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55–461 PDF 2010

A REVIEW OF COAST GUARD 

ACQUISITION PROGRAMS 

AND POLICIES 

(111–95) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COAST GUARD AND MARITIME TRANSPORTATION 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

March 11, 2010 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JAMES L. OBERSTAR, Minnesota, Chairman 

NICK J. RAHALL, II, West Virginia, Vice 

Chair 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

GENE TAYLOR, Mississippi 

ELIJAH E. CUMMINGS, Maryland 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

BRIAN BAIRD, Washington 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

RUSS CARNAHAN, Missouri 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

MAZIE K. HIRONO, Hawaii 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

MICHAEL A. ARCURI, New York 

HARRY E. MITCHELL, Arizona 

CHRISTOPHER P. CARNEY, Pennsylvania 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

STEVE COHEN, Tennessee 

LAURA A. RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

SOLOMON P. ORTIZ, Texas 

PHIL HARE, Illinois 

JOHN A. BOCCIERI, Ohio 

MARK H. SCHAUER, Michigan 

BETSY MARKEY, Colorado 

MICHAEL E. MCMAHON, New York 

THOMAS S. P. PERRIELLO, Virginia 

DINA TITUS, Nevada 

HARRY TEAGUE, New Mexico 

JOHN GARAMENDI, California 

VACANCY 

JOHN L. MICA, Florida 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

VERNON J. EHLERS, Michigan 

FRANK A. LOBIONDO, New Jersey 

JERRY MORAN, Kansas 

GARY G. MILLER, California 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

CONNIE MACK, Florida 

LYNN A WESTMORELAND, Georgia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

ROBERT E. LATTA, Ohio 

BRETT GUTHRIE, Kentucky 

ANH ‘‘JOSEPH’’ CAO, Louisiana 

AARON SCHOCK, Illinois 

PETE OLSON, Texas 

(II) 

SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION 

ELIJAH E. CUMMINGS, Maryland, Chairman 

CORRINE BROWN, Florida 

RICK LARSEN, Washington 

GENE TAYLOR, Mississippi 

BRIAN BAIRD, Washington 

TIMOTHY H. BISHOP, New York 

STEVE KAGEN, Wisconsin 

MICHAEL E. MCMAHON, New York, Vice 

Chair 

LAURA A. RICHARDSON, California 

JAMES L. OBERSTAR, Minnesota 

(Ex Officio) 

FRANK A. LOBIONDO, New Jersey 

DON YOUNG, Alaska 

HOWARD COBLE, North Carolina 

VERNON J. EHLERS, Michigan 

TODD RUSSELL PLATTS, Pennsylvania 

PETE OLSON, Texas 

(III) 

(V) 

CONTENTS Page 

Summary of Subject Matter .................................................................................... vi 

TESTIMONY 

Rabago, Rear Admiral Ronald J., Assistant Commandant for Acquisition & 

Chief Acquisition Officer, United States Coast Guard ...................................... 3 

PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS 

LoBiondo, Hon. Frank A., of New Jersey .............................................................. 12 

PREPARED STATEMENT SUBMITTED BY WITNESS 

Rabago, Rear Admiral Ronald J. ............................................................................ 20 

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(1) 

HEARING ON A REVIEW OF THE COAST 

GUARD ACQUISITION PROGRAMS AND POLICIES 

Thursday, March 11, 2010, 

HOUSE OF REPRESENTATIVES

SUBCOMMITTEE ON COAST GUARD, AND MARITIME

TRANSPORTATION, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 10:00 a.m., in Room 

2167, Rayburn House Office Building, the Honorable Elijah E. 

Cummings [Chairman of the Subcommittee] presiding. 

Mr. CUMMINGS. The Subcommittee will come to order. 

The Subcommittee convenes today to continue what has been our 

ongoing examination of the Coast Guard’s acquisition programs 

and policies. As I have repeatedly said during my tenure, I believe 

that one of our central responsibilities as a Congress is to conduct 

effective oversight and effective oversight requires diligent and continuing follow-up. This is the fourth hearing the Subcommittee has 

convened on the Coast Guard’s acquisition efforts during my tenure 

as Subcommittee Chairman, and I feel confident in saying it will 

not be the last. 

