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88–351 PDF 2015

MAINTAINING COAST GUARD READINESS 

(113–74) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COAST GUARD AND MARITIME TRANSPORTATION 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

SECOND SESSION 

JUNE 18, 2014 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

Available online at: http://www.gpo.gov/fdsys/browse/ 

committee.action?chamber=house&committee=transportation 

(II) 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

BILL SHUSTER, Pennsylvania, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee, 

Vice Chair 

JOHN L. MICA, Florida 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

SAM GRAVES, Missouri 

SHELLEY MOORE CAPITO, West Virginia 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

LOU BARLETTA, Pennsylvania 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

DANIEL WEBSTER, Florida 

STEVE SOUTHERLAND, II, Florida 

JEFF DENHAM, California 

REID J. RIBBLE, Wisconsin 

THOMAS MASSIE, Kentucky 

STEVE DAINES, Montana 

TOM RICE, South Carolina 

MARKWAYNE MULLIN, Oklahoma 

ROGER WILLIAMS, Texas 

MARK MEADOWS, North Carolina 

SCOTT PERRY, Pennsylvania 

RODNEY DAVIS, Illinois 

MARK SANFORD, South Carolina 

DAVID W. JOLLY, Florida 

NICK J. RAHALL, II, West Virginia 

PETER A. DEFAZIO, Oregon 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

TIMOTHY J. WALZ, Minnesota 

STEVE COHEN, Tennessee 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

JOHN GARAMENDI, California 

ANDRE ́ CARSON, Indiana 

JANICE HAHN, California 

RICHARD M. NOLAN, Minnesota 

ANN KIRKPATRICK, Arizona 

DINA TITUS, Nevada 

SEAN PATRICK MALONEY, New York 

ELIZABETH H. ESTY, Connecticut 

LOIS FRANKEL, Florida 

CHERI BUSTOS, Illinois 

SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

DUNCAN HUNTER, California, Chairman 

DON YOUNG, Alaska 

HOWARD COBLE, North Carolina 

FRANK A. LOBIONDO, New Jersey 

PATRICK MEEHAN, Pennsylvania 

STEVE SOUTHERLAND, II, Florida, 

Vice Chair 

TOM RICE, South Carolina 

MARK SANFORD, South Carolina 

DAVID W. JOLLY, Florida 

BILL SHUSTER, Pennsylvania (Ex Officio) 

JOHN GARAMENDI, California 

ELIJAH E. CUMMINGS, Maryland 

RICK LARSEN, Washington 

TIMOTHY H. BISHOP, New York 

LOIS FRANKEL, Florida 

CORRINE BROWN, Florida 

JANICE HAHN, California 

NICK J. RAHALL, II, West Virginia 

(Ex Officio) 

(III) 

CONTENTS Page 

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

TESTIMONY 

PANEL 1 

Vice Admiral Charles D. Michel, Deputy Commandant for Operations, United 

States Coast Guard .............................................................................................. 3 

Michele Mackin, director, Acquisition and Sourcing Management, Government Accountability Office .................................................................................. 3 

PANEL 2 

Ronald O’Rourke, specialist in naval affairs, Congressional Research Service .. 19 

James H. Offutt, national president, Navy League of the United States ........... 19 

PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS 

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

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Vice Admiral Charles D. Michel ............................................................................. 33 

Michele Mackin ........................................................................................................ 38 

Ronald O’Rourke ...................................................................................................... 50 

James H. Offutt ....................................................................................................... 62 

SUBMISSIONS FOR THE RECORD 

Vice Admiral Charles D. Michel, Deputy Commandant for Operations, United 

States Coast Guard: 

Response to request for information from Hon. Duncan Hunter, a Representative in Congress from the State of California, regarding riskbased prioritization ....................................................................................... 8 

Response to request for information from Hon. John Garamendi, a Representative in Congress from the State of California, regarding what 

the U.S. Coast Guard requires to get the C–27s fully operational, 

and a preliminary deployment schedule for the C–27s ............................. 12 

ADDITION TO THE RECORD 

Government Accountability Office, Coast Guard Acquisitions: Better Information on Performance and Funding Needed to Address Shortfalls (June 

2014) ...................................................................................................................... 68 

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(1) 

MAINTAINING COAST GUARD READINESS 

WEDNESDAY, JUNE 18, 2014 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COAST GUARD

AND MARITIME TRANSPORTATION, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 9:35 a.m. in Room 

2253, Rayburn House Office Building, Hon. Duncan Hunter (Chairman of the subcommittee) presiding. 

Mr. HUNTER. Good morning. The subcommittee will come to 

order. The subcommittee is meeting today to review the Coast 

Guard’s major acquisition programs. 

After over a decade, the Coast Guard has finally taken delivery 

of critically needed new and improved assets. Unfortunately, just 

as the Service’s acquisition program is starting to see success, the 

President is yet again proposing a budget that could doom it to failure. The President’s budget cuts funding needed to acquire critically needed replacement assets by 21 percent. That is one-fifth of 

what is needed. This will further delay the delivery of new assets, 

increase acquisition costs for taxpayers, exacerbate growing capability gaps, and seriously degrade Coast Guard mission effectiveness. 

As this subcommittee has continually highlighted, the Coast 

Guard currently operates tens, and in some cases, hundreds of 

thousands of hours short of its operational targets. This means assets are not there for the Service to secure our ports, protect our 

environment, and ensure the safety of our waterways. 

A few weeks ago, the Commandant of the Coast Guard and the 

commanding officer of U.S. Southern Command, John Kelly, testified before us that one of the largest reasons why drug interdiction 

rates have fallen to historic lows in recent years is due to the Coast 

Guard failing legacy assets. The only way to reverse the decline in 

the Coast Guard’s mission performance is to make the necessary 

investments to acquire new and improved assets. 

Unfortunately, based on the last few budget requests, as well as 

the fiscal year 2015 through 2019 CIP, it appears the President refuses to make those investments. According to the Capital Investment Plan, the CIP over the 5 five fiscal years, annual funding for 

Coast Guard acquisitions never exceeds $1.2 billion. That is approximately $1 billion less than the GAO and the former Commandant of the Coast Guard have testified is needed on an annual 

basis to keep the current acquisition program on schedule and on 

budget. 

2 

As I have said for some time now, just since I have been the 

chairman here, so about 2 years, if the President is going to continue to send us budgets that fail to pay for the assets needed to 

meet Coast Guard mission needs, then it is time for him and to you 

to review the Coast Guard mission responsibilities. 

Fortunately, it appears that somebody may be listening. I understand the Coast Guard recently announced it intends to start a review of the Mission Needs Statement guiding its current acquisition program. While this is good news, I have two concerns. 

First, the revised MNS needs to be budget conscious. This means 

the administration either needs to identify what missions the Coast 

Guard will no longer do, or how they intend to pay for the increase 

in assets and capabilities needed to meet current and future missions. 

Second, it needs to happen quickly. The acquisition program is 

already so far behind schedule and over budget, we simply do not 

have the years to wait for this administration’s plan for the program’s future. I mean if things stay the way they are now—I have 

4 more years as chairman. I am not going to wait for 2 of those 

to get the new Mission Needs Statement. OK? This subcommittee 

intends to move an authorization bill early next year, and we are 

going to see something from the Coast Guard by then. 

I thank the witnesses for appearing today, and look forward to 

their testimony. 

With that I yield to Ranking Member Garamendi. 

Mr. GARAMENDI. I am going to move very quickly here. I want 

to get on to hear the testimony. Very important subject. I will enter 

my statement into the record. 

I will note that the President’s budget is a reflection of the Budget Control Act that the House of Representatives and the Senate 

passed. 

So, with that, let’s get this underway. There is little doubt that 

the Coast Guard has done an admirable job since 2008, when it assumed full control of the largest recapitalization program in the 

Service’s history. Nonetheless, problems are evident, and the oversight of this committee is important. 

I look forward to the testimony. My written statement will be, 

without objection, hopefully, entered into the record. Let’s move on. 

Thank you. 

Mr. HUNTER. Without objection, so ordered. 

On our first panel of witnesses today are Vice Admiral Charles 

Michel, Deputy Commandant for Operations of the United States 

Coast Guard, and Ms. Michele Mackin, director, Aquisition and 

Sourcing Management at the Government Accountability Office. 

Admiral Michel, I understand you have a long and distinguished 

history with our subcommittee. Welcome back. John put that in 

there. 

[Laughter.] 

Mr. HUNTER. Welcome back, and thank you for your service. You 

are now recognized for your statement. 

3 

TESTIMONY OF VICE ADMIRAL CHARLES D. MICHEL, DEPUTY 

COMMANDANT FOR OPERATIONS, UNITED STATES COAST 

GUARD; AND MICHELE MACKIN, DIRECTOR, ACQUISITION 

AND SOURCING MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE 

Admiral MICHEL. Well, Chairman Hunter, Ranking Member 

Garamendi, good morning. And thank you very much for the welcome, and thanks for the opportunity to testify today on Coast 

Guard readiness and the status of major systems acquisitions. My 

complete statement has been provided, and I ask that it be entered 

into the record, and that I be allowed to summarize my remarks. 

The Coast Guard faces increasing challenges in meeting its missions in a difficult fiscal environment, with rapidly advancing technologies employed by both legitimate maritime industries, as well 

as our adversaries. Our aging surface vessels are of particular concern, as they play a unique role in the Nation’s layered security, 

and are often the Nation’s sole method for asserting and protecting 

national imperatives in the offshore and coastal realms. 

As Alexander Hamilton recognized in creating the revenue cutter 

service in 1790, maritime interdiction is often the most efficient 

and effective method of protecting our citizens against 

transnational threats. In order to do this, Coast Guard assets must 

be able to compel vessels engaged in illicit activity to stop, which 

at times requires employment of force. In addition, our assets must 

be able to deliver personnel to take law enforcement or other appropriate action. Without such capabilities, our Nation may be unable to act against these threats before they reach land, where they 

become exponentially more difficult to track and achieve successful 

endgame. 

As the Coast Guard’s Deputy Commandant for Operations, I understand the unique value that capable Coast Guard assets bring 

to the front line of defense for the American people, our allies, and 

our neighbors. I have also witnessed the devastating impacts when 

vessels are unreliable, obsolete, or simply out-classed by our adversaries or by the sea itself. Fielding and maintaining capital assets 

like ships and aircraft requires a national commitment. 

Our Nation, as a major maritime power, has traditionally and 

rightly relied upon the great oceans as not only vital trade routes 

essential to national prosperity and global engagement, but also as 

an inherent line of defense against foreign threats. To ensure these 

enduring national imperatives remain robust, the Coast Guard is 

committed to responsibly recapitalizing our fleet, while managing 

risk to preserve the effectiveness of our frontline operations. 

