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


REVIEW OF RECENT GAO REPORTS ON ICEBREAKER ACQUISITION AND THE NEED FOR 
                      A NATIONAL MARITIME STRATEGY

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

                                (115-57)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                COAST GUARD AND MARITIME TRANSPORTATION

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                           NOVEMBER 29, 2018

                               __________

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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        EDDIE BERNICE JOHNSON, Texas
SAM GRAVES, Missouri                 ELIJAH E. CUMMINGS, Maryland
ERIC A. ``RICK'' CRAWFORD, Arkansas  RICK LARSEN, Washington
LOU BARLETTA, Pennsylvania           MICHAEL E. CAPUANO, Massachusetts
BOB GIBBS, Ohio                      GRACE F. NAPOLITANO, California
DANIEL WEBSTER, Florida              DANIEL LIPINSKI, Illinois
JEFF DENHAM, California              STEVE COHEN, Tennessee
THOMAS MASSIE, Kentucky              ALBIO SIRES, New Jersey
MARK MEADOWS, North Carolina         JOHN GARAMENDI, California
SCOTT PERRY, Pennsylvania            HENRY C. ``HANK'' JOHNSON, Jr., 
RODNEY DAVIS, Illinois                   Georgia
MARK SANFORD, South Carolina         ANDRE CARSON, Indiana
ROB WOODALL, Georgia                 RICHARD M. NOLAN, Minnesota
TODD ROKITA, Indiana                 DINA TITUS, Nevada
JOHN KATKO, New York                 SEAN PATRICK MALONEY, New York
BRIAN BABIN, Texas                   ELIZABETH H. ESTY, Connecticut, 
GARRET GRAVES, Louisiana                 Vice Ranking Member
BARBARA COMSTOCK, Virginia           LOIS FRANKEL, Florida
DAVID ROUZER, North Carolina         CHERI BUSTOS, Illinois
MIKE BOST, Illinois                  JARED HUFFMAN, California
RANDY K. WEBER, Sr., Texas           JULIA BROWNLEY, California
DOUG LaMALFA, California             FREDERICA S. WILSON, Florida
BRUCE WESTERMAN, Arkansas            DONALD M. PAYNE, Jr., New Jersey
LLOYD SMUCKER, Pennsylvania          ALAN S. LOWENTHAL, California
PAUL MITCHELL, Michigan              BRENDA L. LAWRENCE, Michigan
JOHN J. FASO, New York               MARK DeSAULNIER, California
A. DREW FERGUSON IV, Georgia         STACEY E. PLASKETT, Virgin Islands
BRIAN J. MAST, Florida
JASON LEWIS, Minnesota
MIKE GALLAGHER, Wisconsin
VACANCY
                                ------                                7

        Subcommittee on Coast Guard and Maritime Transportation

                    BRIAN J. MAST, Florida, 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
JASON LEWIS, Minnesota, Vice Chair   STACEY E. PLASKETT, Virgin Islands
VACANCY                              PETER A. DeFAZIO, Oregon (Ex 
BILL SHUSTER, Pennsylvania (Ex           Officio)
    Officio)
                                CONTENTS

                                                                   Page

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

                               WITNESSES

Rear Admiral Mark H. Buzby, U.S. Navy (Ret.), Administrator, 
  Maritime Administration:

    Oral statement...............................................     4
    Prepared statement...........................................     6
Rear Admiral Michael J. Haycock, Assistant Commandant for 
  Acquisition and Chief Acquisition Officer, U.S. Coast Guard:

    Oral statement...............................................     7
    Prepared statement...........................................     9
Marie A. Mak, Director of Contracting and National Security 
  Acquisitions, U.S. Government Accountability Office:

    Oral statement...............................................    10
    Prepared statement...........................................    12
Andrew Von Ah, Director of Physical Infrastructure, U.S. 
  Government Accountability Office:

    Oral statement...............................................    20
    Prepared statement...........................................    22
Ronald O'Rourke, Specialist in Naval Affairs, Congressional 
  Research Service:

    Oral statement...............................................    27
    Prepared statement...........................................    29

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Hon. John Garamendi of California................................     3
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REVIEW OF RECENT GAO REPORTS ON ICEBREAKER ACQUISITION AND THE NEED FOR 
                      A NATIONAL MARITIME STRATEGY

                              ----------                              


                      THURSDAY, NOVEMBER 29, 2018

                  House of Representatives,
          Subcommittee on Coast Guard and Maritime 
                                    Transportation,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:02 a.m., in 
room 2253, Rayburn House Office Building, Hon. Brian J. Mast 
(Chairman of the subcommittee) presiding.
    Mr. Mast. The subcommittee will come to order.
    Without objection, the Chair is authorized to declare a 
recess at any time.
    Sorry we had to squeeze you all in here like this. You all 
are severely outnumbering Mr. Garamendi and myself.
    Mr. Garamendi. But think about the opportunities next year: 
a new, reconditioned room.
    Mr. Mast. I think you are certainly finding the silver 
lining.
    Mr. Garamendi. In the meantime we suffer.
    Mr. Mast. Yeah.
    All right. Today the subcommittee will hear testimony on 
two recent reports by the Government Accountability Office, 
GAO. The GAO conducts reviews and audits to provide information 
for Congress to perform its oversight functions in order to 
improve the performance and accountability of the Federal 
Government.
    Today we review reports that discuss the Coast Guard's 
icebreaker acquisition program and the need for the Department 
of Transportation to release the National Maritime Strategy.
    The Coast Guard is in the process of procuring the first 
new heavy icebreakers in over 40 years. Icebreakers are 
essential for Coast Guard operations in the Arctic and the 
Antarctic. They are critical to maintaining U.S. interests in 
these regions.
    The three heavy polar icebreakers the Coast Guard says it 
needs are estimated to cost approximately $9.8 billion 
throughout their life cycle. In such an important and costly 
acquisition program, congressional oversight is absolutely 
needed to ensure the program is on time and on budget.
    However, GAO found that the estimates for the cost, 
schedule, and performance baselines for the icebreaker 
acquisition program do not follow standard best practices. The 
National Academies of Sciences study expressed similar concerns 
last year.
    The subcommittee is particularly interested to learn if the 
Coast Guard intends to wisely complete design of the first 
polar icebreaker before beginning construction or to 
imprudently start construction while design work is going on.
    This subcommittee has been a strong supporter of the 
icebreaker acquisition program and we will continue to conduct 
oversight to ensure the program is a success.
    The second GAO report focuses on the need for the 
Department of Transportation to release the National Maritime 
Strategy. Congress required this strategy to be completed by 
2015, but 3 years after that deadline the Secretary still has 
not released it. The National Defense Authorization Act for 
fiscal year 2019 extended that deadline for the Secretary to 
submit the strategy to February of 2020.
    This strategy is critical to addressing the challenges 
facing the U.S.-flag fleet, including the potential shortage of 
U.S. mariners and the decreasing number of U.S.-flag vessels.
    As a maritime nation, the U.S. needs to address these 
challenges now. I can assure you that I do understand firsthand 
the importance of having sufficient maritime assets to get U.S. 
forces and their supplies to where they need to be.
    I do thank the witnesses for being here today, and I look 
forward to hearing their testimony on all of these issues.
    I will now yield to the ranking member, Mr. Garamendi, for 
5 minutes to make any opening statement that he may have.
    Mr. Garamendi. I thank you, Mr. Chairman. I am looking 
forward to working with you, at least for some while, and then 
we will see where the world takes us.
    By the way, we did a good piece of work 2 days ago.
    Mr. Mast. Yeah.
    Mr. Garamendi. For the third session in a row the Coast 
Guard reauthorization was done in a timely way. And so for the 
staff, John and David and for others that are involved in that, 
well done. We ought to make it four and five and six. Should we 
make that our goal? And under your ranking membership?
    Mr. Mast. That is right.
    Mr. Garamendi. And thank you for taking the chairmanship.
    I am wandering, but I am really happy with what has been 
done around here. So let me just go through this.
    For the Government Accountability Office, thank you.
    Coast Guard, Maritime Administration, thank you for being 
here. Thank you for your work.
    Bottom line, we are going to make these icebreakers--excuse 
me, Polar Security Cutters--happen. That is going to take 
place, and it is going to take place on time, on budget, and 
that is our goal.
    Throughout this Congress this subcommittee has focused on 
oversight of what the Coast Guard has done, and we intend to 
continue to do so. The acquisition program, a lot of progress 
has been made on acquisition programs.
    In this respect, significant acquisition programs have 
risen to the level of importance within the office of the Coast 
Guard to replace its aging fleet of polar icebreakers with a 
new generation of Polar Security Cutters. New acronym: PSCs. 
Are we ready for that? OK.
    Generally, collaboration within the Coast Guard and Navy 
Integrated Program Office [IPO] appears to have enabled the 
successful development of solid requirements, produced a cost-
conscious iterative design, and accelerated delivery time for 
the first of the six new PSCs.
    Of course, the GAO has raised concerns--it is their job to 
do so--especially that the IPO may have underestimated the 
risks.
    Moreover, the GAO contends that the IPO has been overly 
optimistic in its ability of the Congress to provide stable 
funding. Wrong. There is $7.2 billion in the defense budget.
    The defense of the Arctic cannot take place without a PSC. 
All it takes is $1 billion out of that $7.12 billion to 
complete this project.
    Am I clear about what at least this person intends to do?
    In addition, CRS has noted that the PSC program could 
benefit from using different contracting methods, such as a 
block buy--I just told you how we can fund it--and a multiyear 
contract, which I just told you how we can fund it, to increase 
the affordability and efficiency across the program. We are 
going to have a robust discussion about getting this done.
    Before Admiral Buzby thinks I have forgotten about him----
    Admiral Buzby. Never, sir.
    Mr. Garamendi [continuing]. I want to learn from him where 
the Trump administration is.
    I would suggest that the committee, beginning the next 
year, subpoena the Director of the Office of Management and 
Budget. Therein lies the problem. That is why we do not have 
Admiral Buzby's report. It is stuck right there.
    And so, Mr. Mulvaney, the question is yours. Why we do not 
have this is in his hands. And we will see.
    I have a written thing here. I am going to run out of time 
very quickly, Tom, and I don't want you to admonish me about 
being longwinded. But there are things that can be done and 
must be done. We need that report. And I am terribly impatient.
    So we have the Ready Reserve Fleet. We have other 
opportunities. We need to get at it.
    I will yield back at that point. Thank you.
    [Mr. Garamendi's prepared statement follows:]

                                 
        Prepared Statement of Hon. John Garamendi of California
    Thank you, Mr. Chairman, I am looking forward to this morning's 
discussion of two recent reports released by the Government 
Accountability Office (GAO). Allow me to welcome our witnesses from the 
Coast Guard, the Maritime Administration, the GAO, and the 
Congressional Research Service (CRS).
    Throughout this Congress this subcommittee has focused its 
oversight on what the Coast Guard has done, and intends to do, to 
improve its acquisition programs, principally to keep them on budget 
and to deliver new assets and equipment according to schedule.
    In this respect, few acquisition programs rise to the level of 
importance of the Coast Guard's effort to replace its aged fleet of 
polar icebreakers with a new generation of Polar Security Cutters, or 
PSCs.
    Generally, collaboration within the joint Coast Guard/Navy 
Integrated Program Office (IPO) appears to have enabled the successful 
development of solid requirements, produced a cost-conscious iterative 
design, and accelerated the delivery timetable for the first of six new 
PSCs.
    Of course, GAO has raised concerns, especially that the IPO may 
have under-estimated risks. Moreover, GAO contends that the IPO has 
been overly optimistic in the ability of the Congress to provide stable 
funding over the life of the program, and raise questions about the 
ability of U.S. shipyards to construct these complex vessels under 
tight time constraints.
    In addition, CRS has noted that the PSC program could benefit from 
using different contracting methods, such as block-buy and multiyear 
contracts, to increase affordability and efficiency across the program. 
I intend to have a robust discussion of all these points.
    Before Admiral Buzby thinks that I have forgotten him, I will want 
to learn from him where the Trump administration stands on producing a 
National Maritime Strategy as required by law.
    As Admiral Buzby well knows, you cannot steer a vessel without a 
rudder. Well, at present, we have no National Maritime Policy. As such, 
we are left rudderless and drifting without a clear course of action to 
steer by.
    A whole host of issues, such as sustaining military sealift 
capacity, recapitalizing the Ready Reserve fleet, and replenishing the 
pool of licensed and unlicensed U.S. seafarers, to name just a few, 
must be addressed, and must be addressed now!
    The development of a National Maritime Strategy, while four years 
overdue, remains imperative, and I look forward to hearing from Admiral 
Buzby regarding his views on the administration's progress in 
developing this seminal plan. Thank you.

    Mr. Mast. Thank you, Mr. Garamendi.
    Our witnesses today are Rear Admiral Mark H. Buzby, 
Administrator of Maritime Administration; Rear Admiral Michael 
J. Haycock, Assistant Commandant for Acquisition and Chief 
Acquisition Officer for the Coast Guard; Ms. Marie Mak, 
Director of Contracting and National Security Acquisitions at 
the Government Accountability Office; Mr. Andrew Von Ah, 
Director of Physical Infrastructure at the Government 
Accountability Office; Mr. Ronald O'Rourke, Specialist in Naval 
Affairs at the Congressional Research Service.
    I ask unanimous consent that our witnesses' full statement 
be included in the record.
    Without objection, so ordered.
    Since your written testimony has been made a part of the 
record, the subcommittee would request that you limit your oral 
testimony for 5 minutes. Thank you all for taking the time to 
be here.
    Admiral Buzby, you are recognized to give your statement.

  TESTIMONY OF REAR ADMIRAL MARK H. BUZBY, U.S. NAVY (RET.), 
ADMINISTRATOR, MARITIME ADMINISTRATION; REAR ADMIRAL MICHAEL J. 
    HAYCOCK, ASSISTANT COMMANDANT FOR ACQUISITION AND CHIEF 
 ACQUISITION OFFICER, U.S. COAST GUARD; MARIE A. MAK, DIRECTOR 
    OF CONTRACTING AND NATIONAL SECURITY ACQUISITIONS, U.S. 
 GOVERNMENT ACCOUNTABILITY OFFICE; ANDREW VON AH, DIRECTOR OF 
PHYSICAL INFRASTRUCTURE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; 
AND RONALD O'ROURKE, SPECIALIST IN NAVAL AFFAIRS, CONGRESSIONAL 
                        RESEARCH SERVICE

    Admiral Buzby. Good morning. Thank you, Chairman Mast, 
Ranking Member Garamendi, members of the subcommittee. Thank 
you for this opportunity to testify about the need for a 
National Maritime Strategy.
    In August of this year, the United States Government 
Accountability Office completed a report on maritime security 
examining the role of U.S.-flag commercial vessels in 
supporting Department of Defense sealift needs. The report 
recommended that the Department of Transportation should 
complete a national strategy for sustaining the U.S.-flag 
fleet, a recommendation with which the Department of 
Transportation concurs.
    The 2014 Coast Guard Act directed DOT to produce a strategy 
identifying which Federal regulations and policies reduce the 
competitiveness of U.S.-flag vessels in international trade. 
That strategy would also assess the impact of reduced cargo 
flow due to restrictions in the United States Armed Forces 
stationed overseas, as well as provide recommendations for 
making U.S.-flag vessels more competitive in international 
trade.
    A comprehensive National Maritime Transportation Strategy 
will serve the Maritime Administration's mission to foster, 
promote, and develop the U.S. maritime industry to meet the 
Nation's economic and security needs. A critical part of this 
mission is ensuring the availability of U.S. ships, and 
qualified merchant mariners to crew those ships, to deploy 
military forces around the world to meet DoD sealift 
requirements.
    When the United States goes to war, 90 percent of DoD cargo 
is moved with a strategic sealift fleet consisting of 
Government-owned ships and the commercial U.S.-flagged fleet.
    The GAO report also reviewed the impact of the Government's 
support for a U.S.-flag fleet on national defense needs, the 
challenges of sustaining the U.S.-flag fleet for defense needs, 
as well as the status of the National Maritime Strategy. It 
concluded that while U.S. Government support for commercial 
sealift indeed helps meet national defense needs, the rise in 
operating costs and a decline in Government cargo volumes 
hamper the ability of U.S.-flag commercial ships to compete in 
international trade.
    This has resulted in a decline in U.S.-flag ships trading 
internationally and in the number of available jobs for U.S. 
merchant mariners, all of which compromises our Nation's 
ability to crew Government-owned reserve ships in a large-scale 
war or crisis.
    Finally, GAO concluded that the lack of a coherent, 
comprehensive National Maritime Transportation Strategy hinders 
effective policymaking on the complex issue of Government 
support for the U.S.-flag fleet.
    Given that the 18 Federal agencies and numerous other 
stakeholders are involved, MARAD has taken profuse steps to 
ensure that all voices are heard. Since Congress directed MARAD 
to develop this comprehensive strategy, we have met extensively 
with the full spectrum of public and private stakeholders 
representing all maritime industry professions, sectors, and 
regions.
    The draft strategy was placed into interagency review under 
the prior administration. It was subsequently withdrawn by the 
current administration so they could have the opportunity to 
review, revise, and align the strategy accordingly.
    Congress recently passed the fiscal year 2019 National 
Defense Authorization Act, which extended the deadline of this 
strategy to February 2020. We appreciate this extension, which 
will allow us to better align the National Maritime Strategy 
with the administration's National Security Strategy and 
National Defense Strategy. MARAD is using the additional time 
afforded by Congress to further collaborate with stakeholders 
to refine the strategy's goals.
    I appreciate this subcommittee's interest in seeing the 
National Maritime Strategy completed and for your continued 
support of the U.S. merchant marine. I am happy to respond to 
any questions you have, sir.
    [Admiral Buzby's prepared statement follows:]

                                 
  Prepared Statement of Rear Admiral Mark H. Buzby, U.S. Navy (Ret.), 
                 Administrator, Maritime Administration
    Good morning, Chairman Mast, Ranking Member Garamendi, and members 
of the subcommittee. Thank you for this opportunity to testify about 
the need for a National Maritime Strategy.
    In August of this year, the U.S. Government Accountability Office 
(GAO) completed a report on maritime security, which examined the role 
U.S.-flag commercial vessels play in supporting Department of Defense 
(DoD) sealift needs.\1\ GAO recommended that the Department of 
Transportation (DOT) should complete the national maritime strategy and 
establish and provide to Congress a timeline by which the strategy 
document will be issued as required in the Howard Coble Coast Guard and 
Maritime Transportation Act of 2014 (2014 Coast Guard Act), P.L. 113-
281. DOT concurred with GAO's recommendation. Subsequent to the 
publication of this report, Congress passed and the President signed 
the John S. McCain National Defense Authorization Act for Fiscal Year 
(FY) 2019 (P.L. 115-232), which extended the deadline of this strategy 
to February 2020. This extension affords the Administration the 
opportunity to align the National Maritime Strategy with other 
Administration strategy documents.
---------------------------------------------------------------------------
    \1\ Maritime Security, DOT Needs to Expeditiously Finalize the 
Required National Maritime Strategy for Sustaining U.S.-Flag Fleet, 
GAO-18-478, August 2018.
---------------------------------------------------------------------------
    The 2014 Coast Guard Act directed DOT, in consultation with the 
U.S. Coast Guard (USCG), to produce a strategy that identifies Federal 
regulations and policies that reduce the competitiveness of U.S.-flag 
vessels in international trade and the impact of reduced cargo flow due 
to reductions in United States Armed Forces stationed overseas. In 
addition, the strategy must include recommendations to make U.S.-flag 
vessels more competitive in international trade.
    Developing a National Maritime Strategy will help the Maritime 
Administration (MARAD) accomplish its mission to foster, promote, and 
develop the U.S. maritime industry to meet the Nation's economic and 
security needs. MARAD had embarked on a strategy development effort 
prior to passage of the 2014 Coast Guard Act. While the 2014 Coast 
Guard Act requirements are included in the scope of the statute, 
because of the evolving nature of the industry, it is important to 
develop a strategy that can serve the government and industry over the 
long term. A critical part of this mission is ensuring the availability 
of U.S. ships, and qualified merchant mariners to crew those ships, to 
meet DoD sealift requirements. DoD relies on these strategic sealift 
capabilities to efficiently and effectively deploy military forces 
around the world. When the United States goes to war, DoD's U.S. 
Transportation Command moves 90 percent of its cargo requirements with 
the strategic sealift fleet, which consists of government-owned ships 
augmented by the commercial U.S.-flagged fleet.\2\ A key issue MARAD 
faces in carrying out its mission includes simultaneously coordinating 
access to shipping services to meet commercial demands, with 
potentially overlapping DoD sealift requirements, and other national 
emergency needs that involve this limited fleet of U.S.-flag vessels. 
In addition to this important work, the people of MARAD must work with 
the interagency and direct focus on improving the Nation's lagging 
competitiveness in port and intermodal freight infrastructure. The 
National Maritime Strategy is aimed at addressing all of these 
challenges.\3\
---------------------------------------------------------------------------
    \2\ General Darren W. McDew, United States Air Force Commander, 
U.S. Transportation Command, Statement before the Senate Armed Services 
Committee on the State of Command, April 10, 2018, page 8.
    \3\ The National Maritime Strategy will address requirements from 
the 2014 Coast Guard Authorization Act, as well as fulfill a directive 
from the fiscal year Consolidated Appropriations Act, P.L. 113-76, 
requiring DOT, in collaboration with DoD, to develop a national sealift 
strategy that ensures the long-term viability of the U.S. Merchant 
Marine.
---------------------------------------------------------------------------
    In its report, GAO reviewed: (1) The effect the U.S. government's 
support for the U.S.-flag fleet has had on national defense needs and 
other government programs; (2), the challenges identified by 
stakeholders in sustaining the U.S.-flag fleet for defense needs; and, 
(3) the status of the National Maritime Strategy. GAO concluded that 
although U.S. Government support for commercial sealift helps meet 
national defense requirements, operating cost increases unique to the 
U.S. flag and a decline in government impelled cargo volumes have 
challenged the ability of U.S.-flag commercial ships to remain 
economically viable in international trade. As demand for U.S.-flag 
ships in international trade has declined in recent years in response 
to these pressures, the number of ships and associated jobs available 
to U.S. citizen merchant mariners continues to decline. In turn, 
MARAD's ability to identify qualified volunteer mariners to crew 
Government-owned reserve ships in the event of a large-scale war or 
emergency is more challenging. GAO concluded that the continued lack of 
a National Maritime Strategy limits decisionmakers' ability to make 
policy choices related to these challenges in a comprehensive way that 
considers the complex issues related to the government support that is 
currently required to retain the U.S.-flag fleet. To reverse the 
continued long-term decline of the American fleet, the National 
Maritime Strategy must also seek to enhance U.S. maritime 
competitiveness to a degree sufficient enough to generate and sustain 
growth in commercial demand for U.S.-flag shipping.
    MARAD is conscious of the time it has taken to develop the strategy 
since Congress directed that it be done in 2014. In this time, MARAD 
has conducted extensive engagement with public and private stakeholders 
representing the full spectrum of maritime industry professions, 
sectors, and regions. As the U.S. Committee on the Marine 
Transportation System (CMTS) notes, there are 18 Federal Agencies and 
numerous public stakeholders with a role in maritime transportation 
issues. Each of these Agencies is an important stakeholder and their 
input is critical to address both the challenge involved in developing 
a strategy for the U.S. merchant marine that can garner wide-spread 
support and the importance of developing a long-term strategy to 
address future needs. As you may be aware, the draft strategy was 
placed into review under the prior Administration. It was subsequently 
withdrawn by the current Administration so that they could have an 
opportunity to review, revise, and align the strategy accordingly. We 
appreciate that Congress provided an extension on this requirement to 
allow us to best align this strategy with the Administration's National 
Security Strategy and National Defense Strategy. MARAD has not stood 
idle during this interim period. We are using the extension afforded by 
Congress as an opportunity to further collaborate with stakeholders to 
refine goals of the strategy and produce an effective National Maritime 
Strategy.
    I appreciate this subcommittee's continued support for the U.S. 
merchant marine and look forward to working with you to address the 
challenges facing the U.S. maritime industry and take advantage of 
opportunities to enhance and improve the U.S. maritime transportation 
system.
    I am happy to respond to any questions you may have.

