[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]





                   MAINTAINING COAST GUARD READINESS

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

                                (113-74)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                            
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 18, 2014

                               __________

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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    NICK J. RAHALL, II, West Virginia
THOMAS E. PETRI, Wisconsin           PETER A. DeFAZIO, Oregon
HOWARD COBLE, North Carolina         ELEANOR HOLMES NORTON, District of 
JOHN J. DUNCAN, Jr., Tennessee,          Columbia
  Vice Chair                         JERROLD NADLER, New York
JOHN L. MICA, Florida                CORRINE BROWN, Florida
FRANK A. LoBIONDO, New Jersey        EDDIE BERNICE JOHNSON, Texas
GARY G. MILLER, California           ELIJAH E. CUMMINGS, Maryland
SAM GRAVES, Missouri                 RICK LARSEN, Washington
SHELLEY MOORE CAPITO, West Virginia  MICHAEL E. CAPUANO, Massachusetts
CANDICE S. MILLER, Michigan          TIMOTHY H. BISHOP, New York
DUNCAN HUNTER, California            MICHAEL H. MICHAUD, Maine
ERIC A. ``RICK'' CRAWFORD, Arkansas  GRACE F. NAPOLITANO, California
LOU BARLETTA, Pennsylvania           DANIEL LIPINSKI, Illinois
BLAKE FARENTHOLD, Texas              TIMOTHY J. WALZ, Minnesota
LARRY BUCSHON, Indiana               STEVE COHEN, Tennessee
BOB GIBBS, Ohio                      ALBIO SIRES, New Jersey
PATRICK MEEHAN, Pennsylvania         DONNA F. EDWARDS, Maryland
RICHARD L. HANNA, New York           JOHN GARAMENDI, California
DANIEL WEBSTER, Florida              ANDREE CARSON, Indiana
STEVE SOUTHERLAND, II, Florida       JANICE HAHN, California
JEFF DENHAM, California              RICHARD M. NOLAN, Minnesota
REID J. RIBBLE, Wisconsin            ANN KIRKPATRICK, Arizona
THOMAS MASSIE, Kentucky              DINA TITUS, Nevada
STEVE DAINES, Montana                SEAN PATRICK MALONEY, New York
TOM RICE, South Carolina             ELIZABETH H. ESTY, Connecticut
MARKWAYNE MULLIN, Oklahoma           LOIS FRANKEL, Florida
ROGER WILLIAMS, Texas                CHERI BUSTOS, Illinois
MARK MEADOWS, North Carolina
SCOTT PERRY, Pennsylvania
RODNEY DAVIS, Illinois
MARK SANFORD, South Carolina
DAVID W. JOLLY, Florida
                                ------                                7

        Subcommittee on Coast Guard and Maritime Transportation

                  DUNCAN HUNTER, California, Chairman
DON YOUNG, Alaska                    JOHN GARAMENDI, California
HOWARD COBLE, North Carolina         ELIJAH E. CUMMINGS, Maryland
FRANK A. LoBIONDO, New Jersey        RICK LARSEN, Washington
PATRICK MEEHAN, Pennsylvania         TIMOTHY H. BISHOP, New York
STEVE SOUTHERLAND, II, Florida,      LOIS FRANKEL, Florida
  Vice Chair                         CORRINE BROWN, Florida
TOM RICE, South Carolina             JANICE HAHN, California
MARK SANFORD, South Carolina         NICK J. RAHALL, II, West Virginia
DAVID W. JOLLY, Florida                (Ex Officio)
BILL SHUSTER, Pennsylvania (Ex 
    Officio)
                                CONTENTS

                                                                   Page

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

                               TESTIMONY
                                Panel 1

Vice Admiral Charles D. Michel, Deputy Commandant for Operations, 
  United States Coast Guard......................................     3
Michele Mackin, director, Acquisition and Sourcing Management, 
  Government Accountability Office...............................     3

                                Panel 2

Ronald O'Rourke, specialist in naval affairs, Congressional 
  Research Service...............................................    19
James H. Offutt, national president, Navy League of the United 
  States.........................................................    19

           PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS

Hon. John Garamendi, of California...............................    32

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Vice Admiral Charles D. Michel...................................    33
Michele Mackin...................................................    38
Ronald O'Rourke..................................................    50
James H. Offutt..................................................    62

                       SUBMISSIONS FOR THE RECORD

Vice Admiral Charles D. Michel, Deputy Commandant for Operations, 
  United States Coast Guard:

    Response to request for information from Hon. Duncan Hunter, 
      a Representative in Congress from the State of California, 
      regarding risk-based prioritization........................     8
    Response to request for information from Hon. John Garamendi, 
      a Representative in Congress from the State of California, 
      regarding what the U.S. Coast Guard requires to get the C-
      27s fully operational, and a preliminary deployment 
      schedule for the C-27s.....................................    12

                         ADDITION TO THE RECORD

Government Accountability Office, Coast Guard Acquisitions: 
  Better Information on Performance and Funding Needed to Address 
  Shortfalls (June 2014).........................................    68
  
[GRAPHIC] [TIFF OMITTED] 

 
                   MAINTAINING COAST GUARD READINESS

                              ----------                              


                        WEDNESDAY, JUNE 18, 2014

                  House of Representatives,
                        Subcommittee on Coast Guard
                       and Maritime Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:35 a.m. in 
Room 2253, Rayburn House Office Building, Hon. Duncan Hunter 
(Chairman of the subcommittee) presiding.
    Mr. Hunter. Good morning. The subcommittee will come to 
order. The subcommittee is meeting today to review the Coast 
Guard's major acquisition programs.
    After over a decade, the Coast Guard has finally taken 
delivery of critically needed new and improved assets. 
Unfortunately, just as the Service's acquisition program is 
starting to see success, the President is yet again proposing a 
budget that could doom it to failure. The President's budget 
cuts funding needed to acquire critically needed replacement 
assets by 21 percent. That is one-fifth of what is needed. This 
will further delay the delivery of new assets, increase 
acquisition costs for taxpayers, exacerbate growing capability 
gaps, and seriously degrade Coast Guard mission effectiveness.
    As this subcommittee has continually highlighted, the Coast 
Guard currently operates 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 secure our ports, 
protect our environment, and ensure the safety of our 
waterways.
    A few weeks ago, the Commandant of the Coast Guard and the 
commanding officer of U.S. Southern Command, John Kelly, 
testified before us that one of the largest reasons why drug 
interdiction rates have fallen to historic lows in recent years 
is due to the Coast Guard failing legacy assets. The only way 
to reverse the decline in the Coast Guard's mission performance 
is to make the necessary investments to acquire new and 
improved assets.
    Unfortunately, based on the last few budget requests, as 
well as the fiscal year 2015 through 2019 CIP, it appears the 
President refuses to make those investments. According to the 
Capital Investment Plan, the CIP over the 5 five fiscal years, 
annual funding for Coast Guard acquisitions never exceeds $1.2 
billion. That is approximately $1 billion less than the GAO and 
the former Commandant of the Coast Guard have testified is 
needed on an annual basis to keep the current acquisition 
program on schedule and on budget.
    As I have said for some time now, just since I have been 
the chairman here, so about 2 years, if the President is going 
to continue to send us budgets that fail to pay for the assets 
needed to meet Coast Guard mission needs, then it is time for 
him and to you to review the Coast Guard mission 
responsibilities.
    Fortunately, it appears that somebody may be listening. I 
understand the Coast Guard recently announced it intends to 
start a review of the Mission Needs Statement guiding its 
current acquisition program. While this is good news, I have 
two concerns.
    First, the revised MNS needs to be budget conscious. This 
means the administration either needs to identify what missions 
the Coast Guard will no longer do, or how they intend to pay 
for the increase in assets and capabilities needed to meet 
current and future missions.
    Second, it needs to happen quickly. The acquisition program 
is already so far behind schedule and over budget, we simply do 
not have the years to wait for this administration's plan for 
the program's future. I mean if things stay the way they are 
now--I have 4 more years as chairman. I am not going to wait 
for 2 of those to get the new Mission Needs Statement. OK? This 
subcommittee intends to move an authorization bill early next 
year, and we are going to see something from the Coast Guard by 
then.
    I thank the witnesses for appearing today, and look forward 
to their testimony.
    With that I yield to Ranking Member Garamendi.
    Mr. Garamendi. I am going to move very quickly here. I want 
to get on to hear the testimony. Very important subject. I will 
enter my statement into the record.
    I will note that the President's budget is a reflection of 
the Budget Control Act that the House of Representatives and 
the Senate passed.
    So, with that, let's get this underway. There is little 
doubt that the Coast Guard has done an admirable job since 
2008, when it assumed full control of the largest 
recapitalization program in the Service's history. Nonetheless, 
problems are evident, and the oversight of this committee is 
important.
    I look forward to the testimony. My written statement will 
be, without objection, hopefully, entered into the record. 
Let's move on. Thank you.
    Mr. Hunter. Without objection, so ordered.
    On our first panel of witnesses today are Vice Admiral 
Charles Michel, Deputy Commandant for Operations of the United 
States Coast Guard, and Ms. Michele Mackin, director, 
Aquisition and Sourcing Management at the Government 
Accountability Office.
    Admiral Michel, I understand you have a long and 
distinguished history with our subcommittee. Welcome back. John 
put that in there.
    [Laughter.]
    Mr. Hunter. Welcome back, and thank you for your service. 
You are now recognized for your statement.

