[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]





 BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: COAST GUARD SEA, 
                   LAND, AND AIR CAPABILITIES, PART 2

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

                                (115-23)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 25, 2017

                               __________

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             Committee on Transportation and Infrastructure



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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

                  BILL SHUSTER, Pennsylvania, Chairman
DON YOUNG, Alaska                    PETER A. DeFAZIO, Oregon
JOHN J. DUNCAN, Jr., Tennessee,      ELEANOR HOLMES NORTON, District of 
  Vice Chair                             Columbia
FRANK A. LoBIONDO, New Jersey        JERROLD NADLER, New York
SAM GRAVES, Missouri                 EDDIE BERNICE JOHNSON, Texas
DUNCAN HUNTER, California            ELIJAH E. CUMMINGS, Maryland
ERIC A. ``RICK'' CRAWFORD, Arkansas  RICK LARSEN, Washington
LOU BARLETTA, Pennsylvania           MICHAEL E. CAPUANO, Massachusetts
BLAKE FARENTHOLD, Texas              GRACE F. NAPOLITANO, California
BOB GIBBS, Ohio                      DANIEL LIPINSKI, Illinois
DANIEL WEBSTER, Florida              STEVE COHEN, Tennessee
JEFF DENHAM, California              ALBIO SIRES, New Jersey
THOMAS MASSIE, Kentucky              JOHN GARAMENDI, California
MARK MEADOWS, North Carolina         HENRY C. ``HANK'' JOHNSON, Jr., 
SCOTT PERRY, Pennsylvania                Georgia
RODNEY DAVIS, Illinois               ANDRE CARSON, Indiana
MARK SANFORD, South Carolina         RICHARD M. NOLAN, Minnesota
ROB WOODALL, Georgia                 DINA TITUS, Nevada
TODD ROKITA, Indiana                 SEAN PATRICK MALONEY, New York
JOHN KATKO, New York                 ELIZABETH H. ESTY, Connecticut, 
BRIAN BABIN, Texas                       Vice Ranking Member
GARRET GRAVES, Louisiana             LOIS FRANKEL, Florida
BARBARA COMSTOCK, Virginia           CHERI BUSTOS, Illinois
DAVID ROUZER, North Carolina         JARED HUFFMAN, California
MIKE BOST, Illinois                  JULIA BROWNLEY, California
RANDY K. WEBER, Sr., Texas           FREDERICA S. WILSON, Florida
DOUG LaMALFA, California             DONALD M. PAYNE, Jr., New Jersey
BRUCE WESTERMAN, Arkansas            ALAN S. LOWENTHAL, California
LLOYD SMUCKER, Pennsylvania          BRENDA L. LAWRENCE, Michigan
PAUL MITCHELL, Michigan              MARK DeSAULNIER, California
JOHN J. FASO, New York
A. DREW FERGUSON IV, Georgia
BRIAN J. MAST, Florida
JASON LEWIS, Minnesota
                                ------                                

        Subcommittee on Coast Guard and Maritime Transportation

                  DUNCAN HUNTER, California, Chairman
DON YOUNG, Alaska                    JOHN GARAMENDI, California
FRANK A. LoBIONDO, New Jersey        ELIJAH E. CUMMINGS, Maryland
GARRET GRAVES, Louisiana             RICK LARSEN, Washington
DAVID ROUZER, North Carolina         JARED HUFFMAN, California
RANDY K. WEBER, Sr., Texas           ALAN S. LOWENTHAL, California
BRIAN J. MAST, Florida               ELEANOR HOLMES NORTON, District of 
JASON LEWIS, Minnesota, Vice Chair       Columbia
BILL SHUSTER, Pennsylvania (Ex       PETER A. DeFAZIO, Oregon (Ex 
    Officio)                             Officio)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
                                CONTENTS

                                                                   Page

Summary of Subject Matter and ``Acquisition, Construction, and 
  Improvements: FY2018 Unfunded Priorities List,'' U.S. Coast 
  Guard, July 20, 2017...........................................    iv

                               TESTIMONY
                                Panel 1

Admiral Paul F. Zukunft, Commandant, U.S. Coast Guard............     4

                                Panel 2

Rear Admiral Richard D. West, U.S. Navy, Retired, Chair, 
  Committee on Polar Icebreaker Cost Assessment, National 
  Academies of Sciences, Engineering, and Medicine...............    25
Rear Admiral Michael J. Haycock, Assistant Commandant for 
  Acquisition and Chief Acquisition Officer, U.S. Coast Guard....    25
Marie A. Mak, Director of Acquisition and Sourcing Management, 
  U.S. Government Accountability Office..........................    25
Ronald O'Rourke, Specialist in Naval Affairs, Congressional 
  Research Service...............................................    25

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. Don Young of Alaska.........................................    48
Hon. John Garamendi of California................................    50

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Admiral Paul F. Zukunft..........................................    53
Rear Admiral Richard D. West.....................................    57
Rear Admiral Michael J. Haycock..................................    70
Marie A. Mak.....................................................    73
Ronald O'Rourke..................................................    91

                       SUBMISSIONS FOR THE RECORD

Admiral Paul F. Zukunft and Rear Admiral Michael J. Haycock, U.S. 
  Coast Guard, submission of the following:

    Responses to requests for information from the following 
      Representatives:

        Hon. John Garamendi of California 



        Hon. Duncan Hunter of California and Hon. Peter A. 
          DeFazio of Oregon......................................    40
    Chart, ``FY2018-FY2022 Five-Year Capital Investment Plan: 
      Acquisition, Construction, and Improvements''..............   102
    Fiscal Year 2014 Report to Congress, ``Defense-Related 
      Activities,'' May 22, 2014, published by the U.S. Coast 
      Guard......................................................   103
Rear Admiral Richard D. West, U.S. Navy, Retired, Chair, 
  Committee on Polar Icebreaker Cost Assessment, National 
  Academies of Sciences, Engineering, and Medicine, submission of 
  the following:

    Responses to questions for the record from Hon. John 
      Garamendi, a Representative in Congress from the State of 
      California.................................................    61
    Letter Report, ``Acquisition and Operation of Polar 
      Icebreakers: Fulfilling the Nation's Needs,'' published by 
      the Division on Earth and Life Studies and Transportation 
      Research Board of the National Academies of Sciences, 
      Engineering, and Medicine..................................   110
      
      
     
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 BUILDING A 21ST-CENTURY INFRASTRUCTURE FOR AMERICA: COAST GUARD SEA, 
                   LAND, AND AIR CAPABILITIES, PART 2

                              ----------                              


                         TUESDAY, JULY 25, 2017

                  House of Representatives,
          Subcommittee on Coast Guard and Maritime 
                                    Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:08 a.m. in 
room 2167 Rayburn House Office Building, Hon. Duncan Hunter 
(Chairman of the subcommittee) presiding.
    Mr. Hunter. The subcommittee will come to order. Thanks for 
being here today, Commandant. It is just you right now, this is 
good.
    The subcommittee is meeting today to pick up from where we 
left off from our June 7th hearing on Coast Guard 
infrastructure. An important aspect of the previous hearing was 
the Coast Guard stating it would submit its unfunded priorities 
list with a 5-year Capital Investment Plan and a long-term 
major acquisition plan to the committee.
    Unfortunately, as of today's hearing, we only have received 
the unfunded priorities list and a chart from the 5-year 
Capital Investment Plan. But at least it is something.
    Members of this subcommittee are some of the strongest 
supporters of the Coast Guard with a number of us also serving 
on the Armed Services Committee, which allows us to push for 
Coast Guard priorities in parity with the other Armed Forces. 
It can be frustrating and difficult to advocate for Service 
priorities and funding needs when we lack specific Coast Guard 
documents that can best inform congressional decisions on Coast 
Guard acquisition programs.
    With its aging fleet of cutters and aircraft, the Coast 
Guard has implemented extensive maintenance and life-extension 
projects for its assets in order to do more with less capable 
assets. In addition, new assets such as the National Security 
Cutters and the Fast Response Cutters have experienced ongoing 
issues which reduce their capabilities and further exacerbate 
the Service's ability to conduct its missions.
    It is very likely that the Coast Guard assets will reach 
the end of their service life before replacements are in place. 
The threat of mission gaps is a very real possibility. The 
Service will continue to tell us otherwise, and present charts 
that show less substantial gaps, but I still believe the 
Service charts are based on wishful thinking, not fiscal 
reality. And we will represent that with a slide here once the 
hearing really begins.
    While it hasn't been the fault of the U.S. Coast Guard that 
severe budgets have curtailed or delayed acquisition programs, 
the Service can be faulted for a lack of detail on the impacts 
of a stagnant budget on acquisition programs, and subsequently 
on its ability to carry out its missions. The fact that the 
mission needs statement, a 5-year Capital Investment Plan, and 
the fleet mix analysis do not fully tell the story of the Coast 
Guard's short-term and long-term gaps or its plan to address 
them has been an ongoing concern.
    GAO [U.S. Government Accountability Office] has pointed out 
in a number of reports that the Coast Guard should develop a 
long-term plan to influence its short-term planning documents. 
In 2016, Congress required the development of the 20-year major 
acquisition plan since it was clear the Service was not going 
to do one on its own. However, it has been a year and a half 
since the requirement was enacted into law and we still have 
not received a long-term plan from the Coast Guard.
    How important is long-term planning to the Coast Guard? I 
really can't say. We on the committee believe long-term 
planning documents can assist the Coast Guard in getting its 
acquisition programs funded. It is disappointing that we only 
have the unfunded priorities list to discuss today without the 
5-year and 20-year planning documents that should fill in the 
blanks and provide a roadmap for the future. It is hard to 
understand any of these documents by themselves because they 
are not in context; there is no perspective without a 20-year 
plan.
    Regardless, we will continue to have these important 
discussions with the Service. I look forward to hearing from 
our witness today on how we can best address the Coast Guard's 
infrastructure needs.
    I will now yield to Ranking Member Garamendi. You are 
recognized.
    Mr. Garamendi. You were going to go to DeFazio first.
    Mr. Hunter. For an opening statement. To you and then----
    Mr. Garamendi. Thank you, Mr. Chairman. Good morning, 
Admiral, welcome. We are delighted that you are with us. We do 
have some questions.
    I felt that our priority hearing on this topic in early 
June laid out the groundwork for future substantive 
discussions, and it was my expectation that that would happen 
today. I am not at all sure, however.
    It is manifestly frustrating, again, to not have the Coast 
Guard provide the committee with the capital planning and 
budget information the Coast Guard is required by statute to 
provide to this committee. And make no mistake about it, this 
committee is deprived of critical information when both the 5-
year and 20-year Capital Investment Plans are not forthcoming.
    I do notice that something at 5:47 was delivered to us 
yesterday. The absence of these documents makes it difficult, 
if not impossible, to understand and appreciate the budget 
tradeoffs among the acquisition programs. Moreover, this gap in 
information compromises our ability to flag programs that have 
gone off-budget or to ensure that taxpayer dollars are invested 
as wisely as possible to maintain Coast Guard mission readiness 
and capability.
    As I mentioned in my remarks at the June 7th hearing, the 
Coast Guard has an enduring role in protecting our shores and 
in facilitating our maritime commerce. When we talk about 
ensuring the future prosperity and security of our Nation, few 
things are as important as providing the Coast Guard with the 
equipment it needs.
    When this subcommittee is not provided essential 
information to fully understand the complexities of these 
expensive and important procurements, however, it makes it that 
much more difficult for the members of the subcommittee to 
advocate and build greater support in Congress for the Coast 
Guard's budget.
    Trying to understand a document that was delivered late 
yesterday that I saw for the first time this morning when I 
arrived here, for example, the polar icebreaker. Hmm, $19 
million and $18 million--or is it $5 million--$50 million--$150 
million, $430 million and then $300 million, that is maybe one 
icebreaker. What about the other three or the other two or 
other five?
    We cannot do our work without good information, Admiral, 
and we don't have it. And so, I guess I am resigned to having 
to lower my expectations for the future of the Coast Guard. I 
don't want to do that, but you don't leave me much option.
    It is a missed opportunity. We have to make decisions very 
soon about the Federal budget for 2018. The appropriations are 
on the floor maybe today for the Homeland Security Department. 
And this is the information we have available to us. To the 
extent, Admiral, that you and Admiral Haycock can fill in the 
blanks today, would you please do so?
    As to our other witnesses, welcome. I look forward to your 
testimony on these important matters, and let's hope that we 
are not further disappointed. I yield back.
    Mr. Hunter. I thank the gentleman. I'm going to go out of 
order here and recognize the ranking member of the full 
committee, because we are blessed to have him here in this 
hearing. Mr. DeFazio is recognized.
    Mr. DeFazio. Thanks, Mr. Chairman. I would certainly 
endorse remarks of my colleague, the ranking member, Mr. 
Garamendi. I think it was 4 or 5 years ago when we were doing a 
Coast Guard budget hearing I asked your predecessor, ``This is 
it?''
    I mean at that point you didn't even list the icebreakers 
on there. And having been on the icebreaker and having known, 
you know, the fact that one was mothballed and the other one 
is, you know, basically limping along, I was surprised and I 
said, ``I hope that next year you will bring in a more complete 
list of your needs.''
    I know there is a lot of pressure from the trolls at OMB 
[Office of Management and Budget] or others in the 
administration, but if you don't advocate for the Service, we 
can't advocate for the Service. And at some point we have got 
to break this logjam, you know, and I don't know where--I don't 
think it's within the Service that there is this reluctance. I 
don't know exactly where the problem lies. But we need the 
information.
    And as Mr. Garamendi pointed out, I mean, it is very 
puzzling that we finally got the polar icebreaker on the list, 
but it looks like maybe, as he said, perhaps one and, you know, 
obviously you have many, many, many other needs that are not 
reflected on this 1-page summary. So we really need--and later, 
when we are in questions I will be asking, if others don't, 
when we are going to get the 5-year, when we are going to get 
the 20-year.
    I also intend to follow up on the questions that I raised 
regarding the closure of the Potomac River. This is a fairly 
unique situation. We have individual disbursed recreation, some 
of it commercial, some of it--much of it commercial, rented, 
but some of it guided. You have a camp for--a youth camp, 
right, that would be affected because they use that section of 
river?
    And this is not your normal maritime situation, where 
people have marine radios and that. I do note in your letter 
that you say that individuals can apply to the captain of the 
port and get individual authorization. That would be people in 
inner tubes, I guess, and I am not sure how that would work. I 
guess they--you know, maybe they can call in on their cell 
phone, or something like that.
    But, you know, I just don't see--I know the Secret Service 
is always difficult to deal with, but I think you could assure 
security without a total intermittent and unpredictable closure 
because you are going to strand people. I mean if someone is--
if, as I pointed out, the President could play on his other 18-
hole course where he didn't--where it wasn't next to the river, 
where he didn't cut down all the trees, and that could satisfy 
his need to play golf on his own properties to promote his own 
interests, as opposed to going somewhere else that is more 
secure.
    But, you know, to totally close this river, you are going 
to have people floating along in inner tubes, drinking beer, 
coming up against security, and then they have to get miles 
down the river to their pickup point, and I guess they are 
going to be sitting there drinking beer while someone plays 18 
holes of golf, the President or other undesignated important 
individuals.
    So this is something that is going to require some 
pushback, I think, with the Secret Service, where the Coast 
Guard says this is not practical for this sort of recreational 
activity. You could post a Zodiac there with a machine gun, and 
if you see a threatening paddleboarder, take him out. So, you 
know, that would--that might solve the problem. So I will be 
asking questions about that also. Thank you, Mr. Chairman.
    Mr. Hunter. I thank the gentleman.
    Admiral, again, thank you for being here, and for your long 
service. And you are now recognized.

