[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
THE CHALLENGES THAT MAINTAINING LEGACY
ASSETS POSES TO UNITED STATES
COAST GUARD MISSION PERFORMANCE
=======================================================================
(112-105)
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
__________
SEPTEMBER 20, 2012
__________
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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
RANDY HULTGREN, Illinois RUSS CARNAHAN, Missouri
LOU BARLETTA, Pennsylvania GRACE F. NAPOLITANO, California
CHIP CRAVAACK, Minnesota DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas MAZIE K. HIRONO, Hawaii
LARRY BUCSHON, Indiana JASON ALTMIRE, Pennsylvania
BILLY LONG, Missouri TIMOTHY J. WALZ, Minnesota
BOB GIBBS, Ohio HEATH SHULER, North Carolina
PATRICK MEEHAN, Pennsylvania STEVE COHEN, Tennessee
RICHARD L. HANNA, New York LAURA RICHARDSON, California
JEFFREY M. LANDRY, Louisiana ALBIO SIRES, New Jersey
STEVE SOUTHERLAND II, Florida DONNA F. EDWARDS, Maryland
JEFF DENHAM, California
JAMES LANKFORD, Oklahoma
REID J. RIBBLE, Wisconsin
CHARLES J. ``CHUCK'' FLEISCHMANN,
Tennessee
VACANCY
------
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
CHIP CRAVAACK, Minnesota TIMOTHY H. BISHOP, New York
BLAKE FARENTHOLD, Texas MAZIE K. HIRONO, Hawaii
JEFFREY M. LANDRY, Louisiana, MICHAEL H. MICHAUD, Maine
Vice Chair NICK J. RAHALL II, West Virginia
JOHN L. MICA, Florida (Ex Officio) (Ex Officio)
VACANCY
CONTENTS
Page
Summary of Subject Matter........................................ iv
TESTIMONY
Rear Admiral Ronald J. Rabago, Assistant Commandant for
Engineering and Logistics, United States Coast Guard........... 3
Stephen L. Caldwell, Director, Homeland Security and Justice
Issues, Government Accountability Office....................... 3
PREPARED STATEMENTS SUBMITTED BY WITNESSES
Rear Admiral Ronald J. Rabago.................................... 16
Stephen L. Caldwell.............................................. 20
SUBMISSIONS FOR THE RECORD
United States Coast Guard, inserts for the record:
Response to request for information from Hon. Rick Larsen, a
Representative in Congress from the State of Washington, on
the impact of sequestration on the Coast Guard's ability to
maintain its legacy assets, and how the Coast Guard would
distribute cuts that would come from sequestration......... 11
Response to request for information from Hon. Howard Coble, a
Representative in Congress from the State of North
Carolina, on the findings of the Ship Structure and
Machinery Evaluation Board review of the Coast Guard's
Medium Endurance Cutter fleet.............................. 12
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
THE CHALLENGES THAT MAINTAINING
LEGACY ASSETS POSES TO UNITED STATES
COAST GUARD MISSION PERFORMANCE
----------
THURSDAY, SEPTEMBER 20, 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 2:21 p.m. in
Room 2167, Rayburn House Office Building, Hon. Frank LoBiondo
(Chairman of the subcommittee) presiding.
Mr. LoBiondo. The subcommittee will come to order. Mr.
Larsen is on his way, and he gave us, in light of the delay
because of the votes, the green light to get started with the
committee. So I will start with my statement.
The subcommittee is meeting this afternoon to review the
challenges the Coast Guard faces maintaining its legacy assets
and examine how those challenges impact the Service's mission
and performance.
Findings by GAO and others over the years have accurately
shown the rapid decline of legacy assets that is causing the
Coast Guard to fall short of its operational targets, forcing
the Service to spend too much of its tight budget on
maintenance and undermining the success of its critical safety
and security missions. This is a very serious problem that has
me and, I believe, many others very deeply concerned.
Rather than alleviate my concerns, the President-proposed
fiscal year 2013 budget for the Coast Guard only makes the
situation that much worse. The budget request would exacerbate
the growing patrol boat mission hour gap by ending High-Tempo-
High-Maintenance operations, and retiring vessels before their
replacements arrive. The budget request would also slash
funding for the critically needed replacement assets by $272
million, or 19 percent below the current level. Clearly
unacceptable.
This would significantly delay the acquisition of the
critically needed replacement assets, including Fast Response
Cutters, National Security Cutters, Maritime Patrol Aircraft,
and Long Range Surveillance Aircraft. It also proposes to put
off important upgrades to the Jayhawk helicopter fleet, and
delay sustainment projects on Buoy Tenders. Fortunately, our
colleagues on the Appropriation Committee have found the
dollars to reverse these very draconian cuts.
However, the problem remains that as we are forced to pour
more money into maintaining rapidly failing legacy assets,
there is less available for replacement assets. And as we put
off acquisition of new assets, we only increase the strain of
legacy assets. Admiral Allen used to call this the death
spiral.