    Mr. Mast. Thank you, Admiral Buzby.
    Admiral Haycock, you are recognized for your statement.
    Admiral Haycock. Good morning, Mr. Chairman, Ranking Member 
Garamendi, and distinguished members of the subcommittee. On 
behalf of the Commandant and the U.S. Coast Guard, I would like 
to thank you for this opportunity to highlight our efforts to 
recapitalize a key component of the national fleet and acquire 
a new class of Polar Security Cutters that will meet our 
mission requirements in the polar regions.
    I would also like to extend our thanks and our appreciation 
for the hard work that you put in earlier this week when you 
passed the Coast Guard Authorization Act of 2018. There are 
some provisions in there that will benefit us in our major 
acquisition programs.
    I would like to respectfully request that my written 
testimony be entered into the record.
    Mr. Mast. Without objection, so ordered.
    Admiral Haycock. The Coast Guard's current icebreaking 
fleet provides minimal capacity to carry out current 
icebreaking missions in the polar regions and does not 
facilitate uninhibited access or self-rescue. To ensure access 
and project sovereign presence in the high latitudes, the 
Nation must take swift action to rebuild and enhance this 
national capability.
    The United States is an Arctic nation and an Antarctic 
principal with substantial political, national security, 
natural resource, environment, and other interests in the polar 
regions. The Coast Guard and the Nation need a fleet of Polar 
Security Cutters that can not only break through the barriers 
that stand in the way of our access to the polar regions in our 
areas of responsibility, but can also execute the full range of 
maritime security, safety, and stewardship missions once they 
arrive on site.
    As outlined by the Commandant, the Coast Guard is focused 
on a 6-3-1 approach to recapitalize the polar icebreaking 
fleet. That is six icebreakers, three of them with heavy-duty 
icebreaking capability and one being needed immediately. The 
Service plans to build these six icebreakers to provide 
multimission capability in high latitudes.
    We are moving out on an accelerated program to provide 
these national assets quickly and as affordably as we can. And 
to that end, we established an Integrated Program Office with 
the Navy to leverage each Service's experience and lessons 
learned across similar shipbuilding programs. Over the past 2 
years we have pursued a number of strategies to reduce program 
risk, including a comprehensive review and validation of 
operational requirements and an extensive industry study 
strategy with five U.S. shipyards to inform development of the 
system specification.
    This past March we released a solicitation for detailed 
design and production of up to three Polar Security Cutters. 
Source selection is ongoing, and we are on track to award a 
design to one U.S. shipyard this fiscal year.
    With the continued support of the administration and 
Congress, we are as close as we have ever been in the last 40 
years to recapitalizing our old polar icebreaking fleet.
    I am pleased to testify alongside with Ms. Mak from GAO. 
The Coast Guard continues to benefit from our collaborative 
relationship with GAO, and the recent GAO report on the polar 
icebreaking program highlights the work by the Coast Guard and 
the Navy Integrated Program Office to mature the designs and 
technologies while setting realistic cost and schedule 
estimates.
    As noted in the report, the Integrated Program Office has 
complied with the Department of Homeland Security's acquisition 
directives and policies, and we have leveraged the Navy's 
expertise to develop an independent cost estimate to guide the 
acquisition decisions. DHS, the Coast Guard, and the Navy have 
concurred with each of the recommendations in the GAO report, 
and we are collectively moving forward to address each item 
with the timeline noted in the Department's response letter.
    We understand the urgency expressed by the administration 
and Congress, and there is no doubt that we are operating on a 
challenging schedule to replace the Nation's aging polar 
icebreaking fleet. However, we are confident that our 
acquisition approach and our risk reduction efforts will 
position the Integrated Program Office to deliver the first 
Polar Security Cutter as soon as possible. And prudence demands 
that we continue investing in a modernized Coast Guard, and 
your support has helped us make the tremendous progress that we 
have achieved.
    I thank you for the opportunity to testify before you 
today. I look forward to your continued support of the men and 
women in the Coast Guard. And I look forward to your questions. 
Thank you, sir.
    [Admiral Haycock's prepared statement follows:]

                                 
   Prepared Statement of Rear Admiral Michael J. Haycock, Assistant 
 Commandant for Acquisition and Chief Acquisition Officer, U.S. Coast 
                                 Guard
    Good morning Chairman Mast, Ranking Member Garamendi, and 
distinguished members of the subcommittee. I appreciate the opportunity 
to testify today and thank you for your enduring support of the United 
States Coast Guard.
    The Coast Guard offers unique and enduring value to the Nation. A 
branch of the Armed Forces at all times, our combination of broad 
authorities and complementary capabilities squarely align with the 
President's national security and economic prosperity priorities. The 
Coast Guard is also a Federal law enforcement agency, a regulatory 
body, a first responder, and a member of the U.S. Intelligence 
Community, which uniquely position the Service to help secure the 
maritime border, combat transnational criminal organizations (TCOs), 
facilitate and safeguard commerce on America's waterways, and protect 
our national interests in the Polar Regions.
              recapitalization of the nation's polar fleet
    The United States is an Arctic nation and Antarctic principal with 
substantial political, national security, natural resource, 
environmental, and other interests in both Polar Regions. The Coast 
Guard has been the lead Federal agency in assuring surface access to 
the Polar Regions since 1965, meeting the Nation's most critical 
mission needs in the Arctic and Antarctic. The Coast Guard's current 
polar icebreaking fleet provides minimal capacity to carry out current 
icebreaking missions and does not provide uninhibited access, 
continuous presence, or self-rescue. To ensure access and sovereign 
presence in the high latitudes, the Nation must take swift action to 
rebuild and enhance this critical national capability.
    We have established an Integrated Program Office (IPO) with the 
Navy to leverage each service's experience and lessons learned across 
similar shipbuilding programs. Program roles and responsibilities for 
each service are well defined, and the acquisition is following 
established processes and procedures under the Department of Homeland 
Security's (DHS) acquisition framework while incorporating Navy best 
practices.
    The IPO leveraged extensive industry studies with five U.S. 
shipyards to identify and reduce potential acquisition, technology and 
production risks and to inform development of the system specification. 
This effort significantly enhanced our understanding of the state of 
the market and the capabilities of the industrial base. In conjunction 
with the DHS Science and Technology Directorate, the Naval Surface 
Warfare Center Carderock and the Canadian National Research Council, 
the IPO conducted extensive modeling and simulation (M&S) of Polar 
Security Cutter hulls and propulsion systems, which validated our 
``Indicative Design''. The combined industry studies and M&S efforts 
identified cost and resource savings and provided the framework to 
minimize the negative effects of potential risks.
    With the support of the Administration and Congress, we are making 
significant progress toward building new Polar Security Cutters. This 
past March, we released a request for proposal (RFP) as a full and open 
competition, and we are on track to award a Detail Design and 
Construction (DD&C) contract in fiscal year for the construction of up 
to three heavy Polar Security Cutters. We are as close as we have been 
in over 40 years to recapitalizing our polar icebreaking fleet; 
continued investment now is vital to solidifying our standing as an 
Arctic nation and affirms the Coast Guard's role in providing assured 
access to the Polar Regions for decades to come.
    Given the state of our heavy icebreaker fleet, recapitalization 
cannot be delayed and must be carried out expeditiously. As highlighted 
in the 2017 National Security Strategy, China and Russia challenge 
American power, influence, and interests, attempting to erode American 
security and prosperity. This is increasingly the case in the Polar 
Regions. The ongoing rapid expansion of China's icebreaker fleet is a 
bellweather to its ambition as a Polar power. In order to maintain 
American leadership in this vital arena, acquisition of the Polar 
Security Cutter must also account for the pace at which China is 
surging past the United States.
               gao review of the polar icebreaker program
    The Coast Guard continues to benefit from our collaborative 
relationship with the Government Accountability Office (GAO). The 
recent GAO report on the Polar Icebreaker, renamed the ``Polar Security 
Cutter,'' acquisition program highlights the work by the IPO to develop 
mature designs and technologies and set realistic cost and schedule 
estimates. As noted in the report, the IPO has complied with DHS 
acquisition directives and policies and leveraged the Navy's expertise 
to develop an independent cost estimate to guide acquisition decisions.
    The IPO has adopted an acquisition strategy designed to maximize 
competition by inviting industry to propose a design that meets the 
government's operational requirements and to constrain the government's 
cost risk through the use of a fixed price contract. This approach 
leverages lessons learned from recent Coast Guard acquisition programs, 
including the Offshore Patrol Cutter program, as well as similar Navy 
shipbuilding programs.
    The Polar Security Cutter solicitation directs offerors to use 
proven, state of the market technologies and components in their 
proposals to minimize design risk. Under the Polar Security Cutter 
contract, the selected shipyard will mature the proposed design further 
during the detail design process, and a stable design will be achieved 
and approved prior to the start of construction of the first Polar 
Security Cutter. To guide development of industry technical and price 
proposals for DD&C, the IPO provided an estimated cost for the 
government's indicative design--a representative design that meets key 
performance parameters--at an average price of $615 million per ship 
for design and construction of a three-ship acquisition.
    As part of the study, GAO made six recommendations for action by 
DHS, the Coast Guard and the Navy. We concurred with each of the 
recommendations, and we are collectively moving forward on addressing 
each item along the timeline noted in the Department's response letter.
                               conclusion
    Coast Guard mission readiness requires an ability to execute our 
full suite of missions in the present while simultaneously making the 
investments necessary to meet mission demands in the future. There is 
no doubt that we are operating on a challenging schedule to replace the 
Nation's aging polar icebreaker fleet; however we are confident that 
our acquisition approach and the risk reduction measures that we have 
already taken position the IPO to deliver the first PSC on the current 
schedule. Prudence demands we continue investing in a modernized Coast 
Guard, and your support has helped us make tremendous progress.
    Thank you for the opportunity to testify before you today and for 
all that you do for the men and women of the Coast Guard. I look 
forward to your questions.

    Mr. Mast. Thank you, Admiral Haycock.
    Ms. Mak, you are recognized for your statement.
    Ms. Mak. Good morning, Chairman Mast, Ranking Member 
Garamendi, and members of the subcommittee. Thank you for 
inviting me here today to discuss the Coast Guard's acquisition 
of the Polar Security Cutter.
    In our report that we issued in September, we found that 
the Coast Guard has not yet established a sound business case 
for the program. A solid business case is achieved when there 
is a balance between the concept you are trying to build and 
the available resources you have to build it.
    The resources and the associated risks we covered in our 
report include design, technology maturity, cost, and schedule. 
We made several recommendations to address each of these key 
risk areas, all of which DHS and the Coast Guard agreed with 
and have already initiated efforts to address.
    With that said, two risk areas that I would like to 
highlight today are, first, the need to develop a realistic 
schedule that takes into account risks that are inherent to 
shipbuilding programs, particularly unique shipbuilding 
programs like the Polar Security Cutter; and second, the 
importance of understanding the maturity of key technologies 
before awarding the contract for detailed design of the cutter.
    Specifically with regards to schedule, in our review this 
summer we noted that the Coast Guard's planned delivery dates 
were optimistic because it was not informed by a realistic 
assessment of shipbuilding activities. Instead, the schedule 
was driven by the potential gap in icebreaking capabilities 
once the Coast Guard's only operating heavy polar icebreaker, 
the Polar Star, reaches the end of its service life.
    Having visited the Polar Star this summer, I give much 
credit to the Coast Guard crew for doing everything possible to 
keep that cutter operational to resupply the McMurdo Station in 
Antarctica. While we all agree with the Coast Guard that it is 
critical to proceed as quickly as possible, to replace the 
Polar Star, it has to be done with a realistic schedule.
    An overly optimistic schedule does not provide 
decisionmakers with reasonable timeframes of when the 
replacement cutters will be operational. This puts pressure on 
the Coast Guard to potentially take short cuts, which in the 
long run can end up costing more time and money than taking the 
time to do things right the first time upfront.
    Second, our work found that while the Coast Guard completed 
design studies, ice trials, and spoke to industry on key 
technologies, they did not systematically assess the maturity 
and risk associated with these technologies.
    Given that this type of icebreaker has not been built in 
the U.S. for over four decades and that it has unique 
requirements to operate in extreme conditions, such as being 
able to traverse both poles year round, we believe it is 
important to not underestimate the effort required to develop 
the cutter's technologies.
    The best way to address this is for an independent 
objective group to assess the maturity of each technology, 
which then lays out the potential risks and allows the Coast 
Guard to put in place appropriate mitigation strategies.
    It is encouraging that DHS and the Coast Guard have already 
initiated efforts to address our concern in this area, 
especially since we have found that technologies often have a 
ripple effect on the overall design, cost, and schedule of an 
acquisition.
    Much of our prior acquisition shipbuilding work has found 
that lead ships routinely exceed cost and schedule targets and 
do not meet planned performance goals. This is because 
shipbuilding programs typically start with a weak business 
case. Specifically, these programs do not fully assess risks 
and have unrealistic cost, schedule, and performance goals.
    In line with our recommendations from the icebreaker 
report, the Coast Guard needs to ensure that it has developed 
all the elements of a sound business case before making future 
investments. This is important for ensuring continuity between 
the aging legacy asset, the Polar Star, and the new Polar 
Security Cutter so any additional capability gaps are 
minimized.
    Chairman Mast, Ranking Member Garamendi, members of the 
subcommittee, this completes my prepared statement. I would be 
pleased to respond to any questions that you may have. Thank 
you.
    [Ms. Mak's prepared statement follows:]

                                 
    Prepared Statement of Marie A. Mak, Director of Contracting and 
 National Security Acquisitions, U.S. Government Accountability Office
coast guard acquisitions: addressing key risks is important to success 
                      of polar icebreaker program
    Chairman Mast, Ranking Member Garamendi, and members of the 
subcommittee:
    I am pleased to be here today to discuss key challenges the Coast 
Guard faces with its heavy polar icebreaker acquisition program. The 
Coast Guard, a component within the Department of Homeland Security 
(DHS), is developing the first heavy polar icebreakers it has bought in 
over 40 years. The Coast Guard, in collaboration with the Navy, plans 
to invest up to $9.827 billion for the acquisition, operation, and 
maintenance of three heavy polar icebreakers over their entire 30-year 
lifecycle. In March 2018, the Navy released a solicitation that 
included options for the detail design and construction of three polar 
icebreakers. The Navy anticipates awarding the contract to a single 
shipbuilder in the third quarter of fiscal year 2019. As the Polar 
Star--the Coast Guard's only operating heavy polar icebreaker--nears 
the end of its service life, the new icebreakers will play a critical 
role in the Coast Guard's ability to ensure year-round access to the 
Arctic and Antarctic, which affects U.S. economic, maritime, and 
national security interests in these regions.
    My statement today will address (1) key acquisition risks facing 
the polar icebreaker program and (2) funding uncertainties for the 
program. This statement is based primarily on our April and September 
2018 reports examining the Coast Guard's polar icebreaker acquisition, 
as well as drawing from our extensive body of work examining the Coast 
Guard's and the Navy's shipbuilding efforts.\1\ For the reports cited 
in this statement, among other methodologies, we analyzed Coast Guard 
and Navy guidance, data, and documentation, and interviewed Coast Guard 
and Navy officials. Detailed information on our scope and methodology 
can be found in the reports cited in this statement.
---------------------------------------------------------------------------
    \1\ GAO, Coast Guard Acquisitions: Polar Icebreaker Program Needs 
to Address Risks before Committing Resources, GAO-18-600 (Washington, 
DC.: Sept. 4, 2018); and Coast Guard Acquisitions: Status of Coast 
Guard's Heavy Polar Icebreaker Acquisition, GAO-18-385R (Washington, 
DC.: Apr. 13, 2018).
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    We conducted the work on which this statement is based in 
accordance with generally accepted government auditing standards. Those 
standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe the 
evidence obtained provides a reasonable basis for our findings and 
conclusions based on our audit objectives.
 the coast guard did not establish a sound business case for the polar 
                           icebreaker program
    In September 2018, we found the Coast Guard did not have a sound 
business case when it established the acquisition baselines for its 
polar icebreaker program in March 2018 due to risks in four main 
areas--design, technology, cost, and schedule.\2\ Our prior work has 
found that successful acquisition programs start with solid, executable 
business cases before setting program baselines and committing 
resources.\3\ A sound business case requires balance between the 
concept selected to satisfy operator requirements and the resources--
design knowledge, technologies, funding, and time--needed to transform 
the concept into a product, which in this case is a ship with polar 
icebreaking capabilities. Without a sound business case, acquisition 
programs are at risk of breaching the cost, schedule, and performance 
baselines set when the program was initiated--in other words, 
experiencing cost growth, schedule delays, and reduced capabilities.
---------------------------------------------------------------------------
    \2\ GAO-18-600.
    \3\ GAO, Navy Shipbuilding: Past Performance Provides Valuable 
Lessons for Future Investments, GAO-18-238SP (Washington, DC.: June 6, 
2018); Weapon System Requirements: Detailed Systems Engineering Prior 
to Product Development Positions Programs for Success, GAO-17-77 
(Washington, DC.: Nov. 17, 2016); Best Practices: High Levels of 
Knowledge at Key Points Differentiate Commercial Shipbuilding from Navy 
Shipbuilding, GAO-09-322 (Washington, DC.: May 13, 2009); and Defense 
Acquisitions: Realistic Business Cases Needed to Execute Navy 
Shipbuilding Programs, GAO-07-943T (Washington, DC.: July 24, 2007).
---------------------------------------------------------------------------
    At the heart of a business case is a knowledge-based approach. We 
have found that successful shipbuilding programs build on attaining 
critical levels of knowledge at key points in the shipbuilding process 
before significant investments are made (see figure 1).
            Figure 1: Executing a Strong Shipbuilding Case

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]            
            

    We provide additional information below on each of the four main 
risks that affect the soundness of the polar icebreaker program's 
business case.
The Coast Guard Plans to Have a Stable Design before Starting 
        Construction but Did Not Assess Design Maturity Prior to 
        Setting Program Baselines
    The Coast Guard expressed a commitment to having a stable design 
for the polar icebreaker program prior to the start of lead ship 
construction, but it set the program's baselines before conducting a 
preliminary design review--a systems engineering event that is intended 
to verify that the contractor's design meets the requirement of the 
ship specifications and is producible.
    Shipbuilding best practices we identified in 2009 found that design 
stability on a ship is achieved upon completion of the basic and 
functional designs.\4\ The basic design includes fixing the ship steel 
structure; routing all major distributive systems, including 
electricity, water, and other utilities; and ensuring the ship will 
meet the performance specifications. The functional design includes 
further iteration of the basic design, such as providing information on 
the exact position of piping and other outfitting in each block, and 
completing a 3D product model. At this point of design stability, the 
shipbuilder has a clear understanding of the ship structure as well as 
how every system is set up and routed throughout the ship. Consistent 
with our best practices, prior to the start of construction on the lead 
ship, the Coast Guard plans to require the shipbuilder to complete 
basic and functional designs, develop a 3D model output, and provide at 
least 6 months of production information to support the start of 
construction.
---------------------------------------------------------------------------
    \4\ GAO-09-322.
---------------------------------------------------------------------------
    Although the Coast Guard plans to have a stable design prior to 
ship construction, it set the program's acquisition program baselines 
prior to gaining knowledge on the feasibility of the selected 
shipbuilder's design. Program baselines inform DHS's and the Coast 
Guard's decisions to commit resources. Our best practices for 
knowledge-based acquisitions state that before program baselines are 
set, programs should hold key systems engineering events, such as a 
preliminary design review, to help ensure that requirements are defined 
and feasible and that the proposed design can be met within cost, 
schedule, and other system constraints.\5\
---------------------------------------------------------------------------
    \5\ GAO, Best Practices: Using A Knowledge-Based Approach To 
Improve Weapon Acquisition, GAO-04-386SP (Washington, DC.: Jan. 1, 
2004).
---------------------------------------------------------------------------
    The Coast Guard has yet to conduct a preliminary design review for 
the program because DHS's current acquisition policy does not require 
programs to do so until after setting program baselines. However, in 
April 2017, we found that DHS's sequencing of the preliminary design 
review is not consistent with our acquisition best practices, which 
state that programs should pursue a knowledge-based acquisition 
approach that ensures program needs are matched with available 
resources--such as technical and engineering knowledge, time, and 
funding--prior to setting baselines.\6\ As a result, we recommended 
that DHS update its acquisition policy to require key technical 
reviews, including the preliminary design review, to be conducted prior 
to approving programs' baselines. DHS concurred with this 
recommendation and stated that it planned to initiate a study to assess 
how to better align its processes for technical reviews and acquisition 
decisions. Upon completion of the study, DHS plans to update its 
acquisition policies, as appropriate. As of June 2018, DHS indicated 
that it had completed its study and was in the process of updating its 
acquisition policies. GAO will review the policies once complete to 
determine if the updates meet the intent of this recommendation.
---------------------------------------------------------------------------
    \6\ GAO, Homeland Security Acquisitions: Earlier Requirements 
Definition and Clear Documentation of Key Decisions Could Facilitate 
Ongoing Progress, GAO-17-346SP (Washington, DC.: Apr. 6, 2017).
---------------------------------------------------------------------------
    By setting the polar icebreaker program's baselines prior to 
gaining knowledge on the shipbuilder's design, the Coast Guard has 
established cost, schedule, and performance baselines without a stable 
or mature design. Although completing the preliminary design review 
after setting program baselines is consistent with DHS policy, this 
puts the Coast Guard at risk of breaching its established baselines and 
having to revise them later in the acquisition process, after a 
contract has been signed and significant resources have been committed 
to the program. At that point, the program will be well underway and it 
will be too late for decisionmakers to make appropriate tradeoff 
decisions between requirements and resources without causing 
disruptions to the program.
Coast Guard Intends to Use Proven Technologies for the Polar Icebreaker 
        Program but Has Not Assessed Their Maturity
    The Coast Guard intends to use what it refers to as ``state-of-the-
market'' or ``proven'' technologies for the polar icebreaker program, 
but it has not yet conducted a technology readiness assessment to 
determine the maturity of key technologies prior to setting program 
baselines. This approach is inconsistent with our best practices for 
technology readiness.\7\ A technology readiness assessment is a 
systematic, evidence-based process that evaluates the maturity of 
critical technologies--hardware and software technologies critical to 
the fulfillment of the key objectives of an acquisition program. 
According to our best practices, a technology readiness assessment 
should be conducted prior to program initiation.
---------------------------------------------------------------------------
    \7\ GAO, GAO Technology Readiness Assessment Guide: Best Practices 
for Evaluating the Readiness of Technology for Use in Acquisition 
Programs and Projects, GAO-16-410G (Washington, DC.: Aug. 11, 2016).
---------------------------------------------------------------------------
    At the time of our earlier review, Coast Guard officials told us 
the polar icebreaker program does not have any critical technologies 
and thus, does not need to conduct a technology readiness assessment. 
From design studies and industry engagement, Coast Guard officials 
determined that the key technologies required for the polar 
icebreakers, such as the integrated power plant and azimuthing 
propulsors, are available commercially and do not need to be developed. 
Figure 2 provides additional information on the risks for these key 
technologies, as well as design risks for an icebreaker's hull form.
            Figure 2: Key Technology and Design Risks for Notional 
                    Heavy Polar Icebreaker

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                    

  Note: This ship design is notional and does not represent a design 
               solution from the Coast Guard or industry.

    Coast Guard officials stated that the integrated power plant is the 
standard power plant used on domestic and foreign icebreakers. Coast 
Guard officials told us that similarly, market survey data on 
azimuthing propulsors show that ice-qualified azimuthing propulsors in 
the power range required have been used on foreign icebreakers.
    However, according to our best practices, critical technologies are 
not just technologies that are new or novel.\8\ Technologies used on 
prior systems can also become critical if they are being used in a 
different form, fit, or function. Based on our analysis of available 
Coast Guard information, we believe the polar icebreaker program's 
planned integrated power plant and azimuthing propulsors should be 
considered critical technologies given their criticality in meeting key 
performance parameters, how the technologies are being reapplied to a 
different operational environment from prior uses of the technologies, 
and the extent to which they pose major cost risks. By not conducting a 
technology readiness assessment and identifying, assessing, and 
maturing its critical technologies prior to setting the program's 
program baselines, the Coast Guard is potentially underrepresenting 
technical risk and understating its cost, schedule, and performance 
risks.
---------------------------------------------------------------------------
    \8\ GAO-16-410G.
---------------------------------------------------------------------------
Polar Icebreaker Program's Cost Estimate Substantially Met Best 
        Practices but Is Not Fully Reliable
    We found that the Navy's lifecycle cost estimate used to inform the 
polar icebreaker program's $9.827 billion cost baseline substantially 
adheres to most of our cost estimating best practices; however, the 
estimate is not fully reliable.\9\ The cost estimate is not fully 
reliable because it only partially met best practices for being 
credible.\10\ Highlights from our assessment of the polar icebreaker 
program's lifecycle cost estimate are detailed below:
---------------------------------------------------------------------------
    \9\ The GAO Cost Estimating and Assessment Guide was used as 
criteria in this analysis. For more information, see GAO Cost 
Estimating and Assessment Guide: Best Practices for Developing and 
Managing Capital Program Costs, GAO-09-3SP (Washington, DC.: Mar. 2, 
2009). A cost estimate is considered reliable if the overall 
assessments for each of the four characteristics of a reliable cost 
estimate--comprehensive, well documented, accurate, and credible--are 
substantially or fully met.
    \10\ A credible cost estimate should analyze the sensitivity of the 
program's expected cost to changes among key cost-driving assumptions 
and risks. It should also quantify the cost impact of risks related to 
assumptions changing and variability in the underlying data used to 
create the cost estimate.
---------------------------------------------------------------------------
      Comprehensive: substantially met. The estimate includes 
government and contractor costs over the full lifecycle of all three 
ships and documents detailed ground rules and assumptions, such as the 
learning curve used to capture expected labor efficiencies for follow-
on ships. However, the costs for disposal of the three ships were not 
at a level of detail to ensure that all costs were considered and not 
all assumptions, particularly regarding operating and support costs, 
were varied to reflect the impact on cost should these assumptions 
change.
      Well-documented: substantially met. The estimate's 
documentation mostly captured the source data used as well as the 
primary methods, calculations, results, rationales, and assumptions 
used to generate each cost element. However, the documentation alone 
did not provide enough information for someone unfamiliar with the cost 
estimate to replicate what was done and arrive at the same results.
      Accurate: substantially met. The estimate was properly 
adjusted for inflation, and we did not find any mathematical errors in 
the estimate calculations we inspected. Officials stated that labor and 
material cost data from recent, analogous programs were used in the 
estimate. While the documentation does not discuss the reliability, 
age, or relevance of the cost data, Navy officials provided us with 
additional information regarding those data characteristics.
      Credible: partially met. The Navy only modeled cost 
variation in the detail design and construction portion of the program 
and excluded from its analyses any risk impacts related to the 
remainder of the acquisition, operating and support, and disposal 
phases, which altogether comprise about 75 percent of the lifecycle 
cost. Without performing a sensitivity analysis on the entire life 
cycle cost of the three ships, it is not possible for the Navy to 
identify key elements affecting the overall cost estimate. Further, 
without performing a risk and uncertainty analysis on the entire life 
cycle cost of the three ships, it is not possible for the Navy to 
determine a level of confidence associated with the overall cost 
estimate.
    By not quantifying important risks, the Navy may have 
underestimated the range of possible costs for about three-quarters of 
the entire program. The estimate provides an overly optimistic 
assessment of the program's vulnerability to cost growth should risks 
be realized or current assumptions change. This, in turn, may 
underestimate the lifecycle cost of the program.
Polar Icebreaker Program's Optimistic Schedule Is Driven by Capability 
        Gap and Does Not Reflect Robust Analysis
    The Coast Guard's planned delivery dates of 2023, 2025, and 2026 
for the three ships were not informed by a realistic assessment of 
shipbuilding activities, but rather were primarily driven by the 
potential gap in icebreaking capabilities once the Polar Star reaches 
the end of its service life (see figure 3).
            Figure 3: The Coast Guard's Heavy Polar Icebreaker, Polar 
                    Star

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                    

    The Polar Star's service life is estimated to end between fiscal 
years 2020 and 2023. This creates a potential heavy polar icebreaker 
capability gap of about 3 years, if the Polar Star's service life were 
to end in 2020 and the lead polar icebreaker were to be delivered by 
the end of fiscal year 2023 as planned. If the lead ship is delivered 
later than planned in this scenario, the potential gap could be more 
than 3 years. The Coast Guard is planning to recapitalize the Polar 
Star's key systems starting in 2020 to extend the service life of the 
ship until the planned delivery of the second polar icebreaker (see 
figure 4).
            Figure 4: The Coast Guard's Potential Heavy Polar 
                    Icebreaker Capability Gap and Planned Delivery of 
                    New Heavy Polar Icebreakers

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                    

    Further, we compared the program's planned construction schedule to 
the construction schedules of delivered lead ships for major Coast 
Guard and Navy shipbuilding programs active in the last 10 years as 
well as the Healy, the Coast Guard's only medium polar icebreaker. We 
found that the polar icebreaker's lead ship construction cycle time of 
2.5 to 3 years is optimistic, as only 3 of the 10 ships in our analysis 
were constructed in 3 years or less.\11\ Further, as another point of 
comparison, the Healy was constructed in just under 4.5 years.
---------------------------------------------------------------------------
    \11\ The three ships in our analysis that were constructed in 3 
years or less were largely based on commercial designs or built to 
mostly commercial standards.
---------------------------------------------------------------------------
    An unrealistic schedule puts the Coast Guard at risk of not 
delivering the icebreakers when promised and the potential gap in 
icebreaking capabilities could widen. Just as importantly, our prior 
work on shipbuilding programs has shown that establishing optimistic 
program schedules based on insufficient knowledge can create pressure 
for programs to make sacrifices elsewhere, which can lead to work being 
performed concurrently, costly rework, and further delays.\12\
---------------------------------------------------------------------------
    \12\ GAO, Columbia Class Submarine: Immature Technologies Present 
Risks to Achieving Cost, Schedule, and Performance Goals, GAO-18-158 
(Washington, DC.: Dec. 21, 2017); Navy Shipbuilding: Past Performance 
Provides Valuable Lessons for Future Investments, GAO-18-238SP 
(Washington, DC.: June 6, 2018); Ford-Class Aircraft Carrier: Follow-On 
Ships Need More Frequent and Accurate Cost Estimates to Avoid Pitfalls 
of Lead Ship, GAO-17-575 (Washington, DC.: June 13, 2017); and GAO-07-
943T.
---------------------------------------------------------------------------
    To address the risks we identified and establish a sound business 
case, we made a number of recommendations in our September 2018 report 
to DHS, Coast Guard, and the Navy, including:
      Conducting a technology readiness assessment in 
accordance with best practices, identifying critical technologies, and 
developing a plan to mature any technologies not designated to be 
mature before detail design of the lead ship begins;
      Updating the program's cost estimate in accordance with 
best practices before the contract option for construction of the lead 
ship is awarded;
      Developing a program schedule in accordance with best 
practices to set realistic schedule goals for all three ships before 
the contract option for construction of the lead ship is awarded; and
      Updating the program's acquisition program baselines 
prior to authorizing lead ship construction, after completion of the 
preliminary design review, and after it has gained the requisite 
knowledge on its technologies, cost, and schedule.\13\
---------------------------------------------------------------------------
    \13\ GAO-18-600.
---------------------------------------------------------------------------
    DHS concurred with all of our recommendations and identified 
actions it planned to take to address them. For example, earlier this 
month, the Coast Guard indicated that it has identified a preliminary 
list of potential critical technologies and is in the process of 
developing a technology readiness assessment plan. The Coast Guard also 
plans to update the program's cost estimate within 8 months of the 
contract award and update the program schedule within 3 months of the 
contract award.
   how the polar icebreaker program will be funded moving forward is 
                                unclear
    Of the $9.827 billion estimated for the lifecycle costs of the 
polar icebreaker program, about $3 billion is for acquisition costs. 
From 2013 through 2018, the polar icebreaker program has received $360 
million in funding--$60 million in Coast Guard appropriations and $300 
million in Navy appropriations. In addition, according to Coast Guard 
officials, in fiscal year 2017, Coast Guard reprogrammed $30 million in 
fiscal year 2016 appropriations for the polar icebreaker program from 
another program (see figure 5).
            Figure 5: Polar Icebreaker Program Funding, Fiscal Years 
                    2013-2018

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                    

    According to Coast Guard and Navy officials, the Navy plans to use 
the $300 million in Navy appropriations in fiscal year 2019 to fund the 
advanced planning, design, engineering, and long lead time materials 
for the first polar icebreaker. As part of the polar icebreaker 
program's acquisition strategy and reflected in the March 2018 request 
for proposals, the Navy plans to establish options for the subsequent 
detail design and construction of each of the three ships. The request 
for proposals specified that the options will be priced as fixed-price 
incentive type (see table 1).