TESTIMONY OF VICE ADMIRAL CHARLES D. MICHEL, DEPUTY COMMANDANT 
FOR OPERATIONS, UNITED STATES COAST GUARD; AND MICHELE MACKIN, 
   DIRECTOR, ACQUISITION AND SOURCING MANAGEMENT, GOVERNMENT 
                     ACCOUNTABILITY OFFICE

    Admiral Michel. Well, Chairman Hunter, Ranking Member 
Garamendi, good morning. And thank you very much for the 
welcome, and thanks for the opportunity to testify today on 
Coast Guard readiness and the status of major systems 
acquisitions. My complete statement has been provided, and I 
ask that it be entered into the record, and that I be allowed 
to summarize my remarks.
    The Coast Guard faces increasing challenges in meeting its 
missions in a difficult fiscal environment, with rapidly 
advancing technologies employed by both legitimate maritime 
industries, as well as our adversaries. Our aging surface 
vessels are of particular concern, as they play a unique role 
in the Nation's layered security, and are often the Nation's 
sole method for asserting and protecting national imperatives 
in the offshore and coastal realms.
    As Alexander Hamilton recognized in creating the revenue 
cutter service in 1790, maritime interdiction is often the most 
efficient and effective method of protecting our citizens 
against transnational threats. In order to do this, Coast Guard 
assets must be able to compel vessels engaged in illicit 
activity to stop, which at times requires employment of force. 
In addition, our assets must be able to deliver personnel to 
take law enforcement or other appropriate action. Without such 
capabilities, our Nation may be unable to act against these 
threats before they reach land, where they become exponentially 
more difficult to track and achieve successful endgame.
    As the Coast Guard's Deputy Commandant for Operations, I 
understand the unique value that capable Coast Guard assets 
bring to the front line of defense for the American people, our 
allies, and our neighbors. I have also witnessed the 
devastating impacts when vessels are unreliable, obsolete, or 
simply out-classed by our adversaries or by the sea itself. 
Fielding and maintaining capital assets like ships and aircraft 
requires a national commitment.
    Our Nation, as a major maritime power, has traditionally 
and rightly relied upon the great oceans as not only vital 
trade routes essential to national prosperity and global 
engagement, but also as an inherent line of defense against 
foreign threats. To ensure these enduring national imperatives 
remain robust, the Coast Guard is committed to responsibly 
recapitalizing our fleet, while managing risk to preserve the 
effectiveness of our frontline operations.
    I am pleased to update you today on key acquisition 
programs. Before I begin that, I am pleased to report that the 
fiscal 2015 to 2019 Capital Investment Plan, or CIP, was 
recently delivered to the Congress, and I am happy to answer 
your questions about this plan.
    The first three National Security Cutters, or NSCs, are 
operational and performing the full range of Coast Guard 
missions. Later this year we will commission the fourth NSC, 
which will be the first assigned to our Atlantic area, and will 
be home-ported in Charleston, South Carolina. The fifth and 
sixth NSCs are currently in production, and we are approaching 
the start of production for the seventh NSC. The fiscal year 
2015 budget request and the recent House Appropriations 
Committee mark include funding for the eighth NSC, which will 
complete the full program of record for this cutter class.
    To illustrate the NSC's impressive capabilities just in the 
past 4 months, the three operational NSCs have seized more than 
4\1/2\ metric tons of pure cocaine headed to our shores. In 
just six boardings, Mr. Chairman, these seizures amount to 
approximately 60 percent of all the cocaine seized by all the 
law enforcement agencies within the borders of the United 
States in a typical year, and is a nearly $100 million 
wholesale funding source that was taken from ruthless drug 
trafficking organizations.
    Further, this near pure cocaine, as well as the suspects 
and conveyances, were taken off the water before they reached 
the shore and spread waves of devastating crime, corruption, 
public health issues, and other effects against our citizens 
and our international neighbors.
    The NSC is a versatile asset. It protects U.S. natural 
resources in some of the harshest maritime conditions, conducts 
illegal migrant interdiction operations, and integrates with 
DOD forces. The NSC program has also provided our acquisitions 
enterprise with expertise in controlling risk and achieving 
stability in cost and schedule, laying the foundation for the 
successful acquisition of the Offshore Patrol Cutter, or OPC.
    As the committee is aware, on February 11, 2014, the Coast 
Guard awarded fixed price contracts to three contractors for 
the preliminary and design contract for the OPC. Following the 
award, two protests filed with GAO prevented the contracts from 
commencing. I am pleased to announce that on the 2d of June 
2014 GAO upheld the contract award. This allows work to proceed 
on phase 1 of a 2-phase acquisition strategy. During this 
initial 18-month preliminary and contract design phase, three 
contractors will mature their designs and develop fixed-price 
incentive proposals.
    Following a thorough evaluation, the Coast Guard plans to 
down-select to a single contractor for the production of an 
initial segment of 9 to 11 OPCs. During phase 2, the selected 
contractor will complete their detailed design in preparation 
for production of the first OPC.
    We have begun activities in support of the polar icebreaker 
acquisition project, including the recent approval of 
acquisition decision event number one. This milestone, which 
validated the need for the project, allows the Coast Guard to 
move forward into the next phase, where we will develop a 
concept of operations, conduct an analysis of alternatives, 
create a life cycle cost estimate, and refine operational 
requirements. Since this is a unique national platform and 
truly a national asset fulfilling many vital national missions 
in the high-latitude regions, discussions with numerous Federal 
partners and the administration have commenced to develop the 
extensive requirements for polar ice-breaking capability.
    Further, it has been--since it has been about 40 years 
since the Nation last undertook building a heavy icebreaker, it 
will take specialized techniques and materials to construct a 
modern heavy icebreaker. The successful 2012 reactivation of 
the Polar Star has extended the Nation's polar icebreaking 
capabilities, and the Coast Guard is exploring the possibility 
of reactivating Polar Sea as a bridging strategy, until a new 
icebreaker can be constructed and is operational.
    In the aviation domain, we are anticipating delivery of the 
first of 14 planned C-27Js obtained from the Air Force, thanks 
in large part to the efforts of this subcommittee. This month 
we will establish the C-27J asset project office at the 
Aviation Logistics Center in Elizabeth City, North Carolina.
    Mr. Chairman, in closing, for over 223 years the Coast 
Guard has safeguarded our Nation's maritime interests. While 
our missions have not fundamentally changed, the challenges and 
opportunities for our maritime Nation constantly evolve. The 
Coast Guard will continue to maximize current mission 
accomplishment in this dynamic environment, while responsibly 
investing in the Nation's maritime future.
    Thank you for the opportunity to testify before you today; 
I look forward to hearing your concerns and answering your 
questions.
    Mr. Hunter. Thank you, Admiral.
    Ms. Mackin, you are recognized.
    Ms. Mackin. Chairman Hunter, Ranking Member Garamendi, 
members of the subcommittee, good morning. Thank you for having 
me here today to discuss Coast Guard readiness and its 
acquisition of ships, aircraft, and communication systems. My 
statement today is based on a report we are issuing today, work 
we did at the request of this subcommittee.
    As we note in our report, the Coast Guard has made strides 
in its acquisition management. It has maximized competition, 
for example, in procuring the Fast Response Cutter and the 
Offshore Patrol Cutter. It is delivering assets to the 
operators who are very pleased with the enhanced capabilities. 
And key test events are taking place. This testing is very 
important for ensuring that the assets are operationally 
effective.
    Today I would like to highlight what we view as a pressing 
concern facing the Coast Guard, and that is the affordability 
of its acquisition portfolio. This is especially important in 
light of significant remaining costs to complete the planned 
program of record. The Coast Guard still needs about $20 
billion to complete the assets in the program of record--those 
formally part of the deepwater program. This is, in part, 
because costs have grown for some of the assets.
    For example, the National Security Cutter has experienced a 
$2.2 billion cost increase, and initial estimates for the 
Offshore Patrol Cutter have grown from $8 billion to up to $12 
billion, in large part because the initial estimate was not 
rigorously developed.
    The fact is that the Coast Guard cannot afford its 
recapitalization program at current funding levels. Over the 
past 5 years the Coast Guard has received an average of less 
than $1.5 billion. Still, the Coast Guard has stated it needs 
$2 billion to $2.5 billion per year to carry out its planned 
program. Over the past 4 years we have recommended that the 
Coast Guard and DHS reassess the Coast Guard's acquisition 
priorities to better balance mission needs and affordability. 
Thus far, though efforts have been made, an effective 
reassessment has not occurred.
    Compounding the Coast Guard's affordability issues is the 
wave of costs. That is, an impending spike in funding needs. 
Key among these is the Offshore Patrol Cutter, which will 
consume about two-thirds of the Coast Guard's acquisition 
budget while it is being built. Other looming costs include a 
service life extension for the 270-foot Medium Endurance 
Cutters, a strategy to replace aging river buoy tenders, which 
itself could cost up to $1.5 billion, and a potential new polar 
icebreaker. These are serious challenges.
    Our prior work on best practices of commercial firms found 
that they place an emphasis on determining whether programs can 
be developed and sustained within existing resources. In short, 
best practices dictate that resources should be identified and 
maintained, or trade-offs explicitly made. If this is not done, 
programs will have to compete for available funding, and annual 
funding shortfalls must then be addressed by pushing costs into 
the future, cutting procurement quantities, or reducing 
capabilities.
    Our concern is that, rather than pursuing an affordable set 
of long-term needs, the Coast Guard is delaying and reducing 
its acquisition portfolio on an annual basis. This approach 
puts pressure on future budgets, and it also delays fielding 
capabilities to the end user, as schedules are pushed out, 
which, of course, can lead to increased costs.
    In essence, short-term budget decisions may not amount to a 
good long-term investment strategy. This is why we recommend in 
today's report that the Coast Guard develop a long-term fleet 
modernization plan. Such a plan, looking out 20 years and 
taking into account mission needs and expected funding, would 
illuminate what is feasible in the long term. Without such a 
plan, the Coast Guard is not well positioned to determine how 
it will meet mission needs. In the meantime, the annual budget 
process may be supplanting sound acquisition decisions.
    Mr. Chairman, Ranking Member Garamendi, this concludes my 
statement, and I would be happy to answer any questions.
    Mr. Hunter. Thank you very much to both of you. I guess, in 
this situation too, I will just play kind of the referee, and 
you guys can go back and forth. It would be kind of fun.
    I guess the first question that I have--this is just to 
help me understand--if you--you are now working on a new 
Mission Needs Statement, say, over the next year. And you have 
a Capital Investment Plan that matches your old Mission Needs 
Statement. And I am wondering how those two kind of fit 
together, how you have a CIP right now--if you are redoing your 
Mission Needs Statement, how do you really know what you need? 
It is like the Pentagon has never been audited, so how does it 
know what it spends in the first place to figure out what it 
needs later? So, how do you reconcile those?
    Admiral Michel. Well, sir, the current CIP is based on the 
Mission Needs Statement from 2004, which is our best estimate 
and remains our best estimate. As you note, we are actually re-
looking at our Mission Needs Statement to make sure that it 
reflects today's realities, both----
    Mr. Hunter. Which means it will change, because your old 
Mission Needs Statement didn't match the amount of money the 
administration has given you. And that is the problem. That is 
why we are having them--that is why we are asking you to redo 
the Mission Needs Statement, to match the budgetary environment 
that you are in.
    Admiral Michel. Well----
    Mr. Hunter. So it is going to be different.
    Admiral Michel. I think maybe we have got a little bit of a 
different concept on what the Mission Needs Statement is. The 
Mission Needs Statement sets forth the mission requirements for 
the Coast Guard, and is not constrained by budget. Now, to 
actually bring the materials over here onto the Hill, there is 
obviously a budget aspect associated with that when you are 
talking about a capitalization plan. But the Mission Needs 
Statement sets forth the mission needs of the Coast Guard as in 
2004, and as I anticipate the new Mission Needs Statement is 
going to, as well.
    Mr. Hunter. But what the problem has always been is that 
you can't complete your mission, because you have too many 
missions and not enough assets to do it. Right?
    Admiral Michel. Yes, sir. As Ms. Mackin notes, that is my 
serious challenge, and I live that every day, sir, is that 
there is more mission need for the Coast Guard than there is 
Coast Guard to actually go out and do the mission. So I have to 
manage that risk on a daily basis. And whenever I put inputs 
into the acquisition process on what I need out in the field as 
the Deputy Commandant for operations, you know, I have got to 
take the budgetary realities into account in actually 
fulfilling those mission needs.
    But the mission needs remain, just like they do in the 2004 
Mission Needs Statement, which is our current statement of what 
we need in order to get the job done. Now, how you actually go 
about acquiring assets in order to fulfill those mission needs, 
that is the art, sir.
    Mr. Hunter. Well, I guess what I am curious, then, in 
seeing, is a real Mission Needs Statement. So you can have the 
one that is fluff in the sky, you can have that one that has 
everything, regardless of the budgetary environment, but then I 
would like to see the real one that you do, that you prioritize 
what you are going to do, day in and day out, based on what you 
have.
    I guess that is what I am curious in seeing, because so far 
in these hearings for the last couple of years it is, ``We are 
going to try to do everything. We can only get 75 percent of 
most things, and we are up here on these few things, and we 
keep failing and failing,'' by your own recordkeeping. And I 
understand that game, because if you say that you are failing, 
``We need more money,'' then Congress goes, ``OK, we want you 
to succeed, we are going to give you some more money.'' But 
that is not going to happen any more.
    So, what we need is a real--what you look at, and what your 
prioritized Mission Needs Statement is in real life. That is 
constrained by the budget. And you can have your pie-in-the-sky 
Mission Needs Statement too that has everything. We would like 
to see the real thing where you say, ``This is what we can do. 
This is it.''
    Admiral Michel. Yes, sir. Well, I wouldn't characterize our 
2004 Mission Needs Statement as fluff. It is the best 
information that I can provide to you----
    Mr. Hunter. What I mean is you have in it everything. I 
didn't mean it was fluff. What I mean is it has everything that 
you think the Coast Guard should do. Pie in the sky is a 
better----
    Admiral Michel. Sir, you have my commitment that the 
Mission Needs Statement will reflect our very best estimate on 
the mission demands for the Coast Guard. And we need to bring 
that to your attention, sir, because we are having difficulty 
building a Coast Guard that can actually fill out the demand 
signals necessary. So what it requires is me and other members 
of the Coast Guard to address that on a risk-based format.
    And, you know, I would love to have a world where I could 
actually build a Coast Guard that could fulfill the demand 
signal for the Coast Guard. That is not currently the world 
that I live in right now. And I need to ensure that I bring 
those needs, that demand for the Coast Guard, to your attention 
so you can take a look at that. And then you can also take a 
look at the risk that the Coast Guard is incurring on these 
national missions with the assets that it currently has, and 
whatever it is building towards the future.
    But you have my commitment, sir. I am not interested in----
    Mr. Hunter. That is what I would like to see. I would like 
to see the risk-based prioritization that you are doing.
    Admiral Michel. Absolutely, sir.
    [The information follows:]

