service's missions effectiveness, and costs 
will increase in the outyears. And all this on the heels of 
what we thought were a number of years of finally making some 
progress, and we are sliding back down that hill that we pushed 
so hard to get up very rapidly.
    I also continue to be very concerned with the findings by 
the GAO and others with questions--the Service's assertions 
that new assets are providing increased capability.
    For instance, after 10 years, and nearly $4 billion 
appropriated by Congress, the National Security Cutter and the 
C4ISR program still have not met promised capabilities. How 
much patience are we to have? What else can we do? The three 
National Security Cutters operating today still lack enhanced 
small boats, extended aerial surveillance capability, or a 
crewing plan to increase patrol days. And the C4ISR program has 
failed to deliver a common operating picture across all 
aspects--something we were told absolutely would take place.
    I look forward to hearing from the admiral on how these 
acquisitions are a good investment for the taxpayer, and how we 
are going to get the results that we were promised, and fix 
some of these problems and keep them from happening again. It 
seems like it is deja vu, we are getting promises of stuff, 
that it is going to get fixed, and then we are back here again 
with even worse news than we had in the prior occasion.
    Finally, while it is important to focus on how the Coast 
Guard intends to recapitalize its assets, we must not forget 
that the Service faces a half-a-billion dollar backlog in 
shoreside infrastructure. The administration's decision to 
slash shoreside infrastructure funding by 86 percent and zero 
out funds to rehabilitation servicemember housing--extremely 
disappointing doesn't come close to covering it. It is a total 
disregard for what priorities ought to be.
    We ask a lot of the men and women in the United States 
Coast Guard. And failing to provide them and their families 
with adequate housing is just unacceptable. It is totally 
wrong.
    Admiral, I hope you will be able to tell us when we can 
expect to receive the complete housing survey report, and what 
the Coast Guard is doing to ensure our servicemembers have the 
resources and support they need.
    Admiral, I thank you for appearing today. I congratulate 
you on your promotion to vice commandant. Please give our best 
wishes to Vice Admiral Sally Brice-O'Hara on her retirement. 
Please extend a thank-you from the committee for her 37 years 
of outstanding service to our Nation.
    And before I turn over to Mr. Larsen, Admiral, we have 
tried to be your biggest cheerleaders. We have tried over the 
years to push back on the critics, to explain why and how the 
Coast Guard needs the programs that they need. You are making 
it very difficult. Not you, personally, but you are in the seat 
today. And we have got to get on a positive track here.
    Mr. Larsen?
    Mr. Larsen. Thank you, Mr. Chairman, for convening this 
morning's hearing to continue the subcommittee's oversight of 
the U.S. Coast Guard's major acquisition programs and policies. 
Your persistence in keeping the Coast Guard's feet to the fire 
to ensure that their acquisition activities remain on track and 
on schedule is admirable, and essential. It is imperative we 
avoid any future delays and cost overruns if we hope to deliver 
the Coast Guard with the type of 21st-century surface air and 
communication assets that the agency needs.
    It is no exaggeration to say that when the Coast Guard set 
out in 1996 to recapitalize its aging fleets of cutters and 
aircraft, the need for this initiative was unassailable. 
Despite the past setbacks of the former deepwater program, 
since discontinued, recent evidence demonstrates the Coast 
Guard has moved smartly to fully internalize all major 
acquisition activities, and assume the role as lead system 
integrator. New and additional acquisition personnel have been 
hired. Stringent new policies have been adopted to ensure 
timely and effective oversight, both within the Coast Guard and 
the Department of Homeland Security.
    So, I want to commend Admiral Currier for the many positive 
actions taken by the Coast Guard to assume all system 
integrated responsibilities. We all recognize the magnitude of 
the challenge before you, and realize that this effort remains 
very much a work in progress.
    Notwithstanding this progress, however, significant 
impediments remain and must be overcome if we hope to maintain 
the Coast Guard's operational capabilities at sea and in the 
air. Regrettably, the only conclusion I can reach after an 
assessment of the current circumstances is that the status of 
the Coast Guard's major acquisition programs has now risen to 
nothing short of critical.