While the Coast Guard has taken steps to improve the
conditions of its legacy fleet and the efficiency of its
maintenance command, more needs to be done. There are many
questions that need to be answered as a result of GAO's latest
study. The ballooning costs of scheduled and unscheduled
maintenance are a major problem that needs to be addressed. So
we are growing operational gaps in the legacy fleet.
The Coast Guard continues to operate tens--and in some
cases hundreds of thousands--of hours short of its operational
targets. This means assets are not there for the Service to
conduct drug and migrant interdiction, protect our environment,
secure our ports, and ensure the safety of our waterways. I
hope that Admiral Rabago can tell us what the plan is to get
out of this death spiral and ensure mission performance.
I also look forward to hearing Mr. Caldwell's insight into
some of the key findings from the GAO report.
I thank both of you for coming this afternoon. And with
that I would like to yield to Mr. Larsen.
Mr. Larsen. Thank you, Mr. Chairman. And I appreciate that
you found time before the House adjourns to reschedule this
afternoon's hearing regarding the status of the Coast Guard
legacy assets.
Throughout the course of this Congress I have stressed that
we cannot expect the Coast Guard to do more with less at this
time. The GAO's new report of the crumbling condition of the
Coast Guard's legacy fleet provides perhaps the most conclusive
evidence we have yet received that, in fact, the Coast Guard is
being forced to do less with less.
The GAO's analysis highlights the dilemma that the Coast
Guard now finds itself in as it struggles with insufficient
budgets. On the one hand, the Coast Guard is struggling to
overcome billions of dollars in cost overruns and years of
scheduled delays in its effort to recapitalize its entire fleet
of offshore cutters and patrol boats. Yet the very steep cost
of recapitalization, along with the time table that has been
pushed out far to the right by more than a decade, forces the
Coast Guard to rely on its legacy assets which grow less
reliable and more costly to maintain and operate yearly.
Under the present circumstances, much of which the Coast
Guard brought upon itself due to its failed deepwater program,
the Coast Guard is caught between the proverbial rock and a
hard place. For example, the GAO reports that the condition of
each class of legacy assets is poor and generally declining,
and that each class failed to meet key physical condition
targets for the period between fiscal years 2005 and 2011.
Additionally, depot-level maintenance expenditures for the
legacy fleet have increased, and the prospect is that these
costs will continue to increase as these vessels are pushed
further and further past their life expectancies.
Worst of all, due to the declining condition of its legacy
assets, the GAO concludes that the Coast Guard's present
operational capacity targets are unrealistic. In effect, the
GAO is simply paraphrasing what I have been saying all along:
the Coast Guard will be doing less with less.
The Coast Guard is now forced to choose between two vital
needs, either funding the construction of a new modern fleet of
offshore vessels, or maintaining its aged and unreliable legacy
assets. The end result will be diminished maritime security
presence.
Considering the gravity of the situation, I do want to
commend the Coast Guard for the steps it has taken already to
partially address these circumstances, especially its
reorganization of its command structure and its timely
implementation of a mission effectiveness project, or MEP, for
the Medium Endurance Cutters and 110-foot patrol boats.
Yet knowing what we know now, I find it troubling the Coast
Guard has still failed to develop new budget proposals for
additional MEPs or for the service life extension projects to
bolster the operational capacity of its legacy assets for the
next 10 to 15 years. I hope Admiral Rabago will address exactly
where the Coast Guard is in this process to develop a budget
proposal.
The unfortunate truth is that we can no longer ignore the
reality that the GAO has laid before us in the report. We can
choose to devote additional resources to ensure the Coast Guard
maintains its operational readiness throughout its lengthy
transition to a new fleet, or we can continue the current path
of budget cuts, which we know will risk the operational
readiness of a Coast Guard--of the Coast Guard now, and well
into the future.
Present constraints leave us little choice but to examine
carefully the assets and resources we devote to the Coast
Guard. And certainly I am no advocate of blindly throwing money
to solve the problem. We clearly are confronting a budget
situation that means the Coast Guard might be less effective in
drug interdiction at sea or might not respond as quickly to
mariners in distress, or to communities devastated by natural
disaster. I am suggesting that we can no longer continue to cut
the Coast Guard's budget as if it had no effect. We need to set
aside differences to find a way to provide the Coast Guard with
the resources it needs. And without that effort, we cannot
expect the Coast Guard to maintain the same excellent services
they now give our Nation.
With that, I yield back.
Mr. LoBiondo. Thank you, Mr. Larsen. Our witnesses today
are Coast Guard Rear Admiral Ronald Rabago, assistant
commandant for engineering and logistics, and Mr. Stephen
Caldwell, director of GAO's homeland security and justice
issues team.
Admiral, you are recognized.