I am pleased to update you today on key acquisition programs. 

Before I begin that, I am pleased to report that the fiscal 2015 to 

2019 Capital Investment Plan, or CIP, was recently delivered to 

the Congress, and I am happy to answer your questions about this 

plan. 

The first three National Security Cutters, or NSCs, are operational and performing the full range of Coast Guard missions. 

Later this year we will commission the fourth NSC, which will be 

the first assigned to our Atlantic area, and will be home-ported in 

Charleston, South Carolina. The fifth and sixth NSCs are currently 

in production, and we are approaching the start of production for 

4 

the seventh NSC. The fiscal year 2015 budget request and the recent House Appropriations Committee mark include funding for the 

eighth NSC, which will complete the full program of record for this 

cutter class. 

To illustrate the NSC’s impressive capabilities just in the past 4 

months, the three operational NSCs have seized more than 41⁄2

metric tons of pure cocaine headed to our shores. In just six 

boardings, Mr. Chairman, these seizures amount to approximately 

60 percent of all the cocaine seized by all the law enforcement 

agencies within the borders of the United States in a typical year, 

and is a nearly $100 million wholesale funding source that was 

taken from ruthless drug trafficking organizations. 

Further, this near pure cocaine, as well as the suspects and conveyances, were taken off the water before they reached the shore 

and spread waves of devastating crime, corruption, public health 

issues, and other effects against our citizens and our international 

neighbors. 

The NSC is a versatile asset. It protects U.S. natural resources 

in some of the harshest maritime conditions, conducts illegal migrant interdiction operations, and integrates with DOD forces. The 

NSC program has also provided our acquisitions enterprise with 

expertise in controlling risk and achieving stability in cost and 

schedule, laying the foundation for the successful acquisition of the 

Offshore Patrol Cutter, or OPC. 

As the committee is aware, on February 11, 2014, the Coast 

Guard awarded fixed price contracts to three contractors for the 

preliminary and design contract for the OPC. Following the award, 

two protests filed with GAO prevented the contracts from commencing. I am pleased to announce that on the 2d of June 2014 

GAO upheld the contract award. This allows work to proceed on 

phase 1 of a 2-phase acquisition strategy. During this initial 18- 

month preliminary and contract design phase, three contractors 

will mature their designs and develop fixed-price incentive proposals. 

Following a thorough evaluation, the Coast Guard plans to downselect to a single contractor for the production of an initial segment 

of 9 to 11 OPCs. During phase 2, the selected contractor will complete their detailed design in preparation for production of the first 

OPC. 

We have begun activities in support of the polar icebreaker acquisition project, including the recent approval of acquisition decision event number one. This milestone, which validated the need 

for the project, allows the Coast Guard to move forward into the 

next phase, where we will develop a concept of operations, conduct 

an analysis of alternatives, create a life cycle cost estimate, and refine operational requirements. Since this is a unique national platform and truly a national asset fulfilling many vital national missions in the high-latitude regions, discussions with numerous Federal partners and the administration have commenced to develop 

the extensive requirements for polar ice-breaking capability. 

Further, it has been—since it has been about 40 years since the 

Nation last undertook building a heavy icebreaker, it will take specialized techniques and materials to construct a modern heavy icebreaker. The successful 2012 reactivation of the Polar Star has exVerDate Aug 31 2005 14:12 Jan 30, 2015 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\CG&JOI~1\6-18-1~1\88351.TXT JEAN
5 

tended the Nation’s polar icebreaking capabilities, and the Coast 

Guard is exploring the possibility of reactivating Polar Sea as a 

bridging strategy, until a new icebreaker can be constructed and is 

operational. 

In the aviation domain, we are anticipating delivery of the first 

of 14 planned C–27Js obtained from the Air Force, thanks in large 

part to the efforts of this subcommittee. This month we will establish the C–27J asset project office at the Aviation Logistics Center 

in Elizabeth City, North Carolina. 

Mr. Chairman, in closing, for over 223 years the Coast Guard 

has safeguarded our Nation’s maritime interests. While our missions have not fundamentally changed, the challenges and opportunities for our maritime Nation constantly evolve. The Coast Guard 

will continue to maximize current mission accomplishment in this 

dynamic environment, while responsibly investing in the Nation’s 

maritime future. 

Thank you for the opportunity to testify before you today; I look 

forward to hearing your concerns and answering your questions. 

Mr. HUNTER. Thank you, Admiral. 

Ms. Mackin, you are recognized. 

Ms. MACKIN. Chairman Hunter, Ranking Member Garamendi, 

members of the subcommittee, good morning. Thank you for having 

me here today to discuss Coast Guard readiness and its acquisition 

of ships, aircraft, and communication systems. My statement today 

is based on a report we are issuing today, work we did at the request of this subcommittee. 

As we note in our report, the Coast Guard has made strides in 

its acquisition management. It has maximized competition, for example, in procuring the Fast Response Cutter and the Offshore Patrol Cutter. It is delivering assets to the operators who are very 

pleased with the enhanced capabilities. And key test events are 

taking place. This testing is very important for ensuring that the 

assets are operationally effective. 

Today I would like to highlight what we view as a pressing concern facing the Coast Guard, and that is the affordability of its acquisition portfolio. This is especially important in light of significant remaining costs to complete the planned program of record. 

The Coast Guard still needs about $20 billion to complete the assets in the program of record—those formally part of the deepwater 

program. This is, in part, because costs have grown for some of the 

assets. 

For example, the National Security Cutter has experienced a 

$2.2 billion cost increase, and initial estimates for the Offshore Patrol Cutter have grown from $8 billion to up to $12 billion, in large 

part because the initial estimate was not rigorously developed. 

The fact is that the Coast Guard cannot afford its recapitalization program at current funding levels. Over the past 5 years the 

Coast Guard has received an average of less than $1.5 billion. Still, 

the Coast Guard has stated it needs $2 billion to $2.5 billion per 

year to carry out its planned program. Over the past 4 years we 

have recommended that the Coast Guard and DHS reassess the 

Coast Guard’s acquisition priorities to better balance mission needs 

and affordability. Thus far, though efforts have been made, an effective reassessment has not occurred. 

6 

Compounding the Coast Guard’s affordability issues is the wave 

of costs. That is, an impending spike in funding needs. Key among 

these is the Offshore Patrol Cutter, which will consume about twothirds of the Coast Guard’s acquisition budget while it is being 

built. Other looming costs include a service life extension for the 

270-foot Medium Endurance Cutters, a strategy to replace aging 

river buoy tenders, which itself could cost up to $1.5 billion, and 

a potential new polar icebreaker. These are serious challenges. 

Our prior work on best practices of commercial firms found that 

they place an emphasis on determining whether programs can be 

developed and sustained within existing resources. In short, best 

practices dictate that resources should be identified and maintained, or trade-offs explicitly made. If this is not done, programs 

will have to compete for available funding, and annual funding 

shortfalls must then be addressed by pushing costs into the future, 

cutting procurement quantities, or reducing capabilities. 

Our concern is that, rather than pursuing an affordable set of 

long-term needs, the Coast Guard is delaying and reducing its acquisition portfolio on an annual basis. This approach puts pressure 

on future budgets, and it also delays fielding capabilities to the end 

user, as schedules are pushed out, which, of course, can lead to increased costs. 

In essence, short-term budget decisions may not amount to a 

good long-term investment strategy. This is why we recommend in 

today’s report that the Coast Guard develop a long-term fleet modernization plan. Such a plan, looking out 20 years and taking into 

account mission needs and expected funding, would illuminate 

what is feasible in the long term. Without such a plan, the Coast 

Guard is not well positioned to determine how it will meet mission 

needs. In the meantime, the annual budget process may be supplanting sound acquisition decisions. 

Mr. Chairman, Ranking Member Garamendi, this concludes my 

statement, and I would be happy to answer any questions. 

Mr. HUNTER. Thank you very much to both of you. I guess, in 

this situation too, I will just play kind of the referee, and you guys 

can go back and forth. It would be kind of fun. 

I guess the first question that I have—this is just to help me understand—if you—you are now working on a new Mission Needs 

Statement, say, over the next year. And you have a Capital Investment Plan that matches your old Mission Needs Statement. And I 

am wondering how those two kind of fit together, how you have a 

CIP right now—if you are redoing your Mission Needs Statement, 

how do you really know what you need? It is like the Pentagon has 

never been audited, so how does it know what it spends in the first 

place to figure out what it needs later? So, how do you reconcile 

those? 

Admiral MICHEL. Well, sir, the current CIP is based on the Mission Needs Statement from 2004, which is our best estimate and 

remains our best estimate. As you note, we are actually re-looking 

at our Mission Needs Statement to make sure that it reflects today’s realities, both—— 

Mr. HUNTER. Which means it will change, because your old Mission Needs Statement didn’t match the amount of money the administration has given you. And that is the problem. That is why 

7 

we are having them—that is why we are asking you to redo the 

Mission Needs Statement, to match the budgetary environment 

that you are in. 

Admiral MICHEL. Well—— 

Mr. HUNTER. So it is going to be different. 

Admiral MICHEL. I think maybe we have got a little bit of a different concept on what the Mission Needs Statement is. The Mission Needs Statement sets forth the mission requirements for the 

Coast Guard, and is not constrained by budget. Now, to actually 

bring the materials over here onto the Hill, there is obviously a 

budget aspect associated with that when you are talking about a 

capitalization plan. But the Mission Needs Statement sets forth the 

mission needs of the Coast Guard as in 2004, and as I anticipate 

the new Mission Needs Statement is going to, as well. 

Mr. HUNTER. But what the problem has always been is that you 

can’t complete your mission, because you have too many missions 

and not enough assets to do it. Right? 

Admiral MICHEL. Yes, sir. As Ms. Mackin notes, that is my serious challenge, and I live that every day, sir, is that there is more 

mission need for the Coast Guard than there is Coast Guard to actually go out and do the mission. So I have to manage that risk 

on a daily basis. And whenever I put inputs into the acquisition 

process on what I need out in the field as the Deputy Commandant 

for operations, you know, I have got to take the budgetary realities 

into account in actually fulfilling those mission needs. 

But the mission needs remain, just like they do in the 2004 Mission Needs Statement, which is our current statement of what we 

need in order to get the job done. Now, how you actually go about 

acquiring assets in order to fulfill those mission needs, that is the 

art, sir. 