        The Coast Guard is making difficult tradeoffs to best balance 
        critical recapitalization and frontline operations. This 
        strategy ensures we address the degraded condition of our 
        legacy fleet, ensure capability for the future and provide 
        frontline operations where the Nation needs it the most. The 
        Nation faces risk across all our statutory responsibilities, 
        and we seek to address the highest with available resources. 
        One way we are addressing this risk is by recapitalizing our 
        aging assets with more reliable and capable assets better 
        suited for today's operating environment and the environment we 
        expect to face in the future.

        The Coast Guard's highest risk remains in the offshore fleet 
        and our Capital Investment Plan reflects this risk. We are also 
        addressing other areas of risk, other parts of our fleet that 
        need to be recapitalized to ensure we can provide the type of 
        service the Nation needs and has come to expect in the future. 
        For example, we are continuing our acquisition of Fast Response 
        Cutters to address risk in the coastal zones as our legacy 110-
        foot patrol boats are removed from service. We are receiving 
        and missionizing C-27Js to address maritime patrol gaps and 
        risks in the coastal and off-shore zones. Our critical in-
        service vessel sustainment project is helping us address risks 
        in other parts of our fleet, such as our aging buoy tenders. We 
        have also engaged stakeholders across government and are moving 
        out on requirements generation for the acquisition of a heavy 
        polar icebreaker to meet whole of government requirements.

    Mr. Hunter. OK. OK, thank you. Let me get that first 
question, here, we will just ask a quick one.
    If the funding levels in the budget and the new CIP are 
enacted by Congress--so let's go right on to that--how does 
that affect your missions? And what missions will be affected 
the most?
    Admiral Michel. Well, it has a number of different effects. 
And, you know, as you mentioned, our Commandant has testified 
before that a more effective capital investment plan would be 
somewhere in the neighborhood of $2 billion. When you are 
pushing it down, as you correctly identified, into, you know, 
1.2-ish, 1.1-ish, what it does is it forces everything to move 
to the right. It makes the assets harder to get in a timely 
manner, and it presses everything out to the right, which means 
I have got to, on a daily basis, use the assets that exist 
right now.
    Some of the assets are--like our 210-foot cutters--when I 
got off as my last commanding officer job in 2006 as the 
captain of the Coast Guard cutter Resolute, I told the crew 
that, you know, they were serving on a classic. That ship had 
been commissioned in 1966. I was 3 years old when that ship was 
commissioned.
    [Laughter.]
    Admiral Michel. And while that ship, you know, may have 
aged more gracefully than I have over the years, it--still, in 
2006, that ship was 40 years old, and people had been living 
inside this metal ship, 7 by 24, operating out on the seas, 
doing all this--all these missions, operating helicopters, you 
know, navigating, and so on and so forth, on a ship that was 40 
years old. And I almost couldn't believe that I was standing on 
the deck of a 40-year-old ship. There are very few countries in 
the world that would field something like that, particularly as 
a frontline asset. And yet, here we are in 2014, now the ship 
is 48 years old. And the OPC has been pressed further out to 
the right. That is its relief on station.
    So, I have got to manage those suboptimal assets for 
another many, many years. And that is what happens when you 
don't have, you know, a CIP that is responsive to the fleet 
that we have out there, and the recapitalization needs.
    Mr. Hunter. Last question, and tying in with the first 
question. Is the Mission Needs Statement going to be conscious 
of the CIP, of the funding levels in the CIP?
    Admiral Michel. Sir, you know, the funding levels in the 
CIP, very interesting. You know, I have been asked questions 
about how this is--compares to Navy shipbuilding, and things 
like that. Boy, I wish I had some funding stability like the 
Navy had, and could actually provide you with, you know, 
reasonable future projections on the availability of capital 
resources in order to do this type of stuff.
    But the--unfortunately, the history of this program----
    Mr. Hunter. If you would have acquisitions like the Navy, 
you would have never had the big deepwater problem that you 
had, too.
    Admiral Michel. Well----
    Mr. Hunter. It is good to look back and say things like 
that. I agree, wholeheartedly.
    Admiral Michel. Yes, sir. But one of the things that we 
got--we have to have in order for me to provide the 
predictability to you is a stable funding source, and we 
haven't had that. And while I am in agreement with GAO that, 
you know, a 20-year fleet plan may be of value--and that is 
actually one of the things that we are going to try to work 
on--the value eliminates very quickly, and it actually becomes 
deceiving if you don't take into account that--you know, the 
fluctuating funding streams that have been a part of this 
program almost from its inception. And I wish we could get some 
stability in funding to provide that type of predictability 
into the future.
    But you have my commitment, sir, that that mission 
statement is going to be my best--my, and the Coast Guard, and 
the Commandant of the Coast Guard's very--and the Secretary of 
Homeland Security, and anybody else who needs to sign off on 
that particular document--very best estimate on what the demand 
signal for the Coast Guard is, because these are national 
missions that you, the Congress, the American people through 
their representatives, have tasked the Coast Guard with 
performing these functions.
    And it is up to us to not dumb this down and not, you know, 
bring down the demand signal to some artificial level that 
gives you the impression that risk doesn't exist there. I would 
rather provide you with the raw truth on what the demand signal 
for the Coast Guard is, and let you take a look at the risk 
analysis that is being done by myself and others in the 
organization.
    Mr. Hunter. OK. And we will take it. Hey, with that, I am 
going to step out and go to the--there is a little secret brief 
on the Taliban detainees that were released. Thank you. And I 
will be back in a minute. I yield to Mr. Garamendi for his 
opening questions.
    Mr. Garamendi. Thank you, Mr. Chairman. As you leave, the 
discussion that just ensued reminds me very much of that very 
famous Pogo comment, ``We have seen the enemy, and it is us.''
    Admiral, thank you for your testimony, and for your very 
forthright statement that you can only do what we allow you to 
do, and you can only have as your responsibilities what we have 
given you. The problem lies here, in the Congress. The problem 
is that this Congress has decided that a small Government is 
the best thing for this Nation. And that plays itself out in 
the Coast Guard, it plays itself out in the hospitals, it plays 
itself out in the Veterans Administration, and many other 
activities that the general population of the United States 
would like to see us do.
    But the reality is when you want a small Government you get 
the kind of problems that this committee is now trying to work 
its way through: a Mission Needs Statement that is now 10 years 
old, soon to be updated. When would that update be available?
    Admiral Michel. Sir, we are actually trying to complete 
that for our maritime patrol forces, which is the surface 
vessels that we are talking about, to actually coincide with 
the end of the P&CD phase for the OPC, because that will help 
inform that process as we down-select to the single contractor.
    But this is no easy effort. And, you know, the 2004 Mission 
Needs Statement was based on the integrated system. So it is 
very hard to pull apart individual assets from that 2004 
Mission Needs Statement. Now that we have broken apart the 
project into individual segments, we are going to raise the 
level of maturity for that, but that is going to raise the 
difficulty in doing it, because we are relying on an integrated 
systems 2004 Mission Needs Statement. But we are trying to get 
that, sir, in conjunction with the completion of the P&CD phase 
for the OPC.
    Mr. Garamendi. So when?
    Admiral Michel. Eighteen months is our target, sir.
    Mr. Garamendi. From today?
    Admiral Michel. Yes, sir.
    Mr. Garamendi. OK. The mission is actually, as you just 
said in the previous discussion, set by the Congress. Is there 
any need to change the mission? And, if so, what?
    Admiral Michel. Well, I will go back to one of our older 
Commandants. And he was trying to justify sort of the reason 
for the Coast Guard, and he said, you know, ``You could break 
up the Coast Guard and take our 11 statutory missions and send 
them somewhere else, but they are still going to have to get 
done. These are enduring national missions. A lot of them have 
existed since 1790 and have to be done by somebody.''
    The beauty of investing in the Coast Guard is you get one 
organization that you can go to that has a platform like the 
OPC that isn't just designed to do drug interdiction, but it 
does drug interdiction, it does fisheries work, it can act as a 
command and control platform in situations like Hurricane 
Sandy, it can operate----
    Mr. Garamendi. So the answer--excuse me, we are going to be 
quickly out of time, and I should probably attend that 
hearing----
    Admiral Michel. Yes, sir.
    Mr. Garamendi. The issue, then, is the mission is defined 
by Congress, and the Coast Guard has interpreted that mission 
and brought it forward as, ``Here are the things we need to do, 
and here is what--here are the things we need to do the mission 
that Congress has specified.'' OK.
    Your earlier testimony indicated that you are not given the 
resources. The chairman was speaking to this issue, but he was 
incorrectly identifying where the problem lay. The problem is 
here. The problem is with this Congress not providing the 
resources necessary. The Budget Control Act and other 
sequestration issues are at play here.
    So, if--am I correct in suggesting that, in order for the 
Coast Guard to be able to carry out in the very best possible 
way the missions that have been given to the Coast Guard by the 
United States Congress, you are going to need money? Is that 
correct?
    Admiral Michel. Yes, sir. The Coast Guard doesn't have any 
appropriations authority.
    Mr. Garamendi. OK. Now, the question for this committee is 
what are we going to do to make that money available. Your 
Capital Investment Program, your CIP program, I think it is 
important for the Coast Guard to come forward with the need 
to--excuse me the would like to and the need to. In other 
words, the prioritization.
    The reality is that, in the current state of affairs here 
within Congress, there isn't going to be money available. We 
will be, in the next couple of days, voting on tax reductions, 
which will pass the House of Representatives, which will make 
less money available in the future. So we need to have the nice 
to and the need to, the absolute have to have, versus what we 
would--you and us, you and I and perhaps the other members of 
this committee, would like to have. That is what we are going 
to have to have in order for us to do our job and to assist 
you.
    I don't believe the mission is going--the mission 
statements are going to change. And you are going to have to 
help us help you figure out exactly what needs to be done.
    There is a series of questions I have about the C-27, how 
it is coming along, what you need to do to put that into 
effect. Apparently, it was a high-priority issue. You are 
correct in saying this committee and the members of it assisted 
you and the Coast Guard in making that available. We are 
pleased to have done that. Now what do you need, need to, must 
have, in order to get that operational?
    Admiral Michel. Yes, sir. Well, this is the induction of an 
entire new airframe into the Coast Guard system. So not only 
the infrastructure pieces need to be put in place, but 
training, maintenance, all those type of things. And we are 
stepping out smartly on that.
    The standup of the asset project office, which Congress 
helped us with with some funding, is going to be a step in the 
right direction, it is going to be working on the training 
manuals, maintenance pieces, how we are going to integrate this 
in the air fleet, make some recommendations on where these 
things should best be sited.
    The good thing about these aircraft is they are actually 
military standard aircraft, and they have got things like 
secure communications system----
    Mr. Garamendi. Excuse me.
    Admiral Michel. Yes, sir.
    Mr. Garamendi. I am out of time, and would you please be 
very specific in writing to the committee as to exactly what 
you need, when you need it, in order to get these things up and 
operational? I understand that they are now being over 
somewhere in North Carolina. And then also where you intend to 
deploy them, and the schedule for the deployment, if you could, 
give that to us in writing.
    Admiral Michel. Sure.
    [The information follows:]