TESTIMONY OF REAR ADMIRAL RONALD J. RABAGO, ASSISTANT
COMMANDANT FOR ENGINEERING AND LOGISTICS, UNITED STATES COAST
GUARD; AND STEPHEN L. CALDWELL, DIRECTOR, HOMELAND SECURITY AND
JUSTICE ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE
Admiral Rabago. Good afternoon, Chairman LoBiondo, Ranking
Member Larsen, and other distinguished members of the
subcommittee. I am privileged to appear before you today in my
capacity as the Coast Guard's chief engineer to address the
many challenges of maintaining our aging assets--in particular,
our service fleet. I also thank you for your continued strong
advocacy for the men and women of the Coast Guard, and for your
oversight.
I would like to acknowledge the work of Mr. Stephen
Caldwell and his team at GAO, who recently completed this
comprehensive study highlighting the difficulties associated
with sustaining operational availability of the Coast Guard's
cutter fleet. The external perspective provided by the GAO
report not only underscores the challenges that our cutter
crews and shoreside maintenance personnel face on a daily
basis, but it also provides actionable recommendations to
improve our cost estimating processes.
The Coast Guard has taken these recommendations, and has
begun a review of our vessel repair estimating procedures.
Along other management improvements, which I will discuss in a
moment, standardization of cost estimating will further
strengthen our ability to deal with the highly unpredictable
nature of maintaining an aging fleet.
The Coast Guard is operating a fleet of cutters that are
approaching or are beyond their designed service life. Periodic
and substantial investments like our mission effectiveness
project are critical to sustaining an aging fleet. The in-
service vessel sustainment project and our capital investment
plan will also enable us to institutionalize this strategic
approach across multiple cutter classes in the coming years.
However, despite periodic investments and the dedicated
cutter crews, there is a point when it becomes too costly to
repair aging cutters and/or to retrofit their particular
systems. A good example of this is our 378-foot High Endurance
Cutters, which were constructed in the 1960s. These cutters
frequently deploy in a degraded state of mission readiness.
Their obsolescences also contributes to increased repair times,
while critical parts are repaired or even remanufactured
because they are no longer available from suppliers.
Obsolescence is also prevalent on our 140-foot ice breaking
types, navigation fleets, and other cutter classes, which are
fast approaching or well beyond their design service lives.
Despite the declining condition of several classes of our
fleet, our cutter crews somehow continue to overcome these
significant challenges and remarkably respond when our Nation
calls. In the recent weeks, inland navigation cutters the
Saginaw and the Hatchet, average age 40-plus years, responded
in the wake of Hurricane Isaac and helped restore vital
commercial traffic on impacted waterways within days of the
storm's passage.
As I noted earlier, over the last 3 years we have
fundamentally reorganized the way we manage our surface fleet
maintenance programs. We have centralized resources and
governance to streamline and standardize support. We have
established the surface logistics center to consolidate
functions that were previously executed among three separate
commands.
Our regional industrial capabilities, including the Coast
Guard yard in Baltimore, were brought under centralized
programmatic oversight. We continue to make substantial
progress working with the Department of Homeland Security to
improve our financial audit position. All of this has
significantly enhanced our ability to manage costs and respond
to operational priorities across the entire enterprise,
including efficient management of our newest ships, the
National Security Cutters and the Fast Response Cutters.
In our new maintenance organization led by product line
managers, we have emphasized first and foremost the completion
of critical plan maintenance, and are appreciative of Congress'
support of our efforts to reduce deferred maintenance. This
will improve the resiliency of our fleet and has enabled us to
better support the operational commander's requirements and
ensure good stewardship of the resources that are entrusted to
us.
Maturation of our support network extends beyond the
lifelines of the Coast Guard. We have expanded partnerships
with the Navy's Naval Sea Systems Command and the American
Bureau of Shipping. Agreements with the Navy have enabled us to
tap into their expertise for technical analysis, design, and
peer review. We also regularly consult with ABS on a variety of
technical areas that enable us to take advantage of their
expertise and experience.
Under our commandant's leadership, we are carefully
balancing resources to both sustain our aging fleet and to
acquire much-needed new assets, thereby ensuring the Coast
Guard can effectively execute its missions today and long into
the future.
Finally, there are no routine in-port periods for our aging
fleet. The moment a cutter returns to home port from an
operational mission, the crew begins extensive maintenance and
repair efforts to ensure they are ready to sail for the next
mission. Without the many dedicated and talented men and women
working very long hours, our fleet would not sail. I could not
be more proud of our cutter crews and shoreside maintenance
professionals who work through these significant challenges to
ensure your Coast Guard is always ready to perform its many
missions.
Thank you for the opportunity to testify before you today.
I look forward to answering your questions.
Mr. LoBiondo. Thank you, Admiral.
Mr. Caldwell?
Mr. Caldwell. Chairman LoBiondo and Ranking Member Larsen,
thank you for asking GAO to be here to talk about the legacy
fleet. My written statement summarizes our July report, and it
focused on the condition, cost, and performance of these legacy
vessels.