Mr. HUNTER. Well, I guess what I am curious, then, in seeing, 

is a real Mission Needs Statement. So you can have the one that 

is fluff in the sky, you can have that one that has everything, regardless of the budgetary environment, but then I would like to see 

the real one that you do, that you prioritize what you are going to 

do, day in and day out, based on what you have. 

I guess that is what I am curious in seeing, because so far in 

these hearings for the last couple of years it is, ‘‘We are going to 

try to do everything. We can only get 75 percent of most things, 

and we are up here on these few things, and we keep failing and 

failing,’’ by your own recordkeeping. And I understand that game, 

because if you say that you are failing, ‘‘We need more money,’’ 

then Congress goes, ‘‘OK, we want you to succeed, we are going to 

give you some more money.’’ But that is not going to happen any 

more. 

So, what we need is a real—what you look at, and what your 

prioritized Mission Needs Statement is in real life. That is constrained by the budget. And you can have your pie-in-the-sky Mission Needs Statement too that has everything. We would like to see 

the real thing where you say, ‘‘This is what we can do. This is it.’’ 

Admiral MICHEL. Yes, sir. Well, I wouldn’t characterize our 2004 

Mission Needs Statement as fluff. It is the best information that 

I can provide to you—— 

8 

Mr. HUNTER. What I mean is you have in it everything. I didn’t 

mean it was fluff. What I mean is it has everything that you think 

the Coast Guard should do. Pie in the sky is a better—— 

Admiral MICHEL. Sir, you have my commitment that the Mission 

Needs Statement will reflect our very best estimate on the mission 

demands for the Coast Guard. And we need to bring that to your 

attention, sir, because we are having difficulty building a Coast 

Guard that can actually fill out the demand signals necessary. So 

what it requires is me and other members of the Coast Guard to 

address that on a risk-based format. 

And, you know, I would love to have a world where I could actually build a Coast Guard that could fulfill the demand signal for 

the Coast Guard. That is not currently the world that I live in 

right now. And I need to ensure that I bring those needs, that demand for the Coast Guard, to your attention so you can take a look 

at that. And then you can also take a look at the risk that the 

Coast Guard is incurring on these national missions with the assets that it currently has, and whatever it is building towards the 

future. 

But you have my commitment, sir. I am not interested in—— 

Mr. HUNTER. That is what I would like to see. I would like to 

see the risk-based prioritization that you are doing. 

Admiral MICHEL. Absolutely, sir. 

[The information follows:] 

The Coast Guard is making difficult tradeoffs to best balance critical recapitalization and frontline operations. This strategy ensures we address the 

degraded condition of our legacy fleet, ensure capability for the future and 

provide frontline operations where the Nation needs it the most. The Nation faces risk across all our statutory responsibilities, and we seek to address the highest with available resources. One way we are addressing this 

risk is by recapitalizing our aging assets with more reliable and capable assets better suited for today’s operating environment and the environment 

we expect to face in the future. 

The Coast Guard’s highest risk remains in the offshore fleet and our Capital Investment Plan reflects this risk. We are also addressing other areas 

of risk, other parts of our fleet that need to be recapitalized to ensure we 

can provide the type of service the Nation needs and has come to expect 

in the future. For example, we are continuing our acquisition of Fast Response Cutters to address risk in the coastal zones as our legacy 110-foot 

patrol boats are removed from service. We are receiving and missionizing 

C–27Js to address maritime patrol gaps and risks in the coastal and offshore zones. Our critical in-service vessel sustainment project is helping us 

address risks in other parts of our fleet, such as our aging buoy tenders. 

We have also engaged stakeholders across government and are moving out 

on requirements generation for the acquisition of a heavy polar icebreaker 

to meet whole of government requirements. 

Mr. HUNTER. OK. OK, thank you. Let me get that first question, 

here, we will just ask a quick one. 

If the funding levels in the budget and the new CIP are enacted 

by Congress—so let’s go right on to that—how does that affect your 

missions? And what missions will be affected the most? 

Admiral MICHEL. Well, it has a number of different effects. And, 

you know, as you mentioned, our Commandant has testified before 

that a more effective capital investment plan would be somewhere 

in the neighborhood of $2 billion. When you are pushing it down, 

as you correctly identified, into, you know, 1.2-ish, 1.1-ish, what it 

9 

does is it forces everything to move to the right. It makes the assets harder to get in a timely manner, and it presses everything 

out to the right, which means I have got to, on a daily basis, use 

the assets that exist right now. 

Some of the assets are—like our 210-foot cutters—when I got off 

as my last commanding officer job in 2006 as the captain of the 

Coast Guard cutter Resolute, I told the crew that, you know, they 

were serving on a classic. That ship had been commissioned in 

1966. I was 3 years old when that ship was commissioned. 

[Laughter.] 

Admiral MICHEL. And while that ship, you know, may have aged 

more gracefully than I have over the years, it—still, in 2006, that 

ship was 40 years old, and people had been living inside this metal 

ship, 7 by 24, operating out on the seas, doing all this—all these 

missions, operating helicopters, you know, navigating, and so on 

and so forth, on a ship that was 40 years old. And I almost couldn’t 

believe that I was standing on the deck of a 40-year-old ship. There 

are very few countries in the world that would field something like 

that, particularly as a frontline asset. And yet, here we are in 2014, 

now the ship is 48 years old. And the OPC has been pressed further out to the right. That is its relief on station. 

So, I have got to manage those suboptimal assets for another 

many, many years. And that is what happens when you don’t have, 

you know, a CIP that is responsive to the fleet that we have out 

there, and the recapitalization needs. 

Mr. HUNTER. Last question, and tying in with the first question. 

Is the Mission Needs Statement going to be conscious of the CIP, 

of the funding levels in the CIP? 

Admiral MICHEL. Sir, you know, the funding levels in the CIP, 

very interesting. You know, I have been asked questions about how 

this is—compares to Navy shipbuilding, and things like that. Boy, 

I wish I had some funding stability like the Navy had, and could 

actually provide you with, you know, reasonable future projections 

on the availability of capital resources in order to do this type of 

stuff. 

But the—unfortunately, the history of this program—— 

Mr. HUNTER. If you would have acquisitions like the Navy, you 

would have never had the big deepwater problem that you had, too. 

Admiral MICHEL. Well—— 

Mr. HUNTER. It is good to look back and say things like that. I 

agree, wholeheartedly. 

Admiral MICHEL. Yes, sir. But one of the things that we got— 

we have to have in order for me to provide the predictability to you 

is a stable funding source, and we haven’t had that. And while I 

am in agreement with GAO that, you know, a 20-year fleet plan 

may be of value—and that is actually one of the things that we are 

going to try to work on—the value eliminates very quickly, and it 

actually becomes deceiving if you don’t take into account that—you 

know, the fluctuating funding streams that have been a part of this 

program almost from its inception. And I wish we could get some 

stability in funding to provide that type of predictability into the 

future. 

But you have my commitment, sir, that that mission statement 

is going to be my best—my, and the Coast Guard, and the ComVerDate Aug 31 2005 14:12 Jan 30, 2015 Jkt 000000 PO 00000 Frm 00019 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\CG&JOI~1\6-18-1~1\88351.TXT JEAN
10 

mandant of the Coast Guard’s very—and the Secretary of Homeland Security, and anybody else who needs to sign off on that particular document—very best estimate on what the demand signal 

for the Coast Guard is, because these are national missions that 

you, the Congress, the American people through their representatives, have tasked the Coast Guard with performing these functions. 

And it is up to us to not dumb this down and not, you know, 

bring down the demand signal to some artificial level that gives 

you the impression that risk doesn’t exist there. I would rather provide you with the raw truth on what the demand signal for the 

Coast Guard is, and let you take a look at the risk analysis that 

is being done by myself and others in the organization. 

Mr. HUNTER. OK. And we will take it. Hey, with that, I am going 

to step out and go to the—there is a little secret brief on the 

Taliban detainees that were released. Thank you. And I will be 

back in a minute. I yield to Mr. Garamendi for his opening questions. 

Mr. GARAMENDI. Thank you, Mr. Chairman. As you leave, the 

discussion that just ensued reminds me very much of that very famous Pogo comment, ‘‘We have seen the enemy, and it is us.’’ 

Admiral, thank you for your testimony, and for your very forthright statement that you can only do what we allow you to do, and 

you can only have as your responsibilities what we have given you. 

The problem lies here, in the Congress. The problem is that this 

Congress has decided that a small Government is the best thing for 

this Nation. And that plays itself out in the Coast Guard, it plays 

itself out in the hospitals, it plays itself out in the Veterans Administration, and many other activities that the general population of 

the United States would like to see us do. 

But the reality is when you want a small Government you get 

the kind of problems that this committee is now trying to work its 

way through: a Mission Needs Statement that is now 10 years old, 

soon to be updated. When would that update be available? 

Admiral MICHEL. Sir, we are actually trying to complete that for 

our maritime patrol forces, which is the surface vessels that we are 

talking about, to actually coincide with the end of the P&CD phase 

for the OPC, because that will help inform that process as we 

down-select to the single contractor. 

But this is no easy effort. And, you know, the 2004 Mission 

Needs Statement was based on the integrated system. So it is very 

hard to pull apart individual assets from that 2004 Mission Needs 

Statement. Now that we have broken apart the project into individual segments, we are going to raise the level of maturity for 

that, but that is going to raise the difficulty in doing it, because 

we are relying on an integrated systems 2004 Mission Needs Statement. But we are trying to get that, sir, in conjunction with the 

completion of the P&CD phase for the OPC. 

Mr. GARAMENDI. So when? 

Admiral MICHEL. Eighteen months is our target, sir. 

Mr. GARAMENDI. From today? 

Admiral MICHEL. Yes, sir. 

11 

Mr. GARAMENDI. OK. The mission is actually, as you just said in 

the previous discussion, set by the Congress. Is there any need to 

change the mission? And, if so, what? 

Admiral MICHEL. Well, I will go back to one of our older Commandants. And he was trying to justify sort of the reason for the 

Coast Guard, and he said, you know, ‘‘You could break up the 

Coast Guard and take our 11 statutory missions and send them 

somewhere else, but they are still going to have to get done. These 

are enduring national missions. A lot of them have existed since 

1790 and have to be done by somebody.’’ 

The beauty of investing in the Coast Guard is you get one organization that you can go to that has a platform like the OPC that 

isn’t just designed to do drug interdiction, but it does drug interdiction, it does fisheries work, it can act as a command and control 

platform in situations like Hurricane Sandy, it can operate—— 

Mr. GARAMENDI. So the answer—excuse me, we are going to be 

quickly out of time, and I should probably attend that hearing—— 

Admiral MICHEL. Yes, sir. 

