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22–503 PDF 2006

DEEPWATER IMPLEMENTATION

(109–24)

HEARING

BEFORE THE

SUBCOMMITTEE ON

COAST GUARD AND MARITIME TRANSPORTATION

OF THE

COMMITTEE ON

TRANSPORTATION AND

INFRASTRUCTURE

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

FIRST SESSION

JUNE 21, 2005

Printed for the use of the

Committee on Transportation and Infrastructure

(
COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE

DON YOUNG, Alaska, Chairman

THOMAS E. PETRI, Wisconsin, Vice-Chair

SHERWOOD L. BOEHLERT, New York

HOWARD COBLE, North Carolina

JOHN J. DUNCAN, JR., Tennessee

WAYNE T. GILCHREST, Maryland

JOHN L. MICA, Florida

PETER HOEKSTRA, Michigan

VERNON J. EHLERS, Michigan

SPENCER BACHUS, Alabama

STEVEN C. LATOURETTE, Ohio

SUE W. KELLY, New York

RICHARD H. BAKER, Louisiana

ROBERT W. NEY, Ohio

FRANK A. LOBIONDO, New Jersey

JERRY MORAN, Kansas

GARY G. MILLER, California

ROBIN HAYES, North Carolina

ROB SIMMONS, Connecticut

HENRY E. BROWN, JR., South Carolina

TIMOTHY V. JOHNSON, Illinois

TODD RUSSELL PLATTS, Pennsylvania

SAM GRAVES, Missouri

MARK R. KENNEDY, Minnesota

BILL SHUSTER, Pennsylvania

JOHN BOOZMAN, Arkansas

JIM GERLACH, Pennsylvania

MARIO DIAZ-BALART, Florida

JON C. PORTER, Nevada

TOM OSBORNE, Nebraska

KENNY MARCHANT, Texas

MICHAEL E. SODREL, Indiana

CHARLES W. DENT, Pennsylvania

TED POE, Texas

DAVID G. REICHERT, Washington

CONNIE MACK, Florida

JOHN R. ‘RANDY’ KUHL, JR., New York

LUIS G. FORTUN ̃ O, Puerto Rico

LYNN A. WESTMORELAND, Georgia

CHARLES W. BOUSTANY, JR., Louisiana

VACANCY

JAMES L. OBERSTAR, Minnesota

NICK J. RAHALL, II, West Virginia

PETER A. DEFAZIO, Oregon

JERRY F. COSTELLO, Illinois

ELEANOR HOLMES NORTON, District of

Columbia

JERROLD NADLER, New York

ROBERT MENENDEZ, New Jersey

CORRINE BROWN, Florida

BOB FILNER, California

EDDIE BERNICE JOHNSON, Texas

GENE TAYLOR, Mississippi

JUANITA MILLENDER-MCDONALD,

California

ELIJAH E. CUMMINGS, Maryland

EARL BLUMENAUER, Oregon

ELLEN O. TAUSCHER, California

BILL PASCRELL, JR., New Jersey

LEONARD L. BOSWELL, Iowa

TIM HOLDEN, Pennsylvania

BRIAN BAIRD, Washington

SHELLEY BERKLEY, Nevada

JIM MATHESON, Utah

MICHAEL M. HONDA, California

RICK LARSEN, Washington

MICHAEL E. CAPUANO, Massachusetts

ANTHONY D. WEINER, New York

JULIA CARSON, Indiana

TIMOTHY H. BISHOP, New York

MICHAEL H. MICHAUD, Maine

LINCOLN DAVIS, Tennessee

BEN CHANDLER, Kentucky

BRIAN HIGGINS, New York

RUSS CARNAHAN, Missouri

ALLYSON Y. SCHWARTZ, Pennsylvania

JOHN T. SALAZAR, Colorado

(II)
SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

FRANK A. LOBIONDO, New Jersey, Chairman

HOWARD COBLE, North Carolina

WAYNE T. GILCHREST, Maryland

PETER HOEKSTRA, Michigan

ROB SIMMONS, Connecticut

MARIO DIAZ-BALART, Florida

DAVID G. REICHERT, Washington,ViceChair

CONNIE MACK, Florida

LUIS G. FORTUN ̃ O, Puerto Rico

CHARLES W. BOUSTANY, JR., Louisiana

DON YOUNG, Alaska

(Ex Officio)

BOB FILNER, California, Ranking Democrat

CORRINE BROWN, Florida

GENE TAYLOR, Mississippi

JUANITA MILLENDER-MCDONALD,

California

MICHAEL M. HONDA, California

ANTHONY D. WEINER, New York

BRIAN HIGGINS, New York

BRIAN BAIRD, Washington

JAMES L. OBERSTAR, Minnesota

(Ex Officio)