                      IMPLEMENTATION OF THE C-27s

        C-27s Requirements:

        The Coast Guard continues to develop requirements associated 
        with transfer, induction, missionization, and deployment of the 
        C-27 aircraft authorized in the 2014 NDAA. The C-27 Asset 
        Project Office, established this month at the Aviation 
        Logistics Center in Elizabeth City, NC, will further refine 
        cost estimates and implementation schedules. Current estimates 
        for the C-27 AC&I project, as displayed in the FY15-19 Capital 
        Investment Plan, are as follows:


------------------------------------------------------------------------
    FY14         FY15        FY16        FY17        FY18        FY19
------------------------------------------------------------------------
$24,900      $15,000....  $130,000..  $100,000..  $30,000...  $40,000
------------------------------------------------------------------------

        Preliminary operations and maintenance cost estimates are made 
        based on limited Air Force O&M provided C-27J APO operations, 
        as well as Coast Guard experience operating C-130 and HC-144 
        aircraft; but definitive O&M data will need to be refined as 
        the aircraft enters active service at full programmed flight 
        hours. The Coast Guard anticipates stand up of the first C-27 
        operational unit in FY16.
        Deployment Schedule of C-27s:

 Estimated Acquisition Schedule through Completion (based on initial BCA
                               estimates)
------------------------------------------------------------------------
 
------------------------------------------------------------------------
2014...............  Commission APO, receive first aircraft, establish
                      contracts for aircraft restoration and Contractor
                      Logistics Support (CLS)
2015...............  Continue stand up of APO, receive 3 aircraft from
                      AMARG, \1\ Contractor Logistics Support (CLS)
2016...............  Continue APO operations, receive 4 aircraft from
                      AMARG, start missionization NRE, initial issue
                      spares, CLS, stand up first operational unit
2017...............  Continue APO operations, receive 4 aircraft from
                      AMARG, contract for operational & maintenance
                      training devices, missionize first aircraft
2018...............  Receive 2 aircraft from AMARG, missionize 2
                      aircraft
2019-2026..........  Complete Logistics, Missionize remaining aircraft,
                      stand up second operational unit, stand down APO
------------------------------------------------------------------------
\1\ AMARG: Aerospace Maintenance and Regeneration Group--aircraft
  storage facility at Davis-Monthan Air Force Base