     TABLE 1: POLAR ICEBREAKER PROPOSED DETAIL DESIGN AND CONSTRUCTION CONTRACT STRUCTURE AS OF MAY 2018 \\
----------------------------------------------------------------------------------------------------------------
                                                    Initial award or
                 Line item number                        option                      Scope of work
----------------------------------------------------------------------------------------------------------------
1................................................      Initial award     Advanced planning, design, engineering,
                                                                                        long lead time materials
2................................................           Option 1    Detail design and construction of ship 1
3................................................           Option 2    Detail design and construction of ship 2
4................................................           Option 3  Detail design and construction of ship 3\\
----------------------------------------------------------------------------------------------------------------
\\ Source: GAO analysis of Navy information. GAO-19-255T.

    The Navy did not request any funding in fiscal year 2019 for the 
polar icebreaker program, while Coast Guard requested $30 million. 
Subsequently, after discretionary budget caps were relaxed by Congress, 
the administration's fiscal year 2019 budget addendum requested an 
additional $720 million in fiscal year 2019 Coast Guard appropriations 
for the program.\14\ As the program prepares to award a contract in 
fiscal year 2019 worth billions of dollars if all the options are 
exercised, it is unclear to what extent the program will be funded 
using Coast Guard or Navy appropriations or how much total funding will 
be provided.
---------------------------------------------------------------------------
    \14\ See Bipartisan Budget Act of 2018, Pub. L. No. 115-123, 
Sec. 30101(a) (Feb. 9, 2018).
---------------------------------------------------------------------------
    In conclusion, as the Coast Guard embarks on the acquisition of its 
new polar icebreakers to address capability gaps in the Arctic and 
Antarctic regions, it faces a number of key acquisition and funding 
risks. DHS, the Coast Guard, and the Navy must gain key acquisition 
knowledge before committing significant resources to the program while 
Congress faces key funding and tradeoff considerations. To put the 
polar icebreaker program in a position to succeed, Congress and the 
agencies must remain committed to establishing and executing a sound 
business case for the program.
    Chairman Mast, Ranking Member Garamendi, and members of the 
subcommittee, this concludes my prepared statement. I would be pleased 
to respond to any questions.

    Mr. Mast. Thank you, Ms. Mak.
    Mr. Von Ah, you are recognized to give your statement.
    Mr. Von Ah. Good morning, Chairman Mast, Ranking Member 
Garamendi, and members of the subcommittee. Thank you for the 
opportunity to discuss our recent report on costs and 
challenges to sustaining the U.S.-flag fleet for military 
needs.
    DoD relies on oceangoing U.S.-flag vessels, mostly those 
involved in international trade, for its sealift needs. 
However, it has long been recognized that the operating costs 
of U.S.-flag vessels are higher than those of foreign-flag 
vessels, and Government support is therefore necessary to 
maintain the fleet.
    To help ensure the fleet is adequate for defense needs, the 
Government supports selected vessels through the Maritime 
Security Program, which provides operators a stipend in 
exchange for agreeing to provide sealift support, and through 
cargo preference requirements that specify that Federal 
agencies must transport certain percentages of international 
Government cargo on U.S.-flag vessels.
    Despite this support, the U.S.-flag fleet in international 
trade has been in decline for many years, going from 199 
vessels at the end of 1990 to just 82 vessels by the end of 
2017. Recognizing this, Congress mandated in 2014 that DOT 
develop strategies related to the sustainability of the U.S.-
flag fleet.
    In our report we noted that the Department had completed a 
draft strategy in 2016 but that it was subject to the new 
administration's review. At that time officials told us that 
they viewed the existing draft strategy as predecisional and 
could provide no timeline for when they plan to move forward. 
We recommended DOT complete the strategy and establish 
timeframes for its issuance, and since then the 2019 Defense 
Reauthorization Act set a new deadline of February 2020, which 
DoD plans to meet.
    Our report also identified two key challenges to sustaining 
the fleet for defense needs: maintaining the financial 
viability of operators under the U.S. flag and ensuring a 
sufficient number of mariners to crew the Reserve Fleet during 
a military activation.
    With respect to maintaining financial viability, the 
additional cost of operating a U.S.-flag vessel compared to a 
foreign-flag vessel has continued to increase while the volume 
of Government cargo has fallen. These two trends have made it 
harder for vessel operators to remain viable.
    In 2016, as a response to these challenges, Congress 
increased the maritime security stipend from $3\1/2\ million to 
$5 million per vessel annually. Outside of increasing the 
stipend, officials and stakeholders cited a range of options as 
having potential to reduce the costs of operating a U.S.-flag 
vessel, which would in turn make operators more competitive 
commercially and less dependent on Government support.
    These options include looking at any additional costs of 
meeting Coast Guard requirements relative to international 
standards, options related to controlling and reducing crew 
costs, such as mariner income tax relief and liability 
insurance reform and eliminating the ad valorem tax U.S.-flag 
vessels must pay on the cost of maintenance performed in a 
foreign shipyard.
    Stakeholders also identified options to address the decline 
in Government cargo. These options include increasing the 
percentage of Government cargo that must be shipped on U.S.-
flag vessels or requiring that certain export commodities, such 
as oil or liquefied natural gas, be carried on those vessels.
    However, at the time of our review, MARAD officials had not 
yet determined the potential of these options to address the 
underlying issues or the tradeoffs involved. For example, 
increasing cargo preference requirements can result in 
additional cargo for certain U.S.-flag vessels but also result 
in higher shipping costs that could impact the mission of 
civilian agencies or reduce demand for certain exports.
    Turning to the second challenge, a MARAD working group has 
estimated a potential shortage of mariners in the case of a 
drawn-out military effort of about 1,800. However, there is 
some uncertainty around this number. The shortage may be 
understated if some of the available mariners are unwilling or 
unable to continue sailing during times of national emergency 
as they are not required to crew the Reserve Fleet.
    On the other hand, additional mariners are listed in the 
Coast Guard's database as having unlimited credentials but are 
not currently employed on oceangoing vessels. Their 
availability and continuing proficiency remains unknown, 
although we have recommended that MARAD take steps to study the 
availability of those mariners.
    Two options were identified by the working group to address 
the potential shortage. One was to create a mariner reserve 
program where the Government would train them and help maintain 
their credentials for which mariners would in turn be obligated 
to sail in the event of a defense need, and the other was to 
expand the U.S.-flag fleet to support more mariner jobs.
    The working group did not analyze costs or tradeoffs 
associated with these options and instituting a mariner reserve 
program or expanding the fleet would require additional 
Government financial support.
    Until the maritime strategy is in place that examines such 
costs and tradeoffs and makes recommendations accordingly, 
decisionmakers will lack important information to make policy 
choices that consider all aspects of this complex issue.
    Mr. Chairman, this concludes my statement. I would be happy 
to address any questions you or members of the subcommittee may 
have. Thank you.
    [Mr. Von Ah's prepared statement follows:]

                                 
       Prepared Statement of Andrew Von Ah, Director of Physical 
         Infrastructure, U.S. Government Accountability Office
    maritime security: dot is still finalizing strategy to address 
                challenges to sustaining u.s.-flag fleet
    Chairman Mast, Ranking Member Garamendi, and members of the 
subcommittee:
    Thank you for the opportunity to discuss our work on efforts by the 
Departments of Transportation (DOT) and Defense (DoD) to draft a 
national maritime strategy that addresses challenges the government 
faces in supporting the fleet of U.S.-flag vessels.\1\ DoD largely 
relies on internationally trading U.S.-flag vessels (vessels registered 
in the United States that must be mainly crewed by U.S. citizens) for 
sealift--the process of transporting government equipment and supplies 
by sea for military purposes. However, it has long been recognized that 
the operating costs of U.S.-flag vessels are higher than the operating 
costs of foreign-flag vessels, and that government support is therefore 
necessary to maintain a fleet of internationally trading U.S.-flag 
vessels.\2\ To help ensure an adequately sized U.S.-flag fleet for 
defense needs, the government supports internationally trading U.S.-
flag vessels in the following ways: (1) through the Maritime Security 
Program (MSP), which provides the operators of selected U.S.-flag 
vessels a stipend in exchange for their agreeing to provide sealift 
support in times of war or crisis, and (2) through ``cargo preference'' 
requirements that specify that Federal agencies must transport certain 
percentages of international government cargo on U.S.-flag vessels.
---------------------------------------------------------------------------
    \1\ GAO, Maritime Security: DOT Needs to Expeditiously Finalize the 
Required National Maritime Strategy for Sustaining U.S.-Flag Fleet, 
GAO-18-478 (Washington, DC.: Aug. 8, 2018).
    \2\ The U.S. Government also supports U.S.-flag vessels operating 
in domestic trade through what is commonly referred to as the Jones Act 
(Merchant Marine Act of 1920, Pub. L. No.66-261,  27, 41 Stat. 988, 
999 (1920) (codified as amended at 46 U.S.C. 55102)), which, in 
general, requires that maritime transport of cargo between points in 
the United States be carried by vessels that are U.S. flag and 
constructed in the United States. Jones Act vessels may be called upon 
to support sealift by DoD in certain circumstances. However, our August 
2018 report focused on the internationally trading U.S.-flag fleet, 
thus it does not focus on the Jones Act. For more information about the 
Jones Act, see GAO, Puerto Rico: Characteristics of the Island's 
Maritime Trade and Potential Effects of Modifying the Jones Act, GAO-
13-260 (Washington, DC.: Mar. 14, 2013).
---------------------------------------------------------------------------
    Despite the MSP and cargo preference requirements that have helped 
support the U.S.-flag fleet, concerns have been raised about the 
fleet's future sustainability The U.S.-flag fleet has been in decline 
for many years and increasingly faces difficulties in competing for 
international cargo due to the higher costs of operating under the U.S. 
flag. Notably, the number of U.S.-flagged vessels has continued to 
decline--from 199 vessels at the end of 1990 to just 82 vessels by the 
end of 2017, creating a potential shortage of U.S. citizen mariners to 
crew government-owned reserve vessels in times of need.\3\ Recognizing 
these and other challenges, Congress statutorily mandated in 2014 that 
DOT develop national strategies related to the sustainability of the 
U.S.-flag fleet, including recommendations for the future. In the John 
S. McCain National Defense Authorization Act for Fiscal Year 2019,\4\ 
the statutory deadline for the national maritime strategy was extended 
from February 2015 to February 2020.
---------------------------------------------------------------------------
    \3\ According to DoD and DOT, mariners are necessary to crew not 
only the U.S.-flag commercial vessels but also the U.S. government-
owned reserve cargo vessels. These vessels are held in reduced 
operating status with minimal crew in peacetime. When put into full 
operating status the government needs to add additional trained and 
qualified mariners to operate them. Because mariners work on vessels 
for months at a time, commercial vessels typically have at least two 
full sets of mariners to crew a single vessel--one set of which is on 
the vessel while the other is on leave. In times of crisis, one set of 
mariners could continue to work on the commercial vessel, while some of 
those on leave could be called upon to voluntarily crew vessels in the 
government-owned reserve fleet.
    \4\ Pub. L. No. 115-232,  3513(b), 132 Stat. 1636 (2018).
---------------------------------------------------------------------------
    My statement today provides information on (1) the status of the 
mandated national strategies and (2) challenges that stakeholders 
identified related to sustaining the U.S.-flag fleet for defense needs 
and options DOT has considered for addressing them. This statement is 
based on our August 2018 report on challenges to sustaining U.S.-flag 
vessels for military needs.\5\
---------------------------------------------------------------------------
    \5\ GAO-18-478.
---------------------------------------------------------------------------
    For the 2018 report, we reviewed relevant laws, regulations, 
guidance, prior GAO reports, and studies related to MSP and maritime 
economics. We also analyzed data for fiscal year 2012 through 2017 on 
international cargo shipped by government agencies. In addition, we 
spoke with officials from DOT, DoD, and selected agencies subject to 
cargo preference requirements, as well as MSP vessel operators, 
academics knowledgeable about maritime issues, and other stakeholders. 
Detailed information on our scope and methodology can be found in our 
issued report. For this statement, to update the status of DOT's 
efforts on the national maritime strategy, we reviewed the John S. 
McCain National Defense Authorization Act for Fiscal Year 2019 \6\ and 
spoke to DOT officials. We conducted the work on which this statement 
is based in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives.
---------------------------------------------------------------------------
    \6\ Pub. L. No. 115-232, 132 Stat. 1636 (2018).
---------------------------------------------------------------------------
 dot has not finalized a national maritime strategy but plans to do so 
                     by new february 2020 deadline
    In 2014, Congress issued two separate mandates to DOT to develop 
strategies related to challenges facing the U.S.-flag fleet, 
specifically:
      The Secretary of Transportation was directed to develop a 
national maritime strategy with recommendations to, among other things, 
help U.S.-flag vessels remain competitive.\7\
---------------------------------------------------------------------------
    \7\ Pub. L. No. 113-281,  603, 128 Stat. 3022, 3061 (2014).
---------------------------------------------------------------------------
      The Secretary of Transportation and the Maritime 
Administration (MARAD) within DOT were directed to develop, in 
collaboration with DoD, a national sealift strategy to ensure the long-
term viability of U.S.-flag vessels and U.S.-citizen mariners.\8\
---------------------------------------------------------------------------
    \8\ Pub. L. No. 113-76, 128 Stat. 5, 598 (2014).
---------------------------------------------------------------------------
    As we reported in August 2018, according to MARAD and DoD 
officials, MARAD has been working on a single draft maritime strategy 
to meet both mandates because the broader national maritime strategy 
would need to encompass the national sealift strategy, as well.
    While there is no statutory deadline for the completion of the 
national sealift strategy, in the John S. McCain National Defense 
Authorization Act for Fiscal Year 2019,\9\ the statutory deadline for 
the national maritime strategy was extended from February 2015 to 
February 2020. In our August 2018 report, we noted that MARAD officials 
had completed a draft strategy in 2016, but they told us that the 
strategy was subject to the new administration's review. At that time, 
MARAD and DOT officials told us that they viewed the existing draft 
strategy as pre-decisional and could provide no timeline for when they 
planned to move the strategy forward. In our report, we concluded that 
the delay in submitting the strategy to Congress had resulted in 
decisionmakers not having the information they needed and 
recommendations from the agency to inform policymaking in this area. We 
recommended that DOT complete the national maritime strategy and 
establish timeframes for its issuance. DOT concurred with our 
recommendation. In our recent discussions with DOT officials after 
passage of the John S. McCain National Defense Authorization Act for 
Fiscal Year 2019, they told us that DOT now plans to meet the new 
statutory deadline and issue the strategy by February 2020.
---------------------------------------------------------------------------
    \9\ Pub. L. No. 115-232,  3513(b), 132 Stat. 1636 (2018).
---------------------------------------------------------------------------
 stakeholders identified two primary challenges to supporting the u.s.-
flag fleet for defense needs, and dot has identified various options to 
                              address them
    Stakeholders we spoke with for our August 2018 report identified 
two primary challenges to ensuring that the U.S.-flag fleet would 
continue to meet DoD's national defense needs.\10\ First, they 
described maintaining the financial viability of U.S.-flag vessels 
participating in MSP as a challenge. Second, stakeholders identified a 
potential shortage of U.S. citizen mariners available to crew the 
government-owned reserve fleet during a military activation as a 
challenge, in part due to the declining numbers of U.S.-flag vessels 
that employ these mariners. In our August report, we noted that MARAD 
had identified some options to address the competitiveness of U.S.-flag 
vessels and the long-term viability of the U.S.-citizen mariners--
issues that are very similar to the key challenges identified by 
stakeholders. However, DOT and MARAD officials had stated that they 
were not yet ready to address the feasibility of these options, or 
formally propose them.
---------------------------------------------------------------------------
    \10\ These stakeholders included MARAD and DoD officials, MSP 
vessel operators, labor unions, an international ship-registry service, 
a maritime association, and academics with backgrounds in defense 
transportation, food assistance, and maritime economics.
---------------------------------------------------------------------------
Maintaining Financial Viability of the U.S.-Flag Fleet
    According to MARAD officials, the relative cost of operating a 
U.S.-flag vessel compared to a foreign-flag vessel has increased in 
recent years, making it more challenging for vessel operators to remain 
economically viable under the U.S. flag. In our August report we found 
that financial support to U.S.-flag vessels through both the MSP 
stipend and the government cargo preference requirements has helped 
ensure a sufficient number of internationally trading U.S.-flag vessels 
are available to meet DoD's most recently stated cargo capacity needs 
from such vessels.\11\ On the other hand, according to MARAD officials, 
the additional cost of operating a U.S. flag vessel compared to a 
foreign-flag vessel has increased--from about $4.9 million annually in 
2009 and 2010 to about $6.2 to $6.5 million currently--making it harder 
for such vessels to remain financially viable. This cost differential 
results primarily from the rising relative costs of employing U.S. 
versus foreign mariners as crew. Compounding the increasing costs of 
operating U.S. flag vessels, the volume of government cargo--a key 
source of revenue for many U.S.-flagged vessels--has fallen in recent 
years as the international military presence of the United States and 
funding for food aid overseas have both declined. In response to these 
challenges, Congress increased the MSP stipend from $3.5 million to 
$4.99 million per vessel from fiscal year 2016 to 2017. MARAD officials 
said this increase has temporarily stabilized the financial situation 
of MSP vessel operators. However, they added that trends in operating 
costs and government cargo suggest that the ability to retain an 
adequate number of financially viable U.S.-flagged vessels will remain 
an ongoing challenge.
---------------------------------------------------------------------------
    \11\ The MSP stipend provides a fixed financial incentive for 
vessel operators to maintain vessels under the U.S. flag, but on its 
own is not sufficient to support the higher costs of operating U.S.-
flag vessels, according to MARAD officials and MSP operators we spoke 
to. The other key way that MSP vessel operators can make up the 
difference in operating costs between U.S.-flag and foreign-flag 
vessels is through the transport of government cargo under ``cargo 
preference'' requirements. According to a 2015 MARAD report, the higher 
freight rates that DoD and other Federal agencies pay to transport 
government cargo on U.S.-flag vessels are critical to these vessels' 
financial viability.
---------------------------------------------------------------------------
    MARAD officials identified the following options as having 
potential to reduce the costs of operating a U.S.-flag vessel--which 
would in turn make U.S.-flag vessels more competitive in the 
international cargo market:
      MARAD is part of a U.S. Registry Working Group \12\ 
looking at a range of actions to decrease the time and cost of bringing 
vessels under the U.S. flag, including the cost of meeting Coast Guard 
requirements. For example, the group is looking at a recommendation for 
the broader application of internationally recognized vessel standards 
to U.S.-flag vessels to meet Coast Guard requirements.
---------------------------------------------------------------------------
    \12\ According to MARAD, this working group was created to address 
findings from the following study: Transportation Research Board of the 
National Academies of Sciences, Engineering, and Medicine, Impact of 
United States Coast Guard Regulations on United States Flag Registry 
(2016). The working group was created under the National Defense 
Transportation Association and includes participants from MARAD, the 
Coast Guard, the American Bureau of Shipping, the Transportation 
Institute, and U.S.-flag vessel operators, among others.
---------------------------------------------------------------------------
      In the current strategic plan for 2017 through 2021, 
MARAD identified two areas of reform--mariner income-tax relief and 
liability insurance reform--that could reduce the crew costs of 
operating under a U.S. flag.
      According to MARAD officials, some stakeholders have 
recommended that MARAD consider requesting the elimination of a tax on 
U.S.-flag vessels receiving maintenance overseas to reduce maintenance 
costs for U.S.-flag vessels. In general, maintenance and repairs on 
U.S.-flag vessels not conducted at U.S. shipyards are subject to a 
statutory 50 percent ad valorem tax on the cost of maintenance 
performed in a foreign country. According to 12 of the 14 MSP vessel 
operators we spoke with for our August report, U.S. shipyards are 
typically more expensive than foreign shipyards or may not be close to 
the vessel's location or route, so they typically choose to pay the tax 
and have the maintenance performed overseas. Four MSP vessel operators 
we spoke to stated that they send U.S.-flag vessels to U.S. shipyards 
for maintenance when it makes sense from a logistical and financial 
perspective. MARAD officials we spoke to said they are considering the 
effect of eliminating the tax, a step that would reduce costs for 
vessel operators but would potentially negatively affect the financial 
viability of U.S. shipyards, which the law was designed to assist. 
However, MARAD officials stated that they have not yet evaluated these 
tradeoffs.

    MARAD and DoD's Transportation Command (Transportation Command) 
officials have also identified--but not officially proposed--several 
options to address the decline in government cargo carried on U.S.-flag 
vessels, which would also make U.S.-flag vessels more competitive by 
providing more revenues. In our August 2018 report, Transportation 
Command officials and ship operators to whom we spoke told us that they 
consider access to U.S. Government cargo to be a critical means of 
sustaining U.S.-flag vessels.
      Transportation Command and MARAD officials stated that 
one way to increase the amount of commercial cargo on U.S.-flag vessels 
would be to require that certain energy export commodities, such as oil 
or liquefied natural gas, be carried on U.S.-flag vessels. While this 
option has been considered in the past, it would require new 
legislation and would potentially have a negative impact on the export 
market for liquefied natural gas. In 2015, we analyzed the potential 
effects of a requirement that U.S. liquefied natural gas exports be 
carried on U.S.-built and -flagged vessels.\13\ We found that such a 
requirement could potentially increase the number of U.S.-flag vessels 
by 100 over the course of many years; however, due to their higher 
operating costs, this would increase the cost of transporting liquefied 
natural gas from the United States, decrease the competitiveness of 
U.S. liquefied natural gas in the world market, and in turn, reduce 
demand for U.S. liquefied natural gas. MARAD officials stated that 
another option would be increasing the percentage of other cargo, such 
as food aid, that civilian agencies are required to transport on U.S.-
flag vessels. This would also require an amendment to existing 
legislation and would also have tradeoffs, since cargo requirements 
such as these can result in higher shipping costs that can negatively 
affect the missions of civilian agencies, in particular food aid 
agencies.
---------------------------------------------------------------------------
    \13\ GAO, Maritime Transportation: Implications of Using U.S. 
Liquefied-Natural-Gas Carriers for Exports, GAO-16-104 (Washington, 
DC.: Dec. 3, 2015).
---------------------------------------------------------------------------
      Another option identified by MARAD officials to address 
declining government cargo volumes would be to increase the MSP stipend 
to replace some of the government support previously provided through 
cargo preference requirements, as was done for fiscal year 2017.
Potential Shortage of U.S.-Citizen Mariners
    The second challenge identified by stakeholders related to 
maintaining adequate sealift for defense needs is the potential 
shortage of U.S.-citizen mariners available to crew the government-
owned reserve fleet during a crisis. The government's reserve fleet 
vessels are held in reduced operating status with minimal crew in 
peacetime. When put into full operating status--such as for a surge 
related to a wartime effort--these vessels need additional crew, and 
DoD counts on mariners working on oceangoing U.S.-flag vessels to meet 
this need. MARAD and DoD have raised concerns about the sufficiency of 
U.S.-citizen mariners to meet this need. For example, in January 2018, 
in a statutorily mandated report, MARAD's Maritime Workforce Working 
Group estimated a shortage of over 1,800 mariners in the case of a 
drawn-out military effort, although it also recommended data 
improvements to increase the accuracy of the count of available 
mariners.\14\
---------------------------------------------------------------------------
    \14\ U.S. Department of Transportation, Maritime Administration, 
Maritime Workforce Working Group Report (Washington, DC, Sept. 29, 
2017). The National Defense Authorization Act for Fiscal Year 2017, 
(Pub. L. No. 113-328, Div. C,  3517, 130 Stat. 2000, 2789 (2017)), 
required the creation of a Maritime Workforce Working Group to examine 
and assess the size of the pool of citizen mariners necessary to 
support the U.S. flag fleet in times of national emergency.
---------------------------------------------------------------------------
    Specifically, in this report, the working group estimated 
approximately 11,768 qualified and available U.S.-citizen mariners as 
of June 2017--11,839 less than the 13,607 mariners the working group 
estimates would be needed for sustained operation of the reserve and 
commercial fleet.\15\ The working group based its identification of 
11,768 existing qualified U.S.-citizen mariners on the number of U.S.-
citizen mariners actively sailing on U.S.-flag commercial and 
government-owned oceangoing vessels. For the vessels in full operating 
status, the working group accounted for 2 mariners employed for each 
crew position. The double crew, which according to MARAD officials is 
typical for a commercial U.S.-flag vessel operating in international 
trade, allows each mariner, over the course of a year, to work for 6 
months on the vessel and take 6 months of earned leave. The working 
group assumed that during a military activation, commercial operations 
would continue at the same level as during peacetime--but that some 
U.S-citizen mariners currently working on commercial vessels would be 
willing to reduce the amount of earned leave they took in order to work 
on government-owned reserve vessels. The working group analyzed this 
scenario by changing the ratio of crew positions to crew from 2 to 
1.75. As illustrated in figure 1, under this scenario, with an average 
of 26 crew positions per vessel, between 6 and 7 mariners per existing 
commercial oceangoing U.S.-flag vessel are made available to crew the 
reserve fleet.
---------------------------------------------------------------------------
    \15\ The working group considered mariners to be qualified if they 
had certain credentials, referred to as unlimited mariner credentials, 
and had sailed on large oceangoing U.S. flag vessels within the last 18 
months.
---------------------------------------------------------------------------
            Figure 1: Illustration of the Potential Distribution of the 
                    Approximately 52 U.S.-citizen Mariners Hired per 
                    U.S.-Flag Commercial Vessel during Peacetime and 
                    during a Military Activation

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                    

 a Ratios of 2 mariners per crew position in peacetime and 
1.75 mariners per crew position during a military activation are taken 
 from the Maritime Administration's (MARAD) Maritime Workforce Working 
    Group Report, 2017. The number of approximately 52 U.S. citizen 
 mariners employed per U.S.-flag commercial vessel is calculated based 
on information in the same MARAD working group report. Because 26 crew 
 positions multiplied by 1.75 mariners per crew position equals 45.5, 
  the number of mariners per crew position, on earned leave, or on a 
   reserve vessel during military activation is expressed as a range.