As noted, the key issue here is that the recapitalization
program, formally known as Deepwater, experienced schedule
delays that have required the Coast Guard to depend longer on
the legacy fleet. And the recapitalization program has also
experienced major cost escalation from the original estimates
of $17 billion to current estimates of roughly $29 billion,
which puts pressure on the Coast Guard's overall budget and its
ability to maintain and potentially upgrade the increasingly
unreliable legacy fleet.
The overall result of this situation factor is that the
performance is dropping from the legacy fleet, which is
degrading the Coast Guard's ability to do its overall mission.
Further, continued instability in the plans for the
recapitalization fleet create additional uncertainties
regarding mission performance.
For example, more than 10 years into the Deepwater
recapitalization, there is still some uncertainty over the size
of the new fleet, in terms of both the NSCs and the OPCs, and
there is uncertainty over the Coast Guard's commitment to use
multiple crews to achieve 230 days away from home port for the
new vessels.
In preparing for this testimony, I looked through GAO's
many reports over the years on the Coast Guard's fleet, both
old and new, and I would like to share an overall observation.
In general, the Coast Guard has been overly optimistic in its
assumptions about its bridging strategies, and how well they
will work to bridge the gap between the old and the new fleet.
These assumptions have not proven valid in the face of time and
budget realities. I would like to cite a few examples.
In 2008 we reported on lost operational hours caused by the
failed attempt to upgrade existing patrol boats to 123 feet. As
part of its bridging strategy, the Coast Guard planned to use
multiple crews in a High-Tempo-High-Maintenance, or HTHM,
program, to increase operational hours from 1,800 to 4,000
hours per year for each of eight patrol boats. In doing our
work in 2012 we learned the Coast Guard operational hours were
as low as 1,200 hours for some vessels in some years, and only
one boat had achieved or exceeded the 4,000 hours in 1 year
during the several years of the HTHM program.
As another example, in 2009 we reported delays in fielding
the NSCs, and that the new vessels were being fielded without
several of the originally planned capabilities. When asked how
they planned to maintain performance in this situation, the
Coast Guard at that time told us that they planned a major
sustainment program for the legacy High Endurance Cutters, and
that they would carefully manage the mix of these cutters and
the NSCs to maintain a total of 12 major cutters until all the
NSCs were fielded. During our 2012 report, and getting the
update from the Coast Guard, we learned that the High Endurance
Cutter sustainment program was never funded, nor are there
plans at this time to do so. And now the Coast Guard has
accelerated the decommissioning of the High Endurance Cutters.
In 2012, the most recent report, we noted that the Coast
Guard has expended considerable time and money to carefully
pick which cutters of the Medium Endurance fleet it wants to
upgrade through the MEP program and what order it wants to do
so. Coast Guard was optimistic in that these medium cutters
could provide several more years of service. Yet some of these
vessels, such as the Northland, experienced multiple major
system failures soon after they went through the MEP program.
Because of delays in the acquisition of the OPCs, the
operational gap that is of most concern is that of these Medium
Endurance Cutters. And as shown on our July report on page 38,
the gap is exacerbated by uncertainty as to whether the MEP
will provide an additional 5, 10, or 15 years of service.
My final example of Coast Guard optimistic assumptions
relate to the current capital investment plan. As you know,
this plan is subject to change every year, but the most recent
plan in the President's budget shows the NSC class acquisition
stopping at six vessels. The Coast Guard continues to support
the program of record of eight NSCs. But, as we know, there is
a shortage of at least $1 billion in the capital investment
program needed for those two additional vessels.
In closing, I would like to say that lower expectations are
probably in order here. As the Coast Guard continues its
transition from the old to the new fleet, it is not likely to
achieve the same performance that Congress may be expecting. I
think that is already clear, based on your comments so far.
And as Congress continues to deal with budget deficits
through appropriations, Coast Guard is not likely to receive
all the vessels with all the capabilities that it may be
expecting.
With that, I am happy to respond to any questions.
Mr. LoBiondo. All right. Thank you, Mr. Caldwell. Admiral,
I got to say before I actually get into the questions, I find
it stunning and very disappointing that you chose not to
address the GAO report in your remarks. I don't know how we
don't get into this at some point.
The GAO recommends that the Coast Guard set an annual
operational performance target based on actual capacity, actual
capacity, of legacy vessels available to carry out their
missions. The Coast Guard sets those targets based on the
assumption that available assets operate 100 percent of the
planned operating time, which, obviously, they don't.
It is clear that the aging High Endurance Cutters and the
Medium Endurance Cutters and patrol boats will never meet that
target. The Service adjusts its mission-performance targets
annually, but does not adjust legacy vessel operational hour
targets annually. Setting such targets annually would allow the
Coast Guard to conduct more realistic planning, and allow
Congress to more fully understand the impact of delaying both
the maintenance and replacement of those assets. And that is
key so that we, Mr. Larsen and I, can convince our colleagues
that this is a very real problem. I am not sure the Coast Guard
is presenting this the way they should.