    Mr. Chairman, you will recall the Government Accountability 
Office has reported that the absence of baseline estimates for 
several major assets, especially the Offshore Patrol Cutter, 
might drive up the overall cost for the major system 
acquisitions to well over $29 billion. The GAO also asserts 
that revised cost estimates and delivery schedules developed by 
the Coast Guard may be unreliable, because the Coast Guard has 
not adhered consistently with its own best management 
practices.
    The unreliability of the acquisition timetable was made 
even more acute by significant omissions from the Coast Guard's 
fiscal year 2013 budget request, most notably the failure to 
request any funding for the final two National Security 
Cutters, or to account for future outyear requests to build a 
new Polar-class icebreaker.
    Cumulatively, these omissions will add hundreds of millions 
of dollars to future acquisition account requests. And nowhere 
does the budget take into account future outyear operational 
expenses that the Coast Guard will assume when it initiates 
perpetual seasonal activities in the high North.
    More troubling within the current context of zero sum or 
declining Federal budgets, these unbudgeted priorities will 
almost certainly push out further to the right the timetables 
for other important acquisition or construction programs, and 
simultaneously also wrap up maintenance and operating costs for 
the Coast Guard's legacy assets.
    Important initiatives such as the construction of Fast 
Response Cutters and maritime patrol craft, completion of the 
approved program of record for response boat, or the renovation 
of Coast Guard housing and construction of new shore 
infrastructure will be delayed, prematurely terminated, or left 
to languish without these funds. Additionally, the GAO has 
raised concerns about the viability of the Coast Guard ever 
achieving a system of systems capability. It now appears that 
the new generation of command and control and communication 
technologies once promised will not be delivered.
    And so, we have reached a critical threshold. Admiral Papp, 
in his first State of the Coast Guard address, openly 
acknowledged the Coast Guard does not have the resources to 
perform 100 percent in every one of its statutory missions on 
every given day. That is a somber warning, and something that--
which every Member of Congress needs to take seriously.
    After all, our Nation is, first and foremost, a maritime 
Nation. Ninety-five percent of our foreign trade arrives or is 
shipped by sea. The maritime transportation system accounts for 
nearly $700 billion of the U.S. gross domestic product, and 
provides roughly 51 million jobs for U.S. workers. Our Nation's 
economy and its security depend upon safe and reliable maritime 
commerce, and our Coast Guard is the indispensable tool that 
protects and facilitates that commerce.
    Mr. Chairman, unless we are willing to see the gaps in this 
capability expressed by Admiral Papp be--unless we are willing 
to see these gaps become chronic, we need to break from the 
current deficit-driven mindset. If the Coast Guard could find 
the means--I am sorry, if Congress could find the means to 
recapitalize the Coast Guard during the depths of the Great 
Depression, we could find the resources today to provide the 
Coast Guard with the type of modern, capable, multimission High 
Endurance Cutters and aircraft that the Coast Guard deserves. 
Few things are as important.
    With that, I yield back.
    Mr. LoBiondo. Thank you, Mr. Larsen.
    Our witness today is Coast Guard Vice Admiral John Currier, 
deputy commandant for mission support.
    Admiral, you are recognized for a statement.

   TESTIMONY OF JOHN CURRIER, DEPUTY COMMANDANT FOR MISSION 
               SUPPORT, UNITED STATES COAST GUARD

    Admiral Currier. Thank you, Chairman LoBiondo, Ranking 
Member Larsen. Good morning, and thank you for the opportunity 
to provide an update on the Coast Guard's ongoing 
recapitalization program. I have submitted a written statement 
for the record, sir.
    On behalf of the commandant and the men and women of the 
Coast Guard, thank you for your strong support of our Service. 
Your oversight and advocacy have been essential to the Coast 
Guard's many successes.
    We in the Coast Guard as well as you in the subcommittee 
are well aware that the Nation is facing a challenging fiscal 
environment. The Coast Guard understands the pressures faced by 
our Nation. And I can assure you that we are committed to 
maintaining a disciplined and effective acquisition process, 
and to best allocate our resources to address our most urgent 
operational risks. We are making responsible investments to 
build capabilities that this Nation needs now and will for the 
next half-century.