    According to the working group's methodology, given the size of the 
current U.S.-flag oceangoing fleet and the number of currently employed 
mariners on this fleet, there are enough U.S.-citizen mariners to crew 
the reserve fleet during an initial surge, but not for a sustained 
activation, during which the working group estimated that the reserve 
vessels themselves would need a double crew to allow for crew 
rotations. This need for crew rotations on the reserve vessels led the 
working group to estimate a shortage of 1,839 U.S.-citizen mariners. 
Moreover, the working group's report found that the shortage of 
mariners may be understated if some of the estimated available mariners 
are unable or unwilling to continue sailing during times of national 
emergency, as available mariners are not required to crew the reserve 
fleet.
    Although the working group concluded that there is a shortage of 
mariners for sustained operations, its report also details data 
limitations that cause some uncertainty regarding the actual number of 
existing qualified mariners and, thus, the extent of this shortage. The 
working group's approach--driven, in part, by limitations of the U.S. 
Coast Guard's data base that tracks mariner credentials--did not count 
any qualified mariners who are no longer employed on U.S.-flag 
oceangoing vessels or who are employed on other types of vessels but 
may have the required credentials. In fact, according to the working 
group's analysis, over 15,000 mariners listed in the U.S. Coast Guard's 
data base have unlimited credentials but are unaccounted for, as they 
are neither currently employed on large, oceangoing vessels nor serving 
as civil-service mariners committed to government-owned vessels. The 
working group stated that the availability and continuing proficiency 
of these mariners remains unknown. MARAD officials emphasized to us, 
however, that mariners who have not worked on the right types of 
vessels for more than 18 months are likely to need additional training 
before they would be qualified to crew the reserve fleet during a 
military activation.
    The working group's report contains several recommendations related 
to improving information on the number of available and willing 
mariners. These recommendations include replacing the Coast Guard data 
base with one that would enable a more accurate account of available 
mariners, and establishing a periodic survey of the U.S.-citizen 
mariner pool to allow MARAD to determine, with reasonable certainty, 
how many qualified mariners would be available and willing to sail on 
U.S.-government reserve vessels if called upon to do so. The report 
concluded that until these agencies improve the tracking of licensed 
mariners who may be available to crew the government-owned reserve 
vessels when activated into full operating status, the extent to which 
there is a shortage of mariners for defense needs will remain 
unclear.\16\ The lack of information on the extent to which there is a 
shortage of mariners limits the U.S. government's ability to 
effectively plan for such needs. In January 2018, MARAD's administrator 
testified that MARAD is working with the Coast Guard and the maritime 
industry to better track licensed mariners who may no longer be sailing 
but could serve in a time of crisis, and in March 2018, MARAD officials 
told us they are taking steps to initiate a new survey of mariners, as 
recommended in the working group's report.\17\
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    \16\ We reported on data issues related to determining the number 
of mariners available for sealift in GAO, International Food 
Assistance: Cargo Preference Increases Food Aid Shipping Costs, and 
Benefits Are Unclear, GAO-15-666 (Washington, DC.: Aug. 26, 2015).
    \17\ According to MARAD officials, the last such survey was 
conducted in 2003 and it found that only two-thirds of the mariner pool 
were willing to serve in time of crisis.
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    In its report, the working group also identified options to address 
the challenge of ensuring a sufficient number of U.S.-citizen mariners 
for defense needs. It identified two actions that could help increase 
the number of U.S.-citizen mariners--one focused specifically on 
mariners and the other focused more broadly on the merchant marine, 
which encompasses U.S.-flag vessels and U.S.-citizen mariners. However, 
the working group's report did not discuss specific costs or tradeoffs 
related to either action or elaborate any further on them. The report 
identified the following actions:
      MARAD should develop a broad-based reserve program that 
would identify and support qualified mariners willing to sail in 
commercial and government-owned vessels during an emergency. MARAD 
would provide limited financial assistance in training mariners and 
maintaining credentials, in turn for which mariners who participate 
would be obligated to sail in the event of a defense need.
      MARAD and other U.S. Government agencies should support a 
healthy merchant marine (which encompasses U.S.-flag vessels and U.S.-
citizen mariners). The government should fully support programs 
including MSP, requiring the government to ship certain cargo on U.S 
flag vessels, the Jones Act, and government chartering of privately 
owned vessels. If DoD determines that national needs require more 
mariners and vessels than can be provided through current programs, 
those programs should be expanded to meet such needs.

    In conclusion, the U.S.-flag fleet is increasingly facing 
challenges that threaten its ability to meet future defense needs. In 
response to congressional mandates, MARAD has been working on a 
national maritime strategy and plans to issue one by February 2020. 
However, until such a strategy is in place, decisionmakers will have 
limited information to make important policy choices that consider all 
the relevant tradeoffs associated with this complex issue.
    Chairman Mast, Ranking Member Garamendi, and members of the 
subcommittee, this concludes my prepared statement. I would be pleased 
to respond to any questions.

    Mr. Mast. Thank you, Mr. Von Ah.
    Mr. O'Rourke, you are recognized to give your statement.
    Mr. O'Rourke. Chairman Mast, Ranking Member Garamendi, 
distinguished members of the subcommittee, thank you for the 
opportunity to appear before you today to testify on 
icebreakers and the National Maritime Strategy.
    In my 34 years as a CRS naval analyst, I have covered Coast 
Guard ship acquisition for 20 years, the icebreaker program 
specifically for 10 years, and military sealift ships for 28 
years.
    There has been some discussion recently of how certain 
Coast Guard programs, including icebreakers, would not be 
affordable if the Coast Guard's procurement account in coming 
years were limited to about $1.1 billion per year. The notion 
that the account will be limited to that level, however, is no 
longer strongly supported by recent data on funding requests or 
enacted funding levels or projected future funding requests.
    More important, in relation to maintaining Congress' status 
as a coequal branch of Government, including the preservation 
and use of congressional powers and prerogatives, 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, which could deprive Congress of agency in the exercise 
of its constitutional power to set funding levels and determine 
the composition of Federal spending.
    One of the most notable changes in the icebreaker program 
over the last year has been the reduction in their estimated 
procurement cost. The cost had earlier been estimated 
informally at roughly $1 billion per ship, but the Coast Guard 
and Navy informed CRS and CBO in March that they now believe 
that three heavy polar icebreakers could be acquired for an 
average of about $700 million per ship.
    Reductions in the estimated procurement cost strengthen the 
business case for the program. A reduction to $700 million 
would strengthen it substantially.
    The baseline plan calls for acquiring the icebreakers using 
a contract with options. Contracts with options are not 
multiyear contracts. Instead, they operate more like annual 
contracts, and they cannot achieve the kinds of savings that 
are possible with multiyear contracts.
    Procuring three heavy icebreakers under a block-buy 
contract, which is a type of multiyear contract, might reduce 
their combined cost by upwards of $150 million. Last year's 
National Academies report on icebreakers recommended that the 
Coast Guard use an acquisition strategy that includes block-buy 
contracting.
    Coast Guard officials have said they may procure the first 
icebreaker under a single-ship contract and then use a block-
buy contract for subsequent ships. In support of that possible 
approach they have noted the risks involved in building a lead 
ship and the fact that the U.S. hasn't built a heavy polar 
icebreaker in more than 40 years.
    Supporters of including the first icebreaker in a block-buy 
contract could argue that block-buy contracting was invented to 
a large degree expressly to permit the lead ship to be included 
in the contract, and that the Navy has included lead ships in 
block-buy contracts in the Virginia-class submarine program and 
the John Lewis-class oiler program, and that the Navy is 
considering a block-buy contract that includes the lead ship 
for the Columbia-class ballistic missile submarine program. The 
Columbia-class design is more complex than the icebreaker, and 
the U.S. hasn't produced a new class of ballistic missile 
submarine in more than 40 years.
    The cost of the new polar icebreakers might be further 
reduced by procuring both heavy and medium polar icebreakers to 
a common design, as recommended in the National Academies 
report. This approach could save more than $100 million in 
design costs and millions more in production costs for each 
medium polar icebreaker.
    GAO has identified a risk of the first icebreaker being 
delivered later than currently scheduled. CRS agrees with that 
assessment. A late delivery could equate to an increase in the 
cost of building the ship. The Government can insulate itself 
against that risk by using a fixed-price contract, which the 
Coast Guard and Navy plan to do.
    The possibility of a late delivery is something Congress 
may consider in connection with investments for maintaining the 
Polar Star and/or seeking a short-term bridging charter of an 
existing icebreaker. The possibility of a late delivery could 
also become an argument for starting construction of the new 
icebreaker as soon as its design is brought to a high level of 
completion and the ship is otherwise ready to begin 
construction.
    Finally, regarding the National Maritime Strategy, I will 
just pick out one of the points I make in my statement, which 
is that a recently acknowledged potential shortfall of Navy 
escorts for protecting sealift ships in wartime could affect 
the willingness of civilian mariners to serve on those ships. 
If that were to happen, it could exacerbate the currently 
projected shortfall of available mariners.
    Mr. Chairman, this concludes my statement. Thank you again 
for the opportunity to testify, and I will be pleased to 
respond to any questions the subcommittee may have.
    [Mr. O'Rourke's prepared statement follows:]

                                 
  Prepared Statement of Ronald O'Rourke, Specialist in Naval Affairs, 
                     Congressional Research Service
    Chairman Mast, Ranking Member Garamendi, distinguished members of 
the subcommittee, thank you for the opportunity to appear before you 
today to testify on icebreaker acquisition and the need for a national 
maritime strategy. In my work as a CRS analyst on naval and maritime 
military issues for the past 34 years, I have covered Coast Guard ship 
acquisition for Congress for 20 years,\1\ the polar icebreaker program 
specifically for 10 years,\2\ and issues relating to military sealift 
ships periodically for 28 years.\3\ My biography is shown in Appendix 
A.
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    \1\ See, for example: CRS Report 98-830 F, Coast Guard Integrated 
Deepwater System: Background and Issues for Congress, by Ronald 
O'Rourke, first version October 5, 1998, final (i.e., archived) version 
June 1, 2001; CRS Report RS21019, Coast Guard Deepwater Program: 
Background and Issues for Congress, by Ronald O'Rourke, first version 
September 25, 2001, final (i.e., archived) version December 8, 2006; 
CRS Report RL33753, Coast Guard Deepwater Acquisition Programs: 
Background, Oversight Issues, and Options for Congress, by Ronald 
O'Rourke, first version December 18, 2006, final (i.e., archived) 
version January 20, 2012; and CRS Report R42567, Coast Guard Cutter 
Procurement: Background and Issues for Congress, by Ronald O'Rourke, 
first version June 13, 2012, current version October 26, 2018.
    \2\ See CRS Report RL34391, Coast Guard Polar Security Cutter 
(Polar Icebreaker) Program: Background and Issues for Congress, by 
Ronald O'Rourke, first version February 26, 2008, current version 
October 26, 2018.
    \3\ See, for example: CRS Report 90-446 F, Sealift and Operation 
Desert Shield, by Ronald O'Rourke, September 17, 1990; CRS Report 91-
421 F, Persian Gulf War: Defense-Policy Implications for Congress, 
coordinated by Ronald O'Rourke, May 15, 1991 (section on sealift); CRS 
Report RL31946, Iraq War: Defense Program Implications for Congress, 
coordinated by Ronald O'Rourke, June 14, 2003 (section on sealift); and 
CRS Report RL32513, Navy-Marine Corps Amphibious and Maritime 
Prepositioning Ship Programs: Background and Oversight Issues for 
Congress, by Ronald O'Rourke, first version August 5, 2004, final 
(archived) version July 26, 2006.
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    Appendix B to this statement presents a general summary of some 
lessons learned in government shipbuilding. Appendix C presents some 
considerations relating to the use of warranties in government 
shipbuilding. Appendix D presents some considerations relating to 
avoiding procurement cost growth vs. minimizing procurement costs in 
government shipbuilding. Appendix E presents discussion of the Coast 
Guard's National Security Cutter (NSC) program, Offshore Patrol Cutter 
(OPC) program, Fast Response Cutter (FRC) program, and Waterways 
Commerce Cutter (WCC) program, which help form the context for Coast 
Guard icebreaker procurement in a situation of finite Coast Guard 
procurement funding.
                         icebreaker acquisition
Funding and Acquisition Context
            PC&I Account Funding Levels
    There has been some discussion recently of how certain Coast Guard 
procurement priorities, including icebreakers, would not be affordable 
if the Coast Guard's Procurement, Construction, and Improvements (PC&I) 
account in coming years were limited to an average of about $1.1 
billion per year.\4\ An average PC&I funding level of about $1.1 
billion per year would have that effect. In 2013, then-Coast Guard 
Commandant Robert Papp testified that an annual PC&I funding level of 
about $1 billion per year ``almost creates a death spiral for the Coast 
Guard.'' \5\ The notion that the PC&I funding level will be limited to 
an average of about $1.1 billion per year, however, is no longer 
strongly supported by recent data on Coast Guard annual funding 
requests,\6\ annual enacted funding levels,\7\ or projected future 
annual funding requests as shown in Coast Guard 5-year Capital 
Investment Plans (CIPs).\8\
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    \4\ See Government Accountability Office, Coast Guard 
Acquisitions[:] Actions Needed to Address Longstanding Portfolio 
Management Challenges, GAO-18-454, July 2018, Figure 4 on page 22, and 
GAO's spoken testimony during the question-and-answer portion of a July 
24, 2018, hearing on Coast Guard acquisition programs and mission 
balance and effectiveness before the Coast Guard and Maritime 
Transportation subcommittee of the House Transportation Committee, 
during which Figure 4, which depicts a funding funnel, was shown on the 
hearing room's display screens. (The funnel, which compares an annual 
PC&I account funding figure of $1.1 billion to a higher figure of $2 
billion consistent with the Coast Guard's preferred PC&I account annual 
funding level, is not drawn to scale: Although $1.1 billion is 55 
percent of $2 billion, the narrower $1.1-billion bottom of the funnel 
has an opening with a diameter than is no more than 22 percent as wide 
as that of the larger, $2-billion top of the funnel.) In report GAO-18-
454, see also Figure 3 on page 15, which indicates an average requested 
funding level of about $1.1 billion per year for the period FY2014-
FY2018, as well as the discussion on pages 13-14.
    \5\ Admiral Papp's spoken testimony during a May 14, 2013, hearing 
on the Coast Guard's proposed FY2014 budget before the Homeland 
Security subcommittee of the Senate Appropriations Committee, as 
reflected in the transcript for the hearing.
    \6\ While the Coast Guard's annual budget submissions for the 5-
year period FY2014 through FY2018 requested an average of about $1,065 
million per year for the PC&I account, the Coast Guard's most recent 
request for the account--the request in its proposed FY2019 budget--is 
for $1,886.8 million (a figure that reflects a late addition of $720 
million to the request for the polar icebreaker program), and the Coast 
Guard's annual budget submissions for the 5-year period FY2009-FY2013 
requested an average of about $1,322 million for the account.
    \7\ Over the last 10 fiscal years (FY2009-FY2018), enacted funding 
levels for the PC&I account (including rescissions of unobligated 
balances) have averaged about $1,560 million per year. Only once during 
this period, in FY2015, was the enacted figure less than $1,200 million 
(it was $1,166.6 million that year). In the other 9 years, it was more 
than $1,200 million, and sometimes substantially more. The figures for 
the three most recent fiscal years--FY2016, FY2017, and FY2018--were 
$1,928.4 million, $1,370.0 million, and $2,282.4 million, respectively.
    \8\ Although the projected funding requests in the FY2014, FY2015, 
and FY2016 CIPs (showing figures for FY2014-FY2018, FY2015-FY2019, and 
FY2016-FY2020, respectively), averaged about $1,114.8 million per year, 
the projected funding requests in the FY2017 CIP (for the period 
FY2017-FY2021) averaged about $1,427.5 million, and those in the FY2018 
CIP (for the period FY2018-FY2022) averaged about $1,533.1 million.
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    In assessing future funding levels for executive branch agencies, a 
common practice is to assume or predict that the figure in coming years 
will likely be close to where it has been in previous years. While this 
method can be of analytical and planning value, for an agency like the 
Coast Guard, which goes through periods with less acquisition of major 
platforms and periods with more acquisition of major platforms, this 
approach might not always be the best approach, at least for the PC&I 
account.
    More important, in relation to maintaining Congress' status as a 
co-equal branch of government, including the preservation and use of 
congressional powers and prerogatives, 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, which could deprive Congress of agency 
in the exercise of its constitutional power to set funding levels and 
determine the composition of Federal spending.
    As one example of how past funding levels were not the best guide 
to future funding levels, and of how Congress has exercised its 
constitutional power to set funding levels and determine the 
composition of Federal spending, during the period FY2018-FY2015, when 
the Navy's shipbuilding account averaged about $14.7 billion per year 
in then-year dollars, there was recurring discussion about the 
challenge of increasing the account to the substantially higher annual 
funding levels that would soon be needed to begin implementing the 
Navy's 30-year shipbuilding plan. Projections were prepared by CBO 
showing the decline in the size of the Navy that would occur over time 
if funding levels in the shipbuilding account did not increase 
substantially from the average level of about $14.7 billion per year. 
Congress, after assessing the situation, increased the shipbuilding 
account to $18.7 billion in FY2016, $21.2 billion in FY2017, $23.8 
billion in FY2018, and $24.2 billion in FY2019. These increasing 
funding levels occurred even though the Budget Control Act, as amended, 
remained in operation during those years. At the most recent figure of 
$24.2 billion, the Navy's shipbuilding account is now 74 percent 
greater in then-year dollars than it was as recently as FY2010.
            Coast Guard's Non-Use of Multiyear Contracting
    In connection with my work on ship acquisition, I maintain the CRS 
report on multiyear procurement (MYP) and block buy contracting.\9\ In 
both that report and in testimony I have given to other committees in 
recent years on Coast Guard ship acquisition,\10\ I have noted the 
stark contrast between the Navy--which uses multiyear contracting (in 
the form of MYP or block buy contracting) extensively to reduce its 
ship-and aircraft-procurement costs by billions of dollars--and the 
Coast Guard, which to date has never used multiyear contracting in its 
ship or aircraft acquisition programs.
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    \9\ CRS Report R41909, Multiyear Procurement (MYP) and Block Buy 
Contracting in Defense Acquisition: Background and Issues for Congress, 
by Ronald O'Rourke and Moshe Schwartz.
    \10\ See, for example, CRS Testimony TE10020, Building a 21st-
Century Infrastructure for America: Coast Guard Sea, Air, and Land 
Capabilities: Part 2, by Ronald O'Rourke, and CRS Testimony TE10004, 
The Status of Coast Guard Cutter Acquisition Programs, by Ronald 
O'Rourke.
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    The Navy in recent years, with congressional approval, has used 
multiyear contracting for, among other things, all three of its year-
to-year shipbuilding programs--the Virginia-class attack submarine 
program, the DDG-51 destroyer program, and the Littoral Combat Ship 
(LCS) program.\11\ The Navy has been using multiyear contracting for 
the Virginia-class and DDG-51 programs more or less continuously since 
the late 1990's. Savings from the use of MYP recently have, among other 
things, helped Congress and the Navy to convert a nine-ship buy of DDG-
51 class destroyers in FY2013-FY2017 into a 10-ship buy, and a nine-
ship buy of Virginia-class attack submarines in FY2014-FY2018 into a 
10-ship buy. The Navy is also now using block buy contracting for the 
six initial ships in the John Lewis (TAO-205) class oiler program, and 
is considering or anticipating using them for procuring LPD-17 Flight 
II amphibious ships, FFG(X) frigates, and Columbia-class ballistic 
missile submarines. The Navy's use or prospective use of multiyear 
contracting for its year-to-year shipbuilding programs is arguably now 
almost more of a rule than an exception in Navy shipbuilding. For 
Congress, granting approval for using multiyear contracting involves 
certain tradeoffs, particularly in connection with retaining year-to-
year control of funding.\12\ In the case of Navy shipbuilding, Congress 
has repeatedly accepted these tradeoffs.
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    \11\ The term year-to-year shipbuilding program is used here to 
mean a shipbuilding program in which at least one ship of that kind is 
procured each year. The Coast Guard plans to execute the OPC program as 
a year-to-year shipbuilding program.
    \12\ From a congressional perspective, tradeoffs in making greater 
use of multiyear contracting include the following: reduced 
congressional control over year-to-year spending and tying the hands of 
future Congresses; reduced flexibility for making changes in 
acquisition programs in response to unforeseen changes in strategic or 
budgetary circumstances (which can cause an y needed funding reductions 
to fall more heavily on acquisition programs not covered by multiyear 
contracts); a potential need to shift funding from later fiscal years 
to earlier fiscal years to fund economic order quantity (EOQ) purchases 
(i.e., up-front batch orders of selected components for some or all of 
the end items that are to be procured under a multiyear contract); the 
risk of having to make penalty payments to shipbuilders if multiyear 
contracts need to be terminated due to unavailability of funds needed 
for the continuation of the contracts; and the risk that materials and 
components purchased for ships to be procured in future years might go 
to waste if those ships are not eventually procured. Congress has 
considered these tradeoffs in deciding whether to grant the Navy 
authority for using multiyear contracting in the service's shipbuilding 
and other acquisition programs.
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    In contrast with Navy practice, the Coast Guard often uses 
contracts with options in its ship-procurement programs. Contracts with 
options can be referred to as multiple-year contracts, but they are not 
multiyear contracts. Instead, contracts with options operate more like 
annual contracts, and they cannot achieve the kinds of savings that are 
possible with multiyear contracts.\13\ Like the other military 
services, the Coast Guard has statutory authority to use MYP 
contracting and can be granted authority by Congress to use block buy 
contracting.
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    \13\ For additional discussion, see CRS Report R41909, Multiyear 
Procurement (MYP) and Block Buy Contracting in Defense Acquisition: 
Background and Issues for Congress, by Ronald O'Rourke and Moshe 
Schwartz, particularly the section entitled ``MYP and BBC vs. Contracts 
with Options.''
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Polar Security Cutter (PSC) (aka Polar Icebreaker)
    The CRS report on the polar icebreaker program, which the Coast 
Guard now refers to as the Polar Security Cutter (PSC) program, 
provides substantial discussion of various aspects of the program.\14\ 
Below, as requested, are some focused observations on the program.
---------------------------------------------------------------------------
    \14\ CRS Report RL34391, Coast Guard Polar Security Cutter (Polar 
Icebreaker) Program: Background and Issues for Congress, by Ronald 
O'Rourke.
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            Reduction in Estimated Procurement Cost and Business Case
    One of the most notable changes in the PSC program over the last 
year or two has been the reduction in the estimated unit procurement 
cost of the ships. The procurement cost of a new heavy polar icebreaker 
had earlier been estimated informally at roughly $1 billion, but the 
Coast Guard and Navy informed CRS and CBO in March 2018 that they now 
believe that three polar icebreakers could be acquired for a total cost 
of about $2.1 billion, or an average of about $700 million per 
ship.\15\ (The first ship will cost more than the other two because it 
will incorporate design costs for the class and be at the start of the 
production learning curve for the class.) The March 2, 2018, Request 
for Proposals (RFP) for the PSC program states that ``For informational 
purposes only, the government has established an estimate for the HPIB 
[heavy polar icebreaker] shipbuilder costs in the amount of $746M 
[million] for the lead ship . . . with an average ship price of $615M 
across three HPIBs . . . '' \16\ Other information reported by GAO 
identifies a smaller reduction in procurement cost, to something more 
than $900 million per ship.\17\ Other things held equal, reductions in 
the estimated unit procurement cost of the polar icebreaker strengthen 
the business case for the program. A reduction in estimated unit 
procurement cost to an average of $700 million per ship would 
strengthen it substantially.
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    \15\ Source: March 16, 2018, Coast Guard-Navy briefing to CRS and 
CBO on the polar icebreaker program. For further discussion, see the 
section entitled ``Estimated Acquisition Cost Has Declined 
Substantially'' in CRS Report RL34391, Coast Guard Polar Icebreaker 
Program: Background and Issues for Congress, by Ronald O'Rourke.
    \16\ Naval Sea Systems Command (HQ), Solicitation N0002418R2210, 
March 2, 2018, page 257 of 294. See also Government Accountability 
Office, Coast Guard Acquisitions[:] Polar Icebreaker Program Needs to 
Address Risks before Committing Resources, GAO-18-600, September 2018, 
pp. 42-43. The GAO report also states that DHS and the Coast Guard 
estimate the total lifecycle cost of a three-ship PSC program at $8,545 
million (objective) and $9,827 million (threshold) (page 13), and that 
the ships' detail design and construction costs account for about 25 
percent of these figures, with the remaining 75 percent or so accounted 
for by remaining acquisition costs, 30 years of annual operating and 
support (O&S) costs, and end-of-life ship-disposal costs (page 31). 
Twenty-five percent of $8,545 million and $9,827 million would equate 
to design and construction costs of $2,136.3 million (an average of 
about $712 million per ship) and $2,456.8 million (an average of about 
$819 million per ship).
    \17\ A May 2018 GAO report stated that the acquisition program 
baseline (APB) approved for the polar icebreaker program in January 
2018 estimated the program's acquisition cost at $3,207 million, and 
that the ``current estimate'' of the program's acquisition as of 
January 2018 was $2,789 million, or an average of about $930 million 
per ship. (Government Accountability Office, Homeland Security 
Acquisitions[:] Leveraging Programs' Results Could Further DHS's 
Progress to Improve Portfolio Management, GAO-18-339SP, May 2018, p. 
85.) See also Government Accountability Office, Coast Guard 
Acquisitions[:] Actions Needed to Address Longstanding Portfolio 
Management Challenges, GAO-18-454, July 2018, which states on page 18 
that ``The polar icebreaker program has an estimated total acquisition 
cost of more than $3 billion . . . .''
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            Option for Block Buy Contract
    The baseline plan for the PSC program calls for acquiring the ships 
using a contract with options, but Coast Guard and Navy officials are 
open to the idea of instead using a block buy contract to acquire at 
least some of the ships, and requested information on this possibility 
as part of the RFP for the PSC program that was released on March 2, 
2018. Using the above-mentioned $2.1 billion estimated cost for a 
three-ship procurement of PSCs, and based on savings estimates provided 
by the Navy in the past for Navy shipbuilding programs that were being 
proposed for multiyear contracting, using a block buy contract that 
included authority for making economic order quantity (EOQ) purchases 
\18\ rather than a contract with options might reduce the combined 
acquisition cost of three PSCs by upwards of 7 percent, which could 
equate to a savings of upwards of $150 million.
---------------------------------------------------------------------------
    \18\ EOQ purchases are up-front batch orders of selected components 
for some or all of the end items (ships in this case) that are to be 
procured under a multiyear contract.
---------------------------------------------------------------------------
    A congressionally mandated July 2017 National Academies of 
Sciences, Engineering, and Medicine (NASEM) report on acquisition and 
operation of polar icebreakers states (emphasis as in original):

        3. Recommendation: USCG should follow an acquisition strategy 
        that includes block buy contracting with a fixed price 
        incentive fee contract and take other measures to ensure best 
        value for investment of public funds.

        Icebreaker design and construction costs can be clearly 
        defined, and a fixed price incentive fee construction contract 
        is the most reliable mechanism for controlling costs for a 
        program of this complexity. This technique is widely used by 
        the U.S. Navy. To help ensure best long-term value, the 
        criteria for evaluating shipyard proposals should incorporate 
        explicitly defined lifec ycle cost metrics. . . .

        A block buy authority for this program will need to contain 
        specific language for economic order quantity purchases for 
        materials, advanced design, and construction activities. A 
        block buy contracting program with economic order quantity 
        purchases enables series construction, motivates competitive 
        bidding, and allows for volume purchase and for the timely 
        acquisition of material with long lead times. It would enable 
        continuous production, give the program the maximum benefit 
        from the learning curve, and thus reduce labor hours on 
        subsequent vessels. . . .