The Coast Guard’s acquisition programs, particularly its Deepwater Program, are procuring the fleet of ships and aircraft on 

which the service will rely on for decades. In fact, if history is any 

guide, the Coast Guard will rely on these assets many years after 

they have reached the end of their useful service lives. 

There is absolutely no question that the Coast Guard needs new 

assets. The extent of this need was most recently illustrated during 

the service’s response to the earthquake in Haiti, when 10 of the 

Coast Guard’s 12 responding ships suffered what Admiral Allen 

termed in his testimony before our Subcommittee last month as 

mission-affecting breakdowns. Several had to return to port to undergo emergency repairs. 

To ensure that the Coast Guard has assets that can meet its mission needs for the decades during which they will be used, and to 

ensure that the Coast Guard gets the full value for the taxpayer 

funding it expends to purchase these assets, the service must manage its ongoing acquisition efforts effectively and efficiently. Obviously, in the past, the Coast Guard faced significant challenges 

managing Deepwater. 

However, as the Government Accountability Office stated during 

the budget hearing we convened last month to consider the AdminVerDate Aug 31 2005 16:41 Jun 29, 2010 Jkt 000000 PO 00000 Frm 00025 Fmt 6633 Sfmt 6633 P:\DOCS\55461 JASON
2 

istration’s fiscal year 2011 budget request for the Coast Guard, we 

are now in a far better place, and I commend Admiral Allen, Admiral Blore, and now Admiral Rabago, today’s witness, and their 

teams for their enormous work in modernizing and strengthening 

the Coast Guard’s acquisition and management processes. 

Today’s hearing will enable us to examine where we are now and 

to assess the Coast Guard’s current acquisition management challenges. Of particular concern, the Coast Guard has brought the 

lead systems integration function in-house. We want to review how 

the service’s assumption of these responsibilities is proceeding, including whether the Coast Guard has the personnel it needs to effectively and efficiently carry out these functions. Further, the 

Coast Guard is appropriately treating the Deepwater procurements 

on an asset-by-asset basis, rather than as a system of systems that 

the private sector contractor team previously serving as the lead 

systems integrator had envisioned. 

The service is now developing individual acquisition program 

baselines for these assets, and while I know that cost estimates developed by the ICGS team were likely costs to contract rather than 

true program baselines, nonetheless, the costs of the individual assets appear to be rising as the baselines are developed. As such, 

the total cost of the acquisitions planned under Deepwater are uncertain, but it is unlikely that the costs will fall below earlier projections. In fact, it appears that, if implemented as currently 

planned, the Deepwater acquisitions may equal or exceed $27 billion. 

We look forward to a frank discussion of Deepwater’s likely costs 

as we seek to understand how cost increases during a time of constrained budgets will shape the Coast Guard’s acquisition plans, including the tradeoffs that are made in the selection of technologies 

for individual assets. 

Before I close, I note that I authored legislation that has already 

passed the House by a vote of 426 to nothing that would put new 

statutory requirements in place to strengthen the Coast Guard’s 

acquisition management processes. This legislation would require 

the appointment of a chief acquisition officer who could be either 

a member of the military or civilian member of the Senior Executive Service, but who must be a Level 3 program manager and who 

must have 10 years of professional experience in acquisition management. 

Additionally, the legislation would require that the Coast Guard 

put in place systems to ensure that it effectively defines operational requirements before initiating acquisition efforts and to ensure all acquired assets undergo thorough developmental and operational testing. This legislation would also require the service to 

develop and maintain a career path in acquisition management to 

ensure that it has the acquisition professionals it needs to effectively manage its acquisitions. 

This legislation, like so many other bills already passed by the 

House, still awaits consideration in the Senate. I would hope that 

they would move this bill before the end of the current session. 

Mr. CUMMINGS. We will recognize Mr. LoBiondo when he arrives; 

he is at a conference right now and he will be coming in shortly. 

3 

With that, we will now hear from our first witness. Rear Admiral 

Ronald J. Rabago is the Assistant Commandant for Acquisition & 

Chief Acquisition Officer with the United States Coast Guard. 