 TESTIMONY OF ADMIRAL PAUL F. ZUKUNFT, COMMANDANT, U.S. COAST 
                             GUARD

    Admiral Zukunft. Chairman, thank you, and Ranking Member 
Garamendi, Ranking Member DeFazio, and members of this 
committee, staff, thank you for giving me this opportunity to 
testify today.
    I do ask that my written statement be entered into the 
record.
    Mr. Hunter. Without objection.
    Admiral Zukunft. OK. As this committee well knows, the 
Coast Guard is a longstanding member of the armed services. We 
have served in every military campaign dating back to 1790. 
Today, there are over 20 Coast Guard cutters committed to 
supporting DoD's global operations, chopped to DoD.
    And on any given day there are 5 aircraft, 2 specialized 
boarding teams, and an all-Reserve 130-member Port Security 
Unit under the operational command of our DoD combatant 
commanders. I mention this to bring to your attention the Coast 
Guard's national security and defense missions are paramount. 
These are Coast Guard platforms and forces performing defense 
missions that are largely trained, equipped, maintained, and 
salaried as part of the Coast Guard's budget, not part of 
Department of Defense.
    Yet, as a military service, only 4 percent of my budget is 
funded through defense appropriation discretionary 
appropriations. The other 96 I must compete with every other 
Federal discretionary account to fully fund a broad array of 
missions that span the globe and have not diminished over time.
    For the past 5 years our annualized appropriations for 
operations and maintenance has been below the Budget Control 
Act floor. As the other armed services lament the prospect of 
being funded at the BCA water level, the Coast Guard finds 
itself under water in that regard.
    Our 11 statutory missions, they best align with those of 
the Department of Homeland Security. And two of our highest 
priority regions, reining in transnational criminal 
organizations like never before across the Western Hemisphere, 
Central and South America, before they reach the United States, 
and exerting sovereignty while protecting safety of life at sea 
in the Arctic, do not rank high in the regionalized national 
military strategy.
    So yes, we are moored in the proper home port in the 
Department of Homeland Security, and simply require the right 
funding mechanism befitting a military service.
    So, going forward, the Coast Guard requires 5 percent 
annualized growth in its operations and maintenance account and 
a $2 billion floor in our acquisition account. This would allow 
me to dig out of the Budget Control Act basement, sustain 
current operations, and grow our workforce while concurrently 
building out our fleet of National Security Cutters, Offshore 
Patrol Cutters, Fast Response Cutters, icebreakers, inland 
construction tenders, reduce our shore infrastructure backlog 
of $1.6 billion, missionize our C-27J aircraft and advanced 
land-based unmanned aerial systems, and make that a program of 
record.
    Now I regret the less-than-timely--and all you have seen is 
a chart of our 5-year Capital Investment Plan. We continue to 
be in negotiation on late receipt of a budget as we move 
forward, and a Service that has lived through 16 continuing 
resolutions over the last 7 years, and 2 funding lapses, and 40 
percent swings in what our annualized capitalization investment 
is going to be year to year.
    Our unfunded priorities list, that reflects reality. And 
what it shows is a 40-percent gap in our 5-year Capital 
Investment Plan and what we need to be a Coast Guard of the 
21st century.
    Now, rest assured, I will continue to work with our 
Department, with this administration and with Members of 
Congress to close these gaps going into the future. And what 
you need, and I fully understand, is our 20-year CIP [Capital 
Investment Plan].
    As a military service, we are the only military service 
that can say we have a clean financial audit opinion. We have 
done that now for 4 consecutive years. We are delivering ships 
on time, on budget, with zero growth, and with zero 
deficiencies, and these ships pay for themselves in value of 
contraband removed on their maiden deployment. And these ships 
will be in service for more than three decades to come. It is a 
great investment.
    And I appreciate the investment that this committee has 
made to our United States Coast Guard. That makes us the 
world's best Coast Guard, bar none.
    And looking out for the welfare of our people and our 
blended retirement system to ensure that we do not sacrifice 
our retirements, our benefits, and to make sure that we have a 
permanent solution to this legislative mandate that addresses 
blended retirement.
    So on behalf of all 88,000 men and women who serve our 
Coast Guard, thank you for serving us. I look forward to your 
questions.
    Mr. Hunter. Thank you, Commandant. Just because we are so 
happy to have people here I am going to yield to Mr. Lewis for 
5 minutes.
    Mr. Lewis. Thank you, Mr. Chairman, and thank you, Admiral, 
for appearing here today and for your service. We obviously 
honor that and appreciate it.
    I just have one quick question, and I brought it up at the 
last--one of the last hearings, anyway, and that was about the 
need to keep open our shipping lanes in the Great Lakes in the 
harsh winters. I come from the great State of Minnesota, and it 
is vital in Duluth and throughout the country.
    So I am wondering. There is a lot of attention on the polar 
icebreakers, but I am wondering, trying to cover the cost of 
delays and millions of dollars of commercial revenue when we 
have got severe ice coverage on the Great Lakes, what the Coast 
Guard--or where we are in the procurement of a couple of much-
needed Great Lakes icebreakers right now.
    Admiral Zukunft. I thank you for that question. So, current 
state, we are extending the service life of our 140-foot 
icebreaking tugs, who have performed yeoman duty up in the 
Great Lakes. We have had an advantage of a very light ice 
season, so we are not putting wear and tear on any of these 
assets.
    And we have also entered into an agreement with our 
Canadian counterparts several years ago to assure that we have 
some agreement between the two if we have severe ice seasons 
like you saw in 2014 and in 2015, that we can apply those 
scarce resources to the best advantage.
    As you have seen, there is a line item in our 2017 budget 
that addresses design and construction of a Great Lakes 
icebreaker. If I were to rank that on all my priorities right 
now, my biggest priority in my icebreaking fleet is going to be 
our heavy icebreaker, which is consuming not just bandwidth, 
but also a significant portion of our budget, as well.
    Mr. Lewis. No, and I understand that. I understand that 
national security implications of the polar icebreakers and 
getting all of that done. But I am, obviously, concerned. I 
think there is, what, one--the Mackinaw, one icebreaker in the 
Great Lakes, is that correct?
    Admiral Zukunft. That is correct, Congressman.
    Mr. Lewis. And so we are extending the service life of the 
140-foot icebreakers. Do you have any idea how long that 
extension is, or what the life expectancy is?
    Admiral Zukunft. Yes, we plan to get 10 more years out of 
those vessels.
    Mr. Lewis. Ten more years. I am just wondering at what 
point--I mean you mentioned--and I certainly share in your 
concerns how the Guard has been shortchanged in a number of 
areas with regard to the BCA levels, or just getting 4 percent 
of DoD appropriations, and things like that. But I do think 
this is a very important part of your mission, obviously, with 
regard to commerce in the Great Lakes, and I would just call 
your attention to that.
    And I yield back, thank you.
    Mr. Hunter. I thank the gentleman. The ranking member of 
the full committee is recognized.
    Mr. DeFazio?
    Mr. DeFazio. I thank you, Mr. Chairman.
    Admiral, you did state in your testimony about the need for 
$2 billion to begin to catch up. And, you know, I understand 
the pressures you are--the Service has been under, and I am--
always endeavor to support additional funding.
    But even in this 5-year outline you provided us, you don't 
any one of those years hit the $2 billion. I mean it looks like 
it roughly--$800, $600, $400, $200, $300 million short. So that 
totals up to, you know, well over, like, $1.4 billion, 
something like that. So how does this reflect being able to 
catch up on the $2 billion a year?
    Admiral Zukunft. Congressman, I am glad you brought that 
up, because what that does reflects is fiscal guidance. And we 
are a Service that has lived within fiscal guidance, and fiscal 
guidance is not getting the mission done for us.
    So the 5-year--those numbers that you see that don't 
approach $2 billion, those are the constraints of living within 
fiscal guidance.
    Mr. DeFazio. OK----
    Admiral Zukunft. The priorities----
    Mr. DeFazio. Meaning you are being dictated to, in terms of 
what you can ask for?
    Admiral Zukunft. Yes, sir.
    Mr. DeFazio. OK. And whoever is dictating is dictating that 
you come up with numbers that are not adequate. I would just 
like the record to reflect that.
    A quick question about the icebreakers. There was one 
report recently that, you know, if we bought a group, a 
standardized design, four or five, we could get the price down 
after the first one. And then there was a question about 
militarization.
    And I guess my question would be--and I don't know if you 
are the appropriate person, but it seems to me that, you know, 
I could envision a point at which--I mean the Navy is not going 
to be able to get assets up into what is basically going to 
become a seasonal shipping lane and an area of potential 
conflict between ourselves and the Russians, given the 
extraordinary claims they are making in the Arctic.
    And, you know, maybe the Navy should be paying for these 
icebreakers, and you guys operate them. What do you think?
    Admiral Zukunft. Well, we already have an integrated 
program office, stood up with the Navy, and $150 million in the 
Navy shipbuilding account. That builds 20 percent of an 
icebreaker. I would like to see 100 percent of the first 
icebreaker, then look at block buy. And at that point I am 
agnostic, in terms of source of funding.
    Does it support homeland security? Does it support defense? 
Does it support the United States of America? And, most 
importantly, it answers that question. We have unique, 
sovereign interests that other nations are encroaching upon. As 
you mentioned, Russia is claiming all the way up to the North 
Pole.
    Mr. DeFazio. Right.
    Admiral Zukunft. We are just sitting there, watching that 
happen. We need a means to exercise our sovereignty in these 
high latitudes, and we are severely lacking in that.
    We will need that legislative approval to do block buys. 
But beyond this first icebreaker, we need to look at a block 
buy of icebreakers and accelerate the buildout of this program.
    Mr. DeFazio. OK, excellent. Thank you.
    On the issue of the security on the Potomac, have there 
been or could there be discussions with the Secret Service 
regarding something less than a bank-to-bank, you know, total 
closure over a couple-of-mile section of the river?
    Admiral Zukunft. I happened to fly over that very same 
stretch of river late yesterday afternoon, over the golf 
course. As you mentioned, there is no foliage. So it is clearly 
exposed from the riverfront up to the clubhouse.
    We are working with the three canoe groups, the kayak 
groups, to allow them passage on the Maryland side of the 
Potomac River. And then, once you get beyond that, you enter 
class 1 rapids, which you will not take an inner tube down. So 
we are looking at striking a balance between the two.
    So, as you have brought up--and Ranking Member Garamendi, 
as well, have elevated this issue. We listened, and we are 
making that accommodation to the public.
    Mr. DeFazio. OK. For just the organized groups, or would 
that include individual canoeists? I mean----
    Admiral Zukunft. So we have met with the American Canoe 
Association----
    Mr. DeFazio. Right.
    Admiral Zukunft [continuing]. With the groups that haul out 
there. And as long as they stay to the Maryland side of the 
Potomac River, they can pass clearly when the security zone is 
in effect.
    Mr. DeFazio. OK. I hadn't seen that notice, or that change 
in the notice. So that is welcome news.
    And would that accommodate the kids in the camp, too?
    Admiral Zukunft. It would.
    Mr. DeFazio. OK. That is very good news, then. OK. Thank 
you. I will look forward to seeing--now, is that a final 
disposition? Because you had a pending rule. Is it----
    Admiral Zukunft. Well, I read your letters.
    Mr. DeFazio. Yes.
    Admiral Zukunft. And, rather than read it, I have to see 
it.
    Mr. DeFazio. OK.
    Admiral Zukunft. And I am meeting with our staff, the 
sector commander. You know, we can make an accommodation here.
    Mr. DeFazio. OK, excellent. OK. Well, thank you.
    Thank you, Mr. Chairman.
    Mr. Hunter. I thank the ranking member of the full 
committee. I now recognize myself.
    We will just start rolling here, Commandant. The UPL 
[unfunded priorities list] that went to OMB and then finally 
got to us didn't include six FRCs [Fast Response Cutters] for 
CENTCOM [U.S. Central Command]. How big of a priority was that 
for the Coast Guard?
    Admiral Zukunft. When the Executive order came out on 
restoring readiness for our military, as soon as that was 
released, I sent a memo to the Department of Defense, to the 
chairman, to the Secretary of Defense, and said we are going to 
need to recapitalize these six patrol boats that are serving in 
the Northern Arabian Gulf.
    I have also met with the CENTCOM commander, as well. There 
is an enduring requirement to do so. But to use DoD funding to 
be able to build those out. So the reason that does not appear 
in our unfunded priorities list, that could be funded by the 
overseas contingency operations or some other mechanism, 
because that will have an exclusive and sole purpose, DoD 
mission, to----
    Mr. Hunter. Do you think DoD is going to spring for that, 
then?
    Admiral Zukunft. I am hopeful that they will.
    Mr. Hunter. You have a timeline?
    Admiral Zukunft. I do not. So they are looking at how long 
can these 110-foot cutters remain in service. We have only got 
about maybe 5 years. The good news is we have a hot product 
line for these Fast Response Cutters, and we are turning these 
out. As I mentioned, the last five came out with no 
discrepancies. So we can turn out service-ready platforms----
    Mr. Hunter. So, theoretically, you would just add--tack on 
these six to the hotline at some point, and get them over 
there?
    Admiral Zukunft. Correct.
    Mr. Hunter. Got it, thank you. I guess we can go to the 
timing. And this kind of falls into the overarching question of 
the relation between the shortfall of the acquisition, 
construction, and improvements, and the planning for that, and 
your mission capability, because that is what we are looking 
at, right? That is a--we are saying, in dollars, about $200 
million short, at the best. And then, lower than that, much 
more--the gap is bigger, going through.
    [Slide]
    Mr. Hunter. Here is a nice slide. The red line is what we 
have authorized, the blue line is what has been appropriated, 
and the green line is what the Coast Guard's budget request has 
been.
    Just above the red line, say an inch, is where your program 
of record--all your programs of record, let's call them a 
program of record--that is where those hit, is just above the 
red line. So your requests never come close. That big spike is, 
I think, National Security Cutter, right? And then after that, 
even the appropriated dollars go down until you get another 
NSC. But those never meet. And that is expressed in dollars.
    But what I would like you to do right now is talk about it 
in terms of capability.
    Admiral Zukunft. So, what you are looking at is, you know, 
life below the floor of the Budget Control Act. When we deal 
with our fiscal planning guidance, it typically comes in at or 
below the floor already. And then, with each iteration--over 
the last several years we have been asked to then identify a 5-
percent excursion, in addition to a funding level that is 
already funded below the BCA floor, which is why I am looking 
at a 5-percent annualized growth in this account to dig out of 
what is literally a basement, and we have been handed a shovel.
    So, where does that pain get filled? Well, we start 
deferring maintenance. You defer maintenance, you go down a 
slippery slope. We have 72-year-old inland construction tenders 
in service today that enable $4.6 trillion of commerce to take 
place. And we never stepped out and said, ``Well, what are we 
going to do about investing these?''
    So, part of it I bear the responsibility of. We have been a 
Service that will only build one thing at a time: the National 
Security Cutter. When we finish that, we will move on to the 
next. Well, there's five classes of ships that we need to 
recapitalize today.
    And not just the ships, but also the outgoing maintenance 
to maintain these ships, as well, because too often we just 
look at the initial acquisition cost and not the outyear 
expenses for training, for people, for maintenance, and that is 
where you start running into a train wreck, is when you start 
deferring maintenance or you start cutting force structure. And 
that green line has taken us to a place where we cannot 
continue to navigate into the future.
    Mr. Hunter. OK, but your 20-year plan, which we don't have, 
I would guess that that would lay those things out.
    Admiral Zukunft. It will.
    Mr. Hunter. Right? That would--I mean that is where you 
would get that information from. So have you submitted the 20-
year plan?
    Admiral Zukunft. We have not, and I owe that to you.
    Mr. Hunter. So it has not even been submitted to the 
Department at all?
    Admiral Zukunft. It has not.
    Mr. Hunter. OK. I guess, following up with that--and I 
think we have asked you this every time you have been in front 
of this subcommittee--why do you think that discrepancy is 
there? Do you think it is a--the--because DoD doesn't have this 
problem. DoD is able to be--they are strong enough, they can 
tell OMB to go pound sand.
    You say you are a defense service, a military service, yet 
your 11 statutory missions fall in line with homeland security. 
But the Department of Homeland Security is not funding you 
appropriately. So is it a question of Coast Guard willpower, 
like the will to get this done? Brain power? What is the 
problem, do you think?
    Admiral Zukunft. Part of it is just the categorization of 
our appropriation: non-defense discretionary. And so, 96 
percent of that--we compete with all other Federal non-
discretionary funding. And there are lots of non-discretionary 
funding needs, and I don't take that away from anybody. But as 
a military service, you know, I am competing for every other 
aspect, and yet only 4 percent of our funding comes from a 
defense appropriation.
    A recategorization of that would allow me to compete 
better. But when I get fiscal planning guidance, which is 
focused on that 96 percent, and then how do we divvy up 
nondefense discretionary, that is how you end up with green 
lines. That is how you end up with, well, you need to take a 5-
percent excursion below the BCA floor because we need even more 
non-defense discretionary.
    The Coast Guard will never bail out our Nation's debt, 
which is going to approach $830 billion in the year 2026. My 
budget is under $11 billion. The Coast Guard is not going to 
pay us out. But we are a great investment. And what we have not 
done adequately enough is play offense. And this defensive 
back-and-forth of how do we build out a budget in the outyears, 
we need to state our need----
    Mr. Hunter. Let me interject. If your--but when you are in 
the Department of Homeland Security, and you are, let's say, 
tightly held to that planning--to that financial guidance, how 
do you expect to break out of this?
    Admiral Zukunft. I am seeing very positive signs. We saw 
that during a passback that went public, the Coast Guard would 
have seen a 13-percent reduction to its budget. Our Secretary, 
Secretary Kelly, went to the highest places to ensure that the 
Coast Guard was fully funded for 2017. And we are.
    But we have tremendous support, and we did from Secretary 
Johnson, as well. But the access that this Secretary has to key 
leadership within this Government who understands the United 
States Coast Guard, who understands the military--we have very 
good alignment with senior leadership today.
    Mr. Hunter. Do you think that your financial guidance is 
going to change?
    Admiral Zukunft. I do.
    Mr. Hunter. Towards that red line?
    Admiral Zukunft. I do, Chairman. And I will work to make 
sure that happens.
    Mr. Hunter. When do you think that--that we will see that 
reflected?
    Admiral Zukunft. I want to see that happen in 2018, 2019, 
and, again, I want to see--you know, I am serious about this 5 
percent annualized growth, $2 billion. And people say, ``Well, 
you are asking for too much.'' You know, the fact that we can 
account for our dollars, the fact that we have almost no growth 
at all in our acquisition budget--and again, when the Coast 
Guard cutter Stratton or the Hamilton returns from its maiden 
voyage with $1 billion of cocaine on it----
    Mr. Hunter. If we could sell that cocaine, we could----
    [Laughter]
    Admiral Zukunft. Well, we are not there yet. But we are 
transnational----
    Mr. Hunter. California is going to legalize coke----
    [Laughter]
    Admiral Zukunft. Where they are most vulnerable, really, is 
when they are on the water. And their biggest dread is when 
they see a National Security Cutter. Launching a ship-based 
unmanned aerial system--they don't even know they are out 
there, until we find them. And then that armed helicopter 
arrives overhead. And if they try to run away, we stop them: 
585 smugglers brought to the United States for prosecution, 100 
percent of them prosecuted here, in the United States. I think 
that is a successful mission.
    Mr. Hunter. Last thing, then I am going to pass it on to 
Ranking Member Garamendi.
    We had a debate--not quite a debate, we just did the 
National Defense Authorization Act, and we talked about 
icebreakers, and we talked about the fund. I think we lost that 
amendment, right?
    Chairman Thornberry voted against the amendment to allow 
icebreaker money to go into their account in the Navy. And what 
I got from that is that the political leadership here, and the 
Department of Defense, and the Navy, none of them see 
icebreakers as a national security asset. That is what I took 
away from it.
    Why is that? Do you think that is correct? Do you think it 
is more of a savings lives, when you start drilling for oil and 
going after natural resources in the Arctic? Or do you think 
there is a national security mission, not a search-and-rescue, 
break-boats-out-of-ice mission.
    Admiral Zukunft. Let me answer it this way, Chairman. We 
have an area the size of the State of Texas that is part of our 
extended Continental Shelf. And nearly half of the oil and gas 
reserves are below that sea floor, in our 200-mile limit and 
our extended Continental Shelf.
    China has an icebreaker on its way right now, and they will 
do scientific research in this extended Continental Shelf. And 
maybe someday we ratify the Law of the Sea Convention, and we 
claim was is rightfully ours. China will contest that. And so 
we have sovereign interests that are up there.
    Russia will take delivery of two icebreaking corvettes with 
cruise missiles on them. They are militarizing search-and-
rescue stations. And doesn't this look like a movie we have 
seen in the East and South China Sea? It is known as area 
access denial, and we have no means to exert sovereignty.
    So, what do you need an icebreaker to do, not just today, 
but 30 years from now? Reserve space, weight, and power, 
because you might have to weaponize this icebreaker. It is 
great we have submarines, but I think it is very difficult to 
exert sovereignty with a submarine. You have one course of 
action, and that is to sink an adversary.
    Mr. Hunter. Well, tell me, what is the disconnect, then?
    Admiral Zukunft. So the disconnect----
    Mr. Hunter. Because what you are saying makes sense to us, 
but no one else is buying it. And that was made clear last 
week.
    Admiral Zukunft. Well, I think you answered the question: 
buying it. Buying it.
    Mr. Hunter. Money.
    Admiral Zukunft. This is an issue of national security.
    Mr. Hunter. This is one of those things that everybody says 
we need, but nobody wants to put the money in.
    Admiral Zukunft. Yes, sir.
    Mr. Hunter. All right. Thank you very much.
    Ranking Member Garamendi, you are recognized.
    Mr. Garamendi. In your opening statement you said that the 
Coast Guard provides Department of Defense services. You 
mentioned 20 cutters, you mentioned aircraft. What is the total 
cost of the services that you are currently providing for 
national defense purposes? Worldwide.
    Admiral Zukunft. Congressman, I will break that out and 
provide you what that breaks out to. And that includes 
salaries, maintenance, it is a pretty significant number, when 
you add it all up. It is not just the cost of burning fuel, 
doing a mission.