    Mr. Garamendi. Now I have a question for the GAO. You have 
pointed out the problem. And I would like to have your 
analysis----
    Mr. Southerland [presiding]. Mr. Garamendi? I am sorry. I 
mean we have got--I know we have got other gentlemen. Your 
time, as you just so noted, has expired. So we can come back 
for more questions, I am fine with that.
    But Mr. Rice, 5 minutes.
    Mr. Rice. I think I heard you say that your current budget 
is how much, 1-point what?
    Admiral Michel. This is in--the President's budget request 
for AC&I is about 1.1.
    Mr. Rice. 1.1?
    Admiral Michel. Yes, sir.
    Mr. Rice. What did the administration ask for in their 
budget, do you know?
    Admiral Michel. Excuse me. One more time, sir.
    Mr. Rice. What did the administration ask for in the 
President's budget for this year. What did he ask for, funding 
level?
    Admiral Michel. 1.084, 1.1.
    Mr. Rice. So that is not what Congress asked for; that is 
what the President asked for.
    Admiral Michel. That is the President's 2015 budget request 
for the AC&I account for the Coast Guard.
    Mr. Rice. Right. And what did you say it would take to 
fulfill all of your--I mean if you--to carry out every mission, 
your absolutely wish list, what would it take to carry that out 
on an annual level funding basis?
    Admiral Michel. Well, I wouldn't want to characterize it as 
a wish list, because, as an operator, my wish list is pretty 
long.
    Mr. Rice. OK, OK, so----
    Admiral Michel. But our prior Commandant has testified that 
a responsible and adequate capitalization account for the Coast 
Guard would be somewhere in the neighborhood of $2 billion for 
AC&I.
    Mr. Rice. So about double what the President has proposed 
for this year. Is that correct?
    Admiral Michel. Yes, sir.
    Mr. Rice. All right. Now, as a result, when was the last 
time that you received the full amount that you would need on 
an annual basis to fully fund all of these requirements that 
you have dictated? When was the last time that happened?
    [No response.]
    Mr. Rice. That would be never?
    [Laughter.]
    Admiral Michel. Sir, you can go back in the program. I 
don't think we have ever had a $2 billion CIP. I can go back 
and take a look. I can't remember way back in the history, but 
I am pretty sure we have never had one of those.
    Mr. Rice. OK. What are the biggest, most glaring holes that 
we have now, as a result of never having been funded to the 
extent that you think it would be required?
    Admiral Michel. Sir, the--I can tell you the number-one 
priority is on surface vessels and the recapitalization of the 
surface fleet.
    Mr. Rice. So we got some old boats running around there.
    Admiral Michel. Old ships. Yes, sir.
    Mr. Rice. Yes. Now, have any of those sank recently, or do 
we have any problems with getting them in and out, or----
    Admiral Michel. Thank goodness none of them have sunk, 
which is good. But there have been quite a number of 
casualties, and I can provide you data on the breakdown rates 
of these ships. We have gone through some----
    Mr. Rice. You say ``casualties.'' Are people being killed?
    Admiral Michel. Sir?
    Mr. Rice. You said ``casualties.'' Are people being killed?
    Admiral Michel. No, sir. That is a term for a machinery----
    Mr. Rice. OK, got you.
    Admiral Michel [continuing]. Fault, a machinery casualty.
    Mr. Rice. OK.
    Admiral Michel. Not personnel, sir.
    Mr. Rice. Right, OK. How does our Coast Guard stack up with 
the coast guard or coastal protection with other countries? I 
mean England, France, Italy, all those others.
    Admiral Michel. Coast guards vary throughout the world. I 
would say for the coast guards that look sort of like the U.S. 
Coast Guard, our fleet is amongst the oldest.
    I will give you an example. We just yesterday met with the 
head of the Chinese Coast Guard, the China Coast Guard. And 
their recapitalization program, at least as they laid out, is 
massive. I mean they are talking in the neighborhood of 400 
patrol boats to fulfill the missions, as well as some of the 
larger things.
    So, we have got an old fleet, we are very proud of it, and 
we keep it in the best shape that we possibly can, but it needs 
to be replaced, sir.
    Mr. Rice. How many patrol boats do we have?
    Admiral Michel. We have got--I think we have got forty-nine 
110-foot patrol boats, although they are coming in and out, so 
there may be one or two different, because they are actually 
being replaced by the Fast Response Cutters, or FRCs, and we 
have got, I think, our 9th and 10th ones of those that are 
actually in or near in service. That will eventually build up 
to a program of 58 for the Fast Response Cutters.
    Mr. Rice. I would like to ask you a couple questions, if I 
could.
    Ms. Mackin. Yes, please.
    Mr. Rice. Have you reviewed the--I don't want to call it a 
wish list. What would--how would I characterize it? I don't 
want to say anything that is wrong.
    Admiral Michel. I would say the requirements as expressed 
in the Mission Needs Statement.
    Mr. Rice. OK. Have you reviewed that in the Mission Needs 
Statement? Is there anything--he answered earlier that we don't 
need to change the mission of the Coast Guard. Have you 
reviewed that to see if there is anything that you would 
suggest taking out of the mission, or----
    Ms. Mackin. We--you know, we have been reviewing the 
deepwater program for over 10 years. I personally have been 
involved in many of those audits. And the current MNS, the 
current Mission Needs Statement, reflects the deepwater program 
of record. So that is what it is. And we certainly agree it 
needs to be revised. Was very happy to see that the Coast Guard 
is working on that, and that DHS is going to do a portfolio 
analysis of Coast Guard acquisitions, taking into account 
affordability, which is very important.
    Funding levels are not what the Coast Guard would like to 
have, but they have not actually fluctuated that much over the 
past 5 years. So we think that the Coast Guard can have a 
realistic idea of what it can expect.
    We had a chance--if I may just comment on the CIP, the 
current CIP that was released this week--we had a chance to 
review it. And in many cases, program baselines are not 
reflected in the CIP. In other words, for the Fast Response 
Cutter there is a $100 million shortfall in the CIP every year, 
give or take. That means either the Fast Response Cutter 
baseline is going to need to be revised again. Is the schedule 
going to be delayed again? That will increase costs.
    So, we would really like to see the CIP be more in line 
with the acquisition baselines for the individual projects, or 
the Coast Guard, which is already having some readiness issues, 
obviously, it is going to only get worse.
    Mr. Southerland. The gentleman's time has expired.
    Mr. Rice. Thank you. Thank you for what you do, thank you.
    Mr. Southerland. I recognize the gentleman from Florida.
    Mr. Jolly. Thank you, Mr. Chairman. I appreciate the 
comments, appreciate the testimony. And I understand that 
having to balance limited resources among your air and sea 
assets, I appreciate that. I learned from my predecessor early 
on that the Coast Guard is one agency that does more with less 
than just about any other agency in the Federal Government. So 
thank you for what you do. I appreciate it.
    I have a question unrelated to air and sea assets. I know 
you work through balancing limited resources there. Facilities, 
infrastructure, quality of life for your men and women in 
uniform is a concern of mine always. We have three facilities 
in my district. I recently was out at Sector St. Pete, and in 
the off hours some of your guys are laying tile in a new dining 
hall, and painting the walls, and doing drywall, and then in 
the gym, you know, overnight, they are working other issues.
    Can you speak to--as you are balancing air and sea assets, 
you also have facilities and infrastructure that ultimately 
affect quality of life of those who put on the uniform. Just a 
general question: Can you comment on the state of that--of 
those priorities?
    Admiral Michel. I think it is a great question from a 
number of different angles, and I share your concerns about our 
Coast Guard people. And I don't know the guys laying tile, but 
that is typical Coast Guard stuff, very proud of what we do 
but, you know, we do with what we are given or sometimes can 
scrape together.
    But the point that you raise is the AC&I account for the 
shore infrastructure competes directly with the other accounts. 
And it is a matter of prioritization. Again, if I had a wish 
list, I would wish for lots of things to bring better quality 
of life, better housing to our Coast Guard personnel, better 
facilities that they can take care of. But right now, it has 
got to compete directly with our surface assets. And our 
surface assets are just a bleeding wound, and they impact our 
citizens every day, they impact our neighbors every day, and we 
need to get that fixed.
    So, I have got--sir, I appreciate your concern, because 
that is on my radar, as well. But, you know, I have to rack and 
stack these----
    Mr. Jolly. No, I understand, and it is really not a 
criticism. I guess maybe--correct me if my assessment is 
wrong--it seems to have--it comes in last right now because it 
probably has to.
    Would you--I mean I guess what projects actually make it, 
get funded? Is it really when the roof is collapsing at this 
point, in terms of how you have to prioritize? Or are there 
quality of life enhancements that there are funds available for 
at this point? Or is it just not enough resources?
    Admiral Michel. At this point you--there is a line item for 
our shore AC&I.
    Mr. Jolly. Right.
    Admiral Michel. It is woefully inadequate.
    Mr. Jolly. Right.
    Admiral Michel. Obviously, if a roof is falling in, or 
something like that, we are going to have to re-rack and stack 
things.
    Mr. Jolly. Right.
    Admiral Michel. But we have got a process where we run 
through the highest priorities to try to buy down the things at 
the top of the list.
    When it comes down to sort of quality of life things, those 
typically don't get prioritized. We are talking about basic 
things like making sure that the power can remain on, and 
making sure that you don't have a collapsed roof. I mean that 
is kind of where we are in the shore AC&I account.
    Mr. Jolly. I appreciate it. Again, thank you for what you 
do. Appreciate it.
    Mr. Southerland, no further questions.
    Mr. Southerland. Thank you, Mr. Jolly. I have just some 
prepared questions I wanted to ask, and then I have got a 
comment I would like to make.
    I know, under the CIP, the--your acquisitions would not 
receive more than $1.2 billion over the next 5 years. That is 
approximately, you know, $1 billion less than the GAO and the 
former Commandant have testified is needed. And you have stated 
that.
    The GAO has stated that the Coast Guard needs to consider 
trade-offs. And again, I have not been here for the entire 
testimony today. So if you have addressed this already in 
specificity, I apologize. But what are the trade-offs that the 
Coast Guard is considering, you know, to make its acquisitions 
more affordable? You are having to make some hard decisions 
now.
    But, obviously, it seems like, you know, your maintenance, 
you know, you mentioned housing, you mentioned the tiling and, 
I mean, what else are you considering, going forward?
    Admiral Michel. Well, I think the point of affordability 
you raise is spot on. And we have got to actually systemically 
include that in our processes. And I will give you an example.
    Our biggest acquisition, as GAO knows, is the looming 
Offshore Patrol Cutter acquisition. That is going to be the 
biggest line item acquisition that we have got, and sort of the 
entire effort that we have got here. And we have specifically 
designed affordability into that contract.
    First of all, there is actually a competitive process going 
on underway, so I am a little bit restricted in the amount that 
I can say here. And anything that I can say here that I say 
here that is inconsistent with that, the legalities of that 
particular project, obviously, that controls.
    But affordability specifically designed here--we have been 
in about a 2\1/2\-year discussion with potential competitors 
for this particular project to try to set affordability cost 
targets, and that is actually built into the project, itself. 
This also will be a fixed price incentive-type contract, which 
can also help with the affordability aspect. And we have also 
built in a number of off-ramps that, if the project becomes 
unaffordable, then we have got some second- and third-order 
choices that we can make in that particular piece.
    But I think actually learning the lessons of the NSC and 
the FRC has allowed us, on this latest acquisition, to actually 
systemically include the affordability aspects, and make them 
kind of legally actionable, for lack of a better term, through 
the contracting mechanism. So, we have built that into this 
particular class of ship, which is, again, the looming 
acquisition that we have got.
    Mr. Southerland. The--are there any parts of your mission--
I mean you are asked to do a lot. It seems like there are some 
items that probably have higher degree of necessity than 
others. I mean are there any parts of your mission that you 
would say are--would not be--rise to the other issues that are 
very, very important?
    I mean I didn't word that right, but what is nonessential?
    Admiral Michel. Boy, that is a very difficult question, 
since Congress, you know, the American people through their 
representatives, have statutorily tasked us with all these 
mission sets now. We have a----
    Mr. Southerland. But, I mean, you are on the inside. OK? 
You are there. You have to be going, ``Are you kidding me? 
Really? I mean, we got to do this? This is critical to the 
safety of the American people, and Congress has given us 
this.'' It is obvious that the right hand might not know what 
the left hand is doing. I have been here 3\1/2\ years, and I am 
telling you, man, that is a disease here.
    So, my point is, from someone who has your responsibility, 
you know, what is critical, what is good? What is the 
difference between good and best?
    Admiral Michel. I will give you an example, sir. This is 
the type of decisions that I have to make as to whether to send 
one additional ship a year down--that is 20 metric tons of 
cocaine that will be removed from the system. Through long, 
historical averages, every one of those ships I send down there 
that works for a year is 20 metric tons of cocaine. That is 
almost triple what is seized within the border of the United 
States on a typical year.
    And if that 20 metric tons--if I don't send that ship down 
there, that 20 metric tons is likely to get into Central 
America and Mexico, and create all the problems that it has 
down there, as well as public health issues for our citizens. 
And I have got to balance that risk against a foreign fishing 
vessel incursion, against antipiracy work, against migrant 
interdiction work, against pangas that work their way around 
our borders every day.
    I mean the decisions that we are forced to make, because 
the mission need exceeds our ability in the Coast Guard to 
fulfill that, I mean, they are--and I don't want to make this 
hyperbole, but I mean, they are very serious considerations on 
the national security of our Nation, as well as our neighbors, 
and very difficult to rack and stack, you know, safe passage of 
a vessel in a port with protection of fisheries work, with drug 
interdiction work, or migrant interdiction work, or search and 
rescue. All those things are enduring national missions and 
have huge national consequences, and I wish there was more 
Coast Guard. It would allow me to have a little bit of a more 
favorable risk interpretation.
    Mr. Southerland. Right. Thank you very much. I certainly 
have other questions, but to be consistent in controlling the 
time, I will forego those questions. So it seems to be me. I 
know we have got a second panel. I would like to thank you all 
for being here, and we will take a quick break while the second 
panel comes forward. Thank you.
    [Recess.]
    Mr. Southerland. Our second panel of witnesses today 
includes Mr. Ronald O'Rourke, specialist in naval affairs at 
the Congressional Research Service, and Mr. James Offutt, 
national president of the Navy League of the United States.
    Mr. O'Rourke, you are recognized.