Rear Admiral, welcome, and we look forward to hearing your testimony. 

TESTIMONY OF REAR ADMIRAL RONALD J. RABAGO, ASSISTANT COMMANDANT FOR ACQUISITION & CHIEF ACQUISITION OFFICER, UNITED STATES COAST GUARD 

Admiral RABAGO. Good morning, Mr. Chairman, distinguished 

Members of the Subcommittee. As the Coast Guard’s Assistant 

Commandant for Acquisition, I appreciate the opportunity to appear before you today to update you on the Coast Guard’s acquisition enterprise and our strategy going forward for our critically 

needed recapitalization efforts. 

It has been three years since our Commandant, Admiral Thad 

Allen, outlined the beginnings of a comprehensive acquisition reform effort, reforms this Subcommittee helped initiate and shape. 

While there is still work to be done, we have made tremendous 

progress transforming ourselves into an acquisition organization 

that can deliver complex, interoperable, multimillion dollar assets 

to our frontline forces that meet clear documented requirements. 

We have institutionalized consistent processes from our Major Systems Acquisition Manual, and our multi-year strategic plan, the 

Blueprint for Continuous Improvement, provides a guiding framework of actionable and measurable goals. 

The Department of Homeland Security’s role in acquisition management and oversight has also matured. We now benefit from 

their careful review of all of our highest dollar programs at each 

key decision milestone. The Coast Guard now relies on an interactive framework of checks and balances inherent in the roles of 

requirement sponsors and technical authorities. We regularly employ mutually beneficial partnerships with third-party entities such 

as the U.S. Navy. 

I can definitively state that the Coast Guard is the lead system 

integrator for all of our major acquisition projects. We control the 

requirements, the technical baselines, the integration of systems, 

asset interoperability, and sequence delivery of new capability. We 

are responsibly phasing out our existing contractual lead system 

integrated relationships. For example, the current award term contract with integrated Coast Guard systems expires in January 2011 

and will not be renewed. 

We hired 90 new acquisition professionals in fiscal year 2009, 

thereby reducing our civilian vacancy rate from nearly 24 percent 

to less than 11 percent. We are grateful to Congress for its fiscal 

year 2010 appropriation that permits us to hire 100 additional acquisition professionals. We are already recruiting to fill those positions. Furthermore, we are committed to the quality and retention 

of our valued acquisition workforce through professional development and credentialing. We are in full compliance with our Department’s requirement for Level 3 program manager certification for 

our 15 highest dollar programs. Focusing on our people has made 

us a better acquisition organization. 

4 

As we continue to improve, one of the best measures of success 

is timely and cost-effective delivery of critically-needed assets and 

systems to the men and women executing Coast Guard missions for 

our Nation. In May of last year, we took final acceptance of the 

first National Security Cutter, Bertholf, and she has already conducted successful operational patrols while completing her remaining post-delivery work and certifications. 

Waesche just arrived to our Alameda, California home port and 

is preparing for her commissioning in May. She enjoyed numerous 

process improvements during construction and testing, including 

receiving the authority to operate her classified systems a year 

faster than Bertholf. Stratton, our third National Security Cutter, 

is 37 percent complete and will be launched this summer. We received a production proposal for the fourth National Security Cutter that we are evaluating prior to entering into formal negotiations with the shipbuilder. 

We successfully completed a critical design review for the sentinel class fast response cutters and now have four cutters on contract. Construction of the lead ship is underway. We have finalized 

the requirements for the offshore patrol cutter, and in the coming 

year we intend to complete our acquisition strategy, initial cost estimates, alternatives analysis, as we prepare our request for proposal to industry. 

Since October of last year, the HC-144A Maritime Patrol Aircraft 

has been standing the watch at Mobile, Alabama, and most recently performing missions in support of the earthquake response 

over Haiti. Our new maritime distress and response, Rescue 21, 

stands watch over 35,000 miles of our coastline and has already 

saved the lives of numerous mariners. 