    [The information from Admiral Zukunft of the U.S. Coast Guard 
follows. This information is an update to the Coast Guard's fiscal year 
2014 report to Congress: ``Defense-Related Activities,'' which is on 
pages 103-109.]

        Introduction

        In response to the Coast Guard and Maritime Transportation 
        Subcommittee's July 26, 2017, request to provide ``an itemized 
        accounting for Coast Guard support to COCOMs (assets, 
        personnel, operations, etc.),'' the Coast Guard submits the 
        below update to its fiscal year 2014 report to Congress, which 
        was titled, ``Defense Related Activities.''

        Since 2001, the Coast Guard has derived $340,000,000 (excluding 
        overseas contingency operations) of its annual Operating 
        Expenses appropriation for defense-related activities. The 
        update below applies the same methodologies used in the 2014 
        report to provide new estimates using fiscal year 2016 data. 
        Additionally, the Coast Guard conducted further analysis to 
        include pay and allowance costs for Coast Guard members when 
        they conduct defense-related activities.

        Operating Expenses

        For fiscal year 2016, the Coast Guard's estimated allocation 
        and expenditure of the aforementioned $340,000,000 is estimated 
        to be:

----------------------------------------------------------------------------------------------------------------
                                                              Fiscal Year 2016             Fiscal Year 2016
                Defense-Related Activity                      Allocation (BA in          Expenditures (BA in
                                                                  millions)                   millions)
----------------------------------------------------------------------------------------------------------------
Defense Readiness......................................                     $17.172                      $16.553
Domestic Support.......................................                    $193.885                     $195.448
Memorandum of Agreement Annexes........................                     $27.757                      $24.095
Support to Combatant Commanders........................                     $22.902                      $10.245
                                                        --------------------------------------------------------
  Subtotal.............................................                    $261.715                     $246.340
                                                        --------------------------------------------------------
Drug Interdiction......................................                     $78.285                      $93.660
                                                        --------------------------------------------------------
    Total..............................................                    $340.000                     $340.000
----------------------------------------------------------------------------------------------------------------


        The Coast Guard's Mission Cost Model estimates of Operating 
        Expenses funding allocations and expenditures for total 
        defense-related activities in fiscal year 2016 are provided 
        below:

----------------------------------------------------------------------------------------------------------------
                                                              Fiscal Year 2016             Fiscal Year 2016
                Defense-Related Activity                      Allocation (BA in          Expenditures (BA in
                                                                  millions)                   millions)
----------------------------------------------------------------------------------------------------------------
Defense Readiness......................................                     $79.066                      $74.067
Domestic Support.......................................                    $222.468                     $195.448
Memorandum of Agreement Annexes........................                    $115.094                     $107.818
Support to Combatant Commanders........................                     $48.937                      $45.843
                                                        --------------------------------------------------------
  Subtotal.............................................                    $465.565                     $423.176
                                                        --------------------------------------------------------
Drug Interdiction......................................                    $447.380                     $419.096
                                                        --------------------------------------------------------
    Total..............................................                    $912.945                     $842.272
----------------------------------------------------------------------------------------------------------------


        Other Discretionary Appropriations

        Programs funded by Acquisition, Construction, and Improvement 
        (AC&I); Reserve Training (RT); and Research, Development, Test, 
        and Evaluation (RDT&E) ensure that the Coast Guard has the 
        necessary assets, and properly trained and equipped force to 
        conduct defense-related activities. The estimates for each of 
        those appropriations in fiscal year 2016 are provided below:

------------------------------------------------------------------------
                                                   Fiscal Year 2016
          Defense-Related Activity                 Allocation (BA in
                                                       millions)
------------------------------------------------------------------------
AC&I Defense Readiness......................                    $144.177
AC&I Drug Interdiction......................                    $676.154
RT Defense Readiness........................                      $7.561
RT Drug Interdiction........................                     $14.393
RDT&E Defense Readiness.....................                      $0.605
RDT&E Drug Interdiction.....................                      $1.716
                                             ---------------------------
  Total (Other Discretionary)...............                    $844.606
------------------------------------------------------------------------


        Total of Discretionary Defense-Related Activities: $1,757.551 
        (in millions)

        The Coast Guard's Mission Cost Model estimates of Operating 
        Expenses funding allocations and expenditures for total 
        defense-related activities in fiscal year 2016 to include pay 
        and allowances are provided below:

----------------------------------------------------------------------------------------------------------------
                                                              Fiscal Year 2016
                Defense-Related Activity                      Allocation (BA in            Fiscal Year 2016
                                                                  millions)           Expenditures (in millions)
----------------------------------------------------------------------------------------------------------------
Defense Readiness......................................                    $162.205                     $157.206
Domestic Support.......................................                    $482.401                     $455.381
Memorandum of Agreement Annexes........................                    $236.117                     $228.841
Support to Combatant Commanders........................                    $100.396                      $97.302
                                                        --------------------------------------------------------
  Subtotal.............................................                    $981.118                     $938.729
                                                        --------------------------------------------------------
Drug Interdiction......................................                    $917.807                     $889.524
                                                        --------------------------------------------------------
    Total..............................................                  $1,898.926                   $1,828.253
----------------------------------------------------------------------------------------------------------------


        Total of All Discretionary Appropriations' Defense-Related 
        Activities (including OE pay): $2,743.532 (in millions)