Mr. GARAMENDI. The issue, then, is the mission is defined by 

Congress, and the Coast Guard has interpreted that mission and 

brought it forward as, ‘‘Here are the things we need to do, and here 

is what—here are the things we need to do the mission that Congress has specified.’’ OK. 

Your earlier testimony indicated that you are not given the resources. The chairman was speaking to this issue, but he was incorrectly identifying where the problem lay. The problem is here. 

The problem is with this Congress not providing the resources necessary. The Budget Control Act and other sequestration issues are 

at play here. 

So, if—am I correct in suggesting that, in order for the Coast 

Guard to be able to carry out in the very best possible way the missions that have been given to the Coast Guard by the United 

States Congress, you are going to need money? Is that correct? 

Admiral MICHEL. Yes, sir. The Coast Guard doesn’t have any appropriations authority. 

Mr. GARAMENDI. OK. Now, the question for this committee is 

what are we going to do to make that money available. Your Capital Investment Program, your CIP program, I think it is important 

for the Coast Guard to come forward with the need to—excuse me 

the would like to and the need to. In other words, the 

prioritization. 

The reality is that, in the current state of affairs here within 

Congress, there isn’t going to be money available. We will be, in 

the next couple of days, voting on tax reductions, which will pass 

the House of Representatives, which will make less money available in the future. So we need to have the nice to and the need 

to, the absolute have to have, versus what we would—you and us, 

you and I and perhaps the other members of this committee, would 

like to have. That is what we are going to have to have in order 

for us to do our job and to assist you. 

I don’t believe the mission is going—the mission statements are 

going to change. And you are going to have to help us help you figure out exactly what needs to be done. 

12 

There is a series of questions I have about the C–27, how it is 

coming along, what you need to do to put that into effect. Apparently, it was a high-priority issue. You are correct in saying this 

committee and the members of it assisted you and the Coast Guard 

in making that available. We are pleased to have done that. Now 

what do you need, need to, must have, in order to get that operational? 

Admiral MICHEL. Yes, sir. Well, this is the induction of an entire 

new airframe into the Coast Guard system. So not only the infrastructure pieces need to be put in place, but training, maintenance, 

all those type of things. And we are stepping out smartly on that. 

The standup of the asset project office, which Congress helped us 

with with some funding, is going to be a step in the right direction, 

it is going to be working on the training manuals, maintenance 

pieces, how we are going to integrate this in the air fleet, make 

some recommendations on where these things should best be sited. 

The good thing about these aircraft is they are actually military 

standard aircraft, and they have got things like secure communications system—— 

Mr. GARAMENDI. Excuse me. 

Admiral MICHEL. Yes, sir. 

Mr. GARAMENDI. I am out of time, and would you please be very 

specific in writing to the committee as to exactly what you need, 

when you need it, in order to get these things up and operational? 

I understand that they are now being over somewhere in North 

Carolina. And then also where you intend to deploy them, and the 

schedule for the deployment, if you could, give that to us in writing. 

Admiral MICHEL. Sure. 

[The information follows:] 

IMPLEMENTATION OF THE C–27s 

C–27s Requirements: 

The Coast Guard continues to develop requirements associated with transfer, induction, missionization, and deployment of the C–27 aircraft authorized in the 2014 NDAA. The C–27 Asset Project Office, established this 

month at the Aviation Logistics Center in Elizabeth City, NC, will further 

refine cost estimates and implementation schedules. Current estimates for 

the C–27 AC&I project, as displayed in the FY15–19 Capital Investment 

Plan, are as follows: 

FY14 FY15 FY16 FY17 FY18 FY19 

$24,900 $15,000 $130,000 $100,000 $30,000 $40,000 

Preliminary operations and maintenance cost estimates are made based on 

limited Air Force O&M provided C–27J APO operations, as well as Coast 

Guard experience operating C–130 and HC–144 aircraft; but definitive 

O&M data will need to be refined as the aircraft enters active service at 

full programmed flight hours. The Coast Guard anticipates stand up of the 

first C–27 operational unit in FY16. 

13 

Deployment Schedule of C–27s: 

Estimated Acquisition Schedule through Completion 

(based on initial BCA estimates) 

2014 .......... Commission APO, receive first aircraft, establish contracts for aircraft restoration 

and Contractor Logistics Support (CLS) 

2015 .......... Continue stand up of APO, receive 3 aircraft 

from AMARG, 1 Contractor Logistics Support (CLS) 

2016 .......... Continue APO operations, receive 4 aircraft 

from AMARG, start missionization NRE, 

initial issue spares, CLS, stand up first 

operational unit 

2017 .......... Continue APO operations, receive 4 aircraft 

from AMARG, contract for operational & 

maintenance training devices, missionize 

first aircraft 

2018 .......... Receive 2 aircraft from AMARG, missionize 2 

aircraft 

2019–2026 Complete Logistics, Missionize remaining 

aircraft, stand up second operational 

unit, stand down APO 

1 AMARG: Aerospace Maintenance and Regeneration Group—aircraft storage 

facility at Davis-Monthan Air Force Base 

Mr. GARAMENDI. Now I have a question for the GAO. You have 

pointed out the problem. And I would like to have your analysis—— 

Mr. SOUTHERLAND [presiding]. Mr. Garamendi? I am sorry. I 

mean we have got—I know we have got other gentlemen. Your 

time, as you just so noted, has expired. So we can come back for 

more questions, I am fine with that. 

But Mr. Rice, 5 minutes. 

Mr. RICE. I think I heard you say that your current budget is 

how much, 1-point what? 

Admiral MICHEL. This is in—the President’s budget request for 

AC&I is about 1.1. 

Mr. RICE. 1.1? 

Admiral MICHEL. Yes, sir. 

Mr. RICE. What did the administration ask for in their budget, 

do you know? 

Admiral MICHEL. Excuse me. One more time, sir. 

Mr. RICE. What did the administration ask for in the President’s 

budget for this year. What did he ask for, funding level? 

Admiral MICHEL. 1.084, 1.1. 

Mr. RICE. So that is not what Congress asked for; that is what 

the President asked for. 

Admiral MICHEL. That is the President’s 2015 budget request for 

the AC&I account for the Coast Guard. 

Mr. RICE. Right. And what did you say it would take to fulfill all 

of your—I mean if you—to carry out every mission, your absolutely 

wish list, what would it take to carry that out on an annual level 

funding basis? 

14 

Admiral MICHEL. Well, I wouldn’t want to characterize it as a 

wish list, because, as an operator, my wish list is pretty long. 

Mr. RICE. OK, OK, so—— 

Admiral MICHEL. But our prior Commandant has testified that 

a responsible and adequate capitalization account for the Coast 

Guard would be somewhere in the neighborhood of $2 billion for 

AC&I. 

Mr. RICE. So about double what the President has proposed for 

this year. Is that correct? 

Admiral MICHEL. Yes, sir. 

Mr. RICE. All right. Now, as a result, when was the last time 

that you received the full amount that you would need on an annual basis to fully fund all of these requirements that you have dictated? When was the last time that happened? 

[No response.] 

Mr. RICE. That would be never? 

[Laughter.] 

Admiral MICHEL. Sir, you can go back in the program. I don’t 

think we have ever had a $2 billion CIP. I can go back and take 

a look. I can’t remember way back in the history, but I am pretty 

sure we have never had one of those. 

Mr. RICE. OK. What are the biggest, most glaring holes that we 

have now, as a result of never having been funded to the extent 

that you think it would be required? 

Admiral MICHEL. Sir, the—I can tell you the number-one priority 

is on surface vessels and the recapitalization of the surface fleet. 

Mr. RICE. So we got some old boats running around there. 

Admiral MICHEL. Old ships. Yes, sir. 

Mr. RICE. Yes. Now, have any of those sank recently, or do we 

have any problems with getting them in and out, or—— 

Admiral MICHEL. Thank goodness none of them have sunk, 

which is good. But there have been quite a number of casualties, 

and I can provide you data on the breakdown rates of these ships. 

We have gone through some—— 

Mr. RICE. You say ‘‘casualties.’’ Are people being killed? 

Admiral MICHEL. Sir? 

Mr. RICE. You said ‘‘casualties.’’ Are people being killed? 

Admiral MICHEL. No, sir. That is a term for a machinery—— 

Mr. RICE. OK, got you. 

Admiral MICHEL [continuing]. Fault, a machinery casualty. 

Mr. RICE. OK. 

Admiral MICHEL. Not personnel, sir. 

Mr. RICE. Right, OK. How does our Coast Guard stack up with 

the coast guard or coastal protection with other countries? I mean 

England, France, Italy, all those others. 

Admiral MICHEL. Coast guards vary throughout the world. I 

would say for the coast guards that look sort of like the U.S. Coast 

Guard, our fleet is amongst the oldest. 

I will give you an example. We just yesterday met with the head 

of the Chinese Coast Guard, the China Coast Guard. And their recapitalization program, at least as they laid out, is massive. I mean 

they are talking in the neighborhood of 400 patrol boats to fulfill 

the missions, as well as some of the larger things. 

15 

So, we have got an old fleet, we are very proud of it, and we keep 

it in the best shape that we possibly can, but it needs to be replaced, sir. 

Mr. RICE. How many patrol boats do we have? 

Admiral MICHEL. We have got—I think we have got forty-nine 

110-foot patrol boats, although they are coming in and out, so there 

may be one or two different, because they are actually being replaced by the Fast Response Cutters, or FRCs, and we have got, 

I think, our 9th and 10th ones of those that are actually in or near 

in service. That will eventually build up to a program of 58 for the 

Fast Response Cutters. 

Mr. RICE. I would like to ask you a couple questions, if I could. 

Ms. MACKIN. Yes, please. 

Mr. RICE. Have you reviewed the—I don’t want to call it a wish 

list. What would—how would I characterize it? I don’t want to say 

anything that is wrong. 

Admiral MICHEL. I would say the requirements as expressed in 

the Mission Needs Statement. 

Mr. RICE. OK. Have you reviewed that in the Mission Needs 

Statement? Is there anything—he answered earlier that we don’t 

need to change the mission of the Coast Guard. Have you reviewed 

that to see if there is anything that you would suggest taking out 

of the mission, or—— 

Ms. MACKIN. We—you know, we have been reviewing the deepwater program for over 10 years. I personally have been involved 

in many of those audits. And the current MNS, the current Mission 

Needs Statement, reflects the deepwater program of record. So that 

is what it is. And we certainly agree it needs to be revised. Was 

very happy to see that the Coast Guard is working on that, and 

that DHS is going to do a portfolio analysis of Coast Guard acquisitions, taking into account affordability, which is very important. 