    We are mindful of the subcommittee's concerns regarding 
affordability. We have worked very hard to optimize the balance 
between investment and recapitalization and current operations 
within our top line. We have done this in a way that preserves 
the Coast Guard's viability well into the future, while still 
responding to today's essential mission demands. Our fiscal 
year 2013 to 2017 capital investment plan shows that at our 
projected outyear funding levels, we can achieve our 
recapitalization goals. We may not be able to reach these as 
fast as we all would like, particularly with respect to the 
baselines developed in the expanding budget environments of the 
past, however we can continue to make intelligent trade-offs to 
address our most urgent risks.
    We are in the process now of updating our plans to reflect 
the constraints of the current fiscal environment, and we are 
committed to working with this subcommittee to successfully 
replace our aging assets. We know this is the right course, 
because the operational need for our acquisition assets has 
been validated several times over, notably by our fleet mix 
analyses one and two, and by the DHS cutter study.
    In the past, the Coast Guard briefed the subcommittee 
regarding our acquisitions. In some cases, not always great 
stories. Today, I am very proud of the achievement of the Coast 
Guard acquisition directorate, and the mission support 
infrastructure that is behind it. I appreciate how effective 
your oversight in our collective efforts have paid dividends. 
Today we are delivering capable assets that are serving the 
Nation, prosecuting missions, and saving lives along our shores 
this day and every day. Given this transformation, we are able 
to migrate--or mitigate our highest operational risks while we 
remain--which remain in our offshore regions.
    Our major cutter fleet is obsolete and increasingly less 
effective. For example, our 43-year-old High Endurance Cutters 
are achieving 70 percent of their programmed days away from 
home port, and sailing 50 percent of the time with mission-
degrading casualties. This places our crews in an unacceptable 
position. It jeopardizes our ability to refuse threats, protect 
mariners, secure our borders, and be ready to mount capable 
response to any contingency. We need to replace these assets 
now. We have the ability today to do just that.
    We are delivering assets on schedule at a well-negotiated 
price, introducing tremendous capability to our fleet. We are 
reaping the benefits of efficient shipyard processes, 
experienced shipbuilders, and stable production. Last year, the 
production contract for the fifth NSC was awarded at a price 
that was virtually the same as that of the fourth. Recently we 
awarded the contract for long lead-time materials for the sixth 
NSC, and that was awarded at a lower price than the long lead 
material for number five.
    The first Fast Response Cutter was delivered, commissioned, 
and certified ready for sea. We look forward, sir, to showing 
this cutter off to anyone who is interested, certainly the 
subcommittee members, while it is here in DC, on the 
waterfront.
    These are the same processes that allowed us to react 
quickly when a problem was discovered aboard Stratton that you 
mentioned. We were able to rapidly identify the issue, and 
verify that our other cutters, the first two, are not impacted. 
I want to be crystal clear that this is not a classwide issue. 
Most importantly, the close work amongst our acquisition 
contractor, maintenance, and shipyard personnel ensured that 
the problem will be permanently fixed, and she will put to sea 
ready to perform all missions in short order.
    These assets are serving the public in a manner that we 
planned and expected. Even in the face of new threats that were 
not anticipated during the conception of the deepwater program, 
our current acquisitions are able to meet those threats.
    A recent operational case highlights the effective mix of 
our assets. Last March, a Medium Endurance Cutter, a 110-foot 
patrol boat, and a new HC-144 aircraft spotted a self-
propelled, semi-submersible drug boat in the Caribbean Basin. 
The aircraft used its onboard sensors to pinpoint the vessel, 
while both cutters were able to effectively launch small boats 
and arrive on scene, preventing tons of cocaine from crossing 
the southwest border of the United States and reaching our 
streets. This case involved a new asset with improved sensors, 
a Medium Endurance Cutter that had undergone a successful MEP, 
and a legacy asset soon to be replaced by a Fast Response 
Cutter, but all still operating because of the highly effective 
maintenance programs that we have in place.
    This type of success story the Coast Guard hopes to keep 
telling, but would not be possible while at the persistent 
offshore presence in the areas where threats exist. And that is 
supported by shoreside activities that have been modernized. 
This is why we must continue to build new assets such as the 
sixth National Security Cutter as quickly as possible.
    Now is the time to deliver these assets cost effectively, 
and to ensure the Coast Guard is capable of interdicting 
offshore threats for the next half-century. The Service's 
future depends on our ability to recapitalize an aging fleet. 