As we move forward, some challenges remain. Stable budgets 

and continued strong support by the Administration and Congress 

are key to the Coast Guard’s ability to efficiently recapitalize our 

aging assets and systems. Accurate cost estimates, stable requirements, and timely delivery of capability to the field all depend on 

predicable funding streams. 

Our trained and experienced acquisition workforce is central to 

our future success, and the Coast Guard must compete on a level 

playing field with hour military counterparts for acquisition talent 

here in Washington, D.C. and throughout the Nation. Parity in hiring and compensation authorities will enable us to compete fairly, 

especially as other agencies increase the size of their acquisition 

workforce. 

The Coast Guard’s Acquisition Directorate’s job is to recapitalize 

the Coast guard, and I am committed to continue to improve our 

processes and to always be a good steward of the taxpayers’ dollar. 

The Coast Guard men and women who serve our Nation and the 

American public deserve nothing less. 

Mr. Chairman, I would like to request that my full written statement be submitted for the record. Thank you again for the opportunity to come before you today to discuss Coast Guard acquisition, 

and I look forward to your questions. 

Mr. CUMMINGS. Without objection, your full statement will become a part of the record. I want to thank you for your testimony. 

5 

I was just looking at your testimony and was listening to you, 

and you were saying that in fiscal year 2010 the appropriation allowed you to hire 100 additional acquisition professionals. In fiscal 

year 2009 you say we hired 90 new acquisition professionals, reducing our civilian vacancy rate from nearly 24 percent at the end of 

fiscal year 2008 to less than 10 percent by the end of 2009. 

The new budget, the one the President proposes, 2011, does that 

affect you in any way? 

Admiral RABAGO. Yes, it does. It does—— 

Mr. CUMMINGS. I mean as laid out right now. We have made it 

clear in this Subcommittee that we are going to fight to restore 

funding so we can get our personnel level up and do all the things 

that the Coast Guard needs to do. But assuming it stays as it is, 

how would that affect your acquisition efforts? 

Admiral RABAGO. Sir, our acquisition program baselines you 

spoke of earlier, sir, or our plans for executing our acquisition 

projects efficiently, effectively, and laying out a plan for the contracts that do that work, they are based on funding budgets that 

are laid out, and the fiscal year 2011 budget is a change from what 

we saw previously, so what we have to do is take a look at our acquisition program baselines, update those based on the funding 

that we see in fiscal year 2011 plus what is in our capital investment plan for the out-years all the way through to fiscal year 2015, 

and we are in the process of doing that, sir. 

Mr. CUMMINGS. Has it been difficult to find the civilians to go 

into those positions? It seems like you made some significant hires. 

And where do you find these folks; who are they? 

Admiral RABAGO. The first part of your question, sir, it is difficult, but we have a very good human resource team and they are 

able to bring in some tremendously qualified and very capable people into our organization. That includes not only our civilian professionals that we are hiring, but also our military professionals that 

we bring in which round out our acquisition organization. 

The military, of course, we bring in from our technical authorities, our sponsor, our field offices that have experience operating 

and working in the Coast Guard; and, of course, our civilian counterparts, they come from a variety of places, they come from other 

agencies, they come sometimes from the private sector. All of those, 

though, rounded out together, have given us a really high quality 

acquisition workforce. 

Mr. CUMMINGS. And what about training? You know, one of the 

things that we were concerned about is that we grow and train people inside the military, the Coast Guard, and a concern, too, was 

that because of the rotational requirements or rules, that a lot of 

times people are not able to stay long enough to be seasoned, and 

then they move on to something else. How do you deal with that? 

Admiral RABAGO. That is an area that we have really tackled 

very aggressively. In the last five years we have increased the 

number of certified acquisition professionals from around 30 up to 

630. Many of those individuals are not directly in the Acquisition 

Directorate; they reside in our technical authority areas, they work 

in our sponsor shop, they work in a resource shop, they work in 

a variety of places in the Coast Guard. 

6 

And that really represents the future of bringing in and rotating 

military personnel that have acquisition experience into the Acquisition Directorate and then back out again into the technical authorities. So that really becomes our center of gravity in the sense 

of having professionals not just in acquisition, but really throughout the Coast Guard that are learning the skills necessary to be 

successful acquirers. 