Funding levels are not what the Coast Guard would like to have, 

but they have not actually fluctuated that much over the past 5 

years. So we think that the Coast Guard can have a realistic idea 

of what it can expect. 

We had a chance—if I may just comment on the CIP, the current 

CIP that was released this week—we had a chance to review it. 

And in many cases, program baselines are not reflected in the CIP. 

In other words, for the Fast Response Cutter there is a $100 million shortfall in the CIP every year, give or take. That means either the Fast Response Cutter baseline is going to need to be revised again. Is the schedule going to be delayed again? That will 

increase costs. 

So, we would really like to see the CIP be more in line with the 

acquisition baselines for the individual projects, or the Coast 

Guard, which is already having some readiness issues, obviously, 

it is going to only get worse. 

Mr. SOUTHERLAND. The gentleman’s time has expired. 

Mr. RICE. Thank you. Thank you for what you do, thank you. 

Mr. SOUTHERLAND. I recognize the gentleman from Florida. 

Mr. JOLLY. Thank you, Mr. Chairman. I appreciate the comments, appreciate the testimony. And I understand that having to 

balance limited resources among your air and sea assets, I appreciate that. I learned from my predecessor early on that the Coast 

16 

Guard is one agency that does more with less than just about any 

other agency in the Federal Government. So thank you for what 

you do. I appreciate it. 

I have a question unrelated to air and sea assets. I know you 

work through balancing limited resources there. Facilities, infrastructure, quality of life for your men and women in uniform is a 

concern of mine always. We have three facilities in my district. I 

recently was out at Sector St. Pete, and in the off hours some of 

your guys are laying tile in a new dining hall, and painting the 

walls, and doing drywall, and then in the gym, you know, overnight, they are working other issues. 

Can you speak to—as you are balancing air and sea assets, you 

also have facilities and infrastructure that ultimately affect quality 

of life of those who put on the uniform. Just a general question: 

Can you comment on the state of that—of those priorities? 

Admiral MICHEL. I think it is a great question from a number 

of different angles, and I share your concerns about our Coast 

Guard people. And I don’t know the guys laying tile, but that is 

typical Coast Guard stuff, very proud of what we do but, you know, 

we do with what we are given or sometimes can scrape together. 

But the point that you raise is the AC&I account for the shore 

infrastructure competes directly with the other accounts. And it is 

a matter of prioritization. Again, if I had a wish list, I would wish 

for lots of things to bring better quality of life, better housing to 

our Coast Guard personnel, better facilities that they can take care 

of. But right now, it has got to compete directly with our surface 

assets. And our surface assets are just a bleeding wound, and they 

impact our citizens every day, they impact our neighbors every day, 

and we need to get that fixed. 

So, I have got—sir, I appreciate your concern, because that is on 

my radar, as well. But, you know, I have to rack and stack 

these—— 

Mr. JOLLY. No, I understand, and it is really not a criticism. I 

guess maybe—correct me if my assessment is wrong—it seems to 

have—it comes in last right now because it probably has to. 

Would you—I mean I guess what projects actually make it, get 

funded? Is it really when the roof is collapsing at this point, in 

terms of how you have to prioritize? Or are there quality of life enhancements that there are funds available for at this point? Or is 

it just not enough resources? 

Admiral MICHEL. At this point you—there is a line item for our 

shore AC&I. 

Mr. JOLLY. Right. 

Admiral MICHEL. It is woefully inadequate. 

Mr. JOLLY. Right. 

Admiral MICHEL. Obviously, if a roof is falling in, or something 

like that, we are going to have to re-rack and stack things. 

Mr. JOLLY. Right. 

Admiral MICHEL. But we have got a process where we run 

through the highest priorities to try to buy down the things at the 

top of the list. 

When it comes down to sort of quality of life things, those typically don’t get prioritized. We are talking about basic things like 

making sure that the power can remain on, and making sure that 

17 

you don’t have a collapsed roof. I mean that is kind of where we 

are in the shore AC&I account. 

Mr. JOLLY. I appreciate it. Again, thank you for what you do. Appreciate it. 

Mr. Southerland, no further questions. 

Mr. SOUTHERLAND. Thank you, Mr. Jolly. I have just some prepared questions I wanted to ask, and then I have got a comment 

I would like to make. 

I know, under the CIP, the—your acquisitions would not receive more than $1.2 billion over the next 5 years. That is approximately, you know, $1 billion less than the GAO and the former 

Commandant have testified is needed. And you have stated that. 

The GAO has stated that the Coast Guard needs to consider 

trade-offs. And again, I have not been here for the entire testimony 

today. So if you have addressed this already in specificity, I apologize. But what are the trade-offs that the Coast Guard is considering, you know, to make its acquisitions more affordable? You are 

having to make some hard decisions now. 

But, obviously, it seems like, you know, your maintenance, you 

know, you mentioned housing, you mentioned the tiling and, I 

mean, what else are you considering, going forward? 

Admiral MICHEL. Well, I think the point of affordability you raise 

is spot on. And we have got to actually systemically include that 

in our processes. And I will give you an example. 

Our biggest acquisition, as GAO knows, is the looming Offshore 

Patrol Cutter acquisition. That is going to be the biggest line item 

acquisition that we have got, and sort of the entire effort that we 

have got here. And we have specifically designed affordability into 

that contract. 

First of all, there is actually a competitive process going on underway, so I am a little bit restricted in the amount that I can say 

here. And anything that I can say here that I say here that is inconsistent with that, the legalities of that particular project, obviously, that controls. 

But affordability specifically designed here—we have been in 

about a 21⁄2-year discussion with potential competitors for this particular project to try to set affordability cost targets, and that is actually built into the project, itself. This also will be a fixed price 

incentive-type contract, which can also help with the affordability 

aspect. And we have also built in a number of off-ramps that, if the 

project becomes unaffordable, then we have got some second- and 

third-order choices that we can make in that particular piece. 

But I think actually learning the lessons of the NSC and the 

FRC has allowed us, on this latest acquisition, to actually systemically include the affordability aspects, and make them kind of legally actionable, for lack of a better term, through the contracting 

mechanism. So, we have built that into this particular class of ship, 

which is, again, the looming acquisition that we have got. 

Mr. SOUTHERLAND. The—are there any parts of your mission— 

I mean you are asked to do a lot. It seems like there are some 

items that probably have higher degree of necessity than others. I 

mean are there any parts of your mission that you would say are— 

would not be—rise to the other issues that are very, very important? 

18 

I mean I didn’t word that right, but what is nonessential? 

Admiral MICHEL. Boy, that is a very difficult question, since Congress, you know, the American people through their representatives, have statutorily tasked us with all these mission sets now. 

We have a—— 

Mr. SOUTHERLAND. But, I mean, you are on the inside. OK? You 

are there. You have to be going, ‘‘Are you kidding me? Really? I 

mean, we got to do this? This is critical to the safety of the American people, and Congress has given us this.’’ It is obvious that the 

right hand might not know what the left hand is doing. I have been 

here 31⁄2 years, and I am telling you, man, that is a disease here. 

So, my point is, from someone who has your responsibility, you 

know, what is critical, what is good? What is the difference between good and best? 

Admiral MICHEL. I will give you an example, sir. This is the type 

of decisions that I have to make as to whether to send one additional ship a year down—that is 20 metric tons of cocaine that will 

be removed from the system. Through long, historical averages, 

every one of those ships I send down there that works for a year 

is 20 metric tons of cocaine. That is almost triple what is seized 

within the border of the United States on a typical year. 

And if that 20 metric tons—if I don’t send that ship down there, 

that 20 metric tons is likely to get into Central America and Mexico, and create all the problems that it has down there, as well as 

public health issues for our citizens. And I have got to balance that 

risk against a foreign fishing vessel incursion, against antipiracy 

work, against migrant interdiction work, against pangas that work 

their way around our borders every day. 

I mean the decisions that we are forced to make, because the 

mission need exceeds our ability in the Coast Guard to fulfill that, 

I mean, they are—and I don’t want to make this hyperbole, but I 

mean, they are very serious considerations on the national security 

of our Nation, as well as our neighbors, and very difficult to rack 

and stack, you know, safe passage of a vessel in a port with protection of fisheries work, with drug interdiction work, or migrant 

interdiction work, or search and rescue. All those things are enduring national missions and have huge national consequences, and I 

wish there was more Coast Guard. It would allow me to have a little bit of a more favorable risk interpretation. 

Mr. SOUTHERLAND. Right. Thank you very much. I certainly have 

other questions, but to be consistent in controlling the time, I will 

forego those questions. So it seems to be me. I know we have got 

a second panel. I would like to thank you all for being here, and 

we will take a quick break while the second panel comes forward. 

Thank you. 

[Recess.] 

Mr. SOUTHERLAND. Our second panel of witnesses today includes 

Mr. Ronald O’Rourke, specialist in naval affairs at the Congressional Research Service, and Mr. James Offutt, national president 

of the Navy League of the United States. 

Mr. O’Rourke, you are recognized. 

19 

TESTIMONY OF RONALD O’ROURKE, SPECIALIST IN NAVAL AFFAIRS, CONGRESSIONAL RESEARCH SERVICE; AND JAMES H. 

OFFUTT, NATIONAL PRESIDENT, NAVY LEAGUE OF THE 

UNITED STATES 

Mr. O’ROURKE. Mr. Chairman and distinguished members of the 

subcommittee, thank you for the opportunity to appear before you 

today to testify on Coast Guard acquisition. With your permission, 

I would like to submit my statement for the record, and summarize 

it here briefly. 

As a starting point, it can be noted that the Coast Guard’s program of record includes, by the Coast Guard’s calculation, roughly 

60 percent of the cutters and 50 percent of the aircraft that would 

be needed to fully perform the Coast Guard’s statutory missions in 

coming years. In this sense, not completely fulfilling the program 

of record would deepen a capacity shortfall relative to projected future mission demands that is already built into Coast Guard plans. 

Coast Guard testimony earlier this year suggests that the delay 

in submitting the fiscal year 2015 CIP was due largely to a disagreement between the Coast Guard and OMB about future funding levels in the AC&I account, with OMB apparently supporting 

a level of roughly $1 billion a year, and the Coast Guard apparently advocating a higher figure of perhaps $1.5 billion per year or 

more. 