        If advantage is taken of learning and quantity discounts 
        available through the recommended block buy contracting 
        acquisition strategy, the average cost per heavy icebreaker is 
        approximately $791 million, on the basis of the acquisition of 
        four ships.\19\
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    \19\ National Academies of Sciences, Engineering, and Medicine, 
Division on Earth and Life Studies and Transportation Research Board, 
Acquisition and Operation of Polar Icebreakers: Fulfilling the Nation's 
Needs, Letter Report, with cover letter dated July 11, 2017, pp. 14, 
15.

    Although Coast Guard officials have expressed interest in using a 
block buy contract for procuring PSCs, they are considering the option 
of procuring the first PSC under a single-ship contract and then using 
a block buy contract to procure subsequent PSCs. In support of that 
option, Coast Guard officials have noted the risks involved in building 
a lead ship and the fact that the United States has not built a heavy 
polar icebreaker in more than 40 years. Opponents of including the 
first PSC in a block buy contract might argue, for example, that 
problems with the design of PSC components might be transmitted from 
the first PSC to later PSCs by up-front EOQ purchases of those 
components made under a block buy contract. They might additionally 
argue that excluding the first PSC from a block buy contract preserves 
more government flexibility on whether and when to procure a second 
PSC, which could be advantageous for responding to potential changes in 
operational needs or budgetary circumstances.
    Supporters of including the first PSC in a block buy contract could 
argue that block buy contracting was invented to a large degree 
expressly to permit a lead ship to be included in the contract, that 
the Navy has included lead ships in block buy contracts in the 
Virginia-class attack submarine program and the TAO-205 class oiler 
program, and that the Navy is considering using a block buy contract 
that includes the lead ship for procuring the initial ships in the 
Columbia-class ballistic missile submarine program. The comparison with 
the Navy's plans for the Columbia-class, they could argue, is of 
particular note, because the United States has not procured the lead 
ship of a new class of ballistic missile submarines in more than 40 
years, the Columbia-class design is more complex in certain regards 
than the PSC design, and the Columbia-class design will incorporate a 
new-design electric-drive propulsion plant'something that the United 
States has never before done on a series-production nuclear-powered 
submarine.
    The lead ship in the PSC program will carry a risk of requiring 
design changes to fix problems in the design that are only discovered 
as a result of building the design. That risk, however, will exist 
regardless of whether the lead ship is built under a single-ship 
contract of a block buy contract, and it is not clear how much more 
chance there would be under a block buy contract of transmitting any 
such design problems to the second PSC, because the Coast Guard's 
notional schedule for the PSC program calls for procuring the second 
ship about 18 months after the first (i.e., while construction of the 
first PSC is still in progress). To the extent that there would be a 
greater chance of transmitting design problems to the second PSC under 
a block buy contract, the question would then become one of weighing 
the potential cost of fixing those design problems against the added 
economies of including the first PSC in a block buy contract. 
Supporters of including the lead ship in a block buy contract could 
argue that the risks of encountering a design problem in the first ship 
have been mitigated by the industry's shift since the last polar 
icebreakers were built from paper designs to computer-aided design, by 
the Navy's involvement in the PSC program, and by the PSC program's 
strategy of using a parent design (i.e., an existing polar-capable 
icebreaker design) as the basis for the PSC design. As shown in 
Appendix B, a key lesson-learned in government shipbuilding is to bring 
the design of the ship in question to a high level of completion before 
beginning construction of the ship, precisely so as to minimize the 
risk of design problems. Supporters of including the lead ship in a 
block buy contract could argue that if there is a significant risk of 
substantial design problems in the lead ship, that is not an argument 
against including the lead ship in a block buy contract--it is an 
argument against beginning construction of the ship under any form of 
contract.
            Risk of Delayed Delivery of Lead Ship
    GAO has identified a risk of the first PSC being delivered later 
than its currently scheduled delivery date.\20\ CRS agrees with that 
assessment. The Navy's experience in building lead ships suggests that 
there is a substantial risk of the first PSC being delivered late--
perhaps as much as a year or more later than currently scheduled. A 
late delivery could equate to an increase in the cost of building the 
ship, because it could reflect having to use more labor hours to build 
the ship than had been estimated, and because the ship will absorb more 
of the shipyard's overhead costs by remaining in the shipyard for a 
longer period of time. The government can insulate itself against the 
risk of such cost growth by using a fixed-price contract to build the 
ship (which the Coast Guard and Navy plan to do).
---------------------------------------------------------------------------
    \20\ See Government Accountability Office, Coast Guard 
Acquisitions[:] Polar Icebreaker Program Needs to Address Risks before 
Committing Resources, GAO-18-600, September 2018, pp. 33-40.
---------------------------------------------------------------------------
    The possibility of a late delivery is something the Coast Guard and 
Congress may consider preparing for in terms of investments for 
maintaining Polar Star as an operational ship and/or seeking a short-
term bridging charter of a foreign polar icebreaker. To the extent that 
a delay in delivering the lead ship would extend a gap in time between 
the retirement of Polar Star and the entry into service of the first 
PSC, that could become an argument for starting construction of the 
lead PSC as soon as its design is brought to a high level of completion 
and the ship is otherwise ready to begin construction.
            Option for Using a Common Design for Heavy and Medium PSCs
    The Coast Guard envisages procuring up to three new medium 
icebreakers after it procures three new heavy polar icebreakers--a plan 
known as 3+3. The July 2017 NASEM report concluded that notional 
operational requirements for new medium polar icebreakers would result 
in ships that would not be too different in size from new heavy polar 
icebreakers. (That is not particularly surprising--the Coast Guard's 
current medium polar icebreaker, Healy, is actually somewhat larger 
than the Coast Guard's heavy polar icebreaker, Polar Star. Healy has 
less icebreaking capability than Polar Star, but more capacity for 
supporting onboard science operations.) Given this probable similarity 
in size, the NASEM report recommended building a single medium polar 
icebreaker to the same common design as the three new heavy polar 
icebreakers (i.e., 4+0), and operating these four new ships in 
conjunction with Healy to produce a five-ship polar icebreaker fleet. 
The 4+0 production strategy, the report concluded, would reduce the 
cost of the medium icebreaker by avoiding the cost of developing a 
second icebreaker design and making the medium polar icebreaker the 
fourth ship on an existing production learning curve rather than the 
first ship on a new production learning curve. An abstract from the 
NASEM report on this proposal is shown in Appendix F to this statement.
    If policymakers decide to procure a second or third new medium 
polar icebreaker, the same general approach recommended by the NASEM 
report could be followed, leading to a 5+0 or 6+0 acquisition. The 
potential percentage savings under a five- or six-ship block buy 
contract with EOQ authority could be greater than the figure of upwards 
of 7 percent mentioned earlier for a three-ship block buy--they could 
be closer to 10 percent. Building a single common icebreaker design 
rather than two designs to meet needs for heavy and medium polar 
icebreakers might also reduce life-cycle operation and support costs.
    An April 12, 2018, press report states:

        As the Coast Guard prepares to review industry bids for a new 
        heavy polar icebreaker, the service is keeping its options open 
        for the right number and mix of polar icebreakers it will need 
        in the future, Adm. Paul Zukunft, the [then-]Commandant of the 
        Coast Guard, said on Wednesday [April 11].

        The Coast Guard's program of record is for three heavy and 
        three medium polar icebreakers but Zukunft said the ``jury is 
        still out'' whether that will remain so. Right now, the service 
        is aiming toward building three new heavy icebreakers, but it 
        might make sense just to keep building these ships, he told 
        reporters at a Defense Writers Group breakfast in Washington, 
        DC.

        Zukunft said that ``when you start looking at the business case 
        after you build three, and then you need to look at what is the 
        economy of scale when you start building heavy icebreakers, and 
        would it be less expensive to continue to build heavies and not 
        mediums.'' He added that the heavy icebreakers provide more 
        capability, and if the price is ``affordable'' and in ``the 
        same range'' as building medium icebreakers, then ``maybe you 
        end up with one class of heavy icebreakers.''

        Building only one class of ships has a number of advantages in 
        terms of maintenance, crew familiarity, configuration 
        management, and more, he said. A decision on what the future 
        icebreaker fleet will consist of is ``still probably several 
        years out . . . but that's one option that we want to keep open 
        going forward,'' Zukunft said.\21\

    \21\ Calvin Biesecker, ``Coast Guard Leaving Options Open For 
Future Polar Icebreaker Fleet Type,'' Defense Daily, April 12, 2018. 
Ellipsis as in original.
---------------------------------------------------------------------------
Great Lakes Icebreakers
    The Coast Guard's current Great Lakes icebreaker fleet consists of 
nine cutters:
      one heavy icebreaker--Mackinaw (WLBB-30), a 240-foot ship 
displacing 3,500 tons;
      six 140-foot Bay-class icebreaking tugs displacing 662 
tons each; and
      two 225-foot Juniper-class seagoing buoy tenders 
displacing about 2,000 tons each that have a light icebreaking 
capability.\22\
---------------------------------------------------------------------------
    \22\ Source: U.S. Coast Guard, ``Ninth Coast Guard District 
Units,'' accessed November 19, 2018, at: https://
www.atlanticarea.uscg.mil/Atlantic-Area/Units/District-9/Ninth-
District-Units/. A total of 10 cutters are assigned to the Ninth 
District, which is responsible for the Great Lakes, the Saint Lawrence 
Seaway, and parts of the surrounding States. The tenth cutter assigned 
to the Ninth District is a 100-foot inland buoy tender whose primary 
missions do not include icebreaking.

    Although Mackinaw is referred to as a heavy icebreaker, the word 
heavy in this instance is being used in the context of Great Lakes 
icebreaking--Mackinaw is much larger and has more icebreaking 
capability than the eight other ships listed above.\23\ Mackinaw would 
not, however, qualify as a heavy polar icebreaker, as it is much 
smaller and has much less icebreaking capability than a heavy polar 
icebreaker.\24\
---------------------------------------------------------------------------
    \23\ At continuous speeds of 3 knots, Mackinaw can break ice up to 
32 inches thick, the 140-foot icebreaking tugs can break ice up to 22 
inches thick, and the 225-foot seagoing buoy tenders can break ice up 
to 14 inches thick.
    \24\ The Coast Guard's two heavy polar icebreakers--the operational 
Polar Star and the non-operational Polar Sea, are 399 feet long and 
displace about 13,200 tons each. Polar Star can break ice up to six 
feet (72 inches) thick at a continuous speed of 3 knots. The Coast 
Guard states that Mackinaw is equivalent to the Canadian Coast Guard 
ship Samuel Risley, a Great Lakes-homeported icebreaker and buoy tender 
that Canada classifies as a light icebreaker in a comparison conducted 
across its entire icebreaking fleet, including its Arctic icebreakers. 
(U.S. Coast Guard, Great Lakes Icebreaking Mission Analysis, Fiscal 
Year Report to Congress, August 30, 2016, p. 5.)
---------------------------------------------------------------------------
    Coast Guard officials have stated that they do not view the 
procurement of additional Great Lakes icebreakers as an urgent near-
term acquisition need. In support of this assessment, they cite the 
capabilities of the current Great Lakes icebreaking fleet, the 
relatively young age of Mackinaw (which entered service in 2006), 
service life extension work being done on the ice-breaking tugs that is 
designed to add 15 years to their service lives,\25\ and Canada's own 
Great Lakes icebreaking capabilities. A 2016 1Coast Guard report to 
Congress on the Great Lakes icebreaking mission stated:
---------------------------------------------------------------------------
    \25\ For more on this service life extension work, see U.S. Coast 
Guard, ``In-Service Vessel Sustainment Program,'' accessed November 19, 
2018, at: https://www.dcms.uscg.mil/Our-Organization/Assistant-
Commandant-for-Acquisitions-CG-9/Programs/Surface-Programs/In-Service-
Vessel-Sustainment-Program/.

        The current mix of heavy and medium [Great Lakes] icebreakers 
        is capable of managing priorities and requests for icebreaking 
        in Tier 1 and 2 waterways. When a severe ice season stresses 
        Coast Guard asset capabilities, the existing agreement and 
        partnership with Canada fills the capability gap and brings in 
        extra heavy-icebreaking resources to manage the ice . . . [T]he 
        2014 and 2015 ice seasons were a 20-year anomaly, consuming 
        almost twice as many cutter resource hours as in any other year 
---------------------------------------------------------------------------
        since 2005.

        The Coast Guard cannot reliably predict the economic impact of 
        maintaining a single heavy Great Lakes icebreaker. 
        Additionally, given the extreme conditions when ice coverage 
        exceeds 90 percent, it is not clear that shipping delays would 
        be significantly mitigated by an increase in icebreaking 
        capability. Delays can be associated with several factors such 
        as slow transit speeds, availability of pilots, and 
        simultaneous and competing demand signals for icebreaking 
        services across the Great Lakes.\26\
---------------------------------------------------------------------------
    \26\ U.S. Coast Guard, Great Lakes Icebreaking Mission Analysis, 
Fiscal Year 2016 Report to Congress, August 30, 2016, p. 11. The report 
was required by S.Rept. 114-68 of June 18, 2015, the Senate 
Appropriations Committee's report on S. 1619, the Department of 
Homeland Security Appropriations Bill, 2016 (see page 75).

    The Coast Guard's position notwithstanding, some Members of 
Congress in recent years have expressed interest in the possibility of 
bolstering the Coast Guard's Great Lakes icebreaking fleet by procuring 
a second icebreaker with capabilities generally similar to those of 
Mackinaw. Interest in this option was reinforced by the winters of 
2013-2014 and 2014-2015, which featured particularly high levels of ice 
coverage on the Great Lakes.\27\ The committee report language 
requiring the above-quoted Coast Guard report to Congress is one 
example of this interest.\28\ Another example is Section 215 of S. 
1129, the Coast Guard Authorization Act of 2017 as reported in the 
Senate (S.Rept. 115-89 of June 15, 2017), which states:
---------------------------------------------------------------------------
    \27\ Although interest in procuring a second heavy Great Lakes 
icebreaker was reinforced by high levels of ice coverage in the winters 
of 2013-2014 and 2014-2015, interest in Congress in procuring such a 
ship dates back further than 2013. See, for example, H.R. 1747 of the 
111th Congress, the Great Lakes Icebreaker Replacement Act, which was 
introduced on March 26, 2009, reported by the Committee on 
Transportation and Infrastructure on April 21, 2009 (H.Rept. 111-81), 
and agreed to by the House by voice vote on April 27, 2009. A similar 
bill, S. 1024, was introduced in the Senate on May 12, 2009.
    \28\ S.Rept. 114-68 stated: GREAT LAKES ICEBREAKING CAPACITY 
The Coast Guard is required by law to maintain a heavy icebreaking 
capability on the Great Lakes to assist in keeping channels and harbors 
open to navigation in response to the reasonable demands of commerce to 
meet the winter shipping needs of industry. The Committee is concerned 
that the Coast Guard does not possess adequate capacity to meet its 
statutorily required icebreaking mission on the Great Lakes, with 
negative consequences to the regional and national economy as well as 
to the safety of local communities. While the Committee fully supports 
the Coast Guard's Service Life Extension Project for its nine-vessel 
140-foot icebreaking tugs as part of the In-Service Vessel Sustainment 
Program, it notes that additional assets may be necessary to 
successfully operate in the heavy ice conditions often experienced by 
the Great Lakes. The Committee directs the Coast Guard to undertake an 
updated mission analysis study to determine the assets necessary to 
effectively carry out its icebreaking requirements on the Great Lakes, 
including consideration of a second heavy icebreaker for the Great 
Lakes, consistent with the capabilities of the Mackinaw. The updated 
mission analysis should factor in recent historically high levels of 
ice coverage and the economic costs of reduced Great Lakes shipping 
associated with maintaining only one heavy icebreaker. The updated 
mission analysis shall be submitted to the Committee not later than 180 
days after the date of enactment of this act. (Page 75)

---------------------------------------------------------------------------
        SEC. 215. Great Lakes icebreaker acquisition.

        (a) Icebreaking on the Great Lakes.--For fiscal years 2018 and 
        2019, the Commandant of the Coast Guard may use funds made 
        available pursuant to section 2702(2) of title 14, United 
        States Code, as amended by section 101 of this Act, for the 
        selection of a design for, and the construction of, an 
        icebreaker that is at least as capable as the Coast Guard 
        Cutter Mackinaw to enhance icebreaking capacity on the Great 
        Lakes.

        (b) Initial survey and design work.--The Commandant of the 
        Coast Guard shall commence initial survey and design work 
        associated with the acquisition of a new Coast Guard icebreaker 
        that is at least as capable as the Coast Guard Cutter Mackinaw 
        to enhance icebreaking capacity on the Great Lakes.

        (c) Acquisition plan.--Not later than 45 days after the date of 
        enactment of this Act, the Commandant shall submit a plan to 
        the Committee on Commerce, Science, and Transportation of the 
        Senate and the Committee on Transportation and Infrastructure 
        of the House of Representatives for acquiring an icebreaker 
        described in subsections (a) and (b). Such plan shall include--

        (1) the details and schedule of the acquisition activities to 
        be completed; and

        (2) a description of how the funding for Coast Guard 
        acquisition, construction, and improvements that was 
        appropriated under the Consolidated Appropriations Act of 2017 
        (Public Law 115-31) will be allocated to support the 
        acquisition activities referred to in paragraph (1).\29\
---------------------------------------------------------------------------
    \29\ In addition, Section 314 of S. 1129 as reported in the Senate 
states (emphasis added):
    SEC. 314. Inland waterway and river tender, and bay class 
icebreaker acquisition plan.
    (a) Acquisition plan.--Not later than 545 days after the date of 
enactment of this Act, the Commandant of the Coast Guard shall submit 
to the Committee on Commerce, Science, and Transportation of the Senate 
and the Committee on Transportation and Infrastructure of the House of 
Representatives a plan to replace the aging fleet of inland waterway 
and river tenders, and the bay class icebreakers.
    (b) Contents.--The plan described in subsection (a) shall include--
    (1) a schedule for the acquisition to begin;
    (2) the date the first vessel will be delivered;
    (3) the date the acquisition will be complete;
    (4) a description of the order and location of replacements;
    (5) an estimate of the cost per vessel and for total acquisition 
program of record; and
    (6) an analysis of whether existing vessels can be used.

    An examination of procurement costs for Mackinaw, the National 
Science Foundation's ice-capable research ship Sikuliaq, new 
oceanographic research ships being procured for NOAA, and OPCs suggests 
that a new Mackinaw-sized heavy Great Lakes icebreaker built in a U.S. 
shipyard might have a design and construction cost between $175 million 
and $300 million, depending on its exact capabilities and the 
acquisition strategy employed.\30\ The design portion of the ship's 
cost might be reduced if Mackinaw's design or the design of some other 
existing icebreaker were to be used as the parent design. Depending on 
the capabilities and other work load of the shipyard selected to build 
the ship, the construction time for a new heavy Great Lakes icebreaker 
might be less than that of a new heavy polar icebreaker.
---------------------------------------------------------------------------
    \30\ Source: CRS analysis of cost per weight for Mackinaw (adjusted 
for inflation), Sikuliaq, new NOAA oceanographic research ships now 
being procured, and OPCs.
    Some press reports in 2015 and 2016 cited a cost of about $200 
million for a new heavy Great Lakes icebreaker. (See, for example, Todd 
Spangler, ``A New Icebreaker for the Great Lakes? It's Far from 
Certain,'' Detroit Free Press, August 7, 2015; ``Frozen Commerce: Great 
Lakes Businesses Need a New Icebreaker,'' Pittsburgh Post-Gazette, 
August 17, 2015; Todd Spangler, ``Call for Arctic Icebreakers Could 
Hurt Great Lakes,'' Detroit Free Press, September 1, 2015; Bob Gross, 
``Congress Authorizes New Icebreaker for Great Lakes,'' Times Herald 
(Port Huron, MI), February 3, 2016; ``Task Force Calls Anew for More 
Great Lakes Icebreakers, Second Poe-Sized Lock,'' Professional Mariner, 
February 17, 2016 [the article states that it presents the text of a 
news release from the Great Lakes Maritime Task Force].) An opinion 
column in 2016 cited a figure of $240 million. (John Hageman, ``Is 
Winter Great Lakes Shipping Necessary?'' Sandusky Register, February 
18, 2016.)
    The Great Lakes Maritime Task Force, an organization that states 
that it ``was founded in 1992 in Toledo, Ohio, to promote waterborne 
commerce and related industries on the Great Lakes'' (see Great Lakes 
Maritime Task Force, ``About Us,'' accessed November 26, 2018, at: 
http://www.glmtf.org/about), states in its annual report for 2017 that 
a second heavy Great Lakes icebreaker ``is projected to cost $240 
million.'' (2017 Annual Report of Great Lakes Maritime Task Force, PDF 
page 3 of 6, accessed November 26, 2018, at: http://www.glmtf.org/wp-
content/uploads/2018/05/2017-Annual-Report.pdf.) The same figure is 
cited in the organization's annual report for 2016. The organization's 
annual report for 2015 cited a figure of approximately $200 million.
---------------------------------------------------------------------------
               need for a new national maritime strategy
    Regarding the issue of the need for a national maritime 
strategy,\31\ four observations can be made.
---------------------------------------------------------------------------
    \31\ As used here, the term national maritime strategy means a 
strategy for ensuring that the U.S. merchant marine fleet and the U.S. 
civilian mariner workforce are adequate for, among other things, 
meeting DoD needs for military sealift capacity in time of crisis or 
conflict. In other contexts, the term maritime strategy can have other 
meanings. Navy officials, for example, have often used the term to 
refer to a strategy for how to employ naval forces in a major conflict.
---------------------------------------------------------------------------
Shift in Security Environment; New National Defense Strategy
    The first observation relates to two legislative requirements from 
2014 for the Department of Transportation (DOT) to issue a national 
sealift strategy and a national maritime strategy. GAO notes that these 
two requirements have not been met, and that this has deprived Congress 
of information for supporting decisionmaking relating to the U.S.-flag 
merchant fleet.\32\
---------------------------------------------------------------------------
    \32\ Government Accountability Office, Maritime Security[:] DOT 
Needs to Expeditiously Finalize the Required National Maritime Strategy 
for Sustaining U.S.-Flag Fleet, GAO-18-478, August 2018, summary page 
and pp. 34-35.
---------------------------------------------------------------------------
    If DOT had issued such a strategy in the period 2014-2016 or even 
in 2017, they would have reflected the Obama Administration's defense 
strategy rather than the Trump Administration's defense strategy, an 
unclassified summary of which was not published until January 2018.\33\ 
More broadly, a national maritime strategy issued in the period 2014-
2017 might not have fully reflected the shift in the international 
security environment from the post-cold war era to the current era of 
renewed great power competition.\34\
---------------------------------------------------------------------------
    \33\ Department of Defense, Summary of the 2018 National Defense 
Strategy of the United States of America, Sharpening the American 
Military's Competitive Edge, undated, released January 19, 2018, 11 pp.
    \34\ For more on this shift, see CRS Report R43838, A Shift in the 
International Security Environment: Potential Implications for 
Defense--Issues for Congress, by Ronald O'Rourke.
---------------------------------------------------------------------------
    This shift was not placed explicitly at the forefront of declared 
U.S. national security strategy until the Trump Administration released 
its national security strategy in December 2017.\35\
---------------------------------------------------------------------------
    \35\ White House, National Security Strategy of the United States 
of America, December 2017, 55 pp. For further discussion of this shift 
and its acknowledgment in the U.S. national security strategy, see CRS 
Report R43838, A Shift in the International Security Environment: 
Potential Implications for Defense--Issues for Congress, by Ronald 
O'Rourke.
---------------------------------------------------------------------------
    In light of this, it might be argued that if a national maritime 
strategy had been issued in 2014-2017, it would today be in need of 
update, revision, or replacement. That does not negate the impact to 
policymakers of having been deprived of such a strategy in 2014-2017, 
but it suggests that even if such a strategy had been issued during 
that period, policymakers might nevertheless be in a situation today of 
wanting a new version to be prepared. A similar observation can be made 
about the Navy's current force-level goal for achieving and maintaining 
a fleet of 355 ships. As discussed in the CRS report on Navy force-
structure and shipbuilding plans, this force-level goal was based on a 
force structure analysis conducted in 2016, and thus reflects the Obama 
Administration's defense strategy rather than the Trump 
Administration's defense strategy.\36\ As noted in the CRS report, the 
Navy has acknowledged this issue and has stated that it is preparing an 
update or revision to its 355-ship force-level goal that will be based 
on the Trump Administration's defense strategy.
---------------------------------------------------------------------------
    \36\ CRS Report RL32665, Navy Force Structure and Shipbuilding 
Plans: Background and Issues for Congress, by Ronald O'Rourke.
---------------------------------------------------------------------------
Mobility Capabilities and Requirements Study 2018 (MCRS-18)
    A second observation relates to Section 144(b) of the National 
Defense Authorization Act for Fiscal Year 2018 (H.R. 2810/P.L. 115-91 
of December 12, 2017), which requires DoD to conduct a new mobility 
capability and requirements study, and to brief the congressional 
defense committees on the results of the study not later than September 
30, 2018. DoD states that it started the study, which it refers to as 
the Mobility Capabilities and Requirements Study 2018 (MCRS-18), on 
March 8, 2018, and that it is scheduled for completion in the fall of 
2018.\37\ In connection with the point made in the previous section, 
the Commander of U.S. Transportation Command (USTRANSCOM), Air Force 
General Darren W. McDew, testified earlier this year that MCRS-18 
``will reflect requirements articulated in the new National Defense 
Strategy . . . .'' \38\
---------------------------------------------------------------------------
    \37\ Source: U.S. Transportation Command, ``Mobility Capabilities 
and Requirements Study Gets Underway,'' March 29, 2018.
    \38\ Statement of General Darren W. McDew, United States Air Force, 
Commander, United States Transportation Command, Before the Senate 
Armed Services Committee On the State of the Command, April 10, 2018, 
p. 12.
---------------------------------------------------------------------------
    A September 25, 2017, press report about MCRS-18 states that 
``Since the early 1990's, Pentagon mobility studies have consistently 
identified a requirement for about 20 million square feet of roll-on/
roll-off capacity to quickly transport material in support of a 
contingency.'' \39\ Mobility studies conducted from the 1990's until 
recently, however, were all done in the post-cold war era, when U.S. 
military force planning focused to a large degree on potential crises 
and conflicts against regional military powers such as Iran and North 
Korea. Given the recent shift from the post-cold war era to the new era 
of renewed great power competition and the resulting formal shift in 
U.S. military force planning toward a primary emphasis on potential 
challenges posed by China and Russia, it is not clear that MCRS-18 will 
leave the figure of 20 million square feet of roll-on/roll-off capacity 
unchanged. A change in this figure could have implications for the 
content of a new national maritime strategy.
---------------------------------------------------------------------------
    \39\ Jason Sherman, ``DOD Eyes 2018 to Set Assumptions, Scenarios 
for Mobility Capability Study,'' Inside the Navy, September 25, 2017.
---------------------------------------------------------------------------
Recapitalization of DoD Sealift Fleet
    A third observation relates to DoD's aging fleet of surge sealift 
ships. Since 2016, the condition of this fleet and DoD's strategy for 
recapitalizing it in coming years have become matters of concern for 
policymakers. In February 2017, the Army reportedly sent an information 
paper to Congress warning of an ``unacceptable risk in force 
projection'' within the next 5 years if the Navy does not act quickly 
to address the situation.\40\ In May 2016, the House Armed Services 
Committee directed GAO to report on the readiness of Military Sealift 
Command Ships (MSC) and employment plans.\41\ GAO's report, issued in 
August 2017, focused in part on declining readiness rates for DoD's 
surge sealift ships.\42\
---------------------------------------------------------------------------
    \40\ David B. Larter, ``US Army Warns of Crippling Sealift 
Shortfalls During Wartime,'' Defense News, November 11, 2018. See also 
John Grady, ``Official: U.S. Military Sealift Capacity is `On the 
Ragged Edge,'' USNI News, April 11, 2018; David B. Larter, ``The US 
Army Is Preparing to Fight in Europe, But Can It Even Get There?'' 
Defense News, October 8, 2018. David B. Larter, ``The US Navy Will Have 
to Pony Up and Race the Clock to Avoid a Sealift Capacity Collapse,'' 
Defense News, October 20 2018.
    \41\ H.Rept. 114-537 of May 4, 2016, on H.R. 4909, the National 
Defense Authorization Act for FY2017, pp. 126-127.
    \42\ Government Accountability Office, Navy Readiness[:] Actions 
Needed to Maintain Viable Surge Sealift and Combat Logistics Fleets, 
GAO-17-503, August 2017, 33 pp.
---------------------------------------------------------------------------
    In March 2018, the Navy reportedly submitted to Congress a report 
on a proposed strategy for recapitalizing the surge sealift fleet, as 
well as requested legislative authorities for implementing the 
strategy.\43\ Section 1021 of the National Defense Authorization Act 
for Fiscal Year 2018 (H.R. 2810/P.L.-115-91 of December 12, 2017) and 
Sections 1012 and 1013 of the John S. McCain National Defense 
Authorization Act for Fiscal Year 2019 (H.R. 5515/P.L. 115-232 of 
August 13, 2018) amended 10 U.S.C. 2218--the statute governing the 
National Defense Sealift Fund (NDSF)--to, among other things, provide 
DoD with authority, subject to certain conditions, to purchase used 
vessels, including a limited number of foreign-built vessels, as part 
of its effort to recapitalize the surge sealift fleet. Section 1019 of 
P.L. 115-232 requires the Navy, in consultation with the Maritime 
Administration (MARAD) and USTRANSCOM, submit to the congressional 
defense committees a report setting forth a business case analysis of 
recapitalization options for the Ready Reserve Force (RRF).\44\ How, 
and how quickly, the surge sealift fleet is recapitalized could have 
implications for the content of a new national maritime strategy.
---------------------------------------------------------------------------
    \43\ See, for example, Justin Katz, ``Navy Sends Congress $242 
Million Plan to Recap Surge Sealift,'' Inside Defense (Daily News), 
March 29, 2018. See also Justin Katz, ``DOD Requests Authorities for 
Sealift Surge Force Procurement in FY-19 Defense Policy Bill,'' Inside 
Defense (The Insider), April 3, 2018.
    \44\ Section 1019 states that the business case analysis is to 
include each sealift capability area and associated capacity for which 
RRF ships are required to be recapitalized through FY2018, and that the 
categories of ships to be considered are to include U.S. purpose-built 
vessels such as Common Hull Auxiliary Multi-mission Platform (CHAMP) 
ships; U.S. non-purpose built vessels such as vessels formerly engaged 
in Jones Act trade; foreign-built ships that participated in the 
Maritime Security Program (MSP); foreign-built vessels that did not 
participate in the MSP; and foreign-designed, U.S.-built ships.
---------------------------------------------------------------------------
Potential Shortfall of Navy Escorts and Possible Impacts on Mariners
    A fourth observation relates to the availability of U.S.-citizen 
mariners to crew DoD sealift ships in wartime. GAO notes MARAD's 
September 2017 estimate of a potential shortage of U.S.-citizen 
mariners available to crew U.S.-owned reserve sealift ships during a 
crisis or conflict.\45\ The challenge of finding adequate numbers of 
appropriately trained mariners to crew DoD sealift ships in time of 
crisis or conflict is a longstanding issue, dating back at least to 
1990, when mariners in their 50's, 60's, and 70's (and one aged 81), 
some brought out of retirement, were reportedly needed to help fill out 
the crews of DoD sealift ships that were activated for Operation Desert 
Shield (the initial phase of the U.S. reaction to Iraq's 1990 invasion 
of Kuwait).\46\ Problems in filling out ship crews reportedly 
contributed to delays in activating some RRF sealift ships to 
participate in the operation.\47\ A potential shortage of U.S.-citizen 
mariners for manning DoD sealift ships in wartime has been a recurring 
matter of concern since then.
---------------------------------------------------------------------------
    \45\ Government Accountability Office, Maritime Security[:] DOT 
Needs to Expeditiously Finalize the Required National Maritime Strategy 
for Sustaining U.S.-Flag Fleet, GAO-18-478, August 2018, summary page 
and pp. 29-33. MARAD's estimate is presented in U.S. Department of 
Transportation, Maritime Administration, Maritime Workforce Working 
Group Report, undated, transmission letter dated September 29, 2017, 
137 pp. See also John Grady, ``MARAD: U.S. Short Almost 2,000 Mariners 
to Supply American Force in War,'' USNI News, March 8, 2018.
    \46\ See, for example, Lourdes Rodriguez-Florido, ``Worth Their 
Salt; Scarcity of Trained Mariners During Gul War Prompts Call-Up of 
Some Old Men of the Sea,'' Sun-Sentinel, February 6, 1992; Robert 
Little, ``Merchant Marine's Demise Endangers War Readiness,'' Baltimore 
Sun, August 5, 2001.
    \47\ See, for example, CRS Report 90-446 F, Sealift and Operation 
Desert Shield, by Ronald O'Rourke, September 17, 1990, p. 21. For an 
example of an analysis expressing concern about this issue even before 
1990, see Stephen D. Boyce, Strategic Mobility and the Decline of the 
United States Merchant Marine, Air War College Research Report, 1989, 
78 pp.
---------------------------------------------------------------------------
    This longstanding issue, however, may now be affected by a new 
factor that relates to the defense of DoD sealift ships in wartime. 
From 1990 until recently (i.e., during the post-cold war era), the 
defense of DoD sealift ships was not a pressing concern. In the new era 
of renewed major power competition, it has become a concern, given 
current and potential future Chinese and Russian capabilities for 
interdicting ships. Section 1072 of the National Defense Authorization 
Act for Fiscal Year 2018 (H.R. 2810/P.L. 115-91 of December 12, 2017) 
requires the Navy to submit a report on its plans for defending combat 
logistics and strategic mobility forces--meaning Navy underway 
replenishment ships, RRF sealift ships, and MSC surge sealift ships--
against potential wartime threats. The report is to include, among 
other things, a ``description of the combat logistics and strategic 
mobility forces capacity, including additional combat logistics and 
strategic mobility forces, that may be required due to losses from 
attacks,'' an ``assessment of the ability and availability of United 
States naval forces to defend combat logistics and strategic mobility 
forces from the threats,'' and a ``description of specific capability 
gaps or risk areas in the ability or availability of United States 
naval forces to defend combat logistics and strategic mobility forces 
from the threats . . . .''
    The question of how DoD sealift ships will be defended in wartime, 
including the possibility of capability gaps for defending them, could 
have implications for the potential shortage of U.S.-citizen mariners 
for crewing DoD sealift ships in wartime. An October 10, 2018, press 
report stated:

        In the event of a major war with China or Russia, the U.S. 
        Navy, almost half the size it was during the height of the cold 
        war, is going to be busy with combat operations. It may be too 
        busy, in fact, to always escort the massive sealift effort it 
        would take to transport what the Navy estimates will be roughly 
        90 percent of the Marine Corps and Army gear the force would 
        need to sustain a major conflict.

        That's the message Mark Buzby, the retired rear admiral who now 
        leads the Department of Transportation's Maritime 
        Administration, has gotten from the Navy, and it's one that has 
        instilled a sense of urgency around a major cultural shift 
        inside the force of civilian mariners that would be needed to 
        support a large war effort.

        ``The Navy has been candid enough with Military Sealift Command 
        and me that they will probably not have enough ships to escort 
        us. It's: `You're on your own; go fast, stay quiet,' '' Buzby 
        told Defense News in an interview earlier this year.

        Along with Rear Adm. Dee Mewbourne at Military Sealift Command, 
        who would get operational control of the whole surge force in a 
        crisis, Buzby has been working to educate mariners on things 
        that might seem basic to experienced Navy personnel but are new 
        to many civilian mariners. . . .

         . . . significant losses among the available pool of mariners 
        would likely dissuade some from volunteering (bad) and would 
        mean the loss of mariners with critical skills needed to 
        operate the fleet for months or even years in a major 
        contingency (worse). And even without losses, MARAD estimates 
        the country is about 1,800 mariners short if any kind of 
        rotational presence is needed . . . .

        To try and offset these daunting challenges, MSC and the 
        Maritime Administration are getting their mariners to think 
        more like sailors when it comes to digital emissions. . . .

        ``Adm. Mewbourn at Military Sealift Command and I have talked a 
        lot about this and we have been trying to get the word out to 
        people that we are going to have to do things differently,'' 
        Buzby said.

        ``Turn your navigation lights off, turn your [Automatic 
        Identification System] off, turn your radars off, tell your 
        crews not to use their cell phones--all those [Emissions 
        Condition] things that we in the Navy are familiar with that 
        are completely foreign to a merchant mariner and are seen as an 
        imposition. . . .

        Military Sealift Command is focusing more on operating inside 
        contested waters, said Tom Van Leunen, the command's spokesman.

        ``We are operationalizing the force, that's been Adm. 
        Mewborne's focus since he got here. We're focused on preparing 
        mariners for the more complex operational environment,'' Van 
        Leunen said.

        As part of those efforts, the command has developed a basic and 
        advanced operations course for its mariners and has been 
        participating in more fleet exercises, he said.

        Mewborne's efforts on ``mariner resiliency'' have been setting 
        the right tone, Buzby said. The effort focuses on containing 
        electronic emissions, becoming physically fit to be able to 
        combat damage over long periods and a sobering reminder at the 
        end, he added.

        ``The last bullet point on one of the slides is `Learn how to 
        swim,' '' he said. ``It's to that point. There's not going to 
        be a bunch of destroyers around us as we take those ships over 
        there. We're going to be hitting the sea buoy, cranking it up 
        and going hell-bent for leather, hoping to stay undetected.''

         . . . while the [NATO] alliance continues to scrape the rust 
        off its large-scale logistics trains, the question of whether 
        the mariners will show up to man the lift vessels is an open 
        one, and one that Buzby thinks about from his office at the 
        MARAD.

        ``We are going into a contested environment, so we are going to 
        have attrition to deal with, in both ships and the people who 
        sail on them,'' Buzby said. ``Who knows, that might dissuade 
        some people.

        ``The tradition of the Merchant Marine is we go to sea no 
        matter what, damn the torpedoes. Most of us believe that our 
        people will not be dissuaded. But until they walk up the 
        gangway, you never know.'' \48\
---------------------------------------------------------------------------
    \48\ David B. Larter, `` `You're On Your Own': US Sealift Can't 
Count on Navy Escorts in the Next Big War,'' Defense News, October 10, 
2018.
---------------------------------------------------------------------------
An Implication from the Above Observations
    One implication of these four observations is that the situation 
concerning the future of military sealift is currently complex and 
dynamic, with multiple issues and developments unfolding in parallel. 
This will make the task of assessing sealift needs and capabilities and 
developing a supporting national maritime strategy more challenging.
    Chairman Mast, this concludes my statement. Thank you again for the 
opportunity to testify, and I will be pleased to respond to any 
questions the subcommittee may have.
                 appendix a. biography--ronald o'rourke
    Mr. O'Rourke is a Phi Beta Kappa graduate of the Johns Hopkins 
University, from which he received his B.A. in international studies, 
and a valedictorian graduate of the University's Paul Nitze School of 
Advanced International Studies, where he received his M.A. in the same 
field.
    Since 1984, Mr. O'Rourke has worked as a naval analyst for CRS. He 
has written many reports for Congress on various issues relating to the 
Navy, the Coast Guard, defense acquisition, China's naval forces and 
maritime territorial disputes, the Arctic, the international security 
environment, and the U.S. role in the world. He regularly briefs 
Members of Congress and congressional staffers, and has testified 
before congressional committees on many occasions.
    In 1996, he received a Distinguished Service Award from the Library 
of Congress for his service to Congress on naval issues.
    In 2010, he was honored under the Great Federal Employees 
Initiative for his work on naval, strategic, and budgetary issues.
    In 2012, he received the CRS Director's Award for his outstanding 
contributions in support of the Congress and the mission of CRS.
    In 2017, he received the Superior Public Service Award from the 
Navy for service in a variety of roles at CRS while providing 
invaluable analysis of tremendous benefit to the Navy for a period 
spanning decades.
    Mr. O'Rourke is the author of several journal articles on naval 
issues, and is a past winner of the U.S. Naval Institute's Arleigh 
Burke essay contest. He has given presentations on naval, Coast Guard, 
and strategy issues to a variety of U.S. and international audiences in 
government, industry, and academia.
     appendix b. a summary of some acquisition lessons learned for 
                        government shipbuilding
    This appendix presents a general summary of lessons learned in 
government shipbuilding, reflecting comments made repeatedly by various 
sources over the years.\49\ These lessons learned include the 
following:
---------------------------------------------------------------------------
    \49\ This appendix is adapted from Appendix J of CRS Report 
RL32665, Navy Force Structure and Shipbuilding Plans: Background and 
Issues for Congress, by Ronald O'Rourke. See also Government 
Accountability Office, Navy Shipbuilding[:] Past Performance Provides 
Valuable Lessons for Future Investments, GAO-18-238SP, June 2018, 36 
pp.
---------------------------------------------------------------------------
      At the outset, get the operational requirements for the 
program right. Properly identify the program's operational requirements 
at the outset. Manage risk by not trying to do too much in terms of the 
program's operational requirements, and perhaps seek a so-called 70 
percent-to-80 percent solution (i.e., a design that is intended to 
provide 70 percent-80 percent of desired or ideal capabilities). 
Achieve a realistic balance up front between operational requirements, 
risks, and estimated costs.
      Impose cost discipline up front. Use realistic price 
estimates, and consider not only development and procurement costs, but 
life-cycle operation and support (O&S) costs.
      Employ competition where possible in the awarding of 
design and construction contracts.
      Use a contract type that is appropriate for the amount of 
risk involved, and structure its terms to align incentives with desired 
outcomes.
      Minimize design/construction concurrency by developing 
the design to a high level of completion before starting construction 
and by resisting changes in requirements (and consequent design 
changes) during construction.
      Properly supervise construction work. Maintain an 
adequate number of properly trained Supervisor of Shipbuilding 
(SUPSHIP) personnel.
      Provide stability for industry, in part by using, where 
possible, multiyear procurement (MYP) or block buy contracting.
      Maintain a capable government acquisition workforce that 
understands what it is buying, as well as the above points.

    Identifying these lessons is arguably not the hard part--most if 
not all these points have been cited for years. The hard part, 
arguably, is living up to them without letting circumstances lead 
program-execution efforts away from these guidelines.
 appendix c. some considerations relating to warranties in government 
             shipbuilding and other government acquisition
    This appendix presents some considerations relating to warranties 
in shipbuilding and other defense acquisition.\50\
---------------------------------------------------------------------------
    \50\ This appendix is adapted from Appendix K of CRS Report 
RL32665, Navy Force Structure and Shipbuilding Plans: Background and 
Issues for Congress, by Ronald O'Rourke.
---------------------------------------------------------------------------
    In discussions of government shipbuilding, one question that 
sometimes arises is whether including a warranty in a shipbuilding 
contract is preferable to not including one. The question can arise, 
for example, in connection with a GAO finding that ``the Navy 
structures shipbuilding contracts so that it pays shipbuilders to build 
ships as part of the construction process and then pays the same 
shipbuilders a second time to repair the ship when construction defects 
are discovered.'' \51\
---------------------------------------------------------------------------
    \51\ See Government Accountability Office, Navy Shipbuilding[:] 
Past Performance Provides Valuable Lessons for Future Investments, GAO-
18-238SP, June 2018, p. 21. A graphic on page 21 shows a GAO finding 
that the government was financially responsible for shipbuilder 
deficiencies in 96 percent of the cases examined by GAO, and that the 
shipbuilder was financially responsible for shipbuilder deficiencies in 
4 percent of the cases.
---------------------------------------------------------------------------
    Including a warranty in a shipbuilding contract (or a contract for 
building some other kind of end item), while potentially valuable, 
might not always be preferable to not including one--it depends on the 
circumstances of the acquisition, and it is not necessarily a valid 
criticism of an acquisition program to state that it is using a 
contract that does not include a warranty (or a weaker form of a 
warranty rather than a stronger one).
    Including a warranty generally shifts to the contractor the risk of 
having to pay for fixing problems with earlier work. Although that in 
itself could be deemed desirable from the government's standpoint, a 
contractor negotiating a contract that will have a warranty will 
incorporate that risk into its price, and depending on how much the 
contractor might charge for doing that, it is possible that the 
government could wind up paying more in total for acquiring the item 
(including fixing problems with earlier work on that item) than it 
would have under a contract without a warranty.
    When a warranty is not included in the contract and the government 
pays later on to fix problems with earlier work, those payments can be 
very visible, which can invite critical comments from observers. But 
that does not mean that including a warranty in the contract somehow 
frees the government from paying to fix problems with earlier work. In 
a contract that includes a warranty, the government will indeed pay 
something to fix problems with earlier work--but it will make the 
payment in the less-visible (but still very real) form of the up-front 
charge for including the warranty, and that charge might be more than 
what it would have cost the government, under a contract without a 
warranty, to pay later on for fixing those problems.
    From a cost standpoint, including a warranty in the contract might 
or might not be preferable, depending on the risk that there will be 
problems with earlier work that need fixing, the potential cost of 
fixing such problems, and the cost of including the warranty in the 
contract. The point is that the goal of avoiding highly visible 
payments for fixing problems with earlier work and the goal of 
minimizing the cost to the government of fixing problems with earlier 
work are separate and different goals, and that pursuing the first goal 
can sometimes work against achieving the second goal.\52\
---------------------------------------------------------------------------
    \52\ It can also be noted that the country's two largest builders 
of Navy ships--General Dynamics (GD) and Huntington Ingalls Industries 
(HII)--derive about 60 percent and 96 percent, respectively, of their 
revenues from U.S. Government work. (See General Dynamics, 2016 Annual 
Report, page 9 of Form 10-K [PDF page 15 of 88]) and Huntington Ingalls 
Industries, 2016 Annual Report, page 5 of Form 10-K [PDF page 19 of 
134]). Thus, even if a warranty in a shipbuilding contract with one of 
these firms were to somehow mean that the government did not have pay 
under the terms of that contract--either up front or later on--for 
fixing problems with earlier work done under that contract, there would 
still be a question as to whether the government would nevertheless 
wind up eventually paying much of that cost as part of the price of one 
or more future contracts the government may have that firm.
---------------------------------------------------------------------------
    The Department of Defense's guide on the use of warranties states 
the following:

        Federal Acquisition Regulation (FAR) 46.7 states that ``the use 
        of warranties is not mandatory.'' However, if the benefits to 
        be derived from the warranty are commensurate with the cost of 
        the warranty, the CO [contracting officer] should consider 
        placing it in the contract. In determining whether a warranty 
        is appropriate for a specific acquisition, FAR Subpart 46.703 
        requires the CO to consider the nature and use of the supplies 
        and services, the cost, the administration and enforcement, 
        trade practices, and reduced requirements. The rationale for 
        using a warranty should be documented in the contract file. . . 
        .

        In determining the value of a warranty, a CBA [cost-benefit 
        analysis] is used to measure the life cycle costs of the system 
        with and without the warranty. A CBA is required to determine 
        if the warranty will be cost beneficial. CBA is an economic 
        analysis, which basically compares the Life Cycle Costs (LCC) 
        of the system with and without the warranty to determine if 
        warranty coverage will improve the LCCs. In general, five key 
        factors will drive the results of the CBA: cost of the warranty 
        + cost of warranty administration + compatibility with total 
        program efforts + cost of overlap with Contractor support + 
        intangible savings. Effective warranties integrate reliability, 
        maintainability, supportability, availability, and life-cycle 
        costs. Decision factors that must be evaluated include the 
        state of the weapon system technology, the size of the 
        warranted population, the likelihood that field performance 
        requirements can be achieved, and the warranty period of 
        performance.\53\
---------------------------------------------------------------------------
    \53\ Department of Defense, Department of Defense Warranty Guide, 
Version 1.0, September 2009, accessed July 13, 2017, at https://
www.acq.osd.mil/dpap/pdi/uid/docs/
departmentofdefensewarrantyguide[1].doc.
---------------------------------------------------------------------------
 appendix d. some considerations relating to avoiding procurement cost 
                growth vs. minimizing procurement costs
    This appendix presents some considerations relating to avoiding 
procurement cost growth vs. minimizing procurement costs in 
shipbuilding and other government acquisition.\54\
---------------------------------------------------------------------------
    \54\ This appendix is adapted from Appendix L of CRS Report 
RL32665, Navy Force Structure and Shipbuilding Plans: Background and 
Issues for Congress, by Ronald O'Rourke.
---------------------------------------------------------------------------
    The affordability challenge posed by government shipbuilding plans 
can reinforce the strong oversight focus on preventing or minimizing 
procurement cost growth in government shipbuilding programs, which is 
one expression of a strong oversight focus on preventing or minimizing 
cost growth in DoD acquisition programs in general. This oversight 
focus may reflect in part an assumption that avoiding or minimizing 
procurement cost growth is always synonymous with minimizing 
procurement cost. It is important to note, however, that as paradoxical 
as it may seem, avoiding or minimizing procurement cost growth is not 
always synonymous with minimizing procurement cost, and that a 
sustained, singular focus on avoiding or minimizing procurement cost 
growth might sometimes lead to higher procurement costs for the 
government.
    How could this be? Consider the example of a design for the lead 
ship of a new class of ships. The construction cost of this new design 
is uncertain, but is estimated to be likely somewhere between Point A 
(a minimum possible figure) and Point D (a maximum possible figure). 
(Point D, in other words, would represent a cost estimate with a 100 
percent confidence factor, meaning there is a 100 percent chance that 
the cost would come in at or below that level.) If the government 
wanted to avoid cost growth on this ship, it could simply set the 
ship's procurement cost at Point D. Industry would likely be happy with 
this arrangement, and there likely would be no cost growth on the ship.
    The alternative strategy open to the government is to set the 
ship's target procurement cost at some figure between Points A and D--
call it Point B--and then use that more challenging target cost to 
place pressure on industry to sharpen its pencils so as to find ways to 
produce the ship at that lower cost. (Government officials sometimes 
refer to this as ``pressurizing'' industry.) In this example, it might 
turn out that industry efforts to reduce production costs are not 
successful enough to build the ship at the Point B cost. As a result, 
the ship experiences one or more rounds of procurement cost growth, and 
the ship's procurement cost rises over time from Point B to some higher 
figure--call it Point C.
    Here is the rub: Point C, in spite of incorporating one or more 
rounds of cost growth, might nevertheless turn out to be lower than 
Point D, because Point C reflected efforts by the shipbuilder to find 
ways to reduce production costs that the shipbuilder might have put 
less energy into pursuing if the government had simply set the ship's 
procurement cost initially at Point D.
    Setting the ship's cost at Point D, in other words, may eliminate 
the risk of cost growth on the ship, but does so at the expense of 
creating a risk of the government paying more for the ship than was 
actually necessary. DoD could avoid cost growth on new procurement 
programs starting tomorrow by simply setting costs for those programs 
at each program's equivalent of Point D. But as a result of this 
strategy, DoD could well wind up leaving money on the table in some 
instances--of not, in other words, minimizing procurement costs.
    DoD does not have to set a cost precisely at Point D to create a 
potential risk in this regard. A risk of leaving money on the table, 
for example, is a possible downside of requiring the government to 
budget for its acquisition programs at something like an 80 percent 
confidence factor--an approach that some observers have recommended--
because a cost at the 80 percent confidence factor is a cost that is 
likely fairly close to Point D.
    Procurement cost growth is often embarrassing for the government 
and industry, and can damage their credibility in connection with 
future procurement efforts. Procurement cost growth can also disrupt 
congressional budgeting by requiring additional appropriations to pay 
for something Congress thought it had fully funded in a prior year. For 
this reason, there is a legitimate public policy value to pursuing a 
goal of having less rather than more procurement cost growth.
    Procurement cost growth, however, can sometimes be in part the 
result of government efforts to use lower initial cost targets as a 
means of pressuring industry to reduce production costs--efforts that, 
notwithstanding the cost growth, might be partially successful. A 
sustained, singular focus on avoiding or minimizing cost growth, and of 
punishing the government for all instances of cost growth, could 
discourage the government from using lower initial cost targets as a 
means of pressurizing industry, which could deprive the government of a 
tool for controlling procurement costs.
    The point here is not to excuse away cost growth, because cost 
growth can occur in a program for reasons other than the government's 
attempt to pressurize industry. Nor is the point to abandon the goal of 
seeking lower rather than higher procurement cost growth, because, as 
noted above, there is a legitimate public policy value in pursuing this 
goal. The point, rather, is to recognize that this goal is not always 
synonymous with minimizing procurement cost, and that a possibility of 
some amount of cost growth might be expected as part of an optimal 
government strategy for minimizing procurement cost. Recognizing that 
the goals of seeking lower rather than higher cost growth and of 
minimizing procurement cost can sometimes be in tension with one 
another can lead to an approach that takes both goals into 
consideration. In contrast, an approach that is instead characterized 
by a sustained, singular focus on avoiding and minimizing cost growth 
may appear virtuous, but in the end may wind up costing the government 
more.
  appendix e. coast guard nsc, opc, frc, and wcc acquisition programs
    This appendix presents discussion of the Coast Guard's National 
Security Cutter (NSC) program, Offshore Patrol Cutter (OPC) program, 
Fast Response Cutter (FRC) program, and Waterways Commerce Cutter (WCC) 
program, which help form the context for Coast Guard icebreaker 
procurement in a situation of finite Coast Guard procurement funding. 
The CRS report on cutter procurement provides in-depth discussions of 
the NSC, OPC, and FRC programs.\55\ Below are some focused comments on 
these programs and the WCC program.
---------------------------------------------------------------------------
    \55\ See CRS Report R42567, Coast Guard Cutter Procurement: 
Background and Issues for Congress, by Ronald O'Rourke.
---------------------------------------------------------------------------
Adequacy of Planned Quantities of NSCs, OPCs, and FRCs
    The Coast Guard's 91-ship program of record (POR) for general-
purpose cutters--which dates to 2004 and calls for a force of 8 NSCs, 
25 OPCs, and 58 FRCs--will provide substantially more capability than 
the force of older-generation cutters it will replace. At the same 
time, it can be useful to recall that Coast Guard studies have 
concluded that the planned total of 91 NSCs, OPCs, and FRCs would 
provide only 61 percent of the NSCs, OPCs, and FRCs that would be 
needed to fully perform the service's statutory missions in coming 
years, in part because Coast Guard mission demands are expected to be 
greater in coming years than they were in the past. As shown in Table 
E-1, the Coast Guard's 2011 Fleet Mix Analysis (FMA) Phase 2--the last 
general analysis of future Coast Guard ship force structure 
requirements to be publicly released by the Coast Guard--concluded that 
fully performing the Coast Guard's statutory missions in coming years 
would require a total of 149 NSCs, OPCs, and FRCs.\56\ This point may 
be particularly salient right now in connection with the NSC and FRC 
programs, procurement of which would end soon under the POR figures.
---------------------------------------------------------------------------
    \56\ For additional discussion, see Appendix A of CRS Report 
R42567, Coast Guard Cutter Procurement: Background and Issues for 
Congress, by Ronald O'Rourke.

   TABLE E-1. PROGRAM OF RECORD COMPARED TO FLEET MIX ANALYSIS PHASE 2
                                (2011)\\
------------------------------------------------------------------------
                                                  Refined Objective Mix
                                   Program of         from Fleet Mix
           Ship Type                 Record         Analysis, Phase 2
                                                          (2011)
------------------------------------------------------------------------
NSC............................               8                        9
OPC............................              25                       49
FRC............................              58                       91
                                ----------------------------------------
  Total........................              91                      149
------------------------------------------------------------------------
\\ Source: Coast Guard Fleet Mix Analysis, Phase 2, 2011, Table ES-2 on
  p. iv. For additional discussion, see Appendix A of CRS Report R42567,
  Coast Guard Cutter Procurement: Background and Issues for Congress, by
  Ronald O'Rourke.