    Mr. Garamendi. Yes, I would appreciate that information.
    When we took this issue up on the floor with an amendment 
that I proposed last week, the chairman--I think it was the 
chairman of the Appropriations Committee spoke on the floor and 
said that the Coast Guard does not provide any national defense 
services.
    In answer to the question that the chairman just posed to 
you, the problem is ignorance amongst us. And so we have to 
deal with that. And if you can provide us with the information 
about the actual cost of the services and all of the equipment, 
airplanes, cutters, et cetera, it would be helpful in providing 
a little level of knowledge to keep people here, within this 
Department.
    Also, we might send that information to the Office of 
Management and Budget, where I think I heard you say--no, you 
didn't accuse them of the problem, but you did say you were 
given instructions. And so this sheet of information that you 
gave us is really a result of the Office of Management and 
Budget telling you what you must tell us.
    Don't respond. I don't want you to get in trouble.
    However, I do note that the Office of Management and Budget 
is willing to spend $1.6 billion on a 40- to 70-mile extension 
of existing walls, or repair of existing walls on the Mexican 
border. What could you do with $1.6 billion to really protect 
the United States from immigrants, drug smugglers, and the like 
on the southern border?
    Admiral Zukunft. If you will allow me, firsthand--where 
have I been in the last month? Meeting with Presidents in 
Colombia, in--the Vice President of Ecuador, the President of 
Panama, and heads of state in Mexico City.
    When I was in Ecuador, they have violent crime and they 
have drug usage because of the rampant growth of cocaine coming 
out of the country of Colombia. Colombia is besieged with the 
amount of coke under development.
    Mexico is seeing it at their front at the far end of this, 
but everyone is saying, ``We need more United States Coast 
Guard off our coast.'' And as successful as we are, it really 
comes down to sheer numbers.
    We don't have enough planes in the air, to include unmanned 
aerial systems, enough ships on the ocean to leverage all of 
the information. We have an awareness of over 80 percent of the 
drug flow that is ultimately destined for our Nation. It 
doesn't land, you know, just--well, it lands 1,500 miles south 
of the border. It lands in bulk in 80-pound bails of cocaine. 
And when it lands, law enforcement will turn their head the 
other way because, if they don't, they will be killed.
    The rule of law goes out the window. That is why we are 
seeing violent crime. With that violent crime--which is why you 
are seeing families putting their children in the hands of 
human smugglers to get them to the United States. The irony is 
the United States demand is driving this train. And yet they 
want to get their children here, in the United States.
    But to stop this, where this threat is most vulnerable, is 
actually at sea, where this law enforcement agency will not 
turn its back. We will seize you and we will prosecute you. 
That, to me, is a key instrument of regional stability right 
here in our backyard, where we see some of the worst violent 
crime in the world--is right here, just to the south, and well 
south of our border with our trade partner, Mexico.
    Mr. Garamendi. You gave a very good description of what you 
are doing. What could you to with $1.6 billion in--these are 
our choices. We, the representatives of the American people, 
are making a choice to spend $1.6 billion on a wall, on some 
40--maybe 70 miles of wall, instead of spending that money on 
the U.S. Coast Guard, or on any other thing.
    And my question is, if you had $1.6 billion--it is going to 
be spent in the next year, it is going to be spent in 2018, a 
budget year, $1.6 billion. Now, we could make the choice to 
give $1.6 billion of additional money to the Coast Guard. You 
could build three icebreakers over the next 3 years, 4 years, 
with $1.6 billion. Is that correct?
    Admiral Zukunft. Once----
    Mr. Garamendi. About 700--well, 2\1/2\.
    Admiral Zukunft. Yes. But once we award a contract, do a 
block buy, and then it is a delivery schedule. You know, we 
build out not four, but six Fast Response Cutters each year. We 
accelerate the buildout of the Offshore Patrol Cutter. Because 
these are the assets, especially our Fast Response Cutters, 
Offshore Patrol Cutters, that we can bring and swing into this 
part of the world.
    Mr. Garamendi. And for icebreakers, if you had a block buy, 
they are $700 to $800 million apiece? I think that is the 
current estimate.
    Admiral Zukunft. That is a ballpark figure.
    Mr. Garamendi. So, 2\1/2\, not three. These are choices. 
These are choices that we are making.
    I listened last night to the--sitting there, listening for 
hours to the Rules Committee debating whether to--what to do 
with this $1.6 billion for a wall. I just bring this to the 
attention of all of us here.
    Currently, the plan is three heavies and three lights to 
deal with the issues--icebreakers, going forward. They are not 
in your budget, they are not in your 5-year capital investment 
acquisition, construction, and improvement budget, nor are any 
of the onshore facilities that are in the document that you 
gave us of unfunded priorities.
    Incidentally, I don't see in this document, either, the two 
additional heavies or the two--or the three lights. Is that an 
unfunded priority that is not listed here?
    Admiral Zukunft. What you are seeing is just our near-term 
unfunded priorities list.
    Mr. Garamendi. OK.
    Admiral Zukunft. That doesn't take us out into our 20-year 
CIP.
    Mr. Garamendi. I noticed that you are operating--your total 
budget is somewhere around $10 billion a year--maybe $11 
billion, if we----
    Admiral Zukunft. A 10.7----
    Mr. Garamendi [continuing]. Add in the----
    Admiral Zukunft [continuing]. Salaries, retirement, that is 
everything.
    Mr. Garamendi. I am going to just speak to the chairman 
here for a moment. There are two of us on this committee that 
are also on the Armed Services Committee. And over the last 
week, I know you and I have been trying to leverage into the 
Department of Defense's $700 billion budget another $1 billion 
or so for the Coast Guard for the--particularly for the 
icebreakers. We have been unsuccessful in doing that. And I 
think we ought to continue to try to do that.
    I do not have an explanation for the question you raised, 
Mr. Chairman, about why the U.S. Navy wants to build 350--or 
have 355 ships, and not be able to use any of those ships, 
except for submarines, in the Arctic Ocean. It makes no sense 
to me at all. They want to build more LCSs [littoral combat 
ships], which are, by their own estimate, useless in a 
conflicted environment, but yet they want three more of those, 
which--those three could fund two of the icebreakers.
    I don't understand. I don't understand what the U.S. Navy 
is thinking here. Nor do I understand what my colleagues on the 
House Armed Services Committee are thinking about continuing to 
build ships that are useless in the Arctic, and we know the 
Arctic is a contested environment today, and will be more so in 
the future.
    So I guess I am just speaking, I don't know, maybe to 
myself here. But I want the public to know that there is a 
serious error being made by the House Armed Services Committee, 
and specifically by the subcommittee dealing with seapower, in 
that they are building ships that are not capable in a 
contested environment, LCSs, that do not perform even the 
services in an uncontested environment for which they were 
designed.
    At the same time, unwilling to provide the U.S. Coast 
Guard, which is a defense organization, as well as a civilian 
organization, with the money it needs not only for icebreakers, 
but to provide the men equipment necessary for the existing 
Department of Defense services that they are doing.
    So maybe I am preaching to the choir here, but I want it on 
the record that we are making some serious errors, and we have 
got to correct these errors.
    With that I yield back.
    Mr. Hunter. I thank the ranking member. I think the Coast 
Guard actually built the best LCS. It is called the NSC. That 
is what the Navy needs to get on board with.
    The former chairman of the committee, whose portrait sits 
behind you, Commandant, is now recognized.
    Mr. Young?
    Mr. Young. I thank you, Mr. Chairman.
    Mr. Hunter. And let me introduce his wife; Anne is back 
there, too. Welcome, Anne.
    Mr. Young. I thank you, Mr. Chairman, for having this 
hearing. And, you know, someone once told me you always pay for 
the sins that you have sown. And I look at my portrait every 
day and I think I am paying for my sins right now.
    But Admiral, welcome. We appreciate it. How old are you?
    Admiral Zukunft. Sixty-two.
    Mr. Young. OK. Let's see, 62. You were 14 years old, 
approximately, when I got elected. So congratulations on your 
climb to success.
    Admiral Zukunft. That makes you a ranking member.
    Mr. Young. Yes, thank you. I--you know, we hear a lot 
about--and I listen to my--the minority leader, vice chairman 
of the committee, and I appreciate what he is saying. We are 
actually concentrating on an icebreaker or breakers in the 
Arctic. And I know we need those, but that is not a defensive 
weapon.
    And I look at the border of Alaska, and especially in the 
Arctic, with the activity of Russia and China, it is--some--
China is building icebreakers, which I don't understand. And 
so, of course, Russia has got a whole lot more being built.
    Have you looked at--Admiral, I know this has been an 
ongoing battle with me and the Coast Guard over the years--the 
other possibility of getting an icebreaker into the arena 
quicker than having one constructed? Like leasing from another 
outfit? You know I have been talking about this a long time. 
Have you analyzed this again?
    I know the last time we had a study it was 1980. That is a 
long time ago. So is there a way we can put metal on the water, 
especially for the new shipping through--and the cruise ships. 
Because that Healy is old. And is--have you looked at that at 
all?
    Admiral Zukunft. We have, in fact. One potential vendor we 
have had multiple interactions. They have a platform that has 
yet to complete ice trials. We would not want to lease 
something that can't demonstrate its ability to actually 
operate in the ice that Healy sees. Healy was actually--sat in 
ice for 36 hours last year. So it is not ice-free up there, and 
that is a medium icebreaker. This particular platform doesn't 
have the capability of Healy.
    But we would at least want to make sure that ice trials 
were completed, that we could actually be a good steward of 
taxpayer dollars to lease a platform that would meet our 
requirements. So we have had multiple interactions. Last one 
was probably in May. And the issue of ice trials is still on 
the table right now.
    Mr. Young. The vessel itself that you are talking about--
and I happen to agree with you, if it doesn't do the job, you 
don't want to lease it. But, you know, we could probably lease 
a vessel for a whole lot more for a short period of time than 
we--because I don't have confidence we are going to get the 
money to build the icebreaker you need.
    For some reason, the Arctic is still not on the forefront 
of everybody's mind right now. This health bill and tax bill 
and transportation bill--where is Mr. Shuster? You know, all 
those things. But they are not thinking about what you need.
    And we keep adding on to you, and as the chairman has said, 
we are not properly funding you. And that concerns me. And I 
just want you to know that.
    I have--I think the last icebreakers were built by Lockheed 
and they are no longer in operation. Is there a--is there 
capability with the ship industry to build a good icebreaker?
    Admiral Zukunft. I am very confident there is, Congressman. 
There are five shipyards that we have awarded industry studies 
to. They have done mockups of ice trials, and they are actually 
ahead of the power curve, so to say, in terms of their ability 
to submit a request for proposal, where we could honor and 
start cutting steel.
    What I have in front of me, this is a--about the weight of 
a gold brick. That is a piece of steel out of the Coast Guard 
cutter Polar Star. We have not build ships like this since 
Lockheed Martin built the Polar Sea and Polar Star. They are 
very confident we can build these here in the United States, 
built in the U.S., with U.S. workers.
    Mr. Young. Well, they will be built in the United States. 
That I will guarantee you.
    Admiral Zukunft. Yes, sir.
    Mr. Young. I am not going to--any foreign ship. Now, back 
to parochial activity. As you know, I like your fast cutters, 
or Fast Response Cutters. I happen to be privileged to be on 
one when it first made its maiden voyage. Great ship.
    But I am a little concerned, parochially, about one-on-one 
docking, porting, because it looks like now you are going to 
have two in Ketchikan, one in Sitka. Petersburg has been left 
out, but they had a tender there.
    As we build the next one--I think you are building six 
more?
    Admiral Zukunft. Yes, six will be home-ported in Alaska. 
Sitka, as you mentioned. Seward, Kodiak are other ports of 
consideration, in addition to where we have two in Ketchikan 
right----
    Mr. Young. But again, I am interested because, if you look 
at Alaska--come to my office and look at that map--that is a 
hell of a coast. And we do have problems, you know. I will 
listen to your testimony on the drug problem, you know, I did--
you apprehend, you know, get everything done, and then you say 
they are prosecuted. But how is the prosecution going? How 
many--are we doing anything about it after you catch them?
    Admiral Zukunft. We are doing phenomenally well here, in 
the United States, 100 percent prosecution. If they are 
prosecuted downrange, maybe 5 percent. So extradition, 
prosecution in the United States. And these aren't wrist-slaps. 
These are 10-, 12-, 15-year sentences. They might be able to 
bargain down if they are providing us valuable information 
about where this activity is leaving. So when we talk about 
organized crime, it becomes disorganized once they face 
prosecution.
    Mr. Young. Well, I know I shouldn't say this, Mr. Chairman, 
but I had a bill I have written up that is pretty good. It is 
called D&D bill. You deal and you are dead. The demand is huge 
in the United States, I don't understand that, but dealers just 
absolutely are committing murder. And the prosecution is great, 
10 years, 5 years, that doesn't mean anything. If you knew that 
you were going to be hanging from the yard line, you might 
think a little differently. Thank you, Mr. Chairman.
    Admiral, congratulations again. Good job.
    Admiral Zukunft. Thank you, sir. Thank you for your many 
years of service.
    Mr. Young. Yes.
    Mr. Hunter. Thank you, Mr. Young. Mr. Lowenthal is 
recognized.
    By the way, we almost had an all-California up here. Don 
messed it up.
    Dr. Lowenthal. Honorary Californian.
    Mr. Young. I am from California.
    Dr. Lowenthal. Good morning, Admiral. Cybersecurity, I am 
going to focus a little bit on cybersecurity. And first, thank 
the Coast Guard for really helping our PORTS Caucus when we--in 
our latest discussions about cybersecurity, and I will ask 
about that. It is both a critical part and component of our 
homeland security, and also security for our transportation 
network.
    We all know that an attack upon our critical or crucial 
infrastructure such as the ports can have a tremendous impact 
on goods and movement. And in turn, the entire U.S. economy. 
We--this is a--so the first question is what is the Coast Guard 
doing to keep our ports safe from cyber attack, and to also 
safeguard our critical maritime infrastructure?
    And then the second question is--and I want to again thank 
you for your help--what did the Coast Guard learn? What lessons 
have we learned from the recent attack against Maersk, which, 
as we saw, closed down a number of their terminals, the APM 
Terminals, throughout the Nation?
    So, kind of what are you doing, and what have we learned 
now, using this as a learning experience?
    Admiral Zukunft. Great question, Congressman. So, for more 
than 14 years now we have had Area Maritime Security Committees 
in 37 of our major ports where we have a captain of the port. 
Let me take L.A./Long Beach as an example. They also have cyber 
subcommittees on these Area Maritime Security Committees.
    Now, when the committees were first stood up, there were 
security measures that were put into place: fencing, cameras, 
lighting, transportation worker identification credentials, and 
the like. Industry wasn't so pleased with some of these 
requirements, but it was written into law.
    Now we are dealing with a whole new threat called cyber. We 
were working with the National Institute of Standards and 
Technology, who actually put out voluntary guidelines to all of 
industry.
    But I use L.A./Long Beach as a great case study. I was out 
at Long Beach container terminals last year, and they have 
nearly fully automated that container terminal. Drayage trucks 
that are moved autonomously, they use batteries, they don't 
burn fossil fuel----
    Dr. Lowenthal. We are talking about Long Beach container 
terminal?
    Admiral Zukunft. Yes, sir.
    Dr. Lowenthal. Right now the----
    Admiral Zukunft. So now we have an event with Maersk 
terminals. In fact, I will be in L.A. on Friday of this week, 
and I am going to meet with Maersk to say what did they learn 
from this. What they immediately did was they shut down most of 
their operations. This particular piece of malware erases all 
of your data. So they took mostly precautionary measures by 
doing a shutdown before their data would have been erased, and 
then to make sure that they could bring those systems back 
online.
    What it does indicate is the lack of resiliency in our 
entire maritime transportation system if you look at all of 
maritime shipping, and if there is a cyber event that brings 
that down.
    As you well know, off the coast of California, this is 
just-in-time inventory. And a billion-dollar-plus of commerce 
goes through the ports of L.A./Long Beach each and every day. 
And it doesn't stop there, it goes on a rail system, it goes 
through the Rust Belt, and it goes to New York, and it goes on 
to Antwerp, from there. So any disruption along that supply 
chain has a global consequence. And what that did elevate is we 
can't take our eye off the maritime domain.
    Maersk is doing a great job. Sometimes you are beholding to 
a subcontractor, someone else that has access to your data, 
they provide a back door into your systems. And so that is the 
vulnerability that we need to look at closing, as we start 
looking at what is cybersecurity.
    And the other challenge is how do we hold those accountable 
who would actually try to disrupt our supply chains, because 
this is really an attack on our national security, at the end 
of the day.
    Dr. Lowenthal. Did you learn anything that you might change 
some of our procedures or our interactions with other agencies? 
Out of this, what did we learn? What did the Coast Guard learn, 
in terms of how effective they were in responding to this, and 
having responses, coordinated responses, from all the potential 
agencies that are impacted by a cyber attack?
    Admiral Zukunft. Yes. Well, the first thing we learned, 
Congressman, is we don't have the cyber cavalry, if you will, a 
cyber protection team that can go out and immediately apply 
patches to allow an industry to recovery from a cyber attack.
    What we also learned, though, is Maersk reported. And 
sometimes there are disincentives to reporting that your 
systems may have been compromised, because obviously, you 
know----
    Dr. Lowenthal. Right.
    Admiral Zukunft [continuing]. In the private sector that 
could have secondary consequences. But the fact they were 
forthcoming, so we could look across the entire cyber domain 
within the maritime transportation system, and ascertain that 
this was the only one that had been singled out across all the 
maritime stakeholders, but it allowed us to do a full sweep. Is 
this part of a concerted attack against multiple domains 
besides Maersk?
    Dr. Lowenthal. Well, I am going to yield back. I want to 
thank you.
    I mean I see this as the critical issue, moving forward, is 
how we implement more cybersecurity, and that we understand 
just what we are up to, and that the--you know, this is a 
cooperative venture between the Coast Guard, private industry, 
our ports. And this could have a devastating impact upon the 
U.S. economy.
    And so, I am just really pleased that you are on it, and 
that you are working on these issues. Thank you.
    Mr. Hunter. I thank the gentleman. We are going to wrap up 
here. Mr. Garamendi and I have a couple of last, quick 
questions, and we will go to the second panel.
    Admiral, back to the icebreakers really quick. And the next 
panel, you are going to have the Assistant Commandant for 
Acquisition on that one.
    Admiral Haycock, you will probably answer some of these, 
but--Ron O'Rourke can probably a couple of these, too.
    But just--what is your take on why you don't want to block 
buy the first-in-class heavy? Why not start--if you have the 
design done--and I am sure, with the oversight and the 
attention that the icebreakers are going to get, everybody is 
going to make sure that the design is totally done, that lead 
materials are purchased, that it goes along in that fashion, 
right, so it is not haphazard. Why not block----
    Admiral Zukunft. Well, what we have seen, just in our first 
ship buys, is that there is a learning curve. And obviously, 
with a heavy icebreaker, a very steep learning curve. We 
haven't built a ship of this design in four decades.
    So, there is inherent risk doing a block buy, where 
industry may want to, you know, shed some of that risk. And if 
we do a block buy of maybe $950 million per copy, well, maybe 
that second ship we can negotiate down into a more affordable 
range, and then, recognizing second, third, fourth, and so on, 
those ships, you know, you can then get into a more affordable 
range than we might with a lead ship if we are really trying to 
get all of our requirements met, but do so at an affordable 
range.
    Mr. Hunter. So if you--if things go perfectly, when do you 
think we would start building the first icebreaker, the first 
heavy?
    Admiral Zukunft. We want to award not later than 2019, and 
have it in the water by 2023, have ice trials done, and, if it 
meets all those requirements, that is the time to lock in a 
block buy.
    Mr. Hunter. So how does that match up, then, with the three 
heavies and three mediums?
    Admiral Zukunft. Well, you have probably seen the National 
Academies of Sciences that said, you know, four heavies.
    Mr. Hunter. Also on the next panel. Their stuff said you 
could build a fourth heavy for cheaper--for less money than you 
could build your first-in-class medium.
    Admiral Zukunft. I agree with that, the science that comes 
behind that. Lead ships are typically more expensive. Second 
ships, you know, you realize some economies of scale. But 
certainly a fourth heavy would probably come in less expensive 
than a first medium icebreaker. And it can operate around the 
globe.
    Mr. Hunter. But right now it is pie in the sky, really, 
talking about two, three, four----
    Admiral Zukunft. It informs another study. So we have the 
high latitude that said three heavy, three medium. And why six? 
Well, have you see, whether you are a carrier strike group--but 
it usually takes three ships to have full-time presence in any 
given region: one that is there, one that is coming back and 
will go through a refit, and the other one that is working up 
and getting ready to go. So that is how you end up with a 
number of six.
    Now, that number four that the National Academies of 
Sciences released, those are all four heavy icebreakers, but it 
also includes the Healy. So it leaves you with five. So we are 
still looking at what is the right number. The right number 
right now is one, and get that first one built, do the block 
buy, and start building out this program of record.
    Mr. Hunter. Going back to Mr. Young's question, too, about 
leasing, you said you are waiting for, I am guessing, money for 
ice trials. That is what you said?
    Admiral Zukunft. No real dollars have been negotiated in 
any of this, so----
    Mr. Hunter. But in real terms, though, you are only paying 
for gas. I mean what does it cost to do ice trials? It is gas, 
right? You are not going to hire more coastguardsmen to come in 
and do it. I mean so that is a--your overhead is fixed. So what 
does it cost to go do ice trials with the Aiviq?
    Admiral Zukunft. That would really be for the----
    Mr. Hunter. The--once again, the only existing U.S.-made 
icebreaker in America.
    Admiral Zukunft. So this is a ship that is built with 
direct drive diesel. Icebreakers are typically diesel-electric, 
which means the generators push the shaft. And they absorb that 
shock load every time you collide with ice.
    A reduction gear, fixed gear, is going through that--that 
gear box is going to absorb all that shock. So if you are going 
to do ice trials, there is a likelihood you might have to 
replace a reduction gear. There might be real hidden costs in 
doing ice trials.
    So, if I am a vendor, I might want to protect myself from 
some of that risk. Now, I am not the vendor, but those may be 
some of my thoughts of, OK, if you are really serious about 
this, and I do ice trials, and now I have just caused X number 
of dollars that I am now going to have to fit--and, oh, by the 
way, you are not going to lease it because it didn't meet your 
requirements, I think those are some of the issues that we 
still have to negotiate.
    Mr. Hunter. And lastly for me, the continuation pay to put 
you with the other services--and again, this goes back to the 
Department of Homeland Security versus the Department of 
Defense versus you as a military service versus you under the 
Department of Homeland Security with your 11 missions. We got 
creative, and we were able to do a short-term fix. If you 
could, just talk a minute about the importance of that, and how 
you plan on getting in line with the other services when it 
comes to retirement.
    Admiral Zukunft. Yes. Well, Chairman----
    Mr. Hunter. And just about everything else.
    Admiral Zukunft. You, you know, Ranking Member Garamendi, 
your staff behind you, you guys did a lot of heavy lifting to 
get us through this first wicket. But we can't keep going 
through these wickets year in and year out. Maybe you don't 
clear a wicket one year, because this is real money, this 
continuity pay.
    You know, blended retirement was legislatively mandated. 
And yet this would immediately impact our retirement counts, my 
operation capability. It is a legislative change, but I just 
need the mechanisms, so we don't have to go back year in and 
year out, but a permanent solution.
    But I want to thank you for getting us through this first 
wicket, but there are many more in front of us.
    Mr. Hunter. It is kind of interesting. The blended 
retirement is probably more important, I would guess, to the 
other services. They probably have lower retention than the 
Coast Guard does. You have guys that get in for 10 years, do 
eight tours, special forces, then you get out and you get 
nothing. That is why we fix it on the Armed Services Committee. 
Probably different for the Coast Guard, in terms of your 
retention and the burden on your servicemembers, too. I mean--
--
    Admiral Zukunft. That is correct, sir. We enjoy the highest 
retention of any armed service today. I don't know what 
tomorrow holds in store for us, but certainly today 40 percent 
of our recruits who leave basic training are on active duty 20 
years later. Sixty percent of our officers.
    Mr. Hunter. That is huge.
    Admiral Zukunft. Which is a great return on investment.
    Mr. Hunter. Admiral, thank you very much for being here. 
And I am going to recognize Mr. Garamendi for closing remarks 
here.
    Mr. Garamendi. Admiral, a couple of things. We have talked 
about icebreakers here. We will go into icebreakers a little 
more with the second panel.
    I am concerned about where the National Academies of 
Sciences is going with regard to four icebreakers--four 
heavies, and basically putting aside the issue of the mediums. 
We will deal with that in more detail, but just note my concern 
about that.
    Also, you and I have had this conversation--I want to get 
it on the record--with regard to Buy America. The President 
talks about Made in America; I want to talk about Making it in 
America, which means that these icebreakers, as--my goal is 
everything on that icebreaker is American-made. That may or may 
not be possible. I want to have a very, very tight window here 
for purchase of those parts of the icebreaker that are not 
American-made.
    I would like to know your attitude on this, and find out 
where you think this is going to go.
    Admiral Zukunft. Now, that is a great point. And, you know, 
the frustration I have right now with some of our foreign-made 
parts, they go out of business. Or you find yourself waiting in 
line. That is holding up our ability to provide spare parts for 
the C-27J. Now, granted, we acquired these 14 aircraft, 13 are 
out there on the tarmac right now. But we are dependent upon a 
foreign supply chain to be able to outfit these to carry out 
national security missions.
    And so, we need to look at the world around us, which is 
not exactly breaking out in tranquility. And do we want to be 
attendant upon a foreign source provider to equip our national 
assets?
    And so I am in lock step with you, Congressman, that, yes, 
these have got to be built in America so we don't find 
ourselves--we can't get the parts to keep these platforms 
running.
    Mr. Garamendi. Good. The support necessary to build these 
icebreakers and any other thing really will come from the 
American economy or American manufacturers spread out across 
this Nation participating in the construction of these 
icebreakers or any other pieces of equipment that you need.
    Just a couple of final comments, then. I appreciate your 
testimony. In my opening I was concerned about the information 
that we receive. I understand that you are told what to tell 
us. We do need to know what you need without being censored by 
the Office of Management and Budget. So my specific ask is that 
we get full information about what is required by the Coast 
Guard.
    I also ask for some information with regard to those 
portions of the Coast Guard operations that are clearly for 
national defense, the Department of Defense.
    So, if you will get that to us as quick as possible, it 
would be helpful. We will go forward.
    Admiral, thank you for your testimony.
    Admiral Zukunft. OK, thank you.
    Mr. Garamendi. I yield back.
    Mr. Hunter. Admiral, thank you very much for being here, 
thanks for your service.
    Admiral Zukunft. Thank you.
    Mr. Hunter. It is good seeing you, and we will get ready 
for the next panel.
    Admiral Zukunft. OK. Thank you, Chairman.
    [Pause.]
    Mr. Hunter. Good morning. On panel--we have saved the best 
for last, by the way, that's how it works. On panel 2, we will 
hear testimony from Rear Admiral Richard D. West, U.S. Navy, 
Retired, chair of the National Academies of Sciences' Committee 
on Polar Icebreaker Cost Assessment; Rear Admiral Michael J. 
Haycock, Assistant Commandant for Acquisition and Chief 
Acquisition Officer of the United States Coast Guard; Ms. Marie 
Mak, Director of Acquisition and Sourcing Management with the 
GAO; and Mr. Ronald O'Rourke, specialist in naval affairs with 
the Congressional Research Service.
    With that, Admiral West, you are recognized to give your 
statement.