We do not have the discretion to stop and wait for a more 
favorable budget environment, if we are to remain semper 
paratus.
    Thank you again for the opportunity to testify today, sir. 
Thank you for your steadfast support. I look forward to 
answering your questions.
    Mr. LoBiondo. Thank you, Admiral Currier. On the Stratton, 
I think we have been your biggest cheerleaders for the newer 
assets and demonstrating the need and the efficiencies to be 
realized. But we still don't have an answer on the 123s. I know 
it is a sore subject, but at some point in time there has to be 
an answer for the taxpayers about how these things get screwed 
up.
    So, Stratton is going into drydock when, in June?
    Admiral Currier. Late May, June, yes. Yes, sir.
    Mr. LoBiondo. Late May, June?
    Admiral Currier. Mm-hmm.
    Mr. LoBiondo. And I guess right now it just means it is 
tied up somewhere, right? It can't be doing anything, right?
    Admiral Currier. Well, it has moved to its home port, and 
it is able to get underway with operational restrictions. But 
the repairs have been made.
    If I could, sir, I would like to run through this, just to 
put it into context.
    Mr. LoBiondo. Go ahead.
    Admiral Currier. About a month ago we started to see--we 
got a report from the crew that there was a limited amount of 
seawater in void spaces on Stratton, which really surprised 
everyone. So we did an underwater hull survey, and we found in 
the aft section of the ship areas of concentrated corrosion 
that actually had penetrated the hull with small cracks and 
some pitting. This was confounding to us. We did a 
comprehensive underwater inspection of the hull. We found what 
looked like corrosion.
    We have started a comprehensive engineering analysis. And I 
am not prepared to give answers on causal factors at this 
point. But I can tell you what I know, and I really feel I need 
to do that.
    First of all, this is not a classwide issue. We inspected 
in detail the other two National Security Cutters and found no 
evidence of corrosion like this.
    Second of all----
    Mr. LoBiondo. Excuse me.
    Admiral Currier. Yes, sir.
    Mr. LoBiondo. Evidence of corrosion at all, or----
    Admiral Currier. Yes, sir.
    Mr. LoBiondo. OK.
    Admiral Currier. Nothing that would not be expected of a 
ship----
    Mr. LoBiondo. OK, nothing that would not be considered 
normal.
    Admiral Currier. That is absolutely correct.
    Mr. LoBiondo. OK, OK.
    Admiral Currier. We are going back with this engineering 
analysis on Stratton now because we are extremely interested in 
causal factors on this. There is a spectrum of possibilities on 
how this could be caused.
    On the one end--and this is speculation on my part, but 
somewhat informed speculation from years of maintenance and 
engineering experience--on the one end, it could be a quality 
of steel issue, but we don't have indications to that.
    On the other end, there was some local repairs done on this 
ship through a welding process after there was a bump of the 
pier. So there was a localized repair done to Stratton before 
it was commissioned by the First Lady. This damage is 
consistent with what we have seen before in ships when the 
welding procedure is not performed properly. If it is an 
electric weld and the welding is not grounded properly, you can 
see degradation in welds and cracks open in steel structure on 
ships.
    I am not suggesting at this point that is the cause. What I 
am suggesting is this is--what I am saying, categorically, is 
this is not a classwide issue. We don't have strong indications 
that this was a quality issue in the build of the ship. But we 
won't have a clear answer on the forensics for about another 6 
weeks. In the meantime, the ship will go into drydock, will be 
fully repaired, and put back into service as quickly as we can, 
likely within 30 to 45 days. That is what we know today on 
Stratton.
    This is, in my opinion, sir, not reflective on either the 
acquisition process or the quality of the shipyard in building 
the ship.
    Mr. LoBiondo. So, it is way too early to tell whether the 
rust protection system, the cathodic protection system was--
there is something flawed there? I guess we just have to wait 
to find out?
    Admiral Currier. We looked at the cathodic protection 
system on this ship. There was a quality issue in a wiring--in 
one of the wiring bundles. But that was, in the opinion of our 
engineers, not sufficient to contribute materially to this 
problem. It was a quality issue that was corrected. We looked 
at the cathodic protection systems on the first two National 
Security Cutters and saw no discrepancies whatsoever.