  TESTIMONY OF RONALD O'ROURKE, SPECIALIST IN NAVAL AFFAIRS, 
 CONGRESSIONAL RESEARCH SERVICE; AND JAMES H. OFFUTT, NATIONAL 
          PRESIDENT, NAVY LEAGUE OF THE UNITED STATES

    Mr. O'Rourke. Mr. Chairman and distinguished members of the 
subcommittee, thank you for the opportunity to appear before 
you today to testify on Coast Guard acquisition. With your 
permission, I would like to submit my statement for the record, 
and summarize it here briefly.
    As a starting point, it can be noted that the Coast Guard's 
program of record includes, by the Coast Guard's calculation, 
roughly 60 percent of the cutters and 50 percent of the 
aircraft that would be needed to fully perform the Coast 
Guard's statutory missions in coming years. In this sense, not 
completely fulfilling the program of record would deepen a 
capacity shortfall relative to projected future mission demands 
that is already built into Coast Guard plans.
    Coast Guard testimony earlier this year suggests that the 
delay in submitting the fiscal year 2015 CIP was due largely to 
a disagreement between the Coast Guard and OMB about future 
funding levels in the AC&I account, with OMB apparently 
supporting a level of roughly $1 billion a year, and the Coast 
Guard apparently advocating a higher figure of perhaps $1.5 
billion per year or more.
    The difference between these two positions represents a 
major fork in the road for the Coast Guard. The previous 
Commandant, Admiral Papp, stated on multiple occasions that 
recapitalizing the Coast Guard's ship and aircraft fleets on a 
timely basis, while also adequately funding other AC&I 
programs, would require a funding level of $1.5 billion to $2 
billion a year. A sustained funding level of about $1 billion 
per year, he testified last year, would almost create a death 
spiral for the Coast Guard.
    The newly submitted CIP, which I received from the Coast 
Guard on Monday afternoon, averages about $1.1 billion a year, 
which is a bit more than the $1.0 billion per year in the 
fiscal year 2014 CIP, but still well below the $1.5 billion per 
year of the fiscal year 2013 CIP.
    The new CIP includes the total of $230 million for a new 
polar icebreaker, most of which is in fiscal year 2017 and 
fiscal year 2019. The timing of the procurement of this ship 
has become less certain in this budget submission, and Coast 
Guard testimony earlier this year suggests that if the AC&I 
account remains at about $1 billion per year, the Coast Guard 
would view this ship as something like an unfunded requirement.
    Regarding the NSC program, as the acquisition of these 
ships approaches its end, it can be noted that they could have 
been acquired less expensively if they had been awarded at a 
more even rate, and if at least some of them had been acquired 
with a form of multiyear contracting.
    Regarding the FRC program, the phase 2 contract offers a 
potential opportunity for using multiyear procurement or a 
block-buy contract. A multiyear contract might result in 
acquisition costs that are lower than those possible under the 
options contract that the Coast Guard appears to be planning to 
use. One option for the subcommittee would be to understand the 
potential savings that might be realized through multiyear 
contracting. The subcommittee, for example, could consider 
asking the Coast Guard or the Navy to develop an estimate of 
the potential savings.
    Turning to the OPC program, the new CIP defers the bulk of 
the funding for the first OPC from fiscal year 2017 to fiscal 
year 2018, suggesting that the start of procurement for this 
program will be delayed a year, compared to last year's 
submission.
    Section 215 of H.R. 4005, the Coast Guard and Maritime 
Transportation Act of 2014, provides authority for using 
multiyear procurement contracts in the program. Based on 
experience with Navy shipbuilding programs, this authority may 
not be usable until construction of the first OPC is completed 
in 2021 or 2022, because completion of the lead ship has been 
the standard in Navy shipbuilding programs for demonstrating 
that the program has a stable design, which is one of the 
requirements of the statute that governs multiyear procurement.
    If Congress wants to employ multiyear contracting in the 
OPC program prior to completion of the lead ship in the 
program, it could do so by authorizing block-buy contracting. A 
block-buy contract could achieve much of the savings that would 
be possible in a multiyear procurement contract, particularly 
if it includes authority for making batch order purchases of 
long-leadtime components.
    Mr. Chairman, this concludes my statement. Thank you again 
for the opportunity to testify, and I look forward to the 
subcommittee's questions.
    Mr. Southerland. Thank you, Mr. O'Rourke.
    Mr. Offutt, you are now recognized.
    Mr. Offutt. Thank you, Mr. Chairman, for the opportunity to 
appear before you today on such an important topic. I am 
grateful for your introduction and for your leadership in 
bringing this topic to the Nation's attention. My full 
testimony has been submitted for the record. I offer an 
abbreviated version now, and look forward to your questions.
    The U.S. Coast Guard is truly a unique Service. With 
military and civil responsibilities and humanitarian missions, 
the extraordinary broad mission portfolio continues to serve 
the United States well. But we, as a Nation, have not treated 
the Coast Guard as well as we should have.
    Since 9/11, the Coast Guard has seen its area of 
responsibility grow to 11 statutory missions, but its budget 
growth has de-accelerated, failing to match mission demand or 
meet inflation adjustment. We must fund the Coast Guard 
properly, with an operating budget of no less than $6.8 
billion, and an acquisition, or AC&I budget, in excess of $2 
billion, so that the Service can continue to provide protection 
on the seas from threats delivered by sea, and of the sea 
itself.
    I believe that this is a generational opportunity, and that 
the recapitalization of the Coast Guard is absolutely 
essential. Completing the National Security Cutters in the 
approved program of record is, in my opinion, the Coast Guard's 
most critical acquisition goal. As the replacement vessel for 
the current fleet of 12 High Endurance Cutters, the NSC will 
provide a highly capable vessel, and a robust command and 
control platform, even in harsh operating conditions.
    However, at the rate the new cutters are coming online and 
older ships are being decommissioned, there will be an 
unavoidable gap that will pose significant risk to America's 
security. Some of that gap in the coastal areas will be met by 
Fast Response Cutters, or FRCs, that are currently being 
constructed. The President's request for production funding to 
conduct two more FRCs in fiscal year 2015 is the minimum 
necessary to improve the Coast Guard's waning operational, and 
we at Navy League believe that the actual number should be four 
per year, or one per quarter.
    Highly important for the Coast Guard's operations is to 
begin construction of the Offshore Patrol Cutter, which will 
replace the MECs, or Medium Endurance Cutters, built in the 
1960s through the 1980s. While the OPC is less capable than the 
MEC, it will still function as an operational workhorse to 
carry out the Coast Guard's primary mission.
    The Coast Guard must move forward smartly with reviewing 
the preliminary design for the OPC and very soon begin 
construction. Given the magnitude of the attending capability 
gap, and the significant economies of scale to be realized, 
Navy League believes Congress should fund the construction of 
at least two OPCs annually.
    Aviation assets are also key to the Coast Guard's future. 
One of the more pressing aviation projects is the acquisition 
of HC-130J Long Range Surveillance Aircraft, and the HC-144A 
receives operation and maintenance funding in fiscal year 2015. 
Coast Guard received authority to accept 14 C-27Js from the Air 
Force. Coast Guard needs acquisition construction and 
improvement funding of at least $15 million to continue that 
acquisition program office.
    Finally, in looking at the future scope of the Coast 
Guard's areas of responsibility, one geographic area of 
operation is the Arctic. In recent years, as ice over the 
Arctic gap has diminished and rich new sources of energy are 
believed to be more likely, the Coast Guard must ensure 
continued capability in the Arctic icebreaking.
    Currently, operating with one operational heavy icebreaker 
and one medium icebreaker, the Coast Guard must initiate a 
heavy icebreaker acquisition now, if a new capability is to be 
brought online this decade. This necessary acquisition must be 
seen as a national priority, and it must be funded in addition 
to the Coast Guard's already meager acquisition budget.
    Recently commissioned assets will also require operational 
maintenance funding of at least $72 million.
    As with all mobile forces, presence is the key. The only 
limiting factor to how much our Coast Guard can accomplish is 
how many ships and aircraft they have, and how much training 
they receive. We have had the chance to notice a direct 
correlation, through the budget reduction of recent years. 
Coast Guard, after having a $200 million cut by sequestration, 
saw a 30-percent reduction in drug interdiction. And I believe 
the vice admiral referred to that with the presence of one ship 
making a difference in the Caribbean.
    If the Coast Guard remains unfunded, national leaders will 
have to decide what missions they want unfulfilled. Coast Guard 
cannot do more with less into perpetuity. As fast-paced 
operations continue, the Coast Guard must be effective not only 
through near-flawless mission, but also efficiently manage its 
existing assets.
    In my role of national president of Navy League, I am 
privileged to visit several different ships, particularly a 
110-foot patrol boat commanded by a young lieutenant and a 
Coast Guard station headed by a senior enlisted petty officer. 
I am thoroughly convinced that these young men are well 
prepared to carry out our mission. Their dedication and sense 
of service and devotion to this country inspire and awe me. To 
carry out their missions it is our job to ensure they have the 
means to do so.
    The Navy League would like to thank this committee for its 
leadership and thank Congress for being supportive of the Coast 
Guard and ensuring they have the resources they need. We must 
be good shipmates to them, as they have every American. Thank 
you, and I await your questions.
    Mr. Hunter. Thank you very much for both of your 
testimonies. We will turn now to Member questions. And I would 
like to recognize the gentlelady from California.
    Ms. Hahn. Thank you. I am sorry I missed the first panel. I 
was speaking on the floor on an issue, but I certainly want to 
thank you all for being here today, and big--I am a big 
supporter of our Coast Guard, and am always troubled by, 
frankly, the funding levels that we give to our Coast Guard for 
your--for the missions that we expect from the Coast Guard.
    Very happy to report that I was just in Los Angeles a 
couple weeks ago when we had a change of command, and the 
first-ever woman will be the commanding officer and the captain 
of the port for Long Beach and Los Angeles. That was actually a 
very exciting moment. We are taking over the world one port at 
a time.
    [Laughter.]
    Ms. Hahn. But in your testimony you noted that the Coast 
Guard may view the polar icebreaker as a joint agency goal, as 
the National Science Foundation and Department of Defense share 
a need and desire to have the icebreaker available. We don't 
relate to having icebreakers out on the west coast, but do know 
that it is a big part of what you do.
    And you mentioned that the Coast Guard may even depend on 
resources of those agencies to support the cost of an 
icebreaker. In the budget of these agencies, is there a 
capability to support even a portion of the cost of making an 
icebreaker a reality?
    Mr. O'Rourke. Yes, I did address that point in my 
testimony. The Coast Guard, both in its testimony at hearings 
and in its budget justification documents, describes the polar 
icebreaker as something they would like to fund on an 
interagency basis.
    Ms. Hahn. Right.
    Mr. O'Rourke. The rationale being that other agencies, such 
as the National Science Foundation or DOD, gain significant 
direct benefits from the operation of these icebreakers.
    There is some precedent for funding a polar icebreaker 
somewhere else in the Federal budget outside the Coast Guard's 
budget. The Coast Guard's polar icebreaker Healy was funded in 