TESTIMONY OF REAR ADMIRAL RICHARD D. WEST, U.S. NAVY, RETIRED, 
CHAIR, COMMITTEE ON POLAR ICEBREAKER COST ASSESSMENT, NATIONAL 
ACADEMIES OF SCIENCES, ENGINEERING, AND MEDICINE; REAR ADMIRAL 
 MICHAEL J. HAYCOCK, ASSISTANT COMMANDANT FOR ACQUISITION AND 
  CHIEF ACQUISITION OFFICER, U.S. COAST GUARD; MARIE A. MAK, 
     DIRECTOR OF ACQUISITION AND SOURCING MANAGEMENT, U.S. 
    GOVERNMENT ACCOUNTABILITY OFFICE; AND RONALD O'ROURKE, 
  SPECIALIST IN NAVAL AFFAIRS, CONGRESSIONAL RESEARCH SERVICE

    Admiral West. Chairman Hunter, Ranking Member Garamendi, 
and distinguished members of the subcommittee, thank you for 
the opportunity to discuss the recently released report, 
``Acquisition and Operation of Polar Icebreakers: Fulfilling 
the Nation's Needs.'' I would like this report and my testimony 
entered into the record.
    My name is Dick West. I am a retired U.S. Navy rear admiral 
and I chaired the study committee that authored the report for 
the National Academies. Our report was requested by this 
committee and focuses on strategies to minimize the capital 
acquisition and operating costs for polar icebreakers capable 
of meeting the Coast Guard's mission, including breakout of the 
McMurdo Station.
    For more than 30 years, studies have shown the need for 
polar icebreakers to fulfill the Coast Guard's statutory 
missions and to meet our national goals. These studies have 
indicated an ever-widening gap in the Nation's ability to meet 
these statutory obligations, protect our interest and maintain 
leadership in the high latitudes of our Earth.
    We recommend building four heavy polar icebreakers owned 
and operated by the Coast Guard and propose an acquisition 
strategy that could address these anticipated gaps. We examined 
leasing options and found them to be more expensive for the 
Federal Government over the life of the assets.
    The first three heavy icebreakers could meet the Coast 
Guard's requirements to provide a continuous presence in the 
Arctic, while the fourth heavy icebreaker could perform the 
annual McMurdo breakout. One of the three icebreakers assigned 
to the Arctic could also be emergency backup for the McMurdo 
operation, if it is required.
    The recommended acquisition strategy employs block-buy 
contracting with a fixed-price incentive fee for the four ships 
and a design for a single class of polar icebreakers. By using 
a single design, we estimate that the fourth heavy icebreaker 
would cost less than the first of a medium-class icebreaker.
    With our recommended strategy, icebreaker design and 
construction costs can be clearly defined. A fixed-price, 
incentive-fee construction contract is the most reliable 
mechanism for controlling costs for this program. Block-buy 
authority for this program will need to contain specific 
authorizing language for economic order quantity purchases for 
materials, advanced design and construction activities.
    Such a contracting program, the economic order quantity 
purchases enables series construction, motivates competitive 
shipyard bidding, enables shipyard infrastructure investment, 
and reduces material acquisition costs, allowing for volume 
purchase and for timely acquisition of material long-lead 
items. It would enable continuous production, give the program 
the maximum benefit from the learning curve, and thus reduce 
labor hours and costs on subsequent vessels.
    Technology transfer from icebreaker designers and builders 
with recent experience is critical for reducing design and 
construction costs. In addition, the design should maximize the 
use of commercial off-the-shelf equipment, apply the polar 
code, and commercial standards and reduce military 
specifications to the minimum necessary. Reduction of MIL-SPEC 
[military specifications] requirements could significantly 
lower the acquisition costs of each ship with no loss of 
mission capability.
    Importantly, the program's schedule must allow for 
completion of the design and planning before the start of 
construction. Our recommended acquisition, design, and 
construction strategies will control possible cost overruns and 
provide significant savings in the overall life cycles of the 
polar icebreaking program.
    We recommend that the single design for the heavy 
icebreakers be made science ready and include sufficient space 
and margins to accommodate future installation of scientific 
equipment. The additional design cost is minimal, especially 
when compared to a subsequent retrofit for that vessel.
    Recognizing the Healy is halfway through its expected 
service life, the fourth proposed vessel could be made science 
capable or fully outfitted for science. The Polar Star is well 
beyond her expected service life. We propose an enhanced 
maintenance program with the intent of keeping the vessel 
operational through the delivery of at least the first new 
icebreaker.
    Although extending the life of the Polar Star will be 
challenging, the committee recommends against compressing the 
design and construction schedule of the new icebreakers, as 
such an approach may lead to cost overruns.
    Mr. Chairman, this concludes my statement. Thank you again 
for the opportunity to reply and I stand by to answer any of 
your questions.
    Mr. Hunter. Thank you, Admiral.
    Admiral Haycock, you're recognized.
    Admiral Haycock. Thank you. I have written testimony I 
would like to submit for the record and a short oral statement 
to read.
    Mr. Hunter. Without objection.
    Admiral Haycock. Chairman Hunter, Ranking Member Garamendi, 
members of the subcommittee, good morning. Thank you for the 
opportunity to speak about the Coast Guard's ongoing activities 
to recapitalize our surface, aviation, and command and control 
capabilities. Echoing the sentiments of the Commandant earlier 
this morning, I thank you for your oversight and your continued 
support of our Service.
    I am honored to represent 800 military and civilian 
personnel dedicated to delivering the assets and the 
capabilities to our operational community. Ten years ago this 
month, the Coast Guard stood up the Acquisition Directorate. In 
that time, the Service has strengthened its acquisition 
management and its support functions, and it has invested in 
recruiting, training and retaining a highly qualified 
acquisition workforce. Today, we are seeing strong returns on 
that investment, and I am proud to share with you an update on 
our efforts.
    First, I would like to discuss the Offshore Patrol Cutter, 
the Coast Guard's highest acquisition priority. This past year, 
we awarded a contract for detailed design and construction, 
which will enable us to build up to nine Offshore Patrol 
Cutters. We are on track to move forward with an order for long 
lead-time materials for the first cutter before the end of the 
fiscal year.
    Regarding the heavy polar icebreaker, we are working 
closely with the Navy through an integrated program office to 
begin acquiring the Nation's first heavy polar icebreakers in 
more than 40 years. We have adopted some of the Navy's best 
practices, including the use of industry studies. In fact, we 
awarded five industry study contracts in February to identify 
approaches that can further reduce acquisition costs and 
production timelines. We've also released a draft system 
specification for industry review and we are developing a 
contract solicitation for design and construction on the lead 
heavy icebreaker.
    We are also continuing full-rate production on the National 
Security Cutter and our Fast Response Cutter classes, moving 
forward with missionization and upgrades to our fixed-wing 
aviation fleet, and we are deploying enhanced command and 
control communications systems nationwide.
    The men and the women of the Coast Guard Acquisition 
Directorate have a lot to be proud of and I am committed to 
continuing the success that we have achieved since our standup 
10 years ago. This means employing each and every tool and 
resource at my disposal to continue to deliver the best 
products to our operational commanders at the best price to the 
taxpayer.
    To that end, we are looking at contract authorities that 
are available or may be available, including multiyear 
procurement, that can help us take advantage of cost and 
schedule efficiencies and achieve greater affordability. The 
Coast Guard also recently received findings in the National 
Academies of Sciences' Transportation Research Board's Polar 
Icebreaker Acquisition Operations Study, and I plan to use its 
findings to inform our acquisition approach going forward.
    We greatly appreciate the valuable oversight function 
performed by this subcommittee and the robust independent 
assessments provided by Ms. Mak's team at the Government 
Accountability Office, and Mr. O'Rourke and his team at the 
Congressional Research Service. Your role in Coast Guard 
acquisitions success, both in the past and going forward, is a 
critical one and we thank you for your support.
    The Commandant continues to make fleet recapitalization one 
of the Service's highest priorities and we are proud of the 
efforts to ensure our Service stays true to its motto, semper 
paratus, always ready.
    Thank you for your support of the Coast Guard's effort to 
provide our men and women in uniform with the mission 
capability they need in the 21st century. I appreciate the 
opportunity to testify and I look forward to your questions. 
Thank you.
    Mr. Hunter. Thank you, Admiral.
    Ms. Mak, you're recognized.
    Ms. Mak. Good morning, Chairman Hunter, Ranking Member 
Garamendi, and members of the subcommittee. Thank you for 
inviting me here today to continue our discussion on GAO's body 
of work on the Coast Guard's recapitalization effort. We value 
the excellent working relations we have with the Coast Guard, 
and it is important for me to note that the Coast Guard, for 
the last few years, has been making progress in addressing 
GAO's concerns regarding its acquisition portfolio.
    However, as the Coast Guard moves forward in managing its 
multibillion-dollar acquisition portfolio to modernize its 
aging and maintenance-intensive assets, the Coast Guard is 
facing several key acquisition planning challenges.
    The two areas that I would like to highlight today are, 
first, the importance of well-formulated planning tools for the 
Coast Guard to manage its overall affordability of its 
acquisition portfolio. And, second, the acquisition risks 
related to the heavy polar icebreaker.
    With regard to planning tools, for the past several years, 
the Coast Guard has submitted to Congress its 5-year Capital 
Investment Plan, or CIP, intended to provide insight into the 
proposed budget for that particular fiscal year and the 
following 4 years. We found that the 5-year CIPs report the 
assets' total cost and schedule per the acquisition program 
baseline, however does not account for tradeoffs made in 
previous annual budget cycles. Furthermore, we have found that 
the projected funding levels far exceed the amount that the 
Coast Guard traditionally requests in its annual budget.
    In 2014, we recommended that the Coast Guard develop a 20-
year fleet modernization plan, which is intended to identify 
all acquisitions necessary for maintaining at least its current 
level of service and the fiscal resources to build these 
assets. The Coast Guard reports that efforts are underway to 
develop this long-term plan, which the Coast Guard is calling a 
20-year CIP. But to date, it is unclear when this plan will be 
completed and what level of detail it will contain.
    However, in line with the Office of Management and Budget's 
capital planning guidance, we would expect this 20-year CIP to 
include, among other things, a review of the portfolio of 
assets already owned by the Coast Guard and those that are in 
procurement, the capabilities necessary to bridge the old and 
new assets, and the justification for new acquisitions proposed 
for funding. The most recent unfunded priorities list that you 
referred to earlier is a good start at identifying more of the 
Coast Guard's needs that have been delayed, and we hope to see 
those and more in the 20-year plan.
    A long-term plan that also includes acquisition 
implications, such as sustainment costs, support infrastructure 
and personnel needs would further enable tradeoffs to be 
identified and addressed prior to making irreversible 
commitments, and ensures the maintainability of these assets.
    Second, while the Coast Guard has made progress in 
advancing the acquisition for three heavy polar icebreakers, 
the accelerated schedule it is pursuing poses risk. To meet 
this schedule, the Coast Guard is partnering with the Navy to 
leverage its expertise and reduce costs. This acquisition, 
according to Coast Guard officials, is considered one of its 
high-priority programs. However, such an acquisition would be 
difficult to afford while it builds the Offshore Patrol Cutter, 
which would take anywhere from one-half to two-thirds of the 
Coast Guard's acquisition budget starting in 2018. If funds 
come primarily from Navy appropriations, as was being 
considered, additional risk and concerns associated with the 
actual contracting process exist, with the Navy using the 
Department of Homeland Security's acquisition process. But as 
this committee mentioned earlier, if this is off the table, the 
Coast Guard's affordability concerns just multiplied 
significantly, if funding stays where it historically has been 
the last several years.
    The Coast Guard faces some difficult and complex decisions 
with potentially significant cost and mission implications. 
Without completing this 20-year plan, the Coast Guard will 
continue, as it has in recent years, to plan its future 
acquisitions through the annual budgeting process, a process 
that has led to delayed capabilities. A comprehensive, long-
term strategic plan would provide timely information to 
decision makers on how best to allocate resources in a 
constrained budget environment to build and maintain a modern, 
capable Coast Guard fleet.
    Chairman Hunter, Ranking Member Garamendi, members of the 
subcommittee, this completes my prepared statement. I would be 
pleased to respond to any questions you may have.
    Mr. Hunter. Thank you, Ms. Mak.
    Mr. O'Rourke, good to see you. You're recognized.
    Mr. O'Rourke. Chairman Hunter, Ranking Member Garamendi, 
distinguished members of the subcommittee, thank you for the 
opportunity to appear before you today to discuss Coast Guard's 
sea, air, and land capabilities. As requested, my testimony 
focuses on Coast Guard ship acquisition.
    Mr. Chairman, with your permission, I would like to submit 
my statement for the record and summarize it here briefly.
    Mr. Hunter. Without objection.
    Mr. O'Rourke. Coast Guard officials have begun stating 
regularly that executing their acquisition programs fully and 
on a timely basis will require an AC&I [acquisition, 
construction, and improvement] account of about $2 billion a 
year. Past Coast Guard statements have sometimes put the figure 
as high as $2\1/2\ billion. That would represent a big increase 
over recently requested levels. It can be noted, however, that 
the requested funding levels for the Navy's shipbuilding 
account have increased by about $6.8 billion per year, or by 
about 50 percent, during the period of the Budget Control Act.
    A common practice is to assume or predict that an agency's 
funding levels in coming years will likely be close to where 
they have been in previous years. For the Coast Guard, which 
goes through periods with less acquisition of major platforms 
followed by periods with more acquisition of major platforms, 
this might not always be the best approach, at least for the 
AC&I account.
    Moreover, in relation to maintaining Congress' status as a 
coequal branch of Government, an analysis that assumes or 
predicts that future funding levels will resemble past funding 
levels can encourage an artificially narrow view of 
congressional options regarding future funding levels, 
depriving Congress of agency in the exercise of its 
constitutional power to set funding levels and determine the 
composition of Federal spending.
    The Navy in recent years has used multiyear procurement and 
block-buy contracting to procure more than two-thirds of all 
the ships shown in the Navy's 5-year shipbuilding plans in 
recent years, saving billions of dollars in the process. In 
contrast, the Coast Guard has made zero use of multiyear 
contracting for its shipbuilding programs.
    Using multiyear contracting might reduce the OPC program's 
cost by about $1 billion, which is roughly the cost of a polar 
icebreaker or a 35-ship inland waterway tender program. This 
potential savings of $1 billion represents a once-in-a-
generation opportunity for using multiyear contracting to 
reduce the cost of an individual Coast Guard acquisition 
program by such an amount.
    The Coast Guard currently is using a contract with options 
for acquiring the first nine ships in the OPC program. A 
contract with options is not an example of multiyear 
contracting. Contracts with options operate more like annual 
contracting and they don't achieve the savings that can be 
achieved through multiyear contracting. Acquiring the first 
nine ships in the OPC program under the current contract with 
options could forgo roughly $350 million of the $1 billion in 
potential savings.
    One option for the subcommittee would be to look into the 
possibility of having the Coast Guard replace the current OPC 
contract at an early juncture with a block-buy contract.
    The planned OPC procurement rate of two ships per year 
would deliver OPCs many years after the end of the originally 
planned service lives of the existing Medium Endurance Cutters. 
The Coast Guard has said it plans to extend the service lives 
of the Medium Endurance Cutters to bridge the gap. A possible 
alternative would be to increase the OPC procurement rate to 3 
or 4 ships per year, which could reduce their cost and 
accelerate the delivery of the 25th OPC by 4 to 6 years. There 
are various potential options for increasing its procurement 
rate to three or four per year.
    Using a block-buy contract could reduce the cost of a 
three-ship polar icebreaker procurement by upwards of $200 
million. The savings on the four-ship acquisition recommended 
in the National Academies' report would be greater. And the 
savings on a five- or six-ship procurement would be greater 
still and could exceed $400 million.
    And Mr. Chairman, you brought up the issue of whether the 
lead ship should be under that contract. I would be happy to 
talk with you about that during the Q&A, if you would like.
    The Coast Guard has testified that the new inland waterway 
tenders might cost about $25 million each. Using that figure, a 
35-unit replacement program might cost roughly $875 million. 
That cost, too, might be reduced through multiyear contracting. 
Numerous U.S. shipyards, including yards not capable of 
building the Coast Guard's bigger and more complex cutters, 
might be interested in bidding for this program.
    Mr. Chairman, this concludes my remarks. Thank you again 
for the opportunity to testify and I look forward to the 
subcommittee's questions.
    Mr. Hunter. Thank you, Mr. O'Rourke.
    Let's start. We gave the Coast Guard block-buy authority 
last year, I think. Right? Was it last year, Admiral Haycock? 
Last year, I think?
    Admiral Haycock. I believe that is accurate, yes.
    Mr. Hunter. So would you speak to what Mr. O'Rourke just 
said of why you didn't do a block buy for the OPCs?
    Admiral Haycock. For the OPCs or the FRCs?
    Mr. Hunter. OPCs.
    Admiral Haycock. OPCs. The----
    Mr. Hunter. That is what you referred to, right, Mr. 
O'Rourke?
    Mr. O'Rourke. That's right.
    Admiral Haycock. The OPC contract we awarded last 
September. That contract is well on its way in terms of all the 
preparations and things. Making changes that late in the 
contract would probably have been detrimental to getting it 
awarded. So we didn't do it on the OPC.
    There are opportunities in the future, as Mr. O'Rourke has 
indicated, to actually block buy on the OPC and we are look 
at----
    Mr. Hunter. How much money would you save if you would have 
done a block buy with those? The first nine, you say? You 
bought nine, right?
    Admiral Haycock. Yes, sir.
    Mr. Hunter. Starting with nine, how much money would you 
have saved if you had done a block buy?
    Mr. O'Rourke. My estimate is that there is more than $300 
million of savings over those nine ships that the Coast Guard 
is currently on a track toward forgoing. You could recapture 
much of that savings by putting most of those first nine ships 
under a block-buy contract, rather than simply waiting for that 
contract to be fully implemented over several years and then 
starting with ship 10.
    Mr. Hunter. Let's just stay on this. Why would you not do 
that? I think this is kind of indicative of what happens with 
the Coast Guard in general, and why we put these authorities in 
there, for you to have the authority to purchase ships like the 
Navy does. This is why we put it in there. And so your argument 
was--not yours, but the Coast Guard's argument was 4 years ago 
or 3 years ago, we don't have the authority, we don't have the 