And, of course, we know it is a high priority of the Coast
Guard to provide Congress with the most accurate, easily
understood, transparent information regarding how it meets
mission-performance targets. So can you shed some light on why
does the Coast Guard oppose providing realistic mission target
objectives by setting legacy operational hour targets annually?
Admiral Rabago. Yes, sir. The Coast Guard sets those
operational targets based on the resources that are provided
for the vessels. It is true that, in the aggregate, our fleet
is not achieving those objectives, those targets. However,
individual vessels, and in particular geographic areas, we are
able to achieve that. We are able to achieve those targets. And
we use those targets as a goal to decide where we want to put
the resources.
The operational commanders can express their prerogative to
emphasize and apply resources or direct the maintenance manager
to keep certain vessels in particular areas up to a higher
level. In fact, they do that, and we have allocated resources,
and some of our vessels do in fact achieve those targets in
particular areas. However, as an aggregate, it is a true
statement, sir, that we are not meeting the current targets.
In our MEP program, mission effectiveness program, which
has been effective in terms of improving the reliability--and
we get a third-party analysis of the results, and we have shown
that the operational availability of that fleet has in some
cases doubled, especially for the 110-foot. But also it showed
up in the 210- and 270-foot vessels. So that project has, in
fact, increased the operational--and now we are working to our
targets.
Where we achieve that, sir, we are battling the aging
fleet. These vessels, as you know, sir, are 40 and some
approaching 50 years old, and that is a continuing challenge.
But the targets themselves represent something we are striving
towards, and something that we follow the operational
commander's direction. And we can prioritize and achieve those
targets, at least geographically, or within particular
missions, if so directed by the operational commander. But not
for the whole fleet. We are not doing that, as you mentioned,
sir.
Mr. LoBiondo. Admiral, in 2010 Congress changed the law to
require the Coast Guard's newly acquired vessels to be classed
by the American Bureau of Shipping, a standard all commercial
vessels must meet. Classification ensures that vessel designs
are safe, that vessels are built to the latest marine
engineering standards, and reduces the likelihood of structural
problems when the vessels are ultimately delivered.
Once the Coast Guard takes delivery of the Fast Response
Cutter and the Offshore Patrol Cutter, does the Service intend
to maintain these vessels in class? And, if not, why not?
Admiral Rabago. We see great value in the classification at
delivery. The standards that ABS has set for commercial
vessels, some of which are directly transferable to Coast Guard
cutters, have been very valuable in setting standards that we
have designed our ships to. Certainly we have seen that with
the FRC, which was delivered in class, as one of its contract
requirements. And we are proceeding with that with the Offshore
Patrol Cutter with the naval vessel rules classification
standard. And, in fact, that vessel will be classed at
delivery.
The Coast Guard is--has a number of initiatives with ABS,
where we use their expertise and experience after the vessels
have been delivered. We have done this for many years, and we
continue to value that. Whether we will keep the vessel in
class or not is--we have tried that in the past. We have tried
it with our 175 and our 225 vessels for a period of time, and
at least for those vessels at that time it was not a--we didn't
get the reliability or additional value out of it for the
expenditure of funds, and also for the hours and the people
that were involved in the process of keeping it within class.
So right now we do not anticipate keeping them in class.
However, we continue to work with ABS to get a lot of value out
of the things that they do provide us, which are areas of
structure and other things which ABS sets the standards for,
which we do conform to, because they are good maritime
standards.
Mr. LoBiondo. Admiral, many vessels in the Medium Endurance
Cutter fleet have exceeded their service lives, while others
are fast approaching the end of their service life. The MEC
replacement, the Offshore Patrol Cutter, has yet to be
designed, and will not be fully fielded until the mid-2030s, at
the earlier. The Coast Guard is expected to complete its
mission effectiveness project on the Medium Security Cutter
fleet in fiscal year 2014. In previous testimony before the
subcommittee, the Service indicated this would be the last
overhaul needed by the MECs before the OPCs come in online.
Is it still the belief of the Coast Guard that these Medium
Endurance Cutters will last another 10, 15, maybe even 20 years
past their life expectancy without another overhaul?
Admiral Rabago. Sir, as we complete the mission
effectiveness project, we are going to be taking those vessels
through a process called the Ship Structure and Machinery
Evaluation Board. This is an evaluation process that we have
used for many years. It puts out very, very good information.
And it will tell us what the expected life of the particular
systems and also the structure of the ship.
When we complete that, we will be able to project whether
or not we need to have another mid-life or some sort of a life
extension, or another mission effectiveness project for
particular systems for those vessels. And once we learn that
information, I will be able to answer that question more fully.