    Mr. LoBiondo. So I guess whether this is coming under the 
ship's warranty is something that is just going to have to 
wait?
    Admiral Currier. Yes, sir. I am not prepared to discuss 
warranty issues at this point, because we don't have a solid 
causal factor.
    Mr. LoBiondo. OK. Let's move on to the shortage of the 
spare parts for the Maritime Patrol Aircraft. The Coast Guard 
informed the subcommittee this month that, due to budget 
constraints, there are not a sufficient number of spare parts 
for the fleet to support full operational readiness when it 
initiates operations in Cape Cod this fall.
    We have any idea of what it is going to take to correct 
this, how much money it is going to cost to acquire the needed 
spare parts?
    Admiral Currier. First of all, sir, I am not sure I agree 
with that characterization that your staff was provided. I have 
gone back through both the operations directorate and the 
support directorates in the Coast Guard. We had a meeting to 
discuss this. I am an aviator, so I take this very close to 
heart.
    First of all, this is a longstanding systems acquisition. 
It is stretched out over years. It is certainly not the way we 
would want to do it. But we are buying two--one, two, three, 
sometimes--airframes a year. Along with that, we are buying, to 
a model, sparing for these aircraft. We are also buying mission 
pallets, as you are aware of. So there are three main pieces in 
the acquisition.
    As we progress these airframes, we are incrementally buying 
spares. The characterization that we are going to limit flight 
hours or stand up Cape Cod with inadequate spares is not today 
true. That is not true. In fiscal year 2012 we plan to buy 2 
airframes, 16 and 17. We plan to buy five mission pallets. 
These will be the first mission pallets that are bought by the 
Coast Guard, not under the aegis of ICGS. And spares in the 
fiscal year 2012 funding profile.
    When we definitize the cost of the mission pallets, we will 
know how much money we have left for spares. That decision 
needs to be made. But we will stand up Cape Cod late this year 
and early the year after. They will be adequately spared to fly 
1,200 flight hours. There are no current plans to reduce flight 
hours or to slow down the deployment of these aircraft.
    Mr. LoBiondo. Do you anticipate the shortage in funds that 
we are experiencing in some of these issues to affect the 
scheduled acquisitions for 2013?
    Admiral Currier. 2013, our current plan--and it is a solid 
plan--is to buy airframe number 18 with the funds that are 
available. I would say that, in an ideal situation--we are in a 
fiscal environment where tough choices are required, and we are 
making those tough choices. What we will do is buy airframe 18, 
and with fiscal year 2012 money ensure that we have spares 
adequate to run those aircraft out to 1,200 flight hours. That 
is the way it looks today, sir. And if this changes, I will get 
back through my staff to your committee staff. But at the 
current time we have no plans to reduce flight hours.
    Mr. LoBiondo. Well, that is really good news, Admiral, 
because somehow there was a miscommunication or 
misunderstanding. After the hearing, we will make an attempt to 
find out where the gap in information was. And I am absolutely 
thrilled with your assessment that operational readiness is not 
affected, and whatever is happening is relatively minor 
compared to what we thought that it would be.
    So, I am going to hold for now and go to Mr. Larsen.
    Mr. Larsen. Admiral Currier, I noted a story this morning 
that the--it is possible that the House Appropriations Defense 
Subcommittee will ask the Air Force to continue the purchase of 
C-27s. However, there has been some discussion about the Coast 
Guard's interest in acquiring the C-27. Has the Coast Guard 
completed its business case analysis for that proposal?
    Mr. LoBiondo. Yes, sir, we have. We have instituted or 
conducted a business case analysis, and I received a pre-brief 
on it the other day. We are waiting to brief the commandant, 
who, as you probably know, has recently had a health issue.
    Mr. Larsen. Right.
    Admiral Currier. So we are a little bit behind in catching 
him up. But it is teed up for him to be briefed. I can tell you 
that my interpretation of it is that if we were--if these 
planes were made available to us--and I want to be clear they 
have not as yet been made available----
    Mr. Larsen. Right.
    Admiral Currier [continuing]. But were they to be made 
available, we feel there is significant capitalization cost 
avoidance likely available to us, were we to get 21 of these 
airframes from DOD at no cost.