authority. So we have to spend money that we don't have, 
basically, and not save.
    So we gave Coast Guard the authority. So they are just like 
the Navy now. And then once they had the authority, you chose 
to not use it. I mean, $300 million is, for the Coast Guard, a 
lot of money.
    Admiral Haycock. Yes, sir. It is not that we are choosing 
not to use it. The Coast Guard, we want to save money, Mr. 
Chairman. And we consider ourselves to be good stewards of the 
taxpayers' dollars. The issue is that it is a very attractive 
opportunity, but it also underplays some of the risks involved. 
So the Coast Guard is open to any techniques and tools out 
there. Multiyear, block buy, we are considering all those 
tools. And we haven't necessarily ruled any of them out. It is 
not that we are intentionally not using them. We want to make 
sure that we don't get ourselves in a situation where the risks 
outweigh the benefits.
    No one wants an acquisition to go south. It is a----
    Mr. Hunter. Would you explain how the risks outweigh the 
benefits?
    Admiral Haycock. So some of the risks that we see is you 
are essentially--you are all in, is what it comes down to. You 
are basically saying, I want a block buy for, say, for OPC, 
nine hulls, nine cutters. And then if things aren't going well, 
you are kind of stuck, you are committed.
    Mr. Hunter. What do you mean, if things aren't going well?
    Admiral Haycock. As you know, every acquisition has 
challenges. There are challenges in design, there are 
challenges in production. There are things that you can kind of 
foresee coming and there are things that you can't foresee 
coming. And that is why you have acquisition professionals, 
highly trained people executing the acquisitions.
    So there are things that you just don't see, especially on 
a first in class. And I know Mr. O'Rourke's position is it is a 
good tool for first in class. We are not necessarily saying 
that that is not the case. But our experience with first in 
class is, the first in class oftentimes doesn't look like the 
rest of the fleet.
    Mr. Hunter. I would offer, too, that the Coast Guard's 
shipbuilding hasn't been stellar. So what you see as first in 
class not being right and what the Navy does are two different 
things, we are trying to--what is different with the way you 
build ships and the way that the Navy builds ships? Is there 
special Coast Guard sauce or something? I mean, what is the 
difference between the Navy building ships and the Coast Guard 
building ships?
    Admiral Haycock. Not an awful lot, sir.
    Mr. Hunter. Then why not do what the Navy does?
    Admiral Haycock. We are looking at that.
    Mr. Hunter. OK, if you are looking at it, you are not doing 
it. Right? I mean, 300 million bucks, again, is a lot of money. 
That is going to lead into--do you know what the numbers are 
for your backlog on shore improvements and maintenance, right, 
and upkeep? What is that? It is a total of like $1.4 billion, 
$1.6 billion? It is like $700 million and then another $800 
million or something like that?
    Admiral Haycock. It is big, yes, sir.
    Mr. Hunter. OK. So let's switch really quick. I don't want 
to monopolize just on the one ship, on the OPC. What do you 
plan on doing with that? How do you plan on paying that?
    Admiral Haycock. For?
    Mr. Hunter. How do you plan on paying the backlog and doing 
your shore facility upkeep, along with all the acquisitions?
    And you can't see this chart, but it basically shows which 
lines of ships are going to be completed when. And as you can 
see, the dotted line there, the gray goes up above that. Again, 
that is where you don't have the money to do what you say you 
are going to do.
    Admiral Haycock. As I think this subcommittee has 
recognized, Mr. Chairman, is the budgets that we get for OE and 
for acquisition are not what they need to be. As the Commandant 
has previously testified, we need an annualized 5-percent 
increase in our OE maintenance accounts, we need $2 billion in 
acquisition accounts to do all the things we need to do.
    We don't have the funding, so we have to prioritize. So 
that is what we do. We go through and prioritize, look at the 
things that impact missions most and try to get those 
accomplished first. So that is the process we use and we will 
continue to use.
    Mr. Hunter. So lastly, before I go to Mr. Garamendi, and 
Ms. Mak, I would like you to answer this, too. At what point do 
you realize that you have to plan for real life, as opposed to 
planning for non-real life? Because when you gave your fleet 
mix analysis, I think, 2 or 3 years ago, it was great. That is 
what we would like to see, is what you want, without it being 
screened or changed by anybody. That is what we would like to 
see, so we know at least what do you need to accomplish the 
mission, if you got 100 percent of what you wanted, right? Then 
you come back and say, we are not able to do that because this 
gets scrubbed, and here is the reality of the budget and here 
is what we are going to get.
    At what point do these charts start matching? Meaning, at 
what point do you start planning for what you actually get? 
Right now, are you planning for what is unattainable, because 
there is no money for it. But that is your plan. Your plan is 
to do something that is not possible. So at what point does the 
Coast Guard put its hands in the air and start planning to what 
the actual monies you get? Does that make sense?
    Admiral Haycock. It does. And, Mr. Hunter, that is what we 
are doing now. Under our current Commandant, he has asked us to 
be bold and look at what we really need to do the job and ask 
for it. And that's what we're doing.
    Mr. Hunter. But your 5-year plan is short. Meaning, you 
don't have enough funds for your 5-year plan, let alone your 
20-year plan. Is your 20-year plan going to fall within real 
life budgets, or is it going to go way up while your money 
stays straight?
    Admiral Haycock. I am not certain, because the plan is not 
complete. We are still working that.
    Mr. Hunter. Is the 5-year plan indicative of what the 20-
year plan is going to look like? Because the 5-year plan is 
unattainable, too.
    Admiral Haycock. The 5-year plan is the--it is the 2018 
budget, essentially. And it is, it is constrained. Those are 
essentially the rules that we work under, sir.
    Mr. Hunter. OK. Mr. Garamendi, you are recognized.
    Mr. Garamendi. Mr. O'Rourke, you argued strongly for a 
block buy. Ms. Mak, your opinion of block buy, working off Mr. 
O'Rourke's testimony?
    Ms. Mak. Thank you. We don't believe it is wise to use 
block buy for the icebreaker, let me clarify. Block buy is an 
effective contracting mechanism in certain circumstances. In 
this particular case, we don't agree that this approach is 
valid for the same reason using multiyear is not allowed for 
lead ships.
    When you use multiyear, the statutory criteria include 
stable requirements, for example, design maturity and also 
proof of substantial savings. None of those have been proven 
especially with this first polar icebreaker being built in the 
U.S., a ship that has not been built in over 30 years. There 
are a lot of things at risk that has to be worked through with 
the design and build of the first heavy icebreaker until the 
design is stabilized.
    Based on our shipbuilding work, it generally takes three to 
four ships before the requirements in design get stabilized. 
Given that the number of heavy icebreakers is only expected to 
be three at this point, we are not advocates of using block buy 
for this particular acquisition.
    Mr. Garamendi. Is there another option, besides block buy, 
as a way of moving towards three or four ships?
    Ms. Mak. Annual contracts with options will work, and can 
produce savings. We have just shown that in the FRCs as well, 
and it also gives you more congressional oversight. Once a 
contract is let, every year, if you have the options, if things 
go wrong, you can always pull back. Whereas, with a block buy, 
you can't pull it back once it is paid for. Ordering long-lead 
materials ahead of time locks the Coast Guard in.
    Mr. Garamendi. Mr. O'Rourke, counter?
    Mr. O'Rourke. Yeah. There are arguments on both sides of 
this. The admirals and now Ms. Mak have presented the arguments 
for being cautious about using block buy, especially with a 
lead ship. Let me present the arguments on the other side, so 
that you can have a balanced presentation.
    The first is that block buy was invented precisely so that 
you could use it on the lead ship in a program and the earliest 
ships in a program. The second argument is that the Navy, in 
fact, has done this with its own shipbuilding programs. They 
did it with the Virginia-class submarine, which is a ship that, 
with all due respect to the Coast Guard, is a lot more complex 
than an icebreaker, and the Navy is expected to even do this on 
its Columbia-class ballistic missile submarine, which again is 
a very complex ship and also a ship of a type that we have not 
built in decades.
    Thirdly, the shipyards in this country that are working 
toward this program are also working with the Europeans to 
import their design know-how, and that will mitigate the design 
risk on this.
    Fourth, as the GAO itself has testified in the past, it is 
a best practice in shipbuilding to bring the design of the ship 
to a high stage of completion before you start building it. In 
fact, if you have not done that, you probably shouldn't be 
building the ship under any contracting arrangement at all. So 
if the ship has been brought to a high stage of design 
completion, you have mitigated the risk associated with the 
lead ship. In other words, the idea that lead ships present 
this kind of design risk is a lesson learned from the past that 
reflects earlier, not current, best shipbuilding practices.
    Three more arguments. If you do a block-buy contract, it 
can be, and the National Academies' report recommends, that it 
be a fixed-price incentive contract. That is protecting the 
Government against the risk of cost growth.
    Secondly, if there is a need to make changes in the design 
of the lead ship, you would then want to measure the cost of 
making those changes, which should be relatively minor if you 
have developed the design to a high stage of completion, 
against the savings that you are forgoing by not having that 
ship under a block-buy contract.
    And then seventh and lastly, it is not correct that you 
can't stop a block-buy contract. You can, and the cancellation 
penalties that the Government would need to pay under that 
contract are less than they are under a multiyear procurement 
contract.
    So again, there are two sides of this. And the admirals and 
Ms. Mak have done a good job, I think, of presenting the 
arguments on that side. So for the sake of balance, I've given 
you seven arguments on the other side.
    Mr. Garamendi. Well, I guess we are going to get to decide.
    Admiral West, could you opine on this question?
    Admiral West. Yes, sir. I have to add that we had five 
members of our committee with extensive marine architecture and 
marine shipbuilding experience, you know, generations of 
expertise. And they are convinced the block buy is the way to 
go with the icebreaker. We also heard from retired shipbuilders 
and shipyard owners who also agreed with us.
    Because we haven't built one in a long time, but the design 
is fixed if you have the design. It is not a complicated 
mission. They are doing it internationally now. The designs are 
out there. We are not going to add anything later. There is no 
R&D involved with the design, and we think it fits the block-
buy concept.
    Mr. Garamendi. I appreciate that.
    I think there is another factor involved in this, and that 
is from the point of view of--I will speak for the Coast Guard 
here--they have absolutely no idea what Congress is going to 
give them year to year. And therefore, the block buy is a 
concern.
    Ms. Mak, you are nodding your head as if that might be 
correct. Is that correct? Is that a factor here?
    Ms. Mak. Absolutely. Because if you pay the money to 
purchase other components earlier and the other ships are 
already in construction, you are locked into using those 
components unless, like Mr. O'Rourke mentioned, if the contract 
gets canceled, you have to pay a cancellation fee at some 
point.
    Also, I would like to note that it is a bit early to 
discuss what contracting type the Coast Guard is going to use, 
when they haven't finished all the acquisition paperwork. I 
think more is at risk in the detailed design, cost estimates, 
all of those documents that are required to be done before a 
contract is awarded. And some documentation is required to be 
done by the end of this fiscal year, to be able to award the 
contract in fiscal year 2019.
    Mr. Garamendi. I suppose it is time for me to opine, also, 
if I might. First of all, I like the idea of a block buy 
because it does commit the Congress to the future. And if we 
need three or four icebreakers, then we need to be committed. 
And if we can do that. Now, the next question really has to do 
with the nature of the contract itself, how you write into that 
contract the possibility of design changes. I suspect that 
there are designs and designs. There is the basic design, what 
this thing is going to look like, the hull and the rest, and 
then there are other things that will probably change over 
time. For example, there may be engine issues or the like, and 
those can be written into the contract. So my opinion, block 
buy.
    Now, the question is three or four?
    I'm out of time----
    Mr. Hunter. Keep going. There's no objection----
    Mr. Garamendi. There being no objection, I will continue 
on.
    The National Academies recommended four rather than what we 
were looking at before, three heavies and three mediums. Can 
you get into this in a little more detail, Admiral West, and 
what happens to the other two ships? Can we get by with four or 
do we actually need six?
    Admiral West. We came up with four for two reasons. One is 
the acquisition strategy, making it more robust, and there are 
all sorts of reasons why you will get shipyards more engaged if 
they know they are going to build more than one.
    The second was we looked at the mission, the High Latitude 
Study and the operational requirement the Coast Guard had come 
up with and we saw the presence, the one hull presence in the 
Arctic and we saw the McMurdo breakout and we said, you need 
four ships to do that. And that is the minimum we recommend.
    You can go on from there. At some point, your learning 
curve that each ship is cheaper will level off at some point, 
four, five, six down the way. You may want to change at that 
point. But clearly, we thought that the four large were the 
best investment of public money for the mission right now.
    Mr. Garamendi. So it kind of comes down to, if you're going 
to build an icebreaker, build a heavy because it can do the job 
of the medium as well?
    Admiral West. Build an icebreaker to go break ice. Yes, 
sir.
    Mr. Garamendi. You also spoke to the operational costs, 
that the operational costs of a new icebreaker are 
significantly less than the existing icebreakers. But the 
difference between the operational cost of a heavy icebreaker 
and a medium icebreaker, did you take that into account.
    Admiral West. We did. And I don't have the exact figures, 
but there is not much difference. I mean, the Healy is a very 
large ship. In fact, it is a little bit bigger than the Polar 
Star. So it all depends on how much mission you put on that 
ship and how many people you put on it and who you embark. But 
the operating costs are not that much different.
    Mr. Garamendi. And am I correct, you also recommended that 
all of the ships be designed for scientific purposes, but that 
not every ship be equipped for scientific purposes?
    Admiral West. We decided that if a ship was going to go 
where no other ship can go, and to regions where we don't know 
a heck of a lot about the oceans, that it ought to have a 
science capability. So in the original design, there should be 
a science capability designed into it for weight and space 
moment, and then--which turned out to be relatively cheap, we 
were surprised, as we costed that out, if it is in the original 
design. Rather than trying to retrofit something later on. And 
then if you want to outfit it, then you add the equipment later 
on.
    Mr. Garamendi. It seems to me that the scientific--that if 
we designed the ship for scientific purposes, that the 
scientific equipment ought to be paid by the scientific 
organizations.
    Admiral West. Our option allows that. A science-ready ship 
is roughly $10 to $20 million in the design itself. Putting the 
equipment on board is an additional cost, obviously, and can be 
charged to whoever.
    Mr. Garamendi. Whoever wants to do that.
    Admiral Haycock, what do you opine on the issues of block 
buy and this scientific--four versus six?
    Admiral Haycock. Thank you. First on the block buy, as Mr. 
O'Rourke had indicated that Ms. Mak and I had mounted a 
defense, my intention is not to mount a defense against block 
buy. That is not my intent.
    The subcommittee asked me why we seemed reticent. I just 
want to throw out there, if we have some reticence, it is 
because we want to make sure we have covered all the risks. It 
is clear that Mr. O'Rourke and this subcommittee are trying to 
avail the tools, such as block buy for the Coast Guard's use, 
and we are excited and we appreciate that. And we are open to 
that and we are looking at that.
    So we owe you a report in December on block buy and we will 
get that to you on time and that will help explain some of 
those things. But we are open to using block buy multiyear and 
we are excited about those opportunities.
    Regarding science, one of the things that we have been 
trying to do for the last 9 months, since we teamed up with the 
Navy with our Integrated Program Office, is make the icebreaker 
affordable. So we have taken a hard look at all the things that 
the icebreaker is supposed to do and all the equipment and 
structure and stuff that needs to be put in place to do that. 
And so we have worked hard to reduce the cost of the 
icebreaker.
    I think the initial cost estimates were a little over $1 
billion. And our efforts within the Coast Guard, with CG-4, our 
tech authority for ship design and engineering and production, 
we have been able to reduce the cost of the icebreaker by about 
$200 million so far, and we are still working on that. And our 
industry studies, as we work with industry and learn more, we 
are optimistic we can bring that cost down further.
    One of the things that we have done is we have looked at 
things like science. And so the icebreaker, as currently 
designed from the Government's indicative design perspective, 
has space, weight and power reserved for changes that might 
occur in the future for the Coast Guard's icebreaker mission. 
That might be science, it might be a weapons system. Might be 
whatever the Nation needs the icebreaker to adapt to, that is 
the secret behind our getting ships to last 50 years is we 
build them flexibly, or we build flexibility into the design.
    Mr. Garamendi. And you expect this detail to be available 
the last half of this year?
    Admiral Haycock. I am not following you, sir.
    Mr. Garamendi. The actual design of the icebreaker, power, 
equipment, science equipment, all of that, or science space, 
and you expect all of that to be designed and prepared for 
review by the end of this year?
    Admiral Haycock. We have an internal design we are working 
that enables us to determine whether we can meet requirements 
and to help us estimate costs and such. The intent is not to 
release that to industry, because we want industry to come 
forward with creative and innovative solutions in their 
designs. I don't know if that answers your----
    Mr. Garamendi. I am really getting to the point, when do we 
get to see what you want to do and when can we review that?
    Admiral Haycock. I am going to take that back and figure 
that one out, sir. You know, the design continues to mature and 
we are still----
    Mr. Garamendi. I was looking at your schedules and it looks 
to me like by the end of this year, you would expect to have 
the design completed and ready to go to contracts early next 
year?
    Admiral Haycock. I understand. So what you are asking is, 
at what point in time will we be ready to go on contract for 
the detailed design and production? So the design the 
Government is working, the indicative design is more of an 
estimating tool and the ability to put reasonableness into our 
requirements and verify the requirements are correct and that 
sort of thing.
    What we intend to do is get a request for proposals out 
later next fiscal year, toward the middle of the fiscal year. 
That will be a sign to industry that we need them to submit 
proposals. With those proposals, we anticipate there would be 
designs. And then we would award a contract and then industry--
the team that wins would actually go through and actually 
formalize that design, make it final and make it ready for 
production.