The difference between these two positions represents a major 

fork in the road for the Coast Guard. The previous Commandant, 

Admiral Papp, stated on multiple occasions that recapitalizing the 

Coast Guard’s ship and aircraft fleets on a timely basis, while also 

adequately funding other AC&I programs, would require a funding 

level of $1.5 billion to $2 billion a year. A sustained funding level 

of about $1 billion per year, he testified last year, would almost 

create a death spiral for the Coast Guard. 

The newly submitted CIP, which I received from the Coast 

Guard on Monday afternoon, averages about $1.1 billion a year, 

which is a bit more than the $1.0 billion per year in the fiscal year 

2014 CIP, but still well below the $1.5 billion per year of the fiscal 

year 2013 CIP. 

The new CIP includes the total of $230 million for a new polar 

icebreaker, most of which is in fiscal year 2017 and fiscal year 

2019. The timing of the procurement of this ship has become less 

certain in this budget submission, and Coast Guard testimony earlier this year suggests that if the AC&I account remains at about 

$1 billion per year, the Coast Guard would view this ship as something like an unfunded requirement. 

Regarding the NSC program, as the acquisition of these ships approaches its end, it can be noted that they could have been acquired less expensively if they had been awarded at a more even 

rate, and if at least some of them had been acquired with a form 

of multiyear contracting. 

Regarding the FRC program, the phase 2 contract offers a potential opportunity for using multiyear procurement or a block-buy 

contract. A multiyear contract might result in acquisition costs that 

are lower than those possible under the options contract that the 

Coast Guard appears to be planning to use. One option for the subcommittee would be to understand the potential savings that might 

20 

be realized through multiyear contracting. The subcommittee, for 

example, could consider asking the Coast Guard or the Navy to develop an estimate of the potential savings. 

Turning to the OPC program, the new CIP defers the bulk of the 

funding for the first OPC from fiscal year 2017 to fiscal year 2018, 

suggesting that the start of procurement for this program will be 

delayed a year, compared to last year’s submission. 

Section 215 of H.R. 4005, the Coast Guard and Maritime Transportation Act of 2014, provides authority for using multiyear procurement contracts in the program. Based on experience with Navy 

shipbuilding programs, this authority may not be usable until construction of the first OPC is completed in 2021 or 2022, because 

completion of the lead ship has been the standard in Navy shipbuilding programs for demonstrating that the program has a stable 

design, which is one of the requirements of the statute that governs 

multiyear procurement. 

If Congress wants to employ multiyear contracting in the OPC 

program prior to completion of the lead ship in the program, it 

could do so by authorizing block-buy contracting. A block-buy contract could achieve much of the savings that would be possible in 

a multiyear procurement contract, particularly if it includes authority for making batch order purchases of long-leadtime components. 

Mr. Chairman, this concludes my statement. Thank you again for 

the opportunity to testify, and I look forward to the subcommittee’s 

questions. 

Mr. SOUTHERLAND. Thank you, Mr. O’Rourke. 

Mr. Offutt, you are now recognized. 

Mr. OFFUTT. Thank you, Mr. Chairman, for the opportunity to 

appear before you today on such an important topic. I am grateful 

for your introduction and for your leadership in bringing this topic 

to the Nation’s attention. My full testimony has been submitted for 

the record. I offer an abbreviated version now, and look forward to 

your questions. 

The U.S. Coast Guard is truly a unique Service. With military 

and civil responsibilities and humanitarian missions, the extraordinary broad mission portfolio continues to serve the United States 

well. But we, as a Nation, have not treated the Coast Guard as 

well as we should have. 

Since 9/11, the Coast Guard has seen its area of responsibility 

grow to 11 statutory missions, but its budget growth has de-accelerated, failing to match mission demand or meet inflation adjustment. We must fund the Coast Guard properly, with an operating 

budget of no less than $6.8 billion, and an acquisition, or AC&I 

budget, in excess of $2 billion, so that the Service can continue to 

provide protection on the seas from threats delivered by sea, and 

of the sea itself. 

I believe that this is a generational opportunity, and that the recapitalization of the Coast Guard is absolutely essential. Completing the National Security Cutters in the approved program of 

record is, in my opinion, the Coast Guard’s most critical acquisition 

goal. As the replacement vessel for the current fleet of 12 High Endurance Cutters, the NSC will provide a highly capable vessel, and 

21 

a robust command and control platform, even in harsh operating 

conditions. 

However, at the rate the new cutters are coming online and older 

ships are being decommissioned, there will be an unavoidable gap 

that will pose significant risk to America’s security. Some of that 

gap in the coastal areas will be met by Fast Response Cutters, or 

FRCs, that are currently being constructed. The President’s request 

for production funding to conduct two more FRCs in fiscal year 

2015 is the minimum necessary to improve the Coast Guard’s waning operational, and we at Navy League believe that the actual 

number should be four per year, or one per quarter. 

Highly important for the Coast Guard’s operations is to begin 

construction of the Offshore Patrol Cutter, which will replace the 

MECs, or Medium Endurance Cutters, built in the 1960s through 

the 1980s. While the OPC is less capable than the MEC, it will still 

function as an operational workhorse to carry out the Coast 

Guard’s primary mission. 

The Coast Guard must move forward smartly with reviewing the 

preliminary design for the OPC and very soon begin construction. 

Given the magnitude of the attending capability gap, and the significant economies of scale to be realized, Navy League believes 

Congress should fund the construction of at least two OPCs annually. 

Aviation assets are also key to the Coast Guard’s future. One of 

the more pressing aviation projects is the acquisition of HC–130J 

Long Range Surveillance Aircraft, and the HC–144A receives operation and maintenance funding in fiscal year 2015. Coast Guard received authority to accept 14 C–27Js from the Air Force. Coast 

Guard needs acquisition construction and improvement funding of 

at least $15 million to continue that acquisition program office. 

Finally, in looking at the future scope of the Coast Guard’s areas 

of responsibility, one geographic area of operation is the Arctic. In 

recent years, as ice over the Arctic gap has diminished and rich 

new sources of energy are believed to be more likely, the Coast 

Guard must ensure continued capability in the Arctic icebreaking. 

Currently, operating with one operational heavy icebreaker and 

one medium icebreaker, the Coast Guard must initiate a heavy icebreaker acquisition now, if a new capability is to be brought online 

this decade. This necessary acquisition must be seen as a national 

priority, and it must be funded in addition to the Coast Guard’s already meager acquisition budget. 

Recently commissioned assets will also require operational maintenance funding of at least $72 million. 

As with all mobile forces, presence is the key. The only limiting 

factor to how much our Coast Guard can accomplish is how many 

ships and aircraft they have, and how much training they receive. 

We have had the chance to notice a direct correlation, through the 

budget reduction of recent years. Coast Guard, after having a $200 

million cut by sequestration, saw a 30-percent reduction in drug 

interdiction. And I believe the vice admiral referred to that with 

the presence of one ship making a difference in the Caribbean. 

If the Coast Guard remains unfunded, national leaders will have 

to decide what missions they want unfulfilled. Coast Guard cannot 

do more with less into perpetuity. As fast-paced operations conVerDate Aug 31 2005 14:12 Jan 30, 2015 Jkt 000000 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 P:\HEARINGS\113\CG&JOI~1\6-18-1~1\88351.TXT JEAN
22 

tinue, the Coast Guard must be effective not only through nearflawless mission, but also efficiently manage its existing assets. 

In my role of national president of Navy League, I am privileged 

to visit several different ships, particularly a 110-foot patrol boat 

commanded by a young lieutenant and a Coast Guard station headed by a senior enlisted petty officer. I am thoroughly convinced that 

these young men are well prepared to carry out our mission. Their 

dedication and sense of service and devotion to this country inspire 

and awe me. To carry out their missions it is our job to ensure they 

have the means to do so. 

The Navy League would like to thank this committee for its leadership and thank Congress for being supportive of the Coast Guard 

and ensuring they have the resources they need. We must be good 

shipmates to them, as they have every American. Thank you, and 

I await your questions. 

Mr. HUNTER. Thank you very much for both of your testimonies. 

We will turn now to Member questions. And I would like to recognize the gentlelady from California. 

Ms. HAHN. Thank you. I am sorry I missed the first panel. I was 

speaking on the floor on an issue, but I certainly want to thank you 

all for being here today, and big—I am a big supporter of our Coast 

Guard, and am always troubled by, frankly, the funding levels that 

we give to our Coast Guard for your—for the missions that we expect from the Coast Guard. 

Very happy to report that I was just in Los Angeles a couple 

weeks ago when we had a change of command, and the first-ever 

woman will be the commanding officer and the captain of the port 

for Long Beach and Los Angeles. That was actually a very exciting 

moment. We are taking over the world one port at a time. 

[Laughter.] 

Ms. HAHN. But in your testimony you noted that the Coast 

Guard may view the polar icebreaker as a joint agency goal, as the 

National Science Foundation and Department of Defense share a 

need and desire to have the icebreaker available. We don’t relate 

to having icebreakers out on the west coast, but do know that it 

is a big part of what you do. 

And you mentioned that the Coast Guard may even depend on 

resources of those agencies to support the cost of an icebreaker. In 

the budget of these agencies, is there a capability to support even 

a portion of the cost of making an icebreaker a reality? 

Mr. O’ROURKE. Yes, I did address that point in my testimony. 

The Coast Guard, both in its testimony at hearings and in its budget justification documents, describes the polar icebreaker as something they would like to fund on an interagency basis. 

Ms. HAHN. Right. 

Mr. O’ROURKE. The rationale being that other agencies, such as 

the National Science Foundation or DOD, gain significant direct 

benefits from the operation of these icebreakers. 

There is some precedent for funding a polar icebreaker somewhere else in the Federal budget outside the Coast Guard’s budget. 

The Coast Guard’s polar icebreaker Healy was funded in the Navy 

shipbuilding account in fiscal year 1990. Even so, this is an uncertain funding strategy for the polar icebreaker, because these other 

23 

agencies are facing their own challenges right now in trying to 

meet their own program needs within available resources. 

So, the Coast Guard can certainly appeal to these other agencies. 

Whether these other agencies are going to find the spare wherewithal within their own budgets to help fund that ship I think is 

another question. 

Ms. HAHN. OK, thank you. Thank you. 

Oh, you don’t look like Steve Southerland at all. 

Mr. HUNTER [presiding]. Botox and exercise. 

[Laughter.] 

Ms. HAHN. Really? 

Mr. HUNTER. It is amazing. 

Ms. HAHN. Look away for a moment, and the Republicans have 

changed. 

Mr. HUNTER. Excuse me. Good morning, gentlemen. I guess my 

first question is this. I was thinking—were you here in the last 

panel? 

Mr. O’ROURKE. Yes. 