National Security Cutter (NSC) Program
    The NSCs were procured at irregular rather than regular intervals, 
and they were procured with annual rather than multiyear contracts. 
Both of these aspects of their acquisition made the ships more 
expensive. If NSCs had instead been procured at regular intervals under 
multiyear contracts that included EOQ authority, the reduction in their 
combined procurement cost could have been substantial--possibly enough 
(or even more than enough) to have paid for one of the 11 NSCs that 
have been fully funded through FY2018.
    As discussed below in the section on the OPC program, building 
additional NSCs is one option for acquiring replacements for retiring 
medium-endurance cutters more quickly than currently planned, so as to 
close more quickly any gap in time between retirements of the medium-
endurance cutters and the entry into service of their replacements. The 
NSCs are bigger and in some respects more capable than OPCs, and they 
would individually be more expensive to procure and to operate and 
support than OPCs. The difference in size, capability, and cost between 
the NSC and OPC design is not insignificant, but neither is it a night-
and-day difference. With an estimated full-load displacement of 3,500 
to 3,730 tons,\57\ for example, OPCs are to be roughly 80 percent as 
large as NSCs, which have a full load displacement of about 14,500 
tons.\58\ In terms of size, capability, and cost, the OPC is a lot 
closer to the NSC than it is to the FRC, which is a large patrol craft 
with a full load displacement of 353 tons.
---------------------------------------------------------------------------
    \57\ As of May 26, 2017, the OPC's light ship displacement (i.e., 
its ``empty'' displacement, without fuel, water, ballast, stores, and 
crew) was preliminarily estimated at about 2,640 to 2,800 tons, and its 
full load displacement was preliminarily estimated at about 3,500 to 
3,730 tons. (Source: Figures provided to CRS by Coast Guard liaison 
office, May 26, 2017.)
    \58\ Source for figure of 4,500 tons: Coast Guard NSC fact sheet, 
accessed October 3, 2018, at: https://www.dcms.uscg.mil/Portals/10/CG-
9/Acquisition%20PDFs/Factsheets/NSC.pdf?ver=2017-04-24-142526-023.
---------------------------------------------------------------------------
    Procurement of NSCs for replacing retiring Hamilton-class high-
endurance cutters is approaching its end. If additional NSCs were 
procured in the near term in parallel with OPC procurement as part of a 
strategy for more quickly replacing retiring medium-endurance cutters, 
the additional NSCs could be built using the currently open NSC 
production line, avoiding a break in that production line and thereby 
maximizing production learning curve benefits. The procurement cost of 
any additional NSCs might be further reduced by procuring them at 
regular intervals and using an MYP contract.
OPC Program
    The Coast Guard is using a contract with options to procure the 
first nine OPCs. As stated earlier, although a contract with options 
might look like a multiyear contract, it is not a form of multiyear 
contracting. A contract with options operates more like annual 
contracting and cannot achieve the kinds of savings that are possible 
with multiyear contracting.\59\
---------------------------------------------------------------------------
    \59\ For additional discussion, see CRS Report R41909, Multiyear 
Procurement (MYP) and Block Buy Contracting in Defense Acquisition: 
Background and Issues for Congress, by Ronald O'Rourke and Moshe 
Schwartz, particularly the section entitled ``MYP and BBC vs. Contracts 
with Options.''
---------------------------------------------------------------------------
    Using multiyear contracting in the 25-ship OPC program--
specifically, block buy contracting with EOQ authority for the initial 
ships in the program, followed by either block buy contracting with EOQ 
authority or MYP contracting for later ships in the program--rather 
than annual contracting might reduce the total acquisition cost of the 
program by about $1 billion. This potential savings of $1 billion--a 
figure equal to or greater than the acquisition cost of either a polar 
icebreaker or a 35-ship Waterways Commerce Cutter program--represents a 
rare opportunity for using multiyear contracting to reduce the cost of 
an individual Coast Guard acquisition program by such an amount.
    Acquiring the first nine ships in the OPC program under the current 
contract with options could forego roughly $350 million of the $1 
billion in potential savings. Much of this $350 million in potential 
savings might be recaptured by renegotiating the current contract so as 
to convert it, with congressional approval, into a block buy contract 
with EOQ authority. If acquisition regulations prohibit such a 
renegotiation, the Coast Guard alternatively could choose to not 
exercise most of the options in the current contract and hold a new 
competition for building the current NSC design under a block buy 
contract. The current OPC builder--Eastern Shipbuilding of Panama City, 
FL--would be well positioned to win such a competition, since it would 
involve building Eastern's own design and Eastern would already have 
moved down the initial (i.e., the steepest) part of the learning curve 
for building the design.
    The current planned procurement profile for the OPC, which reaches 
a maximum projected rate of two ships per year, would deliver OPCs many 
years after the end of the originally planned service lives of the 
medium-endurance cutters that they are to replace. Coast Guard 
officials have testified that the service plans to extend the service 
lives of the medium-endurance cutters until they are replaced by OPCs. 
There will be maintenance and repair expenses associated with extending 
the service lives of medium-endurance cutters, and if the Coast Guard 
does not also make investments to increase the capabilities of these 
ships, the ships may have less capability in certain regards than OPCs.
    One possible option for addressing this situation would be to 
increase the maximum annual procurement rate of the replacement ships 
from the currently planned two ships per year to a higher figure. 
Increasing the rate to three or four ships per year, for example, could 
result in the 25th ship being delivered about 4 years or 6 years 
sooner, respectively, than under the currently planned maximum rate. 
Increasing the procurement rate would require a substantial increase to 
the Coast Guard's PC&I account, which gets back to the issue discussed 
earlier of future funding levels for that account and Congress' agency 
in setting funding levels and determining the composition of Federal 
spending.
    From a production point of view, there are at least three options 
for increasing the annual procurement rate of replacement ships from 
the currently planned two ships per year to a higher rate, so as to 
close any gap in time between the retirements of medium-endurance 
cutters and the entry into service of their replacements. These options 
are as follows:
      increasing the annual OPC production rate at Eastern 
Shipbuilding, if Eastern's capacity would permit this;
      building additional OPCs at one or two additional 
shipyards, such as Bollinger Shipyards of Lockport, LA and/or General 
Dynamics' Bath Iron Works (GD/BIW) of Bath, ME--the two other finalists 
in the OPC competition; and
      building additional NSCs at Huntington Ingalls 
Industries/Ingalls Shipbuilding (HII/Ingalls).
    These three options are not mutually exclusive--they could be 
pursued in combination. Additional OPCs built at Bollinger and/or GD/
BIW could be built to the OPC designs that those two shipbuilders 
submitted for the OPC competition. (Those designs are presumably 
optimized for the production facilities at Bollinger and GD/BIW. The 
Coast Guard, moreover, currently does not have data rights for the 
complete vessel design for Eastern's OPC design.\60\) Building 
additional OPCs at Bollinger and/or GD/BIW to the designs developed by 
those two shipbuilders would result in a fleet with two or three 
classes of OPCs, a situation that would increase OPC life-cycle 
operation and support costs and complicate the training and assignment 
of OPC crew members. These additional life-cycle costs and 
complications, however, might be deemed acceptable in return for 
avoiding the costs and risks of extending the service lives of medium-
endurance cutters and shortening any gap in time between the retirement 
of medium-endurance cutters and the entry into service of their 
replacements. The Navy decided in 2010 to fill its requirement for LCSs 
by building two different LCS designs at the same time, and did so 
knowing that this would result in some additional life-cycle operation 
and support costs and crewing-related complications compared to the 
option of building all LCSs to a single design.\61\ The option of 
building additional NSCs as replacements for retiring medium-endurance 
cutters was discussed above in the section on the NSC program.
---------------------------------------------------------------------------
    \60\ Source regarding data rights: Email from Coast Guard liaison 
office to CRS, September 6, 2017.
    \61\ For additional discussion of the LCS program, see CRS Report 
RL33741, Navy Littoral Combat Ship (LCS) Program: Background and Issues 
for Congress, by Ronald O'Rourke. A total of 35 LCSs have been funded 
through FY2019. Of these 35 ships, 17 will be built to one of the LCS 
designs, and 18 will be built to the other.
---------------------------------------------------------------------------
FRC Program
    With 50 FRCs procured through FY2018 and four more requested for 
FY2019, the FRC is approaching the 58-ship figure called for in the 
Coast Guard's program of record. As shown earlier in Table E-1, 
however, the Coast Guard's 2011 Fleet Mix Analysis Phase II concluded 
that a total of 91 FRCs would be needed as part of an overall force of 
149 general-purpose cutters to fully perform the service's statutory 
missions in coming years.
    Procuring additional FRCs beyond the 58th would require additional 
procurement funding, which gets back to the issue discussed earlier of 
future funding levels for the PC&I account and Congress' agency in 
setting funding levels and determining the composition of Federal 
spending. As with the option discussed earlier of procuring additional 
NSCs, procuring additional FRCs immediately following the procurement 
of the 58th FRC would permit them to be built using the currently open 
NSC production line, avoiding a break in that production line and 
thereby maximizing production learning curve benefits. And as with the 
NSC option discussed earlier, the cost of any such additional FRCs 
could be reduced by procuring them under an MYP or block buy contract. 
The resulting increase in Coast Guard force structure from 58 FRCs to 
some higher number would increase long-term Coast Guard operation and 
support costs above currently planned levels.
WCC Program
    The WCC program--the program to replace the Coast Guard's current 
35-ship inland waterways fleet--is a smaller program than those 
discussed above. With a notional procurement cost of roughly $25 
million per cutter, a 35-ship replacement program might have a total 
acquisition cost of roughly $900 million.\62\ Although the scale of the 
program is more modest than that of the NSC, OPC, and FRC programs, the 
WCC program is of importance in terms of its economic benefit to the 
Nation (by supporting waterborne commerce) and the bidding opportunity 
it will provide to U.S. shipyards that are not capable of building 
larger Coast Guard cutters.
---------------------------------------------------------------------------
    \62\ Source for $25 million figure: Spoken testimony of Coast Guard 
Commandant Karl Schultz during the question-and-answer portion of a 
September 16, 2018, hearing on Coast Guard modernization and 
recapitalization before the Coast Guard and Maritime Transportation 
subcommittee of the House Transportation and Infrastructure Committee, 
as reflected in the transcript of the hearing. The Commandant stated: 
``I'm loathed to put a number out, but I think you're talking a $25 
million, plus or minus, [cost per] ship.'' The planned number of new 
replacement WCCs has not yet been determined and could turn out to be 
something other than 35. GAO states that ``according to Coast Guard 
officials, the preliminary rough order of magnitude estimate for total 
acquisition cost is $1.1 billion.'' Government Accountability Office, 
Coast Guard Acquisitions[:] Actions Needed to Address Longstanding 
Portfolio Management Challenges, GAO-18-454, July 2018, p. 19.
---------------------------------------------------------------------------
    As the Coast Guard begins to develop the details of this program, 
potential oversight issues could include, among other things, the 
planned number of replacement cutters (which has not yet been 
determined and could turn out to be something other than 35), planned 
annual procurement quantities and the resulting schedule for replacing 
the existing ships, whether to develop a new design or instead use a 
parent design, the number of shipyards to be used to build the ships, 
and the contracting strategy, including whether to use multiyear 
contracting.
 appendix f. nasem report recommendation for building heavy and medium 
                  polar icebreakers to a common design
    Regarding its proposal to build heavy and medium polar icebreakers 
to a common design, the July 2017 NASEM report stated (emphasis as in 
original):

        2. Recommendation: The U.S. Congress should fund the 
        construction of four polar icebreakers of common design that 
        would be owned and operated by the United States Coast Guard 
        (USCG).

        The current Department of Homeland Security (DHS) Mission Need 
        Statement . . . contemplates a combination of medium and heavy 
        icebreakers. The committee's recommendation is for a single 
        class of polar icebreaker with heavy icebreaking capability. 
        Proceeding with a single class means that only one design will 
        be needed, which will provide cost savings. The committee has 
        found that the fourth heavy icebreaker could be built for a 
        lower cost than the lead ship of a medium icebreaker class. . . 
        .

        The DHS Mission Need Statement contemplated a total fleet of 
        ``potentially'' up to six ships of two classes--three heavy and 
        three medium icebreakers. Details appear in the High Latitude 
        Mission Analysis Report. The Mission Need Statement indicated 
        that to fulfill its statutory missions, USCG required three 
        heavy and three medium icebreakers; each vessel would have a 
        single crew and would homeport in Seattle. The committee's 
        analysis indicated that four heavy icebreakers will meet the 
        statutory mission needs gap identified by DHS for the lowest 
        cost. . . .

        4. Finding: In developing its independent concept designs and 
        cost estimates, the committee determined that the costs 
        estimated by USCG for the heavy icebreaker are reasonable. 
        However, the committee believes that the costs of medium 
        icebreakers identified in the High Latitude Mission Analysis 
        Report are significantly underestimated. . . .

        Although USCG has not yet developed the operational 
        requirements document for a medium polar icebreaker, the 
        committee was able to apply the known principal characteristics 
        of the USCG Cutter Healy to estimate the scope of work and cost 
        of a similar medium icebreaker. The committee estimates that a 
        first-of-class medium icebreaker will cost approximately $786 
        million. The fourth ship of the heavy icebreaker series is 
        estimated to cost $692 million. Designing a medium-class polar 
        icebreaker in a second shipyard would incur the estimated 
        engineering, design, and planning costs of $126 million and 
        would forgo learning from the first three ships; the learning 
        curve would be restarted with the first medium design. Costs of 
        building the fourth heavy icebreaker would be less than the 
        costs of designing and building a first-of-class medium 
        icebreaker. . . .

        6. Recommendation: USCG should ensure that the common polar 
        icebreaker design is science-ready and that one of the ships 
        has full science capability.

        All four proposed ships would be designed as ``science-ready,'' 
        which will be more cost-effective when one of the four ships--
        most likely the fourth--is made fully science capable. 
        Including science readiness in the common polar icebreaker 
        design is the most cost-effective way of fulfilling both the 
        USCG's polar missions and the nation's scientific research 
        polar icebreaker needs. . . . The incremental costs of a 
        science-ready design for each of the four ships ($10 million to 
        $20 million per ship) and of full science capability for one of 
        the ships at the initial build (an additional $20 million to 
        $30 million) are less than the independent design and build 
        cost of a dedicated research medium icebreaker. . . . In 
        briefings at its first meeting, the committee learned that the 
        National Science Foundation and other agencies do not have 
        budgets to support full-time heavy icebreaker access or the 
        incremental cost of design, even though their science programs 
        may require this capability. Given the small incremental cost, 
        the committee believes that the science capability cited above 
        should be included in the acquisition costs.

        Science-ready design includes critical elements that cannot be 
        retrofitted cost-effectively into an existing ship and that 
        should be incorporated in the initial design and build. Among 
        these elements are structural supports, appropriate interior 
        and exterior spaces, flexible accommodation spaces that can 
        embark up to 50 science personnel, a hull design that 
        accommodates multiple transducers and minimizes bubble sweep 
        while optimizing icebreaking capability, machinery arrangements 
        and noise dampening to mitigate interference with sonar 
        transducers, and weight and stability latitudes to allow 
        installation of scientific equipment. Such a design will enable 
        any of the ships to be retrofitted for full science capability 
        in the future, if necessary. . . .

        Within the timeframe of the recommended build sequence, the 
        United States will require a science-capable polar icebreaker 
        to replace the science capabilities of the Healy upon her 
        retirement. To fulfill this need, one of the heavy polar 
        icebreakers would be procured at the initial build with full 
        science capability; the ability to fulfill other USCG missions 
        would be retained. The ship would be outfitted with 
        oceanographic overboarding equipment and instrumentation and 
        facilities comparable with those of modern oceanographic 
        research vessels. Some basic scientific capability, such as 
        hydrographic mapping sonar, should be acquired at the time of 
        the build of each ship so that environmental data that are 
        essential in fulfilling USCG polar missions can be 
        collected.\63\
---------------------------------------------------------------------------
    \63\ National Academies of Sciences, Engineering, and Medicine, 
Division on Earth and Life Studies and Transportation Research Board, 
Acquisition and Operation of Polar Icebreakers: Fulfilling the Nation's 
Needs, Letter Report, with cover letter dated July 11, 2017, pp. 2, 4-
6.