Mr. CUMMINGS. Now, is the acquisitions, is that something that 

is attractive to people in the military? In other words, I know that 

there are various fields that people are automatically attracted to, 

but is acquisition something that folks seem to be excited about? 

Admiral RABAGO. Yes, sir. We find, especially in the last two or 

three years, that we have been able to have a great deal of interest 

in our military professionals wanting to join the team and be part 

of acquisition, not necessarily in the Acquisition Directorate, but 

also in the technical authorities. They want to be part of recapitalizing the Coast Guard and they are excited about that. 

Mr. CUMMINGS. Now, the Coast Guard has, as you stated in your 

testimony, assumed responsibility for acquisition efforts that comprises the Deepwater program. The service is now developing individual acquisition program baselines with these assets, and while 

I know that the core system is developed by ICGS team or likely 

cost to contract, rather than true program baselines, nonetheless, 

the cost of individual assets appear to be rising as the baselines are 

developed, such the total cost of the acquisitions planned under 

Deepwater are uncertain. But it is unlikely that the costs will go 

below what was projected when we held our last hearing to examine the Deepwater programs back in March 2009. 

What do you estimate the cost of the procurements currently en- visioned under Deepwater to be and will the costs exceed the $27 

billion? 

Admiral RABAGO. Yes, sir. As part of our process, you mentioned 

disaggregating the original integrated Deepwater system, APB, 

which had all of the system-of-systems strategy in terms of how the 

individual assets were to be procured. We have moved away from 

that at direction of GAO, at direction of this Subcommittee, as well 

as our Department, into individual acquisition program baselines, 

which are really a plan that talk about cost schedule and performance of the asset. Managing them all in a single acquisition program baseline, we could not do that effectively, and that is why we 

are doing them individually. 

As we go through and do the individual acquisition program 

baselines, we subject those projects to the full rigor of our major 

systems acquisition manual, all of the requirements that are in our 

Coast Guard policy for acquisition, but also concurring with our departmental policy, and make sure that we have accurate cost estimates, that we have a plan that is based on the budgets that we 

project, we have contracts in place that will deliver the capability 

to the Coast Guard in a timely and effectively fashion. 

And when you put that level of accuracy on there, the dollars are 

going to be different from what was done originally by the ICGS 

contract. These are accurate, much more improved in terms of the 

quality and the fidelity of the information in those acquisition program baselines by asset is much better, and therefore we are conVerDate Aug 31 2005 16:41 Jun 29, 2010 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 P:\DOCS\55461 JASON
7 

fident that those then represent the true cost, true schedule, and 

true performance characteristics of the assets that we are acquiring. 

Mr. CUMMINGS. Mr. Coble. 

Mr. COBLE. Thank you, Mr. Chairman. I am sorry I am belated 

today; I am running between different meetings. 

Good to have you with us, Admiral. Admiral, the Coast Guard recently completed a fleet mixture analysis to determine the number 

and types of vessel platforms that will be necessary to support the 

Coast Guard missions in the future. Ranking Members Mica and 

LoBiondo requested this report I think last month. When can we 

expect that report to be submitted to the Subcommittee, Admiral? 

Admiral RABAGO. Sir, our Operational Directorate is overseeing 

that effort; it is in its final review at the Coast Guard and is expected to be briefed to the Department shortly and then out to the 

committees after that point, sir. 

Mr. COBLE. Does the analysis take into account limitations resulting from budget constraints or, rather, does it only make recommendations on the capabilities and qualities of assets that 

would compose an optimal fleet mixture? 

Admiral RABAGO. It takes into account the missions that the 

Coast Guard assets are to work on, it builds off the alternatives 

analysis that was done with the Deepwater Program, and it takes 

a look at the missions that the Coast Guard is executing, again, 

with those assets; and it is looking across the board at all those assets and how the Coast Guard would execute with the ships and 

planes that are there. So it is a very comprehensive review and 

that is why it is taking the time for the Coast Guard to complete 

its final evaluation of it. 

Mr. COBLE. I thank you for that. Admiral, does the report offer 

alternatives that the Coast Guard is considering? 