    Now, there will be--we will have to come back to Congress 
and this subcommittee if that is made available to us and talk 
about upfront funds that might be required to integrate those 
aircraft. Because, rather than the C-144 program, which would 
be stretched out over many years----
    Mr. Larsen. Right.
    Admiral Currier [continuing]. We conceivably could receive 
21 airframes in very short order.
    Mr. Larsen. Right.
    Admiral Currier. So that would require an adjustment on our 
OE money and potential AC&I money.
    This plane, interestingly enough, was actually looked at as 
a candidate for our MRS asset, the HC-144. But at that time the 
144 was chosen. It was chosen by ICGS. We think if the planes 
are made available, that there is a likely potential that we 
would be able to achieve significant cost avoidance by bringing 
them on board.
    Mr. Larsen. Thank you. So the current baseline $24.2 
billion for the former deepwater program was adopted in 2007. 
And since assuming full control as the lead system integrator, 
the Coast Guard has made progress in approving APBs for each 
acquisition project on an asset-by-asset basis. Yet the GAO 
reports that the overall baseline is now estimated to be $29 
billion. What factors have contributed to this increased--16 
percent estimated cost increase in just 5 years?
    Admiral Currier. Sir, I think--I need to take you back just 
a second and talk about deepwater. With ICGS, we had a system 
of systems. They made some projections on total program cost 
that were very immature and very early in the program. As this 
program was stretched out, the fidelity of our cost estimates 
have increased.
    We disaggregated deepwater, as you know. We broke it down 
into component acquisition buys. So to compare the original 
cost figure and estimate to today's potential cost estimate for 
the aggregate program is almost an apples-to-oranges 
comparison.
    The truth of the matter is, with an organization as asset-
intense as the Coast Guard, we are never going to get out of 
the acquisition business. So to try to put a deadline on the 
end of our major systems acquisition probably is unrealistic.
    Our aircraft--our helicopters, in particular, which are a 
major component of the Coast Guard--will come to service life 
end in the 2025 to 2027 range. So we can't really say we are 
going to stop systems acquisition there. This is an ongoing 
process.
    I can provide to you specifics on cost estimates for the 
disaggregated component pieces. But I really don't think there 
is great utility, or can I produce a figure with great fidelity 
for what used to be deepwater but now is the way we are buying 
these systems.
    Mr. Larsen. So last year the GAO emphasized that the Coast 
Guard's 17 major acquisition programs, though, continued to 
experience challenges and in program execution, schedule, and 
resources. Further, the GAO said that the Coast Guard's own 
estimates contained in its capital investment plan recommends 
funding levels through the fiscal year 2016 that are 
unrealistic--that is GAO's words--given the historical pattern 
of appropriations for the AC&I.
    Has the Coast Guard done anything to adjust cost estimates 
contained in the CIP to reflect the present fiscal climate in 
DC?
    Admiral Currier. Yes, sir. We are mindful of resources 
available and, as I said in the opening statement, the 
pressures that the country and Congress are under. We take 
every opportunity to control costs. I would cite the OPC, the 
upcoming OPC, as an example. We have taken a year where Admiral 
Salerno, the DC of--deputy commandant for operations and myself 
have had our staffs in a room, scrubbing the requirements to 
get to thresholds that are the least expensive that will do the 
mission.
    We have entered in, as we have released specifications to 
industry--preliminarily, draft specifications--we have been in 
a robust dialogue with industry specifically to find out how we 
can accomplish our operational requirements at a reduced cost. 
We are--cost is a true variable in the OPC. We have tried to 
reflect that back through others.
    For instance, NSC 4, National Security Cutter four, between 
four and five there was virtually no price difference in the 
construction contracts. That is a success story. We just 
contracted long lead material for number five at less money 
than we contracted long lead material for four. So this is kind 
of emblematic of what we are able to do with these acquisition 
processes if we receive stable funding. So hopefully that 
answers your question, sir.
    Mr. Larsen. Well, it doesn't, but introduces the OPC into 
the discussion further. What is the lineup on the calendar of 
the OPC's operational--initial operating capability, or as the 
DOD term--whatever term Coast Guard uses----
    Admiral Currier. Right.
    Mr. Larsen [continuing]. What is that timeline versus the 
completion of your MEPs and the potential additional MEPs on 
the 210s and the 270s?