Mr. HUNTER. So I guess we always get after the military for not 

giving a nonbudget risk assessment. I mean you want a risk assessment based on how the world is, not what we can afford, right? 

And as I was walking back and forth in between my other hearing 

and this, I realized I was asking the Coast Guard to give us a— 

I guess not a—I wasn’t asking for a risk assessment, but a Mission 

Needs Statement that is based on the budgetary environment. 

So, I don’t want to get those two confused. We still want a unbiased risk assessment from the Coast Guard that just says, ‘‘If we 

had trillions of dollars every year, here is how you mitigate 100 

percent of the risk, and it is going to cost you $1 trillion a year.’’ 

That is what we want from the military, too, and then it is up to 

us to make those decisions. 

So, I guess our question is more about prioritization and how 

they come to their risk-based assessment. So I guess my question, 

Mr. O’Rourke, for you, is if they don’t get more assets, and they 

don’t get more money, how do you evaluate their mission set, just 

in general? 

Mr. O’ROURKE. I think the answer is that we will continue to do 

what we have been doing for years and years, which is not completely fulfilling any number of these missions. 

What you wanted was a fiscally constrained understanding of 

missions—that would be the term that I would use for it—and I 

think one way for the subcommittee to go about getting that would 

simply be to review the records of what the Coast Guard has done 

in recent years concerning mission performance across the 11 statutory missions. The Coast Guard has been making choices, as the 

admiral indicated, about which things to do and not do on a daily 

basis. That establishes a pattern, a record, that the subcommittee 

can examine to see what is being done and what is not being done. 

I think the evidence is there already, it just needs to be compiled 

and presented to the subcommittee. 

Mr. HUNTER. And the admiral was talking about multiyear procurement. 

Mr. O’ROURKE. Well, I was. 

Mr. HUNTER. You were, but he mentioned that, too. 

24 

Mr. O’ROURKE. Oh, OK. 

Mr. HUNTER. He said take it out of his stable funding source and 

know what they are getting a few years out—do that. What is the 

impediment to doing that? Is it how it scores? 

Mr. O’ROURKE. The Coast Guard has statutory authority to use 

multiyear procurement in pretty much the same way that the Department of Defense does. The Coast Guard is mentioned in the 

same statute that grants the authority to DOD. So I don’t see any 

statutory impediment to the Coast Guard using multiyear procurement authority. 

Congress also has the ability on its own to authorize block-buy 

contracting authority for the Coast Guard, if it so desires. There is 

no statute that governs it. Congress can simply do it on its own. 

It seems to me that if there is an impediment to the Coast Guard 

doing it, it has been simple lack of familiarity with these contracting mechanisms, and no prior history of having done it. But 

I do think the Coast Guard is beginning to become more familiar 

and more comfortable with it, and that is one reason why I am emphasizing it as an option for Congress to consider. 

The Navy makes extensive use of these authorities, and has been 

successful, as a result, in being able to buy more ships for a given 

amount of money than would have been possible under more conventional contracting strategies. 

Mr. HUNTER. So how much could they save? Just—let’s say that 

they used it for their OPCs and the FRCs. If they just used it for 

those big buys, let’s just say—— 

Mr. O’ROURKE. For the ships that are under that contract, it can 

save upwards of 10 percent. So if you have a 25-ship OPC program, 

we are talking about getting two of those ships, basically, for free. 

Mr. HUNTER. Got you. 

Mr. O’ROURKE. If you were to apply it across the entire program. 

And you could do it across the entire program by starting with a 

block-buy contract for the first few ships, and then proceeding to 

a multiyear procurement contract once the program met all the 

statutory requirements for MYP. 

Mr. HUNTER. Thank you. Mr. Offutt? 

Mr. OFFUTT. Sir, I would like to emphasize that I believe that 

a Mission Needs Statement with a full-blown understanding of 

what the Coast Guard is being asked to do by the American people 

through the Congress and through the administration is essential. 

Then you—— 

Mr. HUNTER. But they have that now. They already have that. 

Mr. OFFUTT. And they are going to develop a new one. 

Mr. HUNTER. Right. 

Mr. OFFUTT. So I would not ask you to tell them to physically 

constrain that MNS, the MNS. I would ask that, as Mr. O’Rourke 

suggested, that they do an assessment of the risk involved in that. 

And, quite frankly, looking at their history, it is probably a very 

statistically valid way of figuring out what it is they can’t do and 

can do. 

But I believe that we need that—— 

Mr. HUNTER. I guess what we are asking for from them is—— 

Mr. OFFUTT [continuing]. Last for 10 years. 

Mr. HUNTER [continuing]. A QDR. 

25 

Mr. OFFUTT. I believe that we need that. 

Mr. HUNTER. We are asking for a QDR from the Coast Guard. 

That is kind of what—a risk assessment-based, what do you see 

happening in the next 5 years, what are your threats, how are you 

going to counter them. I guess that is what we are asking for. 

Mr. OFFUTT. Well, we still have DOD strategic guidance and 

other documents that are similar to the Mission Needs Statement. 

And I agree with you, what you are asking for is a physically constrained what-can-I-do type of document. 

Again, you know, they are working on the Mission Needs Statement, and it will just take them a little bit longer to dig through 

that other process, too. But I am sure they can provide it for you. 

Can’t speak for the Coast Guard—— 

Mr. HUNTER. I guess how do you separate out—I guess the question is, too, how do you separate out their Capital Investment Plan 

and the shortage of money and how those assets tie in to fulfilling 

their mission needs set. I guess that is the big crux of this, right? 

Because we have their Mission Needs Statement. We know that 

they don’t have enough money to build and buy all the assets that 

they need in the time that they need them in. 

So—and I understand the game in DC, too, is to always be short, 

and then you can always say, ‘‘Well, we are short, we need more.’’ 

But at some point you have to ask for what you can get, and then 

only say that you are going to build what you have the money for, 

which they are not doing right now. They are saying, ‘‘We want to 

build this. And, by the way, we are going to set in stone our plan 

to build this much stuff, but we only have this much money. And 

we understand that that is always going to be that way, so we are 

always going to be—there is always going to be a delta of what we 

plan for and what we can actually do.’’ That leads for bad planning. 

When you are talking about building ships, not necessarily what 

the American people through Congress have asked them to do, 

their mission set, but the actual building of ships, has to tie in with 

how much money they get at some point. And it is not right now. 

So how do you fix that? 

Mr. O’ROURKE. I will give you an option for the subcommittee to 

consider, and it goes back to the testimony that the first panel gave 

about putting together a 20-year plan. If something like that were 

to be done, I think the committee could give consideration to asking 

the Coast Guard to doing three different versions of it, a version 

at $1 billion per year in the AC&I account, another at $1.5 billion 

per year, and other at $2 billion per year. That way, we can see 

what the resulting force structure is over time, and what the impact on the performance of various missions is. 

We seem to be, right now, in my view, in the midst of a debate 

about this fork in the road, about the future of the Coast Guard, 

about whether we are going to have a Coast Guard of a certain size 

and capability and capacity, or a Coast Guard of a different size 

and capability and capacity. And I would not want a 20-year plan 

to, in effect, short-circuit the debate as to what that funding level 

should be, by presenting only one scenario because, if you were to 

do that, it could limit people’s sense of options and possibilities, 

and it also doesn’t provide them with any understanding of how 

26 

these things might change if you were to depart from that one 

funding level, either upward or downward. 

So, one way to get around that would be to ask the Coast Guard, 

if they were to put together a 20-year plan showing how things 

would be bought, what the resulting force structure is, and what 

the consequent mission performance is, to do three versions of that: 

one at $1 billion a year, another at $1.5 billion, and another at $2 

billion, because these seem to be the numbers that are at play in 

the current debate over the AC&I account. And that way we could 

all walk into this situation with our eyes open about what we are 

paying for, what we are getting, and what the mission impact, consequently, will be. 

Mr. HUNTER. Great, we will do it. That is a great idea. 

What do you think—you know what the 11 statutory missions 

are of the Coast Guard? 

Mr. O’ROURKE. I don’t have them listed here. 

Mr. HUNTER. But as you have gone through them, what do you 

think about those in general? Do you think they are too broad? 

Think they are too narrow? There ought to be 20? 

Mr. O’ROURKE. The missions, as stated, are stated broadly 

enough that they can be defined to result in a demand for mission 

assets that can be somewhat variable. Now, does that mean that 

we should try and narrow down the language on the performance 

of those missions? That might not be so easy. 

But there is some leeway in the way the missions are stated 

right now for someone of good faith, looking at that language, to 

define it one way, and someone else of equally good faith to look 

at that mission and define it in a different way and say, ‘‘Well, no, 

I think it means performing it to a different level.’’ 

Mr. HUNTER. When you look at it right now, for instance, you 

have—the Coast Guard pulled, I think, how many of their ships 

from SOUTHCOM? Remember how many ships they pulled? 

Three? They pulled three ships from SOUTHCOM. 

So when the Coast Guard comes in and they talk about—the best 

statement they always have is, ‘‘We can catch more or interdict 

more drugs in 1 year than the entire law enforcement presence of 

the interior of the United States catches,’’ meaning they can get 10 

times as much. It is already at 60 percent with the one at sea hauling in, I don’t know, six or seven catches, right? 

So, the question is, then, you have their Mission Needs Statement, you have what they always come in and talk about, which 

is giant drug busts and SOUTHCOM, yet that is where they pull 

their assets out of first when there is a problem. 

So I guess my question would, from your analysis, if you have 

looked at this, do they need to pull—did they need to pull those assets from SOUTHCOM? 

Mr. O’ROURKE. Well, they don’t have—— 

Mr. HUNTER. Were there areas where they could have reduced 

risk and kept those assets working the drug interdiction cases? 

Mr. O’ROURKE. Could they have deployed more assets into the 

drug mission? 

Mr. HUNTER. Yes. 

27 

Mr. O’ROURKE. To some degree, yes, I think so. Other missions 

would have suffered. I mean it is a rob Peter to pay Paul situation 

at this point. 

Several of the missions are not going fulfilled fully right now. 

The degree to which they are not being fulfilled varies. The protection of fisheries, particularly in certain parts of the western Pacific, 

is going not very much fulfilled, would be one way of putting it. 

And so we are not protecting our own waters and our own marine 

resources out there right now. So that would be another one. 

I don’t think that the mathematics of this are that complicated. 

If you do more in one mission, you are going to have less available 

for doing other missions, particularly if those other missions are 

geographically separated from the one that you are putting more 

assets into. 

Mr. HUNTER. That is rough. 

Mr. OFFUTT. Couldn’t say it better. 