the Navy shipbuilding account in fiscal year 1990. Even so, 
this is an uncertain funding strategy for the polar icebreaker, 
because these other agencies are facing their own challenges 
right now in trying to meet their own program needs within 
available resources.
    So, the Coast Guard can certainly appeal to these other 
agencies. Whether these other agencies are going to find the 
spare wherewithal within their own budgets to help fund that 
ship I think is another question.
    Ms. Hahn. OK, thank you. Thank you.
    Oh, you don't look like Steve Southerland at all.
    Mr. Hunter [presiding]. Botox and exercise.
    [Laughter.]
    Ms. Hahn. Really?
    Mr. Hunter. It is amazing.
    Ms. Hahn. Look away for a moment, and the Republicans have 
changed.
    Mr. Hunter. Excuse me. Good morning, gentlemen. I guess my 
first question is this. I was thinking--were you here in the 
last panel?
    Mr. O'Rourke. Yes.
    Mr. Hunter. So I guess we always get after the military for 
not giving a nonbudget risk assessment. I mean you want a risk 
assessment based on how the world is, not what we can afford, 
right? And as I was walking back and forth in between my other 
hearing and this, I realized I was asking the Coast Guard to 
give us a--I guess not a--I wasn't asking for a risk 
assessment, but a Mission Needs Statement that is based on the 
budgetary environment.
    So, I don't want to get those two confused. We still want a 
unbiased risk assessment from the Coast Guard that just says, 
``If we had trillions of dollars every year, here is how you 
mitigate 100 percent of the risk, and it is going to cost you 
$1 trillion a year.'' That is what we want from the military, 
too, and then it is up to us to make those decisions.
    So, I guess our question is more about prioritization and 
how they come to their risk-based assessment. So I guess my 
question, Mr. O'Rourke, for you, is if they don't get more 
assets, and they don't get more money, how do you evaluate 
their mission set, just in general?
    Mr. O'Rourke. I think the answer is that we will continue 
to do what we have been doing for years and years, which is not 
completely fulfilling any number of these missions.
    What you wanted was a fiscally constrained understanding of 
missions--that would be the term that I would use for it--and I 
think one way for the subcommittee to go about getting that 
would simply be to review the records of what the Coast Guard 
has done in recent years concerning mission performance across 
the 11 statutory missions. The Coast Guard has been making 
choices, as the admiral indicated, about which things to do and 
not do on a daily basis. That establishes a pattern, a record, 
that the subcommittee can examine to see what is being done and 
what is not being done. I think the evidence is there already, 
it just needs to be compiled and presented to the subcommittee.
    Mr. Hunter. And the admiral was talking about multiyear 
procurement.
    Mr. O'Rourke. Well, I was.
    Mr. Hunter. You were, but he mentioned that, too.
    Mr. O'Rourke. Oh, OK.
    Mr. Hunter. He said take it out of his stable funding 
source and know what they are getting a few years out--do that. 
What is the impediment to doing that? Is it how it scores?
    Mr. O'Rourke. The Coast Guard has statutory authority to 
use multiyear procurement in pretty much the same way that the 
Department of Defense does. The Coast Guard is mentioned in the 
same statute that grants the authority to DOD. So I don't see 
any statutory impediment to the Coast Guard using multiyear 
procurement authority.
    Congress also has the ability on its own to authorize 
block-buy contracting authority for the Coast Guard, if it so 
desires. There is no statute that governs it. Congress can 
simply do it on its own.
    It seems to me that if there is an impediment to the Coast 
Guard doing it, it has been simple lack of familiarity with 
these contracting mechanisms, and no prior history of having 
done it. But I do think the Coast Guard is beginning to become 
more familiar and more comfortable with it, and that is one 
reason why I am emphasizing it as an option for Congress to 
consider.
    The Navy makes extensive use of these authorities, and has 
been successful, as a result, in being able to buy more ships 
for a given amount of money than would have been possible under 
more conventional contracting strategies.
    Mr. Hunter. So how much could they save? Just--let's say 
that they used it for their OPCs and the FRCs. If they just 
used it for those big buys, let's just say----
    Mr. O'Rourke. For the ships that are under that contract, 
it can save upwards of 10 percent. So if you have a 25-ship OPC 
program, we are talking about getting two of those ships, 
basically, for free.
    Mr. Hunter. Got you.
    Mr. O'Rourke. If you were to apply it across the entire 
program. And you could do it across the entire program by 
starting with a block-buy contract for the first few ships, and 
then proceeding to a multiyear procurement contract once the 
program met all the statutory requirements for MYP.
    Mr. Hunter. Thank you. Mr. Offutt?
    Mr. Offutt. Sir, I would like to emphasize that I believe 
that a Mission Needs Statement with a full-blown understanding 
of what the Coast Guard is being asked to do by the American 
people through the Congress and through the administration is 
essential. Then you----
    Mr. Hunter. But they have that now. They already have that.
    Mr. Offutt. And they are going to develop a new one.
    Mr. Hunter. Right.
    Mr. Offutt. So I would not ask you to tell them to 
physically constrain that MNS, the MNS. I would ask that, as 
Mr. O'Rourke suggested, that they do an assessment of the risk 
involved in that. And, quite frankly, looking at their history, 
it is probably a very statistically valid way of figuring out 
what it is they can't do and can do.
    But I believe that we need that----
    Mr. Hunter. I guess what we are asking for from them is----
    Mr. Offutt [continuing]. Last for 10 years.
    Mr. Hunter [continuing]. A QDR.
    Mr. Offutt. I believe that we need that.
    Mr. Hunter. We are asking for a QDR from the Coast Guard. 
That is kind of what--a risk assessment-based, what do you see 
happening in the next 5 years, what are your threats, how are 
you going to counter them. I guess that is what we are asking 
for.
    Mr. Offutt. Well, we still have DOD strategic guidance and 
other documents that are similar to the Mission Needs 
Statement. And I agree with you, what you are asking for is a 
physically constrained what-can-I-do type of document.
    Again, you know, they are working on the Mission Needs 
Statement, and it will just take them a little bit longer to 
dig through that other process, too. But I am sure they can 
provide it for you. Can't speak for the Coast Guard----
    Mr. Hunter. I guess how do you separate out--I guess the 
question is, too, how do you separate out their Capital 
Investment Plan and the shortage of money and how those assets 
tie in to fulfilling their mission needs set. I guess that is 
the big crux of this, right? Because we have their Mission 
Needs Statement. We know that they don't have enough money to 
build and buy all the assets that they need in the time that 
they need them in.
    So--and I understand the game in DC, too, is to always be 
short, and then you can always say, ``Well, we are short, we 
need more.'' But at some point you have to ask for what you can 
get, and then only say that you are going to build what you 
have the money for, which they are not doing right now. They 
are saying, ``We want to build this. And, by the way, we are 
going to set in stone our plan to build this much stuff, but we 
only have this much money. And we understand that that is 
always going to be that way, so we are always going to be--
there is always going to be a delta of what we plan for and 
what we can actually do.'' That leads for bad planning.
    When you are talking about building ships, not necessarily 
what the American people through Congress have asked them to 
do, their mission set, but the actual building of ships, has to 
tie in with how much money they get at some point. And it is 
not right now. So how do you fix that?
    Mr. O'Rourke. I will give you an option for the 
subcommittee to consider, and it goes back to the testimony 
that the first panel gave about putting together a 20-year 
plan. If something like that were to be done, I think the 
committee could give consideration to asking the Coast Guard to 
doing three different versions of it, a version at $1 billion 
per year in the AC&I account, another at $1.5 billion per year, 
and other at $2 billion per year. That way, we can see what the 
resulting force structure is over time, and what the impact on 
the performance of various missions is.
    We seem to be, right now, in my view, in the midst of a 
debate about this fork in the road, about the future of the 
Coast Guard, about whether we are going to have a Coast Guard 
of a certain size and capability and capacity, or a Coast Guard 
of a different size and capability and capacity. And I would 
not want a 20-year plan to, in effect, short-circuit the debate 
as to what that funding level should be, by presenting only one 
scenario because, if you were to do that, it could limit 
people's sense of options and possibilities, and it also 
doesn't provide them with any understanding of how these things 
might change if you were to depart from that one funding level, 
either upward or downward.
    So, one way to get around that would be to ask the Coast 
Guard, if they were to put together a 20-year plan showing how 
things would be bought, what the resulting force structure is, 
and what the consequent mission performance is, to do three 
versions of that: one at $1 billion a year, another at $1.5 
billion, and another at $2 billion, because these seem to be 
the numbers that are at play in the current debate over the 
AC&I account. And that way we could all walk into this 
situation with our eyes open about what we are paying for, what 
we are getting, and what the mission impact, consequently, will 
be.
    Mr. Hunter. Great, we will do it. That is a great idea.
    What do you think--you know what the 11 statutory missions 
are of the Coast Guard?
    Mr. O'Rourke. I don't have them listed here.
    Mr. Hunter. But as you have gone through them, what do you 
think about those in general? Do you think they are too broad? 
Think they are too narrow? There ought to be 20?
    Mr. O'Rourke. The missions, as stated, are stated broadly 
enough that they can be defined to result in a demand for 
mission assets that can be somewhat variable. Now, does that 
mean that we should try and narrow down the language on the 
performance of those missions? That might not be so easy.
    But there is some leeway in the way the missions are stated 
right now for someone of good faith, looking at that language, 
to define it one way, and someone else of equally good faith to 
look at that mission and define it in a different way and say, 
``Well, no, I think it means performing it to a different 
level.''
    Mr. Hunter. When you look at it right now, for instance, 
you have--the Coast Guard pulled, I think, how many of their 
ships from SOUTHCOM? Remember how many ships they pulled? 
Three? They pulled three ships from SOUTHCOM.
    So when the Coast Guard comes in and they talk about--the 
best statement they always have is, ``We can catch more or 
interdict more drugs in 1 year than the entire law enforcement 
presence of the interior of the United States catches,'' 
meaning they can get 10 times as much. It is already at 60 
percent with the one at sea hauling in, I don't know, six or 
seven catches, right?
    So, the question is, then, you have their Mission Needs 
Statement, you have what they always come in and talk about, 
which is giant drug busts and SOUTHCOM, yet that is where they 
pull their assets out of first when there is a problem.
    So I guess my question would, from your analysis, if you 
have looked at this, do they need to pull--did they need to 
pull those assets from SOUTHCOM?
    Mr. O'Rourke. Well, they don't have----
    Mr. Hunter. Were there areas where they could have reduced 
risk and kept those assets working the drug interdiction cases?
    Mr. O'Rourke. Could they have deployed more assets into the 
drug mission?
    Mr. Hunter. Yes.
    Mr. O'Rourke. To some degree, yes, I think so. Other 
missions would have suffered. I mean it is a rob Peter to pay 
Paul situation at this point.
    Several of the missions are not going fulfilled fully right 