(III)

(V)

CONTENTS

TESTIMONY

Page

Allen, Vice Admiral Thad W., Chief of Staff, United States Coast Guard,

accompanied by Gregory L. Giddens, Deputy Program Executive Officer

for the Integrated Deepwater System, United States Coast Guard ................ 3

PREPARED STATEMENT SUBMITTED BY A MEMBER OF CONGRESS

Filner, Hon. Bob, of California ............................................................................... 35

PREPARED STATEMENT SUBMITTED BY THE WITNESS

Allen, Vice Admiral Thad W. .................................................................................. 21

(1)

DEEPWATER IMPLEMENTATION

Tuesday, June 21, 2005

HOUSE OF REPRESENTATIVES, COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, SUBCOMMITTEE ON

COAST GUARD AND MARITIME TRANSPORTATION, WASHINGTON, D.C.

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

2167, Rayburn House Office Building, Hon. Frank A. LoBiondo

[chairman of the committee] presiding.

Mr. LOBIONDO. Good morning. The Subcommittee on Coast

Guard and Maritime Transportation will come to order. The Subcommittee is meeting today to hear testimony on the Deepwater

Implementation. We will proceed directly, as we normally do, with

my statement and Mr. Filner’s statement.

The Subcommittee is meeting this morning to continue its oversight of the Deepwater program and to review the revised implementation schedule that was submitted to Congress earlier this

month.

The Subcommittee has repeatedly requested the Coast Guard

provide detailed information on the changes that the re-baselining

will make to the number and nature of assets that will be acquired

under Deepwater, the total cost of the program, and the program’s

delivery schedule. And while I am pleased that the Coast Guard

has finally provided Congress will an out-year projection for the

Deepwater program, I do have several concerns and questions concerning the information submitted.

The most recent ‘‘plan’’ is actually four plans. Two different proposed funding streams are presented, each with two different mixtures of vessels and aircraft and estimates of total project costs.

While this certainly presents a wealth of information on several

possible courses of action, it does not include any recommendation

or prioritization among the four presented options for acquiring

new assets under the Deepwater program, and I think that this is

a problem.

When we required the Coast Guard to develop and submit a rebaseline plan to Congress, we envisioned it as a blueprint to guide

the program to the future. Instead, I am now concerned that the

four plans we received, with their broad ranges and number of assets that will be acquired and the total costs of the program combined with the uncertainty of several funding proposals, leaves us

without any real direction once again.

I am interested in hearing more about the CIP Plus funding

stream that was outlined in the most recent plan. CIP Plan calls

for the reallocation of funding from other sources within the De-
2

partment of Homeland Security to support the legacy asset maintenance and upgrades. This Subcommittee has been and continues to

be extremely concerned by the rapid deterioration of the Coast

Guard’s legacy assets, and I am happy to hear that the Coast

Guard is considering steps to address this pressing problem while

maintaining designated funding for new asset acquisition.

However, I would be happier to hear that the Coast Guard and

the Administration have committed to this funding approach. I

think that is a key word, committed to the approach. I hope that

is something that we will hear today.

Now is the time to make the tough decisions that will guide the

completion of this essential program. While I appreciate the Coast

Guard’s long and hard labor to get this information approved by

the Department and Office of Management and Budget, which has

not always been as cooperative as we would have liked, I still have

concerns about the long-term adequacy.

I hope that the witness testimony today will address these important issues, and I thank the Admiral for appearing before this

Subcommittee.

Mr. Filner.

Mr. FILNER. Thank you, Mr. Chairman, and thank you for raising those issues. I agree with you, and I have some additional

questions or concerns of my own.

I think that Deepwater may be in deep trouble. This project is

very ambitious. The theory was, as I understood it, that the Government would lay out the mission and program requirements, and

the contractor would build a system of systems that would provide

the best value. The best value. Not the lowest cost, but the best

value.

The Coast Guard and their system integrator, Lockheed Martin, spent $49 million to convert eight 110-foot patrol boats to 123-foot

patrol boats, only, as we have learned, to find out that the ships

had major structural problems, and they should build new patrol

boats instead. That is $49 million that is now not available to buy

new equipment.

And it doesn’t look like the program has learned from that lesson. The revised Deepwater plan to include system requirements to

meet post-9/11 challenges proposes, for example, to rebuild the HH65 helicopters and C-130 aircraft, instead of buying new aircraft.

As I said earlier, Deepwater was supposed to be about buying

cutters and aircraft that are the best value for the Government.