Mr. HUNTER. OK. Ms. Hahn, do you have any more questions? 

Ms. HAHN. Yes, thank you, Mr. Chairman. You know, again, I 

know it is unfortunate that we have these funding levels. And to 

be prepared. Because I think, a lot of times, we are unable to foresee some of the threats to our Nation’s homeland that we are depending on the Coast Guard to counteract. I don’t think we, on the 

west coast, really prepared for the panga boats, and when I think 

about Terrell Horne, who lost his life one night off the coast of 

California going against these panga boats. 

So I think there is a lot that it would be nice to match funding 

with, you know, what we need, and try to do a better job, but I 

think there is a lot of threats that we are not really quite sure of, 

but when they happen we expect the Coast Guard to defend us 

against that. 

One of the things I was thinking about is the Coast Guard was 

unable to classify any of their activities as nonessential. And what 

we are talking about today, with a lack of funding, you know, 

maybe we have to do a better job of prioritizing. And just didn’t 

know if either one of you saw any of the responsibilities within the 

Coast Guard Mission Needs Statement as nonessential, or if not 

nonessential, a lower priority. 

Mr. O’ROURKE. If you can trace things in the Mission Needs 

Statement back to the 11 statutory missions, those 11 missions are 

a statement from Congress as to what is essential. And so, if you 

can provide a strong link translating from the 11 statutory missions to what you have in the Mission Needs Statement, then what 

it does is it brings it back to Congress to consider what the statutory missions might be. 

And rather than trying to tighten up the language, which could 

prove to be very difficult, what you would want to get is a better 

understanding from the Coast Guard as to how they look at those 

11 statutory missions, and translate them into narratives of what 

they think needs to be done. And then the Congress can decide 

whether they agree or disagree with that translation process. 

Mr. OFFUTT. I have a slightly different point of view, and that 

is you have these 11 statutory missions, and you have raised and 

trained a Coast Guard that is highly qualified. By the time you 

reach leadership position in the Coast Guard, you have spent well 

28 

over 20 years there. We have relied on their expertise and their 

training. 

And so, I say that through the guidance the Congress gives— 

and, of course, they get a lot of guidance from the administration 

and from DHS—I believe, truly believe, that the professionals in 

the Coast Guard understand what all of their requirements are, 

and that they are able to prioritize those requirements, based on 

the assets they have, based on their training, understanding, and 

personal experience. 

So, I am, again, very satisfied with what I see as the performance of the Coast Guard, not only at the senior leadership, but— 

what amazes me is the youngsters we see out there doing a job. 

We see JGs commanding ships. I saw a JG who was the only female on a ship as the XO of a 110 commanded by a lieutenant. And 

they were spending 24/7 at sea in the Mediterranean, doing their 

missions. And they understood their missions, and they went after 

them all the time. 

So I think that what we end up relying on is the personal ability 

and training and experience of our professional Coast Guard, both 

military and civilians, to actually sort through all of these missions 

and figure out which ones they can do and which ones are the most 

important. 

And it is just—quite frankly, in most Government agencies 

today, in the environment we are in, that is what is happening, you 

know. Our experienced folks in those agencies—it certainly is happening in DOD. We certainly see, you know, a prioritization of missions in all of the other four armed services. And then the Coast 

Guard, as well. I think we need to rely on our professionals. 

Ms. HAHN. And I don’t know if either of you have a comment on 

this, but you know, after 9/11 Congress passed H.R. 1, I think, 

which was 100 percent scanning of containers coming into our 

ports. We are not even close to that. We are at about 2 or 3 percent. We have this layered approach, trying to be more strategic. 

That is what still keeps me up at night, is what will come through 

our ports and create a disaster. 

But how much more is the Coast Guard expending in resources 

to participate in this layered approach, assess containers at risk, 

than if we actually were scanning these containers, so we actually 

knew what was in them? Would that be—is—I mean they are always talking about how it is too expensive, and other reasons why 

we can’t scan containers. I disagree with all that, and I always 

want to go on the record saying I think our ports are still our most 

vulnerable entryway into this country. But what if we actually 

were scanning? 

And, by the way, the technology exists today to scan these containers in a way that would not slow commerce. And would that 

in some way relieve the Coast Guard of tremendous resources in 

trying to participate in this layered approach to security? 

Mr. OFFUTT. Well, I agree with you—— 

Ms. HAHN. A question. 

Mr. OFFUTT. I agree with you that it is a risk. However, I think 

that the feeling of certainty for what is in a container involves 

more than just scanning it, because we actually—when you go back 

to port of origin, we actually have bills of lading and everything, 

29 

so we know that they are there. I have found Coast Guard in my 

travels around the world to visit my Navy League Councils, I have 

found Coast Guard folks in the funniest places, and a lot of them 

are there primarily because that is a container shipping port. 

Qatar is a good example. There were some Coast Guards there, 

and that is their primary job, was to look at bills of lading, and understand what was coming to the United States, and how that operates. 

So, the question is, you know, I think they are doing that mission 

to the extent they can. And could we do the mission better? Could 

we apply more technology? Could we scan things better? I agree 

with you. But I think it is being done to the extent that the professionals believe is necessary to ensure some sort of high percentage 

of reliability. 

Ms. HAHN. So you don’t think it would change if we began scanning 100 percent of our containers. You still think that it is an important, particularly at the port of origin, to—— 

Mr. OFFUTT. Yes, I do. 

Ms. HAHN [continuing]. Look at the manifest—— 

Mr. OFFUTT. I believe you could scan, but I believe that the port 

of origin and invoicing, or bill of lading process, is just as important 

as the scan. 

Ms. HAHN. It is a big, wide ocean. 

Mr. OFFUTT. Yes. 

Ms. HAHN. And a lot can happen—— 

Mr. OFFUTT. A lot can happen. 

Ms. HAHN [continuing]. Between the port of—the point of origin 

and when it lands at one of our U.S. ports. That is all I am going 

to—— 

Mr. OFFUTT. So you are familiar with AIS, though, the tracking 

of ships at sea? So, I mean, that is another part of the verification 

process. 

Yes, Mr. Chairman? 

Mr. HUNTER. Plus CBP, not the Coast Guard, does most of the 

scanning. Customs and Border Protection. 

Mr. OFFUTT. Right, Custom and the border patrols out there. 

Mr. HUNTER. Not the Coast Guard. 

Ms. HAHN. True, but I do think their resources are changed a little bit with their—you know, they now board the ships when they 

come into port. 

I just wonder if we are using their resources now in a way that 

we wouldn’t have to—— 

Mr. HUNTER. I agree. 

Ms. HAHN [continuing}. If they were actually scanned. 

Mr. HUNTER. It only takes one, anyway, correct? Yes. You know, 

I would agree with you if I think that every single person in every 

military service could be trusted to use their best professional opinion and their personality to ensure the job getting done. 

What you are admitting is there is a bad system. You said—so 

basically you are saying there is systemic problems, and we rely 

right now upon the personality and direct intervention of those professionals with experience to determine the best course of action. 

That is a recipe for disaster, because all you need is one bad 

player who doesn’t have the right experience, or takes a wrong 

30 

turn, and the system then is—since it is broken, and you are relying on one personality, you get one bad personality, and it all goes 

to hell. That is a problem with relying on just people making—with 

their best intentions, trying to make decisions that are not based 

on analytics of the system. 

Mr. OFFUTT. Well, I would not like to characterize it as one person. We have team approaches, we have technology to assist us, we 

have interagency, we have lots of backups to that one person. And 

when you see the decision process, which you are familiar—I mean, 

you know, the way the joint chiefs—the way the Coast Guard—the 

way it starts right from the top of the military and works its way 

down is a team approach. I wouldn’t characterize it as one person’s 

decision as to—for that kind of large error—— 

Mr. HUNTER. Well, let’s take this, for example. 

Mr. OFFUTT. OK. 

Mr. HUNTER. Let’s take the President just extended in the Pacific 

the marine sanctuary area that is, like, 50 miles out from different 

islands. He said he is going to quadruple it. OK? The only way you 

keep people from fishing in a marine sanctuary is Coast Guard patrols. That is the only way. 

So, while the President cuts the Coast Guard’s budget, their mission needs requirements and statements remain the same. He gives 

them a four times the area to patrol, while still not having enough 

assets in the—in SOUTHCOM’s AO to interdict drugs. That doesn’t 

seem like a very cohesive system from the top down. So he has 

given the Coast Guard four times more to patrol, while they have 

fewer assets, less money, and are pulling assets from SOUTHCOM. 

Sounds like they got the wrong personality in there somewhere. 

Mr. OFFUTT. No, somebody has to make a decision as to how— 

what is the—or how often—— 

Mr. HUNTER. Well, the President did. He said it is going to be 

four times, and you have to—— 

Mr. OFFUTT. Well, no, I am talking about now. So they are 

given—— 

Mr. HUNTER. You are talking tactics now? 

Mr. OFFUTT. No—yes, I am talking tactics now. 

Mr. HUNTER. So, like, Lieutenant JG—— 

Mr. OFFUTT. But that is not my expertise. But then there is the 

tactics of how soon or how often do we make a patrol through that 

increased area just to show presence. 

Mr. HUNTER. Well, sure. 

Mr. OFFUTT. So, I mean, so that is not—— 

Mr. HUNTER. Well, if the Coast Guard just had—— 

Mr. OFFUTT. I leave that up to professionals. 

Mr. HUNTER. If the Coast Guard just had one ship, I guess a professional could say, ‘‘This one ship is going to be present at any one 

place throughout the year.’’ 

But what I am saying is you got to have a system in place so 

that it is not all based on professionals and personality. 

Mr. OFFUTT. And I believe it is. 

Mr. HUNTER. General Mattis called that Handshake Con. 

Mr. OFFUTT. Right. 

Mr. HUNTER. Handshake Control, which works well—— 

Mr. OFFUTT. No, I agree. That is what is in place. 

31 

Mr. HUNTER [continuing]. Until you got bad hand-shakers. 

Mr. OFFUTT. Right. 

Mr. HUNTER. And then it stops working. 

Any closing statements? 

Mr. OFFUTT. No. I just want to thank you, Mr. Chairman. And 

it has been my privilege to brief two generations of distinguished—— 

Mr. HUNTER. Of Hunters? 

Mr. OFFUTT [continuing]. Chairmans. So—— 

Mr. HUNTER. He was a real chairman; I am a little chairman. 

[Laughter.] 

Mr. HUNTER. But thank you. And, with that, the hearing is adjourned. 

[Whereupon, at 11:02 a.m., the subcommittee was adjourned.] 

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