    [The information from Rear Admiral Haycock of the U.S. Coast Guard 
follows:]

        In FY18, the Coast Guard will release the Request for Proposal 
        (RFP) which contains the requirements that will drive the 
        detail design for the Heavy Polar Icebreaker. The Coast Guard 
        will then review the design submissions submitted by industry 
        in response to the RFP. In FY19, through a full and open 
        competitive process, the Coast Guard will award the Detail 
        Design and Construction contract to the industry team that will 
        complete the design. The Heavy Polar Icebreaker design will be 
        shared with CG&MT, NAS, GAO, and CRS once the Detail Design and 
        Construction contract has been awarded.

    Mr. Garamendi. Mr. Chairman, thank you so very much for the 
additional time. Just a final comment.
    A couple of decisions are going to have to be made by us, 
as I look at this. That is, are we going to go to four heavy 
icebreakers or three and three. Right now, I think, presently, 
we are looking at three and three, so this will be a change, as 
I understand where we are.
    Secondly, there is the final--I am not sure of the word 
``final,'' but the design of the icebreaker itself should be 
available sometime in the next 6 months, correct? And if that 
is the case, then I would think that Ms. Mak and Mr. O'Rourke 
and Rear Admiral West would like to take a look at that and 
give us their opinion as to whether this is the proper design, 
and then we would authorize either a block buy or some other 
mechanism for the ships.
    So this is kind of, looking at our own work schedule out 
ahead, the kind of things, the decisions that we are going to 
have to make.
    And then there is this issue, much larger issue that we are 
going to have to deal with, and that is the overall budget for 
the Coast Guard, both for its acquisitions as well as for 
operations.
    With that, Mr. Chairman, thank you so very much for the 
additional time.
    Mr. Hunter. Thank you, sir.
    Mr. DeFazio is recognized.
    Mr. DeFazio. Thank you, Mr. Chairman.
    Admiral Haycock, you know, I just want to follow up on 
something you said. You're saying the first in class, you know, 
might meet specs but often what comes after that is not so 
great. I mean, don't we write contracts well enough that if 
they don't meet the specifications on the second ship that they 
don't get paid? What kind of contracts does the Government 
write here? I know the 110 contracts, boy, that was pretty 
poorly written. I don't know why the Government can't protect 
the taxpayers better.
    So why would you say well, gee, we are concerned because 
the first in class might meet specs and be great but after that 
they are going to create some crap and we're going to have to 
pay for it?
    Admiral Haycock. I think my comments may have caused you to 
misunderstand.
    Mr. DeFazio. OK.
    Admiral Haycock. It is not that the first in class is good 
and everything that follows is not. It is actually, it is the 
opposite. The first in class is a challenge, because it is the 
first one you have built----
    Mr. DeFazio. Right.
    Admiral Haycock [continuing]. There is a lot of learning 
that goes into it.
    Mr. DeFazio. Yeah, but if it comes out well in the end?
    Admiral Haycock. We almost always find ways to improve it 
and to make it more effective and more efficient and usually 
affordable. So the follow-on ships become better and better as 
they go along. Usually the first in class----
    Mr. DeFazio. But couldn't the contract allow for design 
changes that are within certain parameters? I mean, you are not 
totally redesigning the ship between 1 and 2.
    Admiral Haycock. That is accurate, sir. Yes. The contracts 
are written to provide that sort of flexibility. We don't 
completely redesign or rewrite things.
    Mr. DeFazio. Yeah. But, I mean, you could anticipate that?
    Admiral Haycock. Absolutely.
    Mr. DeFazio. Now, Admiral West, apparently Admiral Zukunft 
did answer a question I had, which is are the Russians 
militarizing some of their icebreakers. And the answer was yes. 
And my question is, I saw that analysis where you could save a 
lot of money, but it is an irrevocable decision. I mean, once 
you have not militarized the icebreakers, then you are out of 
luck unless you want to build a different ship or a pretty much 
dramatically changed ship.
    Don't you believe that at least some of these icebreakers 
should be militarized? I mean, given the potential for conflict 
in the Arctic?
    Admiral West. I am not sure, sir, to be honest with you. I 
know in the operational requirements that I saw, the Coast 
Guard's 2015 ORD, there was some small armament there, the 
ability to ward off ships and take on small ships. I think you 
have a whole different design if you want to make it a warship 
and not an icebreaker. So I am not sure----
    Mr. DeFazio. I am not necessarily talking about a warship 
that is designed for warfighting, but something that is robust 
enough and has defensive capabilities. You know, in World War 
II, we were dumping, you know, mines off the backs of, you 
know, ships that weren't armed or were lightly armed, to try 
and get the German U-boats. I mean, some sort of capability. I 
mean, if we are having to lead a convoy or something through 
the Arctic, you know, escort ships would have to be provided. 
They are going to have to follow. And then if they get the 
icebreaker which is, you know, whatever, lightly armed or 
doesn't have defensive capabilities, then they are in a tough 
spot.
    Admiral West. I think the operational concept for an 
icebreaker in a wartime environment is an interesting study 
that should be done.
    Mr. DeFazio. OK.
    Admiral West. But right now, the ships that are being 
designed do not have that capability.
    Mr. DeFazio. OK, all right. Study that needs to be done. 
All right, that is something to take under consideration. Thank 
you. Appreciate it.
    Mr. Hunter. I thank the gentleman.
    Let's stay on this. Again, DoD has made it clear that there 
is no national security, national defense requirement for an 
icebreaker. So why would you militarize it? I understand what 
the ranking member's point is. But the Department of Defense, 
General Dunford, I have asked him this. And he said there is no 
requirement in any operational plan anywhere in the world for 
an icebreaker.
    Go ahead. Please, comment, opine.
    Admiral West. I can't add to that, sir.
    Mr. Hunter. Admiral Haycock?
    Admiral Haycock. Mr. Chairman, I don't know that I can 
state it any better than the Commandant did in the first 
testimony. I don't understand why people don't see it that way. 
The Coast Guard has been doing defensive or national defense-
related missions since 1790, as the Commandant has indicated.

    [The information from Rear Admiral Haycock of the U.S. Coast Guard 
follows:]

        The U.S. Coast Guard does not typically charge the Department 
        of Defense (DoD) for ``Defense Operations'' missions (i.e., 
        RIMPAC deployment of WMSL is not reimbursed). Over the past 5 
        years, the Coast Guard Icebreaker Polar Star has supported the 
        DoD ``Joint Task Force-Support Forces Antarctica'' as part of 
        Operation DEEP FREEZE.

        Upon crossing 60 degrees South Latitude, Polar Icebreakers 
        enter the Antarctic treaty zone. At that time, Polar 
        Icebreakers shift tactical control to PACOM, specifically Joint 
        Task Force (JTF)-Support Forces Antarctica. Below is a table of 
        total days each year (previous 5 years) the Polar Icebreakers 
        shifted tactical control (TACON) to PACOM.

------------------------------------------------------------------------
  Year      2013      2014     2015     2016     2017     Avg     Total
------------------------------------------------------------------------
Days....  0.......  31.....  45.....  41.....  35.....  38.....  152
------------------------------------------------------------------------

        In the Arctic, the Coast Guard Icebreaker Healy has conducted 
        missions to support Naval Research Labs and other defense 
        science and technology research. These deployments are 
        classified as ``Ice Operation'' missions, although they are in 
        support of DoD. In 2016, Healy conducted 33 days of these 
        operations, while in 2017 she conducted 50 days.