    Mr. Mast. Thank you, Mr. O'Rourke.
    I will now recognize Members for 5 minutes for questions, 
beginning with myself.
    Admiral Haycock, I want to begin with you. There is a 
statement we used in the Army all the time--I know the Coast 
Guard is familiar with it and probably most others--and that is 
simply, if you are failing to plan, you are planning to fail. 
And this is something that could very easily apply to both the 
design build and acquisition of polar cutters and any other 
vessel that we are working on. It can apply to National 
Maritime Strategy. Certainly to everything that we are talking 
about today.
    And so I just want to ask this very bluntly. Are we going 
to be welding steel on an icebreaker before we have a completed 
plan?
    Admiral Haycock. So I understand the phrase the Navy uses, 
and I would like to assure you that we are planning and we are 
planning to be successful. We have put a lot of work into 
making this thing a success with the Integrated Program Office 
and the industry design studies. And so I am confident we are 
going to have a design at a high level maturity before we start 
cutting steel.
    Mr. Mast. Perfect.
    Now, when we talk about this design isn't complete, are we 
talking about the hull length, the engines, or are we just 
talking about picking out the curtains? Give me an idea of 
where we are at on this.
    Admiral Haycock. So we conducted industry studies over the 
last year with five shipyards. Each of those shipyards has gone 
through the industry studies, identified risk areas, things 
like that, and then they have used that to inform their 
designers so they could submit designs as part of their 
proposals. These proposals are in and we are evaluating those.
    I haven't actually, myself, seen those, but I think we are 
going to find that the designs are at a pretty good level of 
maturity for where we would expect them to be today. There are 
some details they are going to have to finish. We haven't 
started detail design. That is the next stage of the design 
process. And so we have time to flesh out those details during 
that detail design process.
    Mr. Mast. So it was mentioned by Mr. O'Rourke in his 
remarks a discussion of block buy, and I want to ask a little 
bit on that. Did the Coast Guard consider the committee's 
recommendation to use common design and block-buy contracting 
with a fixed-price incentive fee contract to reduce the costs 
of acquiring the four heavy icebreakers? What was the 
conversation on that?
    Admiral Haycock. We have listened closely to the 
committee's recommendations, and I would like to thank the 
committee for the authorization they put in the Coast Guard 
Authorization Act to give us those sorts of authorities for 
block buy, multiyear procurement, and that sort of thing.
    We have considered all that for the polar icebreaker 
program. We have actually reached out to some of the industry 
teams during the studies to get some of their input on it as 
well.
    Mr. Mast. I want to ask a question that is just important 
for me as an American, as a soldier, as a Member of Congress. 
Are our icebreakers going to be better than China and Russia's?
    Admiral Haycock. I would say yes. It depends on how you 
define ``better,'' in what areas you are looking.
    Mr. Mast. You define it for me.
    Admiral Haycock. We are going to have a multimission cutter 
that can conduct all Coast Guard missions and project our 
sovereignty and our presence in the Arctic. We are going to 
deliver it on time, it will be on budget, and it will meet all 
of our needs up in the Arctic. We are convinced of that.
    We spent a year validating all the requirements, and we 
know what those requirements are. We know what it is going to 
cost to do it. We have been able to bring the cost of the 
icebreaker down as a result of those studies. So I am confident 
we are going to deliver an icebreaker that meets our Nation's 
needs.
    Mr. Mast. On time and on budget is always a tough one, but 
we are the United States of America. I think historically about 
things that we have done. I mean, the easy lookback is World 
War II, what we did with ships and aircrafts and Sherman tanks 
and everything else, that we needed to go out there and do 
that.
    What can we do to be helpful to make sure that we take that 
reputation that we have had before of being able to deliver on 
time, on budget, and meet the needs of our Coasties, our 
warfighters anywhere, meet those needs for national defense? 
What can we do to be helpful to you in this process?
    Admiral Haycock. Well, this committee has been very 
supportive of this effort from the beginning of time where I 
actually got started with the program. And your support has 
been vital to the tremendous progress we have made so far.
    We have taken some of the cues that you guys have given us. 
We stood up the Integrated Program Office. We have leveraged 
best practices from the Navy and Coast Guard prior 
acquisitions.
    I think probably the most important thing that would be of 
great assistance for us going forward is getting the funding in 
fiscal year 2019 that we have requested for the polar 
icebreaker.
    The reason we need that funding is because we do have an 
aggressive schedule, as GAO has pointed out, and I think Mr. 
O'Rourke has also concurred with, that the schedule is 
aggressive. But the only way we are going to meet that schedule 
is if we get the funding on time. If we don't, it puts the 
program at risk in terms of delivering a lead ship on time and 
its successors, its follow-on cutters as well. And so that 
funding support is important to do that.
    The other piece of that funding support that is of vital 
importance to us is it sends a signal. And so the support we 
have gotten from Congress and the administration over the last 
couple years has made it clear to the Nation and to the 
shipbuilding industry that the U.S. Government is serious about 
national security in the polar regions and that the Government 
is serious about actually revitalizing the fleet by creating or 
building the new PSCs.
    If we don't get the funding that we need in our budget, in 
the 2019 budget, that sends a signal to industry that the 
Nation is second guessing itself and that it is not serious 
about security in the Arctic regions and that we are not 
serious about building these ships.
    So your support in the past has been phenomenal, but your 
continued support in the future on this is of vital importance. 
Otherwise, this program is not going to deliver on time, on 
budget.
    Mr. Mast. Thank you, Admiral Haycock.
    My time has expired. I will now recognize Mr. Garamendi for 
5 minutes for questions.
    Mr. Garamendi. Thank you, Mr. Chairman.
    It always comes down to money, doesn't it? And the problem 
is not the Coast Guard. It is not the shipyards. The problem 
are 435 Members of Congress and 100 Senators and a President.
    Let's just get very blunt with ourselves. We are either 
going to put the money up and build this system out or we are 
not. And we have been dithering now for the 8 years that I have 
been around on this committee. Oh, we can't do it. We don't 
have the money, da, da, da, da. It is us.
    And by the way, the question is going to be resolved in the 
next 2 weeks. The Senate has the money in the appropriation, in 
their appropriation bill. The House does not. The House decided 
to spend $5 billion on a goddamn wall that won't do a thing to 
protect America. The Senate decided to spend the money, $1.2 
billion, on security, which may be a wall, and an icebreaker.
    The problem is us. And we are either going to decide to 
build icebreakers or build a wall, and we are going to do it in 
the next 2 weeks. It is a choice. Make your choice. What do we 
want to do? We are going to forget about the polar, the Arctic 
Ocean?
    Oh, Russia is a problem. The National Defense Strategy says 
there are two major conflicts potential, one Russia, one China. 
Both China and Russia are moving ahead. And we are going to 
build a wall on the Mexican border to prevent, what, 5,000--an 
invasion. My, God.
    The problem is us, folks, plain and simple. The money is 
there. The question is, where are we going to spend it? We 
haven't even gotten to nuclear bombs yet.
    Ms. Mak, you laid it out. We are going to sit here and 
dither and wait, and then we are going to call Admiral Haycock 
or his successor in and pillar him or her about not getting the 
job done when we haven't given him the money or the direction. 
I will go on and on about this, but I am telling you, the money 
is there. The question is, where are we going to spend it?
    Now, moving on, the cost doesn't have to be $1 billion. I 
don't need $6 billion out of the defense budget. I only need 
$4.2 billion over the next 6 to 7 years to build these 
icebreakers. There is going to be a new team in town in 
January, but the problem exists in the next 2 weeks.
    Now, with regard to the issue of the maritime industry, all 
of the witnesses have said the same thing: It is all about 
cargo. Right?
    Is that right, Mr. Von Ah?
    Mr. Von Ah. All of the operators would agree with you. It 
is all about cargo.
    Mr. Garamendi. It is all about cargo.
    Is there any question? Mak? O'Rourke? Buzby?
    So where do we get the cargo? Oh, yes. Well, there is a 
piece of legislation out there, mentioned by most of you, that 
we are going to be exporting oil and gas. Why don't we put it 
on American ships. Piece of legislation, by the way, 
bipartisan, bicameral support for it. Not going to pass this 
year, but if it were to pass next year, we would build 30 to 50 
ships over the next 15 years and we would put the mariners on 
it. So we can do that without the Government paying for it.
    But the oil and gas industry that is going to make a pile 
of money based upon one of our natural resources that the 
public owns, we could do that. It is all about choices, folks. 
And I think you know where I am going to go on these issues.
    Now, with regard to the cost differential--and I am going 
to wrap up in the next 42 seconds with this one--you suggest 
that it is more expensive to operate American ships. Have you 
taken into account in that analysis the subsidies, both direct 
and indirect, that are provided by our competitors?
    Mr. Von Ah. Those are not included in that calculation.
    Mr. Garamendi. I know that. That is why I asked the 
question. And, therefore, the analysis is not valid. The 
analysis is not valid.
    Other countries are providing massive subsidies for their 
maritime industry, for the shipbuilding, as well as for the 
operation. And we do some, but we don't come anywhere close.
    The next time you guys appear before any committee in which 
I happen to be sitting, I want to see that analysis. I don't 
want to see only half of the equation.
    Thank you for your direct answer to my question.
    And by the way, we really ought to subpoena Mulvaney. There 
is the reason why we do not have the report. It is hung up in 
OMB by Mulvaney's predecessor, at least his operation, and the 
same two gnomes are sitting there on this report as they have 
been for the last half decade. And we are not going to get it 
out of there until we put heavy pressure on that system. I know 
it is not your problem, Admiral Buzby.
    Yield back.
    Mr. Mast. Thank you, Mr. Garamendi. I gather you believe 
the 1980s don't want their foreign policy back, as President 
Obama quipped.
    The Chair will now recognize Mr. Weber for 5 minutes.
    Mr. Weber. Would you all turn your mics on? We want to all 
hear this going back and forth.
    Thank you, Mr. Chairman.
    Boy, lots of questions. In regard to the other countries 
that have icebreakers, I think this was alluded to, how many 
other countries? Is it just Russia and China? I guess this 
would be for you, Admiral or the Rear Admiral. Is it just 
Russia and China that, in your opinion, we should be concerned 
with?
    Admiral Haycock. Russia and China are probably the biggest 
concerns up in the Arctic.
    Mr. Weber. How many other countries in the world are you 
aware of have icebreakers?
    Admiral Haycock. The Scandinavian countries have 
icebreakers. I believe Australia has an icebreaker. And there 
may be some other countries in the Western Pacific that are 
working on icebreakers, like potentially South Korea.
    Mr. Weber. Who has built the latest icebreaker?
    Admiral Haycock. I believe China's Xue Long is probably the 
last icebreaker that was built, to my knowledge.
    Mr. Weber. And how long ago was that built?
    Admiral Haycock. That I am not certain, Congressman.
    Mr. Weber. Would it behoove us to check back into those 
processes and see who has built the last icebreaker and what 
improvements they have made and how they did it and what the 
time was and any improvements? Is that something that has been 
considered, any of you all?
    Admiral Haycock. Yes, sir. Yeah. Our industry teams--you 
know, actually, our program office has gone over and visited 
some of the countries. South Korea is building an ice-capable 
LNG carrier, I believe. And so we have gone over there to take 
a look at some of the welding processes they have done. I know 
some of the industry teams have done the same.
    So we are not doing it in a vacuum. We are looking at other 
countries and the technologies they bring to bear and things 
that they have learned, lessons learned. I believe the 
icebreaker, the whole design, is largely leveraged off of some 
of the European work.
    Mr. Weber. OK. And one of you mentioned--it might have been 
you, I believe it was you, Mr. Von Ah--you mentioned, I think, 
small or medium or large.
    Or was it you, Mr. O'Rourke, in your comments, the 
icebreakers? Was it you?
    Mr. O'Rourke. Yes.
    Mr. Weber. How many other countries have a medium and a 
large-scale icebreaker? Do we know?
    Mr. O'Rourke. There are about 18 countries around the world 
that have icebreakers, and most of those icebreakers actually 
are medium and small icebreakers. It is only a small number of 
countries that operate what we refer to as the heavies, and 
that includes us and the Russians essentially.
    Mr. Weber. I wish you would explain to me what is the 
advantage of having a small or smaller icebreaker or large 
icebreaker. Wouldn't you want a ship capable of doing whatever 
needed to be done and not run afoul of a problem with a smaller 
ship?
    Mr. O'Rourke. Countries design icebreakers to meet their 
own national icebreaking needs, and many of these countries 
only need to operate icebreakers capable of breaking through--
--
    Mr. Weber. Yeah, but I am talking about for us. Why would 
we need a medium and a large icebreaker? Why not just build 
large icebreakers that can handle anything?
    Mr. O'Rourke. We have a mix of needs for icebreakers that 
includes both heavy icebreaking, especially for the McMurdo 
breakout mission in Antarctica. But there are occasions when 
you run into what we would refer to as medium ice, 4\1/2\-foot 
ice that can also occur in the Arctic. And I think the idea in 
building medium icebreakers is not to put excessive capacity in 
the ship because it drives up the ship's cost.
    What the National Academies report said last year was that 
they looked at the requirements for heavy and medium 
icebreakers, and they said, well, the medium is going to be 
close enough in size to the heavy that the National Academies 
report then concluded, why don't we just build a single class?
    Mr. Weber. Are they half-priced? Two-thirds price? Any 
idea, cost comparison?
    Mr. O'Rourke. Well, actually right now our current medium 
polar icebreaker, the Healy, is larger than our two heavy polar 
icebreakers. It is about a 14,000- or 15,000-ton ship whereas 
the two polar heavies are 13,000-ton ships. It has less 
icebreaking capability but more capability for onboard science 
research support, and that tended to drive the size up.
    Mr. Weber. OK. This may be for you, Admiral Buzby. How many 
mariners on an icebreaker?
    Or is that for you, Admiral Haycock?
    Admiral Haycock. For commercial icebreakers or for military 
icebreakers?
    Mr. Weber. Military icebreakers.
    Admiral Haycock. So Coast Guard cutter Polar Star has a 
crew of somewhere around 150, I think.
    Mr. Weber. Of 50?
    Admiral Haycock. 150.
    Mr. Weber. 150. And yet we are training 1,800 mariners a 
year. Is that what I understand? Anybody from the six 
academies, do we know that?
    Admiral Buzby. Sir, we graduate about 1,000 new graduates 
every year out of the Merchant Marine Academy.
    Mr. Weber. 1,000. How does that compare to the retirement 
rate?
    Admiral Buzby. Right now there have been not been too many 
retirements lately because of the status of the shipping 
industry. People are hanging in their jobs.
    Mr. Weber. OK. Well, I will agree with my colleague from 
California, Mr. Garamendi, that we need to be putting more 
money into it. Our academies need more support. We need more 
ships. I happen to have Texas A&M at Galveston Maritime Academy 
in my district. They need a ship. I realize it is not an 
icebreaker.
    I don't want to speak for my friend from California, but I 
think he would agree that we have got to pay attention, we have 
got to educate more mariners, and we have got to fund this 
stuff.
    And I am over my time, Mr. Chairman. I appreciate your 
indulgence. I yield back.
    Mr. Mast. Thank you, Mr. Weber.
    The Chair will now recognize Mr. Larsen for 5 minutes.
    Mr. Larsen. Thank you, Mr. Chairman.
    So I have been here for 18 years, and this may be the 
closest we have been to getting any one new icebreaker. And 
then just about the time we do it they change the name of it. 
So forgive me if I call it an icebreaker. It is a habit.
    But, Admiral Haycock, with regards to the Authorization 
Act, which is headed to the President's desk, it requires the 
Coast Guard to conduct an enhanced maintenance program on the 
Polar Star to extend its service life. How does extending the 
service life of the Polar Star impact plans to deploy a new 
icebreaker, a new PSC?
    Admiral Haycock. As I know you are aware, we have only one 
heavy icebreaker in operation. That is Polar Star.
    Mr. Larsen. Yeah.
    Admiral Haycock. We put some resources into Polar Star back 
in the early 2010 timeframe to extend the service life, and we 
were able to extend the service life for about 7 to 10 years. 
And that would mean the end of her service life is about 2023. 
So we know that we need to invest in Polar Star so that we do 
not have a gap in icebreaking. And so we have a plan in place 
to do that.
    Our goal is to identify--and I think we have identified 
most of the systems that need to be addressed, and that is what 
has given us confidence in our cost estimate to do the work. 
But the goal is to do three phased availabilities to address 
those systems that need upgrades the most to extend its service 
life until we have a second Polar Security Cutter delivered.
    Mr. Larsen. Does any of that maintenance have to do with 
the actual structure of the ship or is this all internal 
systems?
    Admiral Haycock. Most of this is internal. The structure is 
in fairly decent shape. It is propulsion control systems and 
habitability, sewage systems, things like that that desperately 
need help to extend the service life.
    Mr. Larsen. So what do you say to the GAO's conclusion from 
Ms. Mak with regards to the deployability of the new icebreaker 
being driven more by a capability gap as opposed to planning 
well for a new class of icebreakers?
    Admiral Haycock. I would concur with the GAO's assessment 
because it is true.
    The problem is, is we are stuck between a rock and a hard 
place. The Polar Star is aging. It is one casualty away from 
not being able to conduct any of its missions. The systems are 
dated. Getting that ship underway and conducting its missions 
is hard on the crew.
    We are conducting maintenance availabilities that are very 
aggressive to keep that thing in operation so it can do its 
mission every single year. It doesn't have self-rescue 
capability. It doesn't have another ship to step in if problems 
occur. So basically we are stuck with a bad situation, right?
    If you take a look at the acquisition process and we hadn't 
done anything to accelerate, we wouldn't have been able to 
deliver a heavy polar icebreaker, a Polar Security Cutter, 
until 2026 or maybe 2028. And so we have gone through, and 
using things like the industry studies and the Integrated 
Program Office we found ways to bring that back to 2023 to 
prevent that gap.
    It is an aggressive schedule, and we concur with that. But 
the Nation's need for a heavy polar icebreaker is not driven by 
our planning process. It is driven by the realities of the 
situation we are in.
    If we had started the process years before, if it had 
gotten the momentum and the support it needed years back, 
decades ago, we wouldn't be in this situation.
    But the Nation's needs are varied, and it didn't compete 
well for priorities. And we have been blessed over the last 
several years that Congress and the administration have 
recognized the dire situation we are in and provided the 
support, and we have got great momentum as a result.
    Mr. Larsen. All right. Thanks. We certainly have tried at 
least over the last 18 years. I can vouch for that.
    Ms. Mak, I will just go to your first conclusion about what 
the GAO found and the concern you had about design. And it 
seems that what you found about design makes sense. Did DHS 
explain why they kind of have a backwards design policy? And 
they said they were going to look at it, evaluate it. Does 
evaluating it mean they are doing anything about it?
    Ms. Mak. Yes. Actually, they are updating their policy. We 
just followed up earlier this week and expect that policy to be 
in place by the end of this year so that it will be more 
knowledge-based. All components under DHS will have to do their 
preliminary design review before setting the baseline for cost, 
schedule, and performance. That will make a lot more sense 
because one has gained a lot more knowledge at that point.
    And like the Coast Guard admiral said, they agreed with our 
recommendations. We expect them to reevaluate cost, schedule, 
and performance after they get more information, after 
preliminary design review.
    Mr. Larsen. All right. Look forward to it. Thank you.
    Thank you, Mr. Chairman.
    Mr. Mast. Thank you, Mr. Larsen.
    Mr. Graves, you are recognized for 5 minutes.
    Mr. Graves of Louisiana. Thank you, Mr. Chairman.
    Admiral Buzby, one of the issues that is supposed to be 
addressed by the long-awaited National Maritime Strategy is the 
availability of mariners for our inland waterways as well as 
our international fleet.
    In Louisiana, a few months ago, we had an allision between 
one of our major river crossings across the Mississippi River 
and a barge. Is this strategy going to fully address the 
availability of mariners and improve performance in safety 
measures? Are those recommendations going to be contained in 
the ultimate strategy that is issued?
    Admiral Buzby. Short answer is, yes, sir. You know, a grand 
part of the strategy is going to have to be our maritime 
workforce, both in numbers and in qualifications. So the 
training of that workforce, the qualification of that 
workforce, the sustainment of that workforce, both for the 
domestic fleet and for the international fleet where I have 
testified where we have a shortage, those are all key parts of 
the strategy and will need to be a part of any strategy that we 
put forward.
    Mr. Graves of Louisiana. This bridge was completely shut 
down for months. It was only recently opened, one lane in each 
direction. It is going to continue to be under restricted 
access for a long period of time. In this case there was a 
barge carrying a crane that hit the bridge. I mean, this is a 
simple math equation that shouldn't take a whole lot of 
calculations to figure out you couldn't make it.
    What steps can be taken in the interim to help improve the 
safety of mariners and transiting waterways in the United 
States?
    Admiral Buzby. Well, part of this crosses over to my 
colleague from the Coast Guard here.
    Obviously, we in the Maritime Administration were 
responsible for the overall training, the processes that result 
in trained mariners, both licensed and unlicensed. We work 
closely with the union schools to produce unlicensed mariners 
and to upgrade continuing education for the licensed folks. We 
are subject to Coast Guard standard, which is in turn tied to 
an international standard for international voyages.
    But I don't know, perhaps Admiral Haycock could comment 
further on it.
    Mr. Graves of Louisiana. Well, I tell you what, I have got 
two more questions and I have got limited time. Let me jump 
back to my second with you.
    Section 3502 of the John McCain National Defense 
Authorization Act requires that the Secretary of Defense direct 
vessels that are in the Ready Reserve Fleet that don't 
currently meet the Safety of Life At Sea requirements, that 
those come into compliance. Can you tell me what steps have 
been taken to direct Ready Reserve Fleet or to come into 
compliance with section 3502?
    Admiral Buzby. Primarily that had come down to covered or 
uncovered life boats, open life boats.
    Mr. Graves of Louisiana. And fire suppression?
    Admiral Buzby. Right. So we are taking steps to upgrade 
those vessels, to correct those systems. We recently spent 
several million dollars to purchase new covered life boats and 
to upgrade those systems. Coast Guard is working closely with 
us on inspection regimes to make sure we are complying.
    Mr. Graves of Louisiana. Thank you.
    Admiral Haycock, listening to the testimony, particularly I 
believe it was Mr. O'Rourke who talked about bringing the 
vessel cost down for the polars from $1 billion down to $700 
million, which certainly is laudable, the more we can bring the 
cost down, the better. And listening to him make 
recommendations on a block buy, you are talking about bringing 
cost down from an initial estimate of $1 billion, if I 
understood you correctly, down to $550 million, because you 
said you thought there was an additional $150 million per copy 
in cost savings.
    Mr. O'Rourke. For all three.
    Mr. Graves of Louisiana. Oh, for all three. So it would be 
total cost savings, OK.
    But even under that scenario, so you are talking about 
bringing it from initial estimate of $3 billion down to $2.1 
billion, and then you are talking about getting it down to $1.9 
billion, in effect, to $1.85 billion.
    This is insane, that here we are talking about--and I know, 
I am going to agree with you, as much as it pains me.
    Mr. Garamendi. So embarrassing.
    Mr. Graves of Louisiana. Yeah. You are not kidding, geez.
    No, my friend from California is exactly right. So, I mean, 
this is crazy that we are talking about--I think that Ms. Mak 
went through in her testimony and laid out the concerns about 
how these strategies are going to dovetail. Here we have the 
Polar Star that is put together with bubble gum and duct tape. 
We have been operating on an acquisition strategy that is 
designed to dovetail.
    Look, that should partially inform our schedule. It should. 
When do we need these vessels?
    But if we are forcing it in when we don't have the numbers, 
the certainty, the acquisition strategy in place--and one of 
you mentioned some other interim strategies. This is very 
concerning, that as important as this capability is for the 
United States, whether it be for a mariner perspective, for a 
defense perspective, we know what the other Arctic nations are 
doing, it is very concerning that we have so much uncertainty 
in this strategy and something that is so important to our 
Nation.
    Could you just briefly respond to that, all the 
uncertainty, the uncertainty in cost, the uncertainty in 
technology, the uncertainty in acquisition strategy, the 
uncertainty in dollars? Can you give us some comfort here that 
this actually makes sense and there is an interim strategy in 
place to ensure that we are not left without any polar 
capabilities?
    Admiral Haycock. Yes, sir, I would be happy to. So polar 
icebreakers in particular are very, very complex, and there's a 
lot of moving parts. And we do our best to run those 
acquisitions to minimize risk and to deliver what is needed to 
be delivered. Folks like the Government Accountability Office 
come in and they do audits and they find things. And we read 
their reports with great interest, because there are ways to 
improve what we are doing.
    One of the driving principles on the Polar Security Cutter 
and the heavy icebreaker program is utilizing state-of-the-
market technology to the maximum extent possible. So we had a 
list of a bunch of things that we used as the guiding 
principles to [inaudible]. That was one of the things 
[inaudible].
    So we wanted to use technology that already exists, so we 
are not creating new stuff just for this icebreaker. We tried 
to leverage existing design work as much as possible to reduce 
those risks. So could we have had a more proactive effort 
[inaudible] as we could have, and we intend to do that, but we 
are comfortable that the technical risk on the polar icebreaker 
program is bearable, it is reasonable, and it is under control.
    Mr. Graves of Louisiana. Admiral--Mr. Chairman, I just want 
to say for the record, I continue to have very strong 
concerns--and I know many of us have talked about this in this 
committee--about the interim strategy. What happens when we 
don't have a new heavy on board and the duct tape and bubble 
gum on the Polar Star are falling apart? I am very concerned 
about that.
    Also, I need to correct the record very quickly, as I just 
hazed the captain of the barge for not being able to do math. I 
butchered it myself, $1.95 billion. But, again, going from $3 
billion to $1.95 billion, that just indicates an extraordinary 
level of uncertainty. Yield back. Thank you.
    Mr. Mast. Thank you, Mr. Graves.
    Did you recently spend a month on a polar icebreaker?
    Mr. Graves of Louisiana. I feel like I am still there.
    Mr. Mast. There is interest in a second round of 
questioning, so I am going to recognize Mr. Garamendi for 
another 5 minutes.
    Mr. Garamendi. I will try to avoid another rant here.
    I had the opportunity in August to visit a new medium 
icebreaker in Finland. They wanted to lease it to the United 
States. Unfortunately, or fortunately as the case might be, it 
is a medium and doesn't serve the purposes that we have and 
certainly doesn't meet the military requirements that all of 
our icebreakers or Polar Security Cutters must have, so--but it 
is brandnew. Had been commissioned less than a year. And so 
there is all the technology that would be used for a heavy 
icebreaker is known to exist. The application of that 
technology and the design, as I understand it, is well 
underway, everything from the various propulsion systems and 
the like. So, yes, we do know how--we do know that it can be 
done and it is done recently.
    Ultimately, it is going to come down to money here. And I 
am making a plea to my colleagues here, as we go into this 
issue of the omnibus, the question will be, before us, whether 
we move forward with an icebreaker, or polar security--and call 
it what you want--Polar Security Cutter--it is literally on the 
line now.
    If we do not fund--do not accept the Senate version, which 
has $750 million in it, for the first icebreaker--Polar 
Security Cutter--this thing will be delayed, and Ms. Mak will 
be correct. And I want her to be really, really wrong.
    And it is up to us. And so I am making this plea to all of 
us that we make this an issue to our various caucuses, to our 
various leadership, that it is now or this thing is going to 
get pushed back, and Mr. Graves' problem about the interim will 
happen. It will--it will happen. The Polar Star is not going to 
survive much longer.
    We did pass a piece of legislation that is useful in 
forcing the Coast Guard to develop a strategy, but that 
strategy is dependent upon the steel and the vacuum tubes and 
other things that are in this ancient ship, being able to be 
replaced, which maybe they can, maybe they can't. But there 
could very well be the problem that Mr. Graves cited. So there 
are so many different pieces here.
    I want to thank the witnesses. You have laid it out. This 
is a serious issue on the mariners. We talked briefly about the 
brown water Navy or the brown water merchant system, the same 
thing applies on the blue water. We need to do that. 
Ultimately, it comes down to vessels. Are the vessels going to 
be available? We can make them available by adopting 
strategies. As I said, there is a--what shall we call it? 
Presently, we have a piece of legislation that would create 
opportunities, Energizing American Shipbuilding Act, H.R. 5893, 
of which some of us are on, and there is a Senate version of 
the same. And so it is not going to pass this year, but we 
ought to make that a priority for next year to address all the 
problems that have been appropriately laid out before us.
    Mr. Mast, I know you are going to hopefully stay with this 
committee. And if you are the ranking member, all for the 
better, and we will see what happens on our side. But this is 
really, really important for every reason, and I will let it go 
at that. Thank you for the opportunity to come back a second 
time.
    Mr. Mast. Thank you, Mr. Garamendi.
    I am going to recognize myself for a few more minutes here. 
I just had a question again for Admiral Haycock and also for 
Mr. O'Rourke. Two separate issues here, but, Admiral Haycock, 
if you could just discuss a little bit, what kind of 
piggybacking goes on among the shipping industry--you name it, 
go wherever you want with it--in terms of going across those 
routes that are provided by our icebreakers. What kind of 
piggybacking would be put in jeopardy if the Polar Star ceased 
to run or we didn't have that capability? What would we lose in 
terms of that?
    Admiral Haycock. So the--our polar icebreakers provide us--
or will provide us with year-round assured access to the Arctic 
regions, and that includes, you know, keeping shipping lanes 
open as necessary and providing, you know, national defense and 
that sort of thing.
    If we don't have the heavy polar icebreakers, then we have 
to rely on others to do that sort of thing. You know, that is--
the Arctic is in Canada's backyard. They have an icebreaker 
fleet that they use. And Russia has a pretty good icebreaking 
fleet that they use. There are sea routes that go up in those 
areas. And if we don't have an icebreaker fleet to project our 
sovereignty in the appropriate regions, then we kind of 
abdicate that responsibility to the other nations.
    Mr. Mast. Who is piggybacking us, though? Because we want 
people piggybacking the United States of America, not 
piggybacking Russia, or piggybacking China. Who is piggybacking 
us? What do we lose if we lose that capability?
    Admiral Haycock. I don't know that we have anybody 
piggybacking us because we only have one medium-duty icebreaker 
serving the Arctic and one heavy-duty icebreaker that is 
predominantly serving the Antarctic. So I don't know that we 
have anybody piggybacking us right now.
    Mr. Mast. So the opportunity is for expansion in that 
world?
    Admiral Haycock. Yes.
    Mr. Mast. We are basically starting from zero.
    Admiral Haycock. Concur.
    Mr. Mast. Very good. And so this--I said I had a second 
question. This goes for Admiral Haycock and also for Mr. 
O'Rourke. When we talk about the idea of block buy, when we are 
cutting steel, the moment that we start cutting steel on a 
ship, does this end the window for a block buy? I mean, 
building a ship, it takes some period of time. How long out do 
we have that ability to go out there, in your opinion, and 
negotiate that idea of a block buy, once we start cutting steel 
on a new vessel?
    Admiral Haycock. I don't know that the opportunity ever 
goes away until you get to the tail end of construction 
process. So if you have a large build sequence, where you have 
a lot of ships, towards the tail end you kind of run out of 
room. So the sooner you execute in the process, the better it 
is.
    But we have time on some of our programs to do that. OPC, 
there are some opportunities there. FRC, we are getting towards 
the tail end; it might be a little late for FRC. We have tried 
to capitalize on some of the benefits of EOQ, economic order 
quantity, that you get from block buy, through the use of the 
options, and the FRC is not a perfect match, but at least we 
get some of the economies of scale there.
    Mr. O'Rourke. In general, the longer you wait, the smaller 
the potential savings you will realize out of a block-buy 
contract. You can be in a situation where you are using a 
single-ship contract or a contract with options, and then you 
can renegotiate it into a block-buy contract, but if you wait 
until that point to renegotiate it, you will not capture as 
much savings as if you had done the block-buy contract right 
from the outset.
    Mr. Mast. Ms. Mak, by all means.
    Ms. Mak. With regards to block buy, it is important to 
recognize that it is just one tool in the toolbox, and it is 
not always appropriate in all circumstances. We have done a lot 
of Navy programs that used block buy in the acquisition 
process, and we have not been able to prove in any instance 
where there have been significant savings when they have used 
the block-buy approach.
    In the case of the Polar Security Cutter, it is really 
important to recognize that there are, at most, three cutters, 
and the savings that may be achieved by purchasing in advance 
may be limited. Specifically, if the design is not stable or if 
the funding is not stable, the Coast Guard could buy parts in 
advance, and then the design changes and they have to purchase 
other parts because of that design change.
    We are very cautious to recommend block buy until the lead 
ship is done, at a minimum, and when the design is stable. Then 
they may consider it.
    Mr. O'Rourke. Right. The Navy is very convinced that they 
have achieved savings in their uses of block buy and also in 
multiyear procurement. There is a counterfactual issue here. 
You can't run it the other way to show what it would have cost. 
In reality, you can only compare it to an estimate of what 
these ships would have cost under single-ship contracts or a 
contract with options.
    The Navy is convinced that they have achieved savings of 
the order of 4 to 5 percent on the Virginia-class block buy for 
the first four Virginia class. They are also convinced that 
they are going to achieve savings on tens of millions of 
dollars per ship over the first six ships in the John Lewis-
class oiler program.
    They are also interested in using it on the Columbia class 
as part of their strategy for reducing the cost of that. Now, 
the savings that the Navy is estimating are against an estimate 
of what they think it would have cost if you had used single-
ship contracting. You can't run the experiment twice. So you 
get into a situation where, of course, you can't prove it, 
because we can't do it both ways at once.
    But these are the estimates that the Navy has put out. They 
are convinced, and DoD has allowed the Navy to go ahead and do 
this on any number of programs, in terms of both block buy and 
multiyear.
    Now in terms of the lead ship, it is important to point out 
that multiyear procurement doesn't allow a lead ship, because 
the law that regulates multiyear procurement establishes a 
requirement for design stability that effectively rules out 
using a lead ship. That is why block-buy contracting was 
essentially invented by Congress. It was invented, to a large 
degree, expressly so that you could put a lead ship under the 
contract and capture a greater amount of savings.
    Now, as Ms. Mak pointed out, there are tradeoffs that 
Congress has to take into account in committing to a block-buy 
contract. The Congress has looked at those tradeoffs repeatedly 
for Navy shipbuilding programs and has approved them repeatedly 
over the years. It is true that if you were to buy components 
upfront under a block-buy contract, and it turns out that the 
design of those components is wrong because you wind up making 
a change in the design of the ship, that you could be left high 
and dry in terms of your investment.
    However, the Coast Guard's current schedule for building 
these icebreakers is to build them in rapid succession with one 
another. The second one is only supposed to follow the first by 
18 months. And the third follows the second by 12 months. What 
that means is, there is going to be a risk of transmitting 
design problems from one ship to the next, arguably, whether 
you use a block-buy contract or not. Because these ships are 
going to be built in rapid succession as a part of a strategy 
for getting a good learning curve on them.
    So it is not clear how much additional risk there is of 
this kind, of doing this under a block buy, as opposed to a 
contract with options. Because the risk really arises from the 
fact that the ships are close together, to one another, perhaps 
more than it has to do with the contracting strategy.
    Mr. Mast. Thank you, Mr. O'Rourke. That was a fantastic 
explanation of that.
    Mr. Larsen, did you require another round of questions?
    Mr. Larsen. A few questions, thanks.
    Mr. Mast. You are recognized for 5 minutes.
    Mr. Larsen. Ms. Mak, one of the findings from GAO had to do 
with technology and technology readiness assessment, which you 
note is not necessarily a matter of new technology, but perhaps 
existing technology applied in a new way. Or certainly existing 
technology applied on a new kind of ship. That certainly 
theoretically makes sense. Are there GAO examples where you 
have found that? I know you are applying that lesson to this 
particular analysis, or is this only theory?
    Ms. Mak. This is a typical finding on much of our 
shipbuilding acquisition work. When the technology has not been 
demonstrated as mature, the program ends up undergoing rework 
later, or doing design and construction concurrently, or doing 
testing concurrently, and then ultimately the acquisition ends 
up costing more and the schedule slips.
    But as I mentioned earlier, the Coast Guard and DHS did 
concur with our recommendations. They are moving forward to 
conduct this technology readiness assessment. It is important 
to recognize that the technologies have been used in different 
vessels, such as the medium and other international 
icebreakers, but they are not in the same form, fit, and 
function that the Polar Security Cutter would need and that is 
a bit unique.
    So we recommend that the key technologies be tested in a 
standard type of process, which in this case is the technology 
readiness assessment process.
    It is also important to note that although these key 
components are state-of-the-market, we have found, in our past 
shipbuilding work, integration is also a big challenge. The key 
technologies need to be able to work together. Doing an 
assessment doesn't get rid of the risks. It just lays it out so 
that the Coast Guard can be more aware of the risks and figure 
out mitigation strategies ahead of time. That is really what 
this assessment is for.
    Mr. Larsen. Yeah. And, unfortunately, integration has been 
a problem, not just with the Coast Guard----
    Ms. Mak. Right.
    Mr. Larsen [continuing]. But with other shipbuilding 
activities.
    Ms. Mak. Absolutely, yes.
    Mr. Larsen. Admiral Buzby, what options has MARAD--so I am 
flipping here--flipping issues here. What options has MARAD 
identified to reverse the decline in the size and the tonnage 
of the U.S.-flag fleet and foreign trade? And of those options, 
have you assessed which are most viable?
    Admiral Buzby. Tough question, sir. As was pointed out by 
Ranking Member Garamendi, it really comes down to----
    Mr. Larsen. Sorry, you got about 1 minute, because I just 
got called to vote for the caucus.
    Admiral Buzby. It really comes down to cargo. Having more 
ships--I mean, we can all want to have more ships, but unless 
there is something for them to carry, you know, it is kind of a 
moot point. So, things that we can do to get more cargo, I 
mean, he mentioned some of them, you know, taking advantage of 
some of the exports that we have. Automobiles as well. We 
export a lot of automobiles from this country. There is a lot 
of things--grain, agricultural items.
    We have to really take a serious look at, you know, what of 
those do we think makes sense through cargo preference or 
bilaterals or whatever, to share some of that cargo so that we 
can have justification for having more vessels to carry that.
    Same thing with Government-impelled cargo. You know, there 
are three pieces to maritime security program: It is the 
stipend that the Government provides; it is Government cargo; 
and it is commercial cargo. All of those have to be present for 
this to work.
    Mr. Larsen. Probably have some followup with you early in 
the next year, but thanks a lot.
    Appreciate it, Mr. Chairman.
    Mr. Mast. Thank you, Mr. Larsen. I appreciate it.
    If there are no further questions, which I see none, I 
thank the witnesses for being here today and the Members for 
their participation. I would ask unanimous consent that the 
record of today's hearing remain open until such time as our 
witnesses have provided answers in writing to any questions 
that may be submitted to the Coast Guard, and unanimous consent 
that the record remain open for 15 days for any additional 
comments and information submitted by the Members or witnesses 
to be included in the record of today's hearing.
    Without objection, so ordered.
    The subcommittee stands adjourned.
    [Whereupon, at 11:20 a.m., the subcommittee was adjourned.]