    Admiral Currier. OK, sir. The 210s have completed the MEP 
process. They are 40-year-old ships, but they have--and the 
MEP, as you know, is not a SLEP, it is not a service life 
extension. It is a--basically a treatment of the hull, 
mechanical engineering at the highest readiness degraders. The 
210s have been completed. fiscal year 2013 we have requested 
funds to complete the last two 270s, 270-foot cutters. That 
puts us in a fairly good position for them to have about 7 to 
10--maybe more--years' service life.
    Now, that doesn't mean that these are pushed out and 
forgotten about. The modernized maintenance practices that we 
are doing, the computerized maintenance, the preventative 
maintenance, we are going to watch these ships carefully. But I 
don't at this time, nor does the commandant, anticipate that we 
are going to have a service life extension or an additional MEP 
program in the MEC fleet. We deliver the first--notionally, we 
deliver the first OPC in the 2020 timeframe, and then we will 
deliver one per year, and it will hopefully pick up to a two-
per-year delivery construction.
    We feel that we can get our MEP fleet into that timeframe, 
as long as we don't have further delays in the OPC, and only 
treat on a case-by-case basis the maintenance that the ships 
need. So we don't anticipate another major mid-life program for 
these ships. We think that we can get them to the point where 
they will be replaced by the OPC. And as we are doing with the 
HECs, there will be reduced spending on these ships near the 
end of their service life, but we will keep them in service.
    Mr. Larsen. So who in the Coast Guard, then, over the next 
several years is responsible for tracking the success of the 
MEP on the 210s and 270s, to ensure that they live that long?
    Admiral Currier. The 270 MEP was funded and managed by our 
acquisition directorate. But now the ships are in service they 
come under our engineering directorate. They have modernized 
practices. Quite frankly, many of them were based on our 
successful aviation maintenance programs that now applied to 
the ships. CG4 it is called, our engineering directorate, will 
have direct authority and responsibility for overseeing the 
material condition and operational availability on those ships.
    Mr. Larsen. Of all of them?
    Admiral Currier. Yes, sir.
    Mr. Larsen. So it won't be ship by ship, it will--they are 
responsible for all of them?
    Admiral Currier. Well, they have--they are responsible for 
all of them, but they view it on a ship-by-ship basis.
    Mr. Larsen. Right, yes, I got it. I understand.
    Admiral Currier. They have a product line that does that.
    Mr. Larsen. Yes. Right, right. Thank you, Mr. Chairman. I 
yield back.
    Mr. LoBiondo. Admiral Currier, I appreciate your 
explanations, I think we have some information gaps here, but I 
have to tell you that I am still terribly troubled by how these 
decisions are being made, and the priorities. And I can't help 
but come back to some things that the Coast Guard is making 
decisions on. And this may be a sore subject, but there is 
going to be about $25 million that it is going to cost to move 
to St. Elizabeths. The promise that the Coast Guard would not 
be moving out there alone appears to be forgotten.
    I don't know how we look Coast Guard men and women in the 
eye with housing problems and some of these other things, and 
we apparently have not done everything we can, or we don't have 
all the answers. The administration proposed budget cuts here 
and what they mean to the Coast Guard overall, which is not 
your fault, and I understand that you somehow have to carry the 
water, toe the line, whatever we are going to see. But I just 
want to let you know to pass to headquarters that I am so 
concerned about this and that I intend on having a conversation 
with Peter King.
    Since the Department of Homeland Security does not appear 
to be concerned with this subcommittee because of our lack of 
jurisdiction over certain of their aspects, and they have sort 
of made that clear to us, I am going to have a conversation 
with Peter King and we will pass on to you, if I can convince 
Peter to take up this gauntlet. Because I just have a serious 
concern about what this means for our overall posture of the 
Coast Guard in the future. So just sort of an idea of where my 
head is on this, because I think we have got big problems here 
that aren't being answered.
    I have a couple more questions. When can we expect to 
receive the Coast Guard report on the condition of Coast Guard 
housing?
    Admiral Currier. OK, sir. That--first of all, we 
commissioned a national housing survey. We have three types of 
housing. And if you--by your leave, sir, I would like to give 
you a little bit of an explanation of where we are.