    Mr. Hunter. And I am saying, according to the Department of 
Defense and the Chairman of the Joint Chiefs of Staff and the 
U.S. Navy, there is no military requirement right now for an 
icebreaker. That is just for an icebreaker by itself, let alone 
a militarized icebreaker.
    Admiral Haycock. I don't know what else to tell you, sir. 
The Commandant made his comments earlier. I don't know why the 
Department of Defense doesn't see it that way.
    Mr. Hunter. Admiral West, let's go back to what you said 
about military design. Specifically, what things would you have 
that is more militarized than what would be commercial? What 
would you pull out of the MIL-SPEC requirements?
    Admiral West. I think you have to first start--what is the 
threat you expect up there? I mean, it is just like we do with 
our warships. What do you want? Is it antisubmarine warfare, is 
it AA warfare? What is the threat? And then you have to build 
in that capability into the ship.
    I think that is an interesting study. What is the threat up 
there?
    I know the Russians are building ice-hardened combatants. I 
think the Canadians are building a Harry DeWolf-class ice-
hardened combatant of some type. So there are people who are 
looking at combatants in the Arctic region, and we certainly 
should look at that.
    I don't think we did look at it when we designed the 
current icebreaker. But I think it is a good study to look at.
    Mr. Hunter. Would you think, I mean, is that the Coast 
Guard's role to look at that or the Navy's role to look at 
that?
    Admiral West. I think it has to be both. I mean, usually 
the comms suite, the weapons suite that are provided to cutters 
as warships come from DoD, so it is a common--an issue that 
they should do together.
    Mr. Hunter. But that study, that would be done by the Navy?
    Admiral West. I think it ought to be done by both of them.
    Mr. Hunter. Ms. Mak, I want to come back to you. Ms. Mak, I 
asked you earlier at what point, and I forgot to get your 
answer, at what point does the Coast Guard start planning for 
real life to meet their actual budgets? As opposed to asking 
for everything under the sun and then having graphs like this 
where there is never enough money to meet their acquisition 
timeline and schedule.
    Ms. Mak. I believe a 20-year plan hopefully will start 
addressing that, because that forces the Coast Guard to lay out 
more than the assets that are needed and are shown in the 5-
year plan. For instance, the 5-year plan doesn't cover quite a 
few other assets. And when you go further out with strategic 
planning, it has to cover more assets and be able to lay out 
those tradeoffs that have to occur if we don't have the funding 
to procure certain assets. And that is why we have been 
advocating for a 20-year plan. Because that forces the Coast 
Guard to lay out all the assets that are needed, all the 
resources that are needed, and then lay out tradeoffs.
    I know the Commandant said earlier that DHS and OMB make 
certain cuts. And agreed, they have to prioritize. But we have 
spoken to DHS and OMB since the last hearing and they also 
acknowledge as long as the Coast Guard lays out this 20-year 
plan within the budget constraints, then the Coast Guard can 
say, if we stay at $1.2 billion for acquisitions, this is what 
doesn't get done. DHS and OMB agreed to that. They don't have a 
problem with listing out all their needs. Whether they get 
funded or not is a different issue, and that's the Department's 
call and OMB's call.
    Mr. Hunter. Let's go back, really quick, Mr. O'Rourke, 
about block buy on the icebreaker. Let's go through it slowly. 
Because we have arguments on each side of this.
    The icebreaker is not a complicated ship. I think that is--
I do my little hand movements of what an icebreaker does. It 
hits stuff, then it goes down, then it backs up, then it hits 
stuff, then it goes down and it backs up and it hits stuff, so 
on and so on, ad nauseam. That is what an icebreaker does.
    To me, it is almost besides the technical aspects of 
bending really thick steel and the way that the boat is 
designed. Beyond that, it is a very untechnical ship. So could 
you speak to that? If you were to do a block buy, starting with 
the first ship, whether it is going to be partially militarized 
or not, and that is decided upon beforehand, can you go through 
the risks associated with it if you don't start, as we are all 
saying, until you have 100 percent design and you have all of 
the materials, at least for the first couple ships, and if this 
can save you $1 billion by block buying the three, what are the 
risks associated with that?
    Mr. O'Rourke. Right, there is some complexity in the 
icebreaker. It is more complex than something like a sealift, a 
military sealift ship that would be similar to a commercial 
cargo ship. But it is not a highly complex ship. We are not 
talking about, you know, a submarine that goes down to a 
pressure depth and has a nuclear reactor on board and also a 
lot of weapons and complex electronics. So it is not a highly 
complex ship.
    Furthermore, there is a lot of design know-how available on 
icebreakers. Even though they have not been built in this 
country in some time, a lot of other people have been building 
them all along and they have accumulated quite a lot of design 
know-how. And the shipyards in this country that are interested 
in this program have access to that and they can choose to 
partner----
    Mr. Hunter. They would partner with----
    Mr. O'Rourke [continuing]. With these, and some of them 
already have. You can import that design know-how into it to 
mitigate the risk.
    But lastly----
    Mr. Hunter. Stop there, though. Your point there, I think, 
needs to be made. It is really not a first-in-class ship. It 
might be for us, but it's really not.
    Mr. O'Rourke. Not for----
    Mr. Hunter. If you bring over the Norwegians and they are 
in your yard with you and they look at everything, it is really 
not a first-in-class ship, it is number 27; it is just being 
built in a U.S. yard, as opposed to a Norwegian yard.
    Mr. O'Rourke. To the extent that you follow a foreign 
design, yeah, that becomes more and more true. It depends on 
exactly how much of the foreign design is incorporated into the 
U.S. design.
    But as a matter of philosophy, if you think there is risk 
in the design of that ship, you shouldn't be building it 
anyway. Best practices are to develop the design to a high 
state of completion and confidence in that design before you 
start bending metal. This is one of the major lessons of 
shipbuilding, and it is not a new one; it goes back some number 
of years.
    So if you think there is risk in that design, then why are 
you contemplating even starting the construction of that ship 
under any circumstances?
    But lastly, let's say you need to make some changes in the 
design as you work your way through the construction process. 
What is the cost of making those changes and how does that 
compare to the savings of having put that ship under the block-
buy contract? That is what you need to weigh. There may be some 
changes you want to put onto that first ship and that may cost 
you some amount of money. But that cost could be a lot less 
than the savings that you will give up by not putting that ship 
under the block-buy contract in the first place. And I think 
that needs to be weighed in the balance.
    If you build the first ship outside the block-buy contract 
and then wait until it is complete, you will not only--before 
committing to a block buy for the follow ships, you will not 
only forgo the savings on the first ship, you will then put an 
interval between that first ship and the second ship that will 
give you a loss of learning and a poorer production learning 
curve, and you will lose savings moving from ship number 1 to 
ship number 2, as well.
    Mr. Hunter. What I am kind of seeing here, and this is just 
me being a conspiracy theorist, but after watching the Coast 
Guard for a couple of years, if you do a block buy or a 
multiyear contract, basically you are--and it is approved, the 
Coast Guard is getting a long-term commitment by the 
Government, by OMB, by the Department of Homeland Security and 
by the appropriators, by this Congress. That is what a block-
buy contract signals, number one. Not only is it just good 
fiscally, but it signals a long-term funding commitment to you 
guys.
    I think that is why you didn't use it for the OPCs. I think 
that's why. I don't think that OMB wants you to have a long-
term show of faith from the Government. Because if you do that, 
then they are going to be 100 percent committed. Because that 
is what a block buy is, right?
    Would you like to speak to that, Admiral Haycock?
    Admiral Haycock. Yes, sir. The thought of having a 
commitment to building three or four or six or however many 
icebreakers is exciting and, you know, we are looking forward 
to that. I think the thing that we need to keep in mind is it 
is not just the OMB or the Department that has signed up for 
the commitment, it is also Congress, as well. And one of the 
things that we learn early on is you want to be careful about 
tying the hands of future Congresses. And so we are trying to 
be respectful of the way business is done.
    So we are excited about making this a priority in the 
commitment upfront and in the commitment, it shows to industry 
that this is real and that the Nation is going to build 
multiple icebreakers. They can get their arms around that and 
that makes them serious, that makes them competitive, and it 
spurs innovation, so we are going to get unique designs that 
are going to be able to meet our needs, and hopefully 
affordable.
    If I could just take a second, sir, to clear up a 
misconception, however. I have heard a number of people, and I 
have been dealing with this for about 9 months now. There is a 
misconception, sir, that an icebreaker, it is really simple and 
it is not complex. And I would agree, in general, it is not 
rocket science. OK. We are not building a submarine, OK, by any 
means.
    But I think people need to understand that we don't need an 
icebreaker. We need a Coast Guard cutter that can break ice so 
it can get to the places it has missions. It doesn't make sense 
to go up to the Arctic and just break ice. In fact, you know, 
some people might not like that, environmentalists, that sort 
of thing, OK?
    We need the icebreaker because there is a mission to 
perform somewhere in the high latitudes. Maybe it is responding 
to a search and rescue case because of increased tourism. Maybe 
it is responding to an environmental spill of some sort because 
of oil exploration or mineral exploration on the seabed. You 
know, maybe it is a national defense mission of some sort, OK? 
Maybe it is mapping the seabed and preparing--making 
sovereignty claims and that sort of thing.
    The point is, there is a mission that we need to accomplish 
and the ice is in the way, so we need to break the ice to get 
to where we need to conduct our missions. Just breaking ice for 
the sake of breaking ice may occur domestically, because we 
need to clear ports and keep them free for commerce. But in the 
high latitudes, it is generally because we have a mission we 
have to accomplish someplace and we need the icebreaker to do 
it.
    And so that is why it is not just a simple icebreaker. It 
is a Coast Guard cutter that has the ability to break ice. So 
it won't be a complex cutter like a National Security Cutter, 
likely it will be something less. But the Coast Guard missions 
that we need to accomplish in terms of communications with 
other authorities, State, local, Tribal, et cetera, all those 
things need to be rolled into the icebreaker.
    Mr. Hunter. We are not saying we are not going to have 
comms on the icebreaker, or a skiff or something. That is not 
what we are saying, right? We are talking about the complexity 
that you choose to build for departments that are not the Coast 
Guard. Whether it is science stuff or militarization. As you 
know, the Coast Guard is a jack of all trades, master of some. 
But if you want to make the icebreaker everything to everybody, 
it will be master of none, and it will be massively expensive.
    If you added all those things with the possible missions 
that coincide with your 11 statutory missions and you try to 
put those all in an icebreaker, your costs are going to go up 
massively. I don't even know what those numbers would be, but I 
am sure you guys have taken a look, that if you got everything 
that you wanted on an icebreaker, what it would cost. It would 
be over $1 billion, right?
    Admiral Haycock. We concur, sir. That has been our effort 
over the last 9 months, is bringing that cost down.
    Mr. Hunter. So you are saying, here is all the stuff we 
wanted. Now we are going to cut it down to what we can afford?
    Admiral Haycock. We are trying to cut out the things that 
do not have major mission impact. That is really what we are 
going after.
    Some of the cost savings that we have identified is also 
from the maturation of the actual cost model itself. So as all 
those things mature, we get more confident in the number and 
the number goes down.
    Mr. Hunter. And you told Mr. Garamendi you are going to 
have the design by the end of the year or the next 6 months or 
year, right? That was----
    Admiral Haycock. I think that also is a misunderstanding. 
So we will get the designs when the industry teams submit their 
proposals for the detailed design and construction. I don't 
know if that makes sense----
    Mr. Hunter. Because what I would like to get before that 
are your requirements. Because you said we got the--here is a 
$1.5 billion ship, we have to whittle that down. When will you 
have your requirements to give the subcommittee, what you have 
whittled it down to?
    Admiral Haycock. So we had an operational requirements 
document that was signed, I think, a year--or this past 
January, I believe. And so we are going to do a revision to 
that document.
    Some of the changes that have been made to our internal 
indicative design, most of them are, you know, kind of buried 
in the engineering requirements, as opposed to the top-level 
operational requirements. So I think you are going to find that 
the icebreaker will meet virtually all the needs we need to 
meet. But the savings and stuff are some of the details.
    Like Admiral West was talking about using commercial versus 
military specifications. We have gone through and that has been 
part of the calculus that has got us to our $200 million 
savings so far, is looking at those requirements and saying, 
which ones do we really have to have as a military 
specification and which ones can we go commercial?
    Mr. Hunter. But if you build block buy into your planning, 
you could add some of those requirements back, because of the 
money that you save. Or you could use the money to go onto the 
next ship, too. Are you, in your planning for your design, are 
you building the block buy? Are you assuming a block buy in 
your calculations? Because that either saves you money or not, 
right?
    Admiral Haycock. Yes, sir, that is part of the calculus. 
Through the foresight of this subcommittee, we had the Navy on 
our team in our Integrated Program Office. The Navy, as Mr. 
O'Rourke has indicated, has done this many times. And so we are 
listening to their counsel and taking things into 
consideration, some of the best practices they've put into 
place.
    I think one of the things we haven't talked about is, you 
know, some of the acquisition processes that we've borrowed 
from the Navy that we are folding into our process. So we are 
learning from our engagement with the Navy. And block buy is 
certainly one of those.
    Mr. Hunter. That is all I have.
    Mr. Garamendi, any closing thoughts?
    Mr. Garamendi. I think I just heard you say closing 
thoughts, which gives me some indication that we are about to 
wrap up here.
    Within the next 6 months, this committee and Congress are 
going to have to make some final decisions about the 
icebreakers. I think, Mr. Chairman, a closing thought is one 
that came up in the discussion a few, well, maybe 20 minutes 
ago. And that is, we should, since both of us are on the 
Seapower and Projection Forces Subcommittee, we should ask that 
subcommittee to ask the U.S. Navy, are there any military 
requirements for the U.S. Navy in the Arctic. It will be 
interesting to see what they have to say as to that. So I am 
going to carry that forward.
    I want to thank the National Academies of Sciences for a 
very detailed study here that provides direction on most of the 
questions that we've asked. So over the next several months, 
probably the next 6 months, we are going to be moving toward 
the finalization of an icebreaker strategy for the United 
States. We are almost there. The question of three, three--
three heavies and three lights, or four heavies, remains to be 
decided, and it is a critical question that we are going to 
have to answer here. The arguments made by the National Science 
Foundation are important and perhaps provide us with the final 
answer.
    Ms. Mak, we are going to have to take a look at the 
question of block buy. I think the answer to that is going to 
lie in the nature of the contract itself and the design going 
into a block buy.
    Also, I think, Mr. O'Rourke, you came up with this issue of 
the first one hits the waves and gets into the water will be 
tested and then the second, third or maybe fourth one will then 
be modified based upon the testing. Sea trials, is that the 
word?
    Mr. O'Rourke. Acceptance trials, yes, testing.
    Mr. Garamendi. Or ice trials, or whatever.
    Mr. O'Rourke. There are lots of phases of that. They go by 
different names.
    I just wanted to add one small point to what I said 
earlier. It was pointed out that under a block buy you might 
make a commitment to get components upfront for all the ships 
covered under the block buy, and that this could pose a risk if 
you decide to change the design or not get the follow ships. 
But that is only true if your block-buy contract is using EOQ 
purchases and buying those things upfront.
    You can still do the block buy without that. It doesn't 
save as much as a block buy that does use EOQ purchases, but it 
still saves. So if you are concerned about the risk of buying 
components and materials that may not work out for follow 
ships, you can get rid of that risk and still do the block-buy 
contract and still save money.
    Mr. Garamendi. Well, once again, it depends on what those 
specific items are. Some are very, very well known and very low 
risk. Others are unique and would have a high risk. And so 
again, that goes to the contract itself and the sufficiency of 
the contract.
    My final point is to Admiral Haycock. You have been unable 
to deliver to us a viable 5-year plan, noting what was given to 
us late last night, which really does not meet what we are 
already committed to build, for example, icebreakers.
    I want to believe that the Coast Guard actually knows what 
it needs to do over the next 5 and 20 years, but that you have 
been prohibited from giving us that information by the Office 
of Management and Budget. That is a problem that I cannot 
accept, and it is one that I am going to, with hopefully--well, 
I am sure with the support of the chairman, try to see if there 
is some way for us to get information on what is a real 5-year 
and 20-year program for the Coast Guard on the acquisition, as 
well as for the operational.
    Presumably, these new icebreakers will need personnel and 
fuel and we will have to build that into the operating budgets 
going forward.
    So, Admiral Haycock, I for one will be pressing hard for a 
20-year budget. It can be informal. It can be handed to us over 
the transom late at night. Or any other mechanism that might be 
used.
    I will note that the U.S. Navy uses an informal mechanism 
to deliver information to us in a variety of ways, as does the 
Air Force.
    I will let it go at that, Mr. Chairman. A very, very 
helpful and useful meeting. Thank you very much for structuring 
it. Thank you.
    Mr. Hunter. I thank the ranking member. This has been a fun 
2\1/2\ hours.
    I would like to thank the few Members that came and 
participated and you, the panel. Thank you very much. 
Appreciate it.
    And with that, we are adjourned.
    [Whereupon, at 12:27 p.m., the subcommittee was adjourned.]
    
    
    
    
    
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