now. The degree to which they are not being fulfilled varies. 
The protection of fisheries, particularly in certain parts of 
the western Pacific, is going not very much fulfilled, would be 
one way of putting it. And so we are not protecting our own 
waters and our own marine resources out there right now. So 
that would be another one.
    I don't think that the mathematics of this are that 
complicated. If you do more in one mission, you are going to 
have less available for doing other missions, particularly if 
those other missions are geographically separated from the one 
that you are putting more assets into.
    Mr. Hunter. That is rough.
    Mr. Offutt. Couldn't say it better.
    Mr. Hunter. OK. Ms. Hahn, do you have any more questions?
    Ms. Hahn. Yes, thank you, Mr. Chairman. You know, again, I 
know it is unfortunate that we have these funding levels. And 
to be prepared. Because I think, a lot of times, we are unable 
to foresee some of the threats to our Nation's homeland that we 
are depending on the Coast Guard to counteract. I don't think 
we, on the west coast, really prepared for the panga boats, and 
when I think about Terrell Horne, who lost his life one night 
off the coast of California going against these panga boats.
    So I think there is a lot that it would be nice to match 
funding with, you know, what we need, and try to do a better 
job, but I think there is a lot of threats that we are not 
really quite sure of, but when they happen we expect the Coast 
Guard to defend us against that.
    One of the things I was thinking about is the Coast Guard 
was unable to classify any of their activities as nonessential. 
And what we are talking about today, with a lack of funding, 
you know, maybe we have to do a better job of prioritizing. And 
just didn't know if either one of you saw any of the 
responsibilities within the Coast Guard Mission Needs Statement 
as nonessential, or if not nonessential, a lower priority.
    Mr. O'Rourke. If you can trace things in the Mission Needs 
Statement back to the 11 statutory missions, those 11 missions 
are a statement from Congress as to what is essential. And so, 
if you can provide a strong link translating from the 11 
statutory missions to what you have in the Mission Needs 
Statement, then what it does is it brings it back to Congress 
to consider what the statutory missions might be.
    And rather than trying to tighten up the language, which 
could prove to be very difficult, what you would want to get is 
a better understanding from the Coast Guard as to how they look 
at those 11 statutory missions, and translate them into 
narratives of what they think needs to be done. And then the 
Congress can decide whether they agree or disagree with that 
translation process.
    Mr. Offutt. I have a slightly different point of view, and 
that is you have these 11 statutory missions, and you have 
raised and trained a Coast Guard that is highly qualified. By 
the time you reach leadership position in the Coast Guard, you 
have spent well over 20 years there. We have relied on their 
expertise and their training.
    And so, I say that through the guidance the Congress 
gives--and, of course, they get a lot of guidance from the 
administration and from DHS--I believe, truly believe, that the 
professionals in the Coast Guard understand what all of their 
requirements are, and that they are able to prioritize those 
requirements, based on the assets they have, based on their 
training, understanding, and personal experience.
    So, I am, again, very satisfied with what I see as the 
performance of the Coast Guard, not only at the senior 
leadership, but--what amazes me is the youngsters we see out 
there doing a job. We see JGs commanding ships. I saw a JG who 
was the only female on a ship as the XO of a 110 commanded by a 
lieutenant. And they were spending 24/7 at sea in the 
Mediterranean, doing their missions. And they understood their 
missions, and they went after them all the time.
    So I think that what we end up relying on is the personal 
ability and training and experience of our professional Coast 
Guard, both military and civilians, to actually sort through 
all of these missions and figure out which ones they can do and 
which ones are the most important.
    And it is just--quite frankly, in most Government agencies 
today, in the environment we are in, that is what is happening, 
you know. Our experienced folks in those agencies--it certainly 
is happening in DOD. We certainly see, you know, a 
prioritization of missions in all of the other four armed 
services. And then the Coast Guard, as well. I think we need to 
rely on our professionals.
    Ms. Hahn. And I don't know if either of you have a comment 
on this, but you know, after 9/11 Congress passed H.R. 1, I 
think, which was 100 percent scanning of containers coming into 
our ports. We are not even close to that. We are at about 2 or 
3 percent. We have this layered approach, trying to be more 
strategic. That is what still keeps me up at night, is what 
will come through our ports and create a disaster.
    But how much more is the Coast Guard expending in resources 
to participate in this layered approach, assess containers at 
risk, than if we actually were scanning these containers, so we 
actually knew what was in them? Would that be--is--I mean they 
are always talking about how it is too expensive, and other 
reasons why we can't scan containers. I disagree with all that, 
and I always want to go on the record saying I think our ports 
are still our most vulnerable entryway into this country. But 
what if we actually were scanning?
    And, by the way, the technology exists today to scan these 
containers in a way that would not slow commerce. And would 
that in some way relieve the Coast Guard of tremendous 
resources in trying to participate in this layered approach to 
security?
    Mr. Offutt. Well, I agree with you----
    Ms. Hahn. A question.
    Mr. Offutt. I agree with you that it is a risk. However, I 
think that the feeling of certainty for what is in a container 
involves more than just scanning it, because we actually--when 
you go back to port of origin, we actually have bills of lading 
and everything, so we know that they are there. I have found 
Coast Guard in my travels around the world to visit my Navy 
League Councils, I have found Coast Guard folks in the funniest 
places, and a lot of them are there primarily because that is a 
container shipping port.
    Qatar is a good example. There were some Coast Guards 
there, and that is their primary job, was to look at bills of 
lading, and understand what was coming to the United States, 
and how that operates.
    So, the question is, you know, I think they are doing that 
mission to the extent they can. And could we do the mission 
better? Could we apply more technology? Could we scan things 
better? I agree with you. But I think it is being done to the 
extent that the professionals believe is necessary to ensure 
some sort of high percentage of reliability.
    Ms. Hahn. So you don't think it would change if we began 
scanning 100 percent of our containers. You still think that it 
is an important, particularly at the port of origin, to----
    Mr. Offutt. Yes, I do.
    Ms. Hahn [continuing]. Look at the manifest----
    Mr. Offutt. I believe you could scan, but I believe that 
the port of origin and invoicing, or bill of lading process, is 
just as important as the scan.
    Ms. Hahn. It is a big, wide ocean.
    Mr. Offutt. Yes.
    Ms. Hahn. And a lot can happen----
    Mr. Offutt. A lot can happen.
    Ms. Hahn [continuing]. Between the port of--the point of 
origin and when it lands at one of our U.S. ports. That is all 
I am going to----
    Mr. Offutt. So you are familiar with AIS, though, the 
tracking of ships at sea? So, I mean, that is another part of 
the verification process.
    Yes, Mr. Chairman?
    Mr. Hunter. Plus CBP, not the Coast Guard, does most of the 
scanning. Customs and Border Protection.
    Mr. Offutt. Right, Custom and the border patrols out there.
    Mr. Hunter. Not the Coast Guard.
    Ms. Hahn. True, but I do think their resources are changed 
a little bit with their--you know, they now board the ships 
when they come into port.
    I just wonder if we are using their resources now in a way 
that we wouldn't have to----
    Mr. Hunter. I agree.
    Ms. Hahn [continuing). If they were actually scanned.
    Mr. Hunter. It only takes one, anyway, correct? Yes. You 
know, I would agree with you if I think that every single 
person in every military service could be trusted to use their 
best professional opinion and their personality to ensure the 
job getting done.
    What you are admitting is there is a bad system. You said--
so basically you are saying there is systemic problems, and we 
rely right now upon the personality and direct intervention of 
those professionals with experience to determine the best 
course of action.
    That is a recipe for disaster, because all you need is one 
bad player who doesn't have the right experience, or takes a 
wrong turn, and the system then is--since it is broken, and you 
are relying on one personality, you get one bad personality, 
and it all goes to hell. That is a problem with relying on just 
people making--with their best intentions, trying to make 
decisions that are not based on analytics of the system.
    Mr. Offutt. Well, I would not like to characterize it as 
one person. We have team approaches, we have technology to 
assist us, we have interagency, we have lots of backups to that 
one person. And when you see the decision process, which you 
are familiar--I mean, you know, the way the joint chiefs--the 
way the Coast Guard--the way it starts right from the top of 
the military and works its way down is a team approach. I 
wouldn't characterize it as one person's decision as to--for 
that kind of large error----
    Mr. Hunter. Well, let's take this, for example.
    Mr. Offutt. OK.
    Mr. Hunter. Let's take the President just extended in the 
Pacific the marine sanctuary area that is, like, 50 miles out 
from different islands. He said he is going to quadruple it. 
OK? The only way you keep people from fishing in a marine 
sanctuary is Coast Guard patrols. That is the only way.
    So, while the President cuts the Coast Guard's budget, 
their mission needs requirements and statements remain the 
same. He gives them a four times the area to patrol, while 
still not having enough assets in the--in SOUTHCOM's AO to 
interdict drugs. That doesn't seem like a very cohesive system 
from the top down. So he has given the Coast Guard four times 
more to patrol, while they have fewer assets, less money, and 
are pulling assets from SOUTHCOM. Sounds like they got the 
wrong personality in there somewhere.
    Mr. Offutt. No, somebody has to make a decision as to how--
what is the--or how often----
    Mr. Hunter. Well, the President did. He said it is going to 
be four times, and you have to----
    Mr. Offutt. Well, no, I am talking about now. So they are 
given----
    Mr. Hunter. You are talking tactics now?
    Mr. Offutt. No--yes, I am talking tactics now.
    Mr. Hunter. So, like, Lieutenant JG----
    Mr. Offutt. But that is not my expertise. But then there is 
the tactics of how soon or how often do we make a patrol 
through that increased area just to show presence.
    Mr. Hunter. Well, sure.
    Mr. Offutt. So, I mean, so that is not----
    Mr. Hunter. Well, if the Coast Guard just had----
    Mr. Offutt. I leave that up to professionals.
    Mr. Hunter. If the Coast Guard just had one ship, I guess a 
professional could say, ``This one ship is going to be present 
at any one place throughout the year.''
    But what I am saying is you got to have a system in place 
so that it is not all based on professionals and personality.
    Mr. Offutt. And I believe it is.
    Mr. Hunter. General Mattis called that Handshake Con.
    Mr. Offutt. Right.
    Mr. Hunter. Handshake Control, which works well----
    Mr. Offutt. No, I agree. That is what is in place.
    Mr. Hunter [continuing]. Until you got bad hand-shakers.
    Mr. Offutt. Right.
    Mr. Hunter. And then it stops working.
    Any closing statements?
    Mr. Offutt. No. I just want to thank you, Mr. Chairman. And 
it has been my privilege to brief two generations of 
distinguished----
    Mr. Hunter. Of Hunters?
    Mr. Offutt [continuing]. Chairmans. So----
    Mr. Hunter. He was a real chairman; I am a little chairman.
    [Laughter.]
    Mr. Hunter. But thank you. And, with that, the hearing is 
adjourned.
    [Whereupon, at 11:02 a.m., the subcommittee was adjourned.]
    
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