It is a number of years until the OPCs will replace the current
MEC fleet. But we will evaluate. We conduct these SSMEBs
periodically to assess the fleet, because we realize that
things change, especially on older vessels. So we do this to
gain a good baseline, and then project whether we need to make
other investments, including follow-ons to the mission
effectiveness project.
Mr. LoBiondo. Mr. Caldwell, I have a couple questions for
you, but I would like now to turn to Mr. Larsen, and then I
will come back to you.
Rick?
Mr. Larsen. Mr. Chairman. And actually, I will start with
Mr. Caldwell.
You assert in your written statement the operational
percentage time free of major casualties for the Coast Guard
legacy assets are well below target levels, and that looming in
the immediate future is a growing gap in the Coast Guard's
operational capacity. Concerning that finding, and the
increasing trend in the difference between target levels and
actual performance as expressed in figure 10 of your report, is
it reasonable to assume that gap will continue to increase in
the absence of any acceleration in the delivery of new assets
or substantial new increase in the Coast Guard's maintenance
budget for its legacy assets?
Mr. Caldwell. The biggest gap that we see right now is
maybe 10 or 12 years out. That is when the medium-endurance
fleet--which is the furthest out in terms of replacement--will
have the biggest problems. That is when those ships are going
to be the oldest, and the OPCs will be coming in at a rate of
maybe two a year, but potentially far behind the rate that MECs
may have to be decommissioned. And those still in service are
certainly going to be operating at lower than optimum rates.
We have a chart in our report that shows this period of
2024 to 2033 may be the peak of that gap. So we are not there
yet, but it is going to get worse.
Mr. Larsen. Well, and that gets to the point. Do you assume
a certain--a constant rate of--I won't say ``failure,'' that is
a strong word, but a constant rate of maintenance, as opposed
to an acceleration rate, acceleration rate of maintenance
necessary for the MEC?
Mr. Caldwell. The assumption that we made in our report is
that the current MEP will provide either 5, 10, or 15 years of
additional life to those vessels. In some cases, you know, you
may get lucky, and a ship has good systems and will work, and
in some cases a ship won't. And those ships won't perform well
and will have to be decommissioned earlier.
I am not an engineer, I don't quite understand this, but
the surprising thing for me in doing this review is that once
you get to an older ship, there is a great deal of imprecision
in determining how long a major repair will last. So we went to
the Coast Guard with various estimates and settled on using
those three assumptions, 5, 10, and 15 years. But it would be
based on the current MEP. We have no assumption of a new MEP,
because there is not a new MEP in the budget.
Mr. Larsen. Sure. So I was a little surprised to read in
your statement that the Department of Homeland Security
objected to your recommendation that the Coast Guard adjust
legacy vessel fleet operational hour targets to reflect actual
capacity, as appropriate by class. Can you explain the DHS's
concern with your recommendation to address operational hour
targets?
Mr. Caldwell. It is somewhat convoluted. What we and the
Coast Guard agree upon is that the Coast Guard has been unable
to meet these operational targets, and we also agree that while
collectively not meeting these targets, some of the individual
vessels do meet those targets.
In our discussions with Coast Guard and DHS, there was a
concern that by lowering those targets, the Coast Guard was
lowering the expectations of what are statutory required
missions. We would not object to them having an ``objective''
target of what levels they would want those operational hours
to be. And if they do adjust those operational hours to show
the reality of recent years and recent history, they could
certainly ramp those back up to that desired level as
appropriate.
When facing the losses that frequently number in the tens
of thousands of hours on an annual basis, the exceptional
output of some individual vessels is not a good reason for
holding to what are unrealistic and unachievable targets. By
adjusting those hours annually to reflect the capacity as
evidenced by the historic and actual performance, as opposed to
the desired capacity of the ships, the Coast Guard would more
realistically be setting its annual targets, and even those for
individual vessels and commands that are in charge of those
vessels.
Mr. Larsen. Admiral, a little change of subject. And it has
to do with sequestration. Based on my review of the OMB report
that was released last week, the Coast Guard is facing about a
$430 million cut to line items. I won't go into the details,
but it is about that amount. A lot of focus around here has
been on the Defense Department, but obviously there is a lot
going on on the domestic side, which you all fall into, in some
respects.
So, can you talk about the impact of sequestration on the
Coast Guard's ability, then, to maintain its legacy assets? And
how--is there discussion about how the Coast Guard would
distribute cuts that would come from sequestration?
Admiral Rabago. Sir, I am not prepared to talk about how we
would distribute across our entire Coast Guard budget. We can
certainly provide that information for the record, sir.
Mr. Larsen. Please do so.
Admiral Rabago. I will let our budget folks provide that.
Mr. Larsen. I am sure they will enjoy providing that
information.
[United States Coast Guard insert for the record follows:]
The Coast Guard does not have a specific plan on how
reductions would be distributed under the potential
sequestration, or identify which programs, projects or
activities would be impacted, and to what degree.