Admiral RABAGO. I have not seen that, sir. I will make sure I get 

back to the record for you on that, sir. 

Mr. COBLE. If you would do that, I would appreciate it. Thank 

you, Admiral. 

Thank you, Mr. Chairman. 

Mr. CUMMINGS. Thank you, Mr. Coble. 

Let’s go back, Admiral, to my question a little earlier. And if you 

can’t tell me, tell me that you can’t tell me, but, again, do you expect the cost of Deepwater to exceed the $27 billion? 

Admiral RABAGO. Sir, with the additional four acquisition program baselines that we have done since the hearing in 2009, the 

estimate at this point is approximately $27.4 billion, and that is, 

again, with those four additional baselines that now have more fidelity and accuracy in our cost estimating. We still have four APBs 

that we are pouring out of the original IDS APB, and once that is 

done, then we will then have the full cost of the Deepwater capability as originally envisioned. 

Mr. CUMMINGS. Now, the budget proposes that the funding for 

the next NSC’s combined funding for long-lead materials and construction in a single year’s appropriation, what is the likely impact 

on production if funding for long-lead materials is not available before the production of funding? 

8 

Admiral RABAGO. There is an impact. Long-lead materials are 

bought in—what we have previously done—approximately one year 

prior to the award of a production contract. That is because the 

materials and the systems that are purchased with that money 

sometimes have as much as two years from the day of order to the 

day of delivery to the shipyard, so it is important that you sequence the arrival of that equipment—like engines and other important components of the ship—in time to meet the construction 

schedule for the ship itself. If it is not ordered in advance, you have 

to make adjustments to the way you build the ship, which could 

produce inefficiencies and increase cost. 

Mr. CUMMINGS. I notice that we have some guests in the room. 

Welcome to our hearing. So that you will know what we are talking 

about, this is the Coast Guard Subcommittee of the Transportation 

Committee, and a few years ago some legislation was put forth to 

acquire some $25 billion worth of assets over the course of 25 

years, and what happened is that the Coast Guard, because we 

needed strong acquisitions personnel and because of the way the 

contract was structured, we literally were not getting the products 

that we needed for our Coast Guard. 

So we have now sort of revamped that so that we are more effective and efficient in acquiring boats and planes, and the Admiral 

here from the Coast Guard is just telling us what we have been 

able to accomplish with regard to that program and revamping it 

so that we can more effectively and efficiently acquire assets for 

our United States Coast Guard. 

The Coast Guard is approximately 42,000 personnel. It is a small 

agency, but they do a lot of very, very important things. 

So I just wanted you to know what we are doing here today, and 

we thank you and we are glad to have you with us. 

Admiral, when you look at where we are, do you think the—do 

you have any comments on the fiscal year 2011 budget? I know you 

are sort in a—you have to go along with what Homeland Security 

is saying, but any comments so that we can—because I don’t want 

us to go backwards. We have made a lot of progress. I am extremely impressed with what has happened, although the Senate 

has not moved on our legislation. But I am extremely impressed 

with what the Coast Guard has done and I don’t want to see us 

go backwards. So do you have anything that you would want us to 

consider as we move forward in trying to make sure that the Coast 

Guard has all the money that it needs to do its job? 

Admiral RABAGO. Sir, we appreciate the support of the Subcommittee and you, sir, as Chairman. Our fiscal year 2011 budget 

is—we are in the process now, as I said before, of evaluating its 

impact and also the plan that came with it in terms of what the 

out-year funding is predicted to be, and we are adjusting and 

adapting our projects through a re-look at our acquisition program 

baselines to make sure that we account for the planned budget and 

funding stream. 

Steady budgets for the Coast Guard, steady stream of funding is 

very important in terms of an acquisition program baseline. If you 

are going to be acquiring an asset for many years, it is very important that you set forth contracts that anticipate funding at certain 

levels and at certain times. So we watch that very closely. We are 

9 

always appreciative when the funding in the budget is stable as we 

move forward; it allows us to plan better and to be more efficient 

in delivering the capability to the Coast guard. 