    We have leased housing, we have public-private venture 
housing that is handled in conjunction with DOD, we have Coast 
Guard-owned housing. Quite frankly, we didn't have--we had a 
regime where it was managed locally by the districts. Under 
modernization we have pulled it under central control. But what 
we found is we didn't have a good service-level view of either 
what we had, what our footprint was, or what our true 
requirements were. So we initiated this national housing survey 
that you are referring to.
    The national housing survey, I just received a brief on it, 
the commandant will be receiving a brief very shortly. After he 
sees it, I think we will--we should be able to make it 
available to your staff. What this does is it surveys all of 
our housing, all types we have. It cites the requirements, 
looks at where we need more, where we need enhanced because of 
material condition, where we need to divest, and it brings it 
all home to our central adjudications, so we can take these 
precious dollars that we have and best apply them to the 
benefit of our people.
    I guarantee you, sir, nobody is more impassioned with 
getting housing right than I am, or the commandant of the Coast 
Guard is. We are--we spent $20 million last year and it zeroed 
out in 2013. We are bringing in the national housing survey, 
and we plan on focusing on housing in the next several fiscal 
years.
    Mr. LoBiondo. OK. Admiral, I just want to come back to this 
spare shortage that we are talking about that is--apparently 
some kind of miscommunication. Conferring with staff, they are 
quite certain of what they were told about this.
    Admiral Currier. OK.
    Mr. LoBiondo. So I will need from you in some rapid 
response fashion whether you are disagreeing with what they 
have apparently conveyed to our subcommittee staff. Because 
this really goes right at the heart of operational readiness 
and some other things that we are going to need to get settled 
as soon as possible. If I could have your assurance that you 
will work with us on that----
    Admiral Currier. Absolutely, sir. The last thing I want is 
misinformation here.
    Mr. LoBiondo. OK.
    Admiral Currier. And I will back through my staff to ensure 
you get an accurate read on this thing.
    Mr. LoBiondo. OK. Anything else, Rick?
    Mr. Larsen. Yes.
    Mr. LoBiondo. Mr. Larsen?
    Mr. Larsen. Admiral, the fiscal year 2013 budget includes 
$8 million to start a survey and design process for acquiring a 
new Polar icebreaker. And I understand that that acquisition 
program certainly extends beyond the 5-year capital investment 
plan. First off, is that correct, that it extends past the 5-
year acquisition plan?
    Admiral Currier. The--I'm sorry?
    Mr. Larsen. The whole program, the acquisition program?
    Admiral Currier. Oh, yes, sir.
    Mr. Larsen. Is it?
    Admiral Currier. Yes, sir.
    Mr. Larsen. OK, good. Yes, right.
    Admiral Currier. Yes.
    Mr. Larsen. So, when does the Coast Guard intend to 
complete the development of the mission requirements for this 
particular new vessel?
    Admiral Currier. Sir, we have $8 million for survey and 
design. Basically, that will include the definition of 
requirements. We feel that--this is a national asset. We have a 
set of requirements. Obviously, NSF likely has a set of 
requirements. And there are other interagency governmental 
entities that have an interest in this, as--particularly as the 
Arctic opens up.
    So, we will start our definition of requirements. But I 
think I need to be clear that this is a major acquisition. This 
is not a minor ship acquisition. We really need to get this 
right. And we talk all the time about our modernized 
acquisition process. We need to take a disciplined approach to 
this.
    The $8 million is sufficient for us to come out of the 
chocks and start defining requirements and looking at designs. 
And we are talking with the Canadians, we are doing all the 
proper things. But this ship is likely an 8- to 10-year 
project. The first thing we need to do is establish a mission 
need and establish requirements. Unless we do that, we fall 
prey to all the bad things that happen in an acquisition 
process downstream.
    So, the long answer--I apologize--to a short question, but 
that $8 million was sufficient for us to start with a mission 
need, to survey the interagency for requirements, and then 
start to put together a clear requirements document for this 
ship.
    Mr. Larsen. Thank you. Thank you, Mr. Chairman.
    Mr. LoBiondo. OK. Admiral Currier, I would like to thank 
you very much. We will obviously have some ongoing dialogue 
about where we go with all this.
    And the committee stands adjourned.
    [Whereupon, at 10:45 a.m., the subcommittee was adjourned.]
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