Overall, the strategy would be to allocate available
resources in a manner that prevents disruptions to our
workforce; preserves the most essential operations,
activities, and services; and prevents long-term
detrimental impacts to the Service, including the
ability to maintain our legacy assets.
Admiral Rabago. The--with regards to the budget that I have
today to take care of the fleet of today, as well as the new
ships that are coming on, I am not yet satisfied that I am
able--I am obviously not reaching the targets that we would
like to reach for all of the vessels. Our newer ships are, and
we use those targets for our newer ships. And after--certainly
we have seen the results of what MEP is providing, in terms of
increased reliability of the systems, which is what the essence
of MEP was.
But for us, we--the money that we have today, it is my
charge to make sure that I spend it very wisely with the
existing assets that we have. The changes that we made to our
maintenance organization, which I did talk about in my opening
statement, or my written statement, is ways to make sure that--
number one is that we know exactly what--where every dollar is
going, in terms of how it applies to maintenance, and how that
maintenance translates into operations.
We have recently strengthened a new metric in the last two
or so years, which is our cost to operate, where I can provide
information to the operational commander. And again, this
becomes a decision process and the prerogative of the
operational commander, where I can say what things actually
cost, what is the cost of operating that 210, that 270, that
110, and provide that operational commander information to make
good decisions about how to allocate the operational resources
based on cost. And we are continuing to improve that. It was
mentioned in the GAO report. It is one of our key metrics. And
it allows, I think, operational commanders to make good
decisions.
So, regardless of where our budget ends up in the future
years, or with some form of sequestration or whatever may come,
we are best positioned to give the operational commanders the
choices they need to choose what assets that they want to run,
what the costs are going to be, in order to achieve the
operational effect that is required to execute our missions.
Mr. Larsen. Well, just one more question. The chairman was
trying to touch on this--why haven't you revised mission
performance targets to account for the current legacy fleet?
Because, you know, from where we sit, it looks like you are
trying to paper over a problem when it is pretty clear you've
got plenty of paper that tells us there is a problem.
Admiral Rabago. Sir, right now we are keeping operational
targets where they are. We certainly read the information in
the report and recognizing that we are not achieving those
targets. Those targets, over time, and the changes to what the
Nation may require of us still are valid targets and what the
Nation should expect out of those ships, in terms of--as
capital assets that we make investments in.
Challenging us, of course, is the age of those ships and
their capabilities that they have, that if we don't
recapitalize them they get more and more expensive. And
therefore, we are allocating money to maintenance activities
that we would just as soon spend to do other things that
produce more operational capabilities. But that is a
consequence of an aging fleet.
In the end, the best choice is to recapitalize particular
assets when they reach a certain age.
Mr. Larsen. Thank you.
Mr. LoBiondo. Just before I got to Mr. Coble, with all due
respect, Admiral, if it is what the Nation expects, but it is
not what is happening, and the cost--we know we need to
recapitalize, but we are not matching up our needs versus our
cost and what, realistically, we are doing and how we are doing
it.
So I mean I have got to agree with Mr. Larsen that I think
that the Coast Guard has got to be more realistic about this,
and we are going to have to get our heads together, since
obviously high brass at the Coast Guard doesn't think so.
Master Chief Coble?
Mr. Coble. Thank you, Mr. Chairman, appreciate it. Admiral,
good to have you all with us today. Admiral, I am told that 4
years ago the Coast Guard assured the subcommittee it was
conducting a condition survey of the HEC fleet. Was such a
survey ever, in fact, conducted?
Admiral Rabago. Yes, we have conducted the SSMEB, which is
a Ship Structure and Machinery Evaluation Board, on that fleet.
We determined the exact condition of it. We have actually made
some modest amount of work to keep those ships operating. But
we have not made a large investment, nor do we intend to.
Mr. Coble. Well, has the subcommittee received the copy of
the report, of the survey?
Admiral Rabago. I don't know, sir. I will find out and make
sure that you have it.
[United States Coast Guard insert for the record follows:]
The Coast Guard completed a Ship Structure and
Machinery Evaluation Board (SSMEB) review of the 378-
foot Medium Endurance Cutter (WHEC) fleet and held a
WHEC Sustainment Conference in 2008 resulting in
findings of the SSMEB in 2009.
During the sustainment conference, it was determined
that the Coast Guard needed to conduct a comprehensive
hull assessment and structural survey to better assess
the true condition of the fleet. The Naval Surface
Warfare Center performed hull corrosion and piping
system surveys from 2009 through 2010 report. This
effort indentified numerous structural and engineering
system deficiencies that require extensive repairs and
further validated the Coast Guard's on-going strategy
to replace these aging assets with National Security
Cutters.
Mr. Coble. I thank you for that.
Admiral Rabago. Yes, sir.
Mr. Coble. Admiral, let me ask you this. How many days away
from port are NSC 1, 2, and 3 currently achieving?