Mr. CUMMINGS. Now, tell me what are the main challenges that 

you have encountered in assuming the lead systems integration responsibilities, and I guess specific challenges you have not yet met 

in performing those tasks? Because, again, going from the lead systems integration, that is quite a shift difference that we made, with 

the two contractors pretty much being in charge now the Coast 

Guard taking on its own responsibilities. You can go ahead and answer the question. 

Admiral RABAGO. Yes, sir. The task of being a lead system integrator is a challenging task; it is one the Coast Guard is embracing 

and we are making great progress with that. We understand what 

it is. We are grateful for the appropriations that have provided the 

additional acquisition professionals to our organization; it has enabled us to manage it. And, again, not just in our Acquisition Directorate, but with our technical authorities, our sponsor, and the 

other entities in the Coast Guard that are required, including our 

ability to deliver these assets and put them out for the Coast 

Guard to use. 

As the lead system integrator, it is two parts for us. One is a 

transition from the commercial contract that is in place. That is 

progressing well and winnowing down, and, as I said, we will not 

renew that contract when it expires in 2011 for the ICGS and the 

Deepwater contract. 

Mr. CUMMINGS. Now, some—no, you go ahead. I am sorry. 

Admiral RABAGO. The other part of it is what we are doing within the Coast Guard. One is a human resource issue, which is the 

certification, the qualification and experience of our acquisition professionals, again, within the Directorate and without; and then also 

putting the policies, the processes, the discipline, the internal controls necessary to manage complex acquisition that run over multiple years and also, as a system integrator, to make all of those 

assets and all of those projects work together effectively so that we 

deliver capability that is integrated and interoperable for our Coast 

Guard forces. 

Mr. CUMMINGS. Now, one of the things that had come up earlier, 

we had wanted to make sure that we were using the Navy because 

the Navy had such a sophisticated acquisitions body to address acquisitions, and we got the impression at one point that the Coast 

Guard had a lot of pride, and we understand that, but we also 

want it to be effective and efficient. So we were wondering how has 

the relationship been with the Navy. 

Admiral RABAGO. The relationship with the Navy is excellent, 

sir. We utilize their expertise in a number of different areas. We 

also contribute to their expertise with some of the work that we do. 

We are at the table with them when it comes to looking at rates 

at shipyards where we both have Navy work and Coast Guard 

work going on; we use some of their expertise for some of the testing and evaluation and capability that they have. We put a Coast 

Guard flavor on it to make sure, though, that the assets being tested are suitable for Coast Guard missions. 

10 

And the Navy has worked very well with us to do exactly that. 

So we have literally dozens of connection points to the U.S. Navy 

and other agencies, including within our own Department, other 

components like Customs and Border Protection. We look for great 

partnerships in a multitude of areas to make sure that we are informed, because even with our growth of acquisition expertise and 

personnel, we can leverage expertise and resources and capacity in 

the other agencies, and we are doing exactly that, sir. 

Mr. CUMMINGS. Now, some cost estimates for the offshore patrol 

cutter seem to indicate that these vessels could cost as much as the 

NSCs. Are the OPCs envisioned to be just slightly smaller versions 

of the NSC? Further, without completion of the fleet mix analysis, 

which will presumably lay out detailed mission requirements for 

the OPC, is the Coast Guard in a position to move forward on the 

design of the OPC? 

Admiral RABAGO. Yes, sir. We have just complete the requirements. The requirements are at the Department for their approval. 

The OPC, as laid out, is going to be a very capable ship. It is not 

an NSC. It will provide great capability that is set forth. We spent 

a lot of time on the requirements to make sure they were right. 

The sponsor has given me a good set of requirements and I, as an 

acquirer, can use those requirements and go off and design and 

continue to work collaboratively with the sponsor and the technical 

authorities to produce a great ship that is going to be able to perform Coast Guard missions. 

Mr. CUMMINGS. Now, do you still expect to procure Aden NSCs and will the cost come in at or under the $4.7 billion acquisition 

program baseline currently in place? Further, are there differences 

between the assumptions made in the APB for the NSC and the 

funding assumptions in your long-range capital plan? If so, what 

are they and what will be done to reconcile them? One of the things 

that I noticed with the NSCs is that it seems as if the costs were 

steadily rising, far above what we had anticipated, because they 

were trying to work out the little problems and whatever, but those 

problems seem to be quite costly. What do you anticipate with regard to cost overruns? 