Admiral Rabago. NSCs 1 and 2 have exceeded 200 days away
from home port, and our goal is to continue to increase that
number until we reach the 230, which is the designed days away
from home port for that class of ships.
Mr. Coble. Thank you. Thank you both for being with us. I
yield back, Mr. Chairman.
Mr. LoBiondo. OK. Thank you there, Master Chief.
Mr. Coble. Yes, sir.
Mr. LoBiondo. Mr. Caldwell, the Coast Guard is nearing
completion of the mission effectiveness project for the MECs
and the patrol boats which began in fiscal year 2005 and cost
$450 million. Was the mission effectiveness project a wise
investment, given that we will not fully bridge the MEC and OPC
delivery, and there is no guarantee regarding how long the
mission effectiveness project will extend these vessels'
service lives?
Mr. Caldwell. Whether it could have been cheaper another
way or whether that money maybe should have gone into moving
the newer assets up sooner, I can't answer that question. But I
think the situation probably would have been worse if we didn't
have that MEP. In terms of the patrol boats, those boats are
going through a much larger overhaul, so the reliability you
would get out of them may be better spent.
With the MECs, it is more difficult, because they are just
replacing the most distressed elements or systems within those
vessels. So it is much less predictable, as to what we are
getting out of those particular vessels in the medium to long
term.
But as I said, the Medium Endurance Cutter gap is the worst
one we are facing right now. So we are between a rock and a
hard place, sir.
Mr. LoBiondo. For future mission performance, the GAO
report notes that the problems with maintaining the legacy
vessel fleet is only expected to worsen in the future, and will
have consequences on mission performance. Could you identify
for us the Coast Guard's greatest challenge regarding
sustaining the legacy fleet and meeting mission requirements?
Mr. Caldwell. They are having to rob Peter to pay Paul with
the resources they have. The challenges are, making those
decisions in terms of which missions they are going to pursue,
and at what locations. For example, you have got very rough
seas off Alaska, the Bering Sea, only certain vessels are
actually capable of doing missions there. They would be pulling
vessels from, say, the Caribbean and drug missions and other
missions there, which is reducing the effectiveness and
performance in the Caribbean.
And then other missions are falling by the wayside, or
being ignored, at least in the short term, because of those
other priorities. These missions might include the fisheries
enforcements and the other missions where life and limb are not
at risk.
Mr. LoBiondo. Thank you. Mr. Larsen?
Mr. Larsen. Admiral, can you cover for us a little bit more
about how you see the positives of the command maintenance
structure, since it has been in place now for a couple of years
and you have some experience? Give us some feedback on that.
Admiral Rabago. Yes, sir. Thank you for the question. Our
maintenance organization previously was an east-west
maintenance organization. So decisions were sometimes different
between the two coasts, and even in the same fleet of vessels.
By consolidating in 2009 and setting up our surface forces
logistics center, we were able to be able to approach the fleet
as a single enterprise. It allowed us to make tradeoffs, in
terms of where the priorities are. It allowed us to create a
concept called the product line manager, which is a single
point of accountability for a particular asset class, and have
a conversation with the operational commander about priorities.
Additionally, what it did is we had those three commands I
mentioned in my opening statement. We separated supply away
from maintenance. In the new organization, a single point of
accountability, the product line manager oversees all
maintenance and supplies. So decisions that are made with
maintenance that do have an impact on what spare parts you have
and the system that you want to support and how you want to
support it can all be made holistically.
And again, we no longer have an east-west, we have a one
Coast Guard approach to taking care of our fleet. That has
allowed us to do a couple of things. One is it is the most
effective and efficient way to use the dollars we are given, in
the sense that we can make sure that they are applied with the
priorities we get from the operational commander.
Secondly, it allows us to gather data that is--we can use
to make good decisions about the priorities. And those are some
of the new metrics, the cost-to-operate metric, which we could
not have gotten before, now allows us to decide and provide
options to Coast Guard leadership, and particularly the
operational commander, as to exactly where they want us to put
our resources when it comes to maintenance. And again, that can
vary based on geography, or it can be based on mission.
Whatever the operational commander decides is the highest
priority, we are able to leverage those resources into those
assets to answer that and that particular requirement.
Additionally, the other efficiencies in the sense of
overseeing our entire industrial enterprise previously, that
was done very geographic, very local. By standardizing our
business process across the way, we were able to actually
redistribute resources across the enterprise to provide a much
more even support so that we have--we don't have haves and
have-nots when it comes to taking care of our fleet. We want to
take care of all of our ships with intent and purpose, and we
want to do it with a data-driven methodology.
Mr. Larsen. That is fine. Thank you.
Mr. LoBiondo. Admiral, thank you very much. Mr. Caldwell,
thank you very much. The subcommittee stands adjourned.
[Whereupon, at 3:05 p.m., the subcommittee was adjourned.]
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