Admiral RABAGO. Yes, sir. We do plan for eight NSCs. That is 

what is in our APB. We will continue with that. We are evaluating 

what the fiscal year 2011 capital investment plan, the out-year 

plan, and how it lays out the funding and the funding in fiscal year 

2011, how that will affect our APB. It is a different funding strategy than what is in our acquisition program baseline, so, again, our 

APB is a plan. We now need to go back and take a look at what 

the realities of the current budget is against that plan and come 

back, and I could then tell you what the changes in cost, if any, 

will be. 

I am sorry, sir. 

Mr. CUMMINGS. No, you go ahead. 

Admiral RABAGO. As far as the ships in terms of cost management, the Department has been working closely with us. We have 

actually taken a close look at cost. One of the biggest drivers for 

cost is changing requirements. The National Security Cutter has 

very stable requirements. We intend to build the same ship all the 

way through to the eighth ship, and we are doing that on the curVerDate Aug 31 2005 16:41 Jun 29, 2010 Jkt 000000 PO 00000 Frm 00034 Fmt 6633 Sfmt 6633 P:\DOCS\55461 JASON
11 

rent set of ships, on the ships that are under construction right 

now, and we intend to continue to manage the cost. 

There were a number of cost increases due to material increases 

and other things that have been put in. Some of those are reflected 

in our current acquisition program baseline; others are inflation 

and other factors that we will look at when we reevaluate what the 

fiscal year 2011 budget, how it affects our acquisition program 

baseline. 

Mr. CUMMINGS. Do you think we have pretty much perfected the 

NSCs now? 

Admiral RABAGO. Yes, sir. We are ready to continue to build 

those ships out. When it comes time to—once you have a stable set 

of requirements, you have your manufacturing processes figured 

out in the shipyard, the most efficient and effective thing to do is 

to build the ships as quickly as you can. The costs only rise as you 

stretch the program. 

Mr. CUMMINGS. Now, the boats that couldn’t float, the ones that 

end up in the Coast Guard yard there in Baltimore, I understood 

they took some of the—they were able to use some parts of those, 

is that right? 

Admiral RABAGO. Yes, sir. Those are the 123s, sir, and those 

eight vessels are the subject currently of a Department of Justice 

investigation. We are supporting that investigation, preserving the 

evidence, but at the same time we have worked closely with them 

to be able to start to remove critical components off of those vessels 

to support our in-service 110-foot vessels which are out, of course, 

executing Coast Guard missions. 

We have taken engines and reduction gears off of two vessels. We 

intend to take the same equipment off of three more so we can put 

them into our repairable pipeline and repair those engines and get 

them out in service back for the Coast Guard. 

Mr. CUMMINGS. Again, we are going to call the hearing to an end, 

but I want to thank you very much for your—hold on a second. 

It is my understanding that Mr. LoBiondo has a statement. We 

will make that statement a part of the record, without objection. 

Mr. CUMMINGS. I want to thank you very much, and, again, I reiterate what I said a little bit earlier. I was very, very pleased— 

and I think I speak for Mr. LoBiondo also—at the progress that we 

have made with regard to acquisitions. It has simply been phenomenal and we are very proud of what you all have been able to 

achieve, and I think that the American people, when we compare 

where Deepwater was a few years ago and where it is now, it is 

light years, and I just want to congratulate you and all of those in 

the Coast Guard who have been a part of making that happen. 

The other thing I would say is I want to thank the Coast Guard 

for your response in Haiti. All the reports that have come back said 

that the Coast Guard performed at the top of its game, no doubt 

about it, just as they did in Katrina. And I just want to make it 

clear to all the Coast Guard’s men and women that we in this Congress are very grateful for all that they have done and all they are 

doing. 

With that, this hearing is at its end. 

Admiral RABAGO. Thank you, sir. 

[Whereupon, at 10:40 a.m., the Subcommittee was adjourned.] 

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