Cost of a particular asset, as I understand, was only to be about

15 percent of the weighted factors when making that decision. Now

decisions are being made entirely on the lowest cost, so that the

Government would end up manufacturing old aircraft instead of

buying new, more capable assets. When the Deepwater modernization project is completed, the Coast Guard will have eight HH-65

helicopters and C-130 aircraft that are over 40 years old. I am told

that is the oldest of any Coast Guard in the world.

What appears to be happening is, as the Coast Guard adds, for

example, new ship system requirements to cutters, OMB says that

the total program cost can’t increase, so the Coast Guard must cut

costs from aircraft modernization and the total number of cutters

purchased. So we are changing, apparently, Deepwater from a pro-
3

gram to modernize the Coast Guard with new equipment to a program that buys too few new ships and keeps the old aircraft.

Mr. Chairman, I think Deepwater is in deep trouble, and the Administration isn’t giving the Coast Guard the support that we

would like and that they need. The Administration is not committed to giving the men and women of the Coast Guard, who risk

their lives everyday to save others, the best equipment that is

available. Instead, they are forcing the Coast Guard to fulfill all of

their future missions based on the budget restraints of today.

We learned just at last week’s hearing that the current fleet of

Coast Guard cutters and aircraft are just not up to the job; they

are having mechanical problems, interdicting only 15 percent of the

cocaine, for example, that enters the United States. If we had that

percentage for WMDs in the future, we are not going to last too

long. Given the direction of Deepwater, I doubt that the Coast

Guard, in fact, will be any more effective once the modernization

project is completed.

Mr. Chairman, like you, I remain committed to the Deepwater

program. However, given the direction of this program in our post9/11 world, I am not exactly convinced yet that the Coast Guard

of the future will be able to meet the challenges that we face in

our future.

Thank you, Mr. Chairman.

Mr. LOBIONDO. Thank you, Mr. Filner.

We are very pleased that the Chair of the Intelligence Committee

and distinguished Congressman, Peter Hoekstra, is with us.

Peter, do you care to make any opening statements?

Mr. HOEKSTRA. No. I am all set. Thank you.

Mr. LOBIONDO. Thank you.

Mr. Coble, I know you are just walking in. We are going through

some opening statements concerning Deepwater. Would you like to

share any words of wisdom with us early on?

Mr. COBLE. Good to be here, Mr. Chairman. Thank you.

Mr. LOBIONDO. Okay. Thank you.

We are very pleased today to have our witnesses, Vice Admiral

Thad Allen, the Chief of Staff of the United States Coast Guard,

and accompanying him is Mr. Gregory Giddens, the Deputy Program Executive Officer for Integrated Deepwater System for the

United States Coast.

Admiral Allen, thank you for being here. Please proceed. You

need to kick on your microphone.

TESTIMONY OF VICE ADMIRAL THAD W. ALLEN, CHIEF OF

STAFF, UNITED STATES COAST GUARD, ACCOMPANIED BY

GREGORY L. GIDDENS, DEPUTY PROGRAM EXECUTIVE OFFICER FOR THE INTEGRATED DEEPWATER SYSTEM, UNITED

STATES COAST GUARD

Admiral ALLEN. Good morning, Mr. Chairman. It is a pleasure

to be here and discuss what is arguably the most important acquisition project the Coast Guard has undertaken probably in its history. I would like to make a few brief remarks and then offer a formal statement for the record, if that is okay, sir.

If I were to describe the overall budget goals for fiscal year 2006

for the Coast Guard, it would be three: to continue to recapitalize
4

Coast Guard assets, and the Deepwater project is all about that;

to implement our maritime security strategy for homeland security;

and to generally improve mission performance with both AC&I and

operating dollars.

We have a revised Deepwater plan that has been based on a

comprehensive program gap analysis that attempts to do three

things: one is to modify original assets to improve post-9/11 capabilities; to retain, upgrade, and convert aviation legacy assets as

part of that final mix; and adjust the program delivery schedule to

maximize operational effectiveness.

The revised plan ensures cutters and aircraft will be equipped

with the right systems and right capabilities. Those capabilities include: interoperable network-centric command-and-control systems,

essential for maritime domain awareness; increased speed and integrated weapons systems; helicopter use of force and vertical insertion capability; improve fixed-wing aircraft for long-range surveillance and transport; enhanced anti-terrorist and force protection capabilities; and detection-and-defense systems for chemical,

biological, and radiological threats.

As a result, Deepwater cutters and aircraft equipped with these

new capabilities can be employed and leveraged far beyond the

operational limitations of the original assets. Together with recent

advancements in maritime domain awareness, intelligence effectiveness, and our homeland security partners, Deepwater assets

will enable us to close existing operational shortfalls and execute

the full range of homeland security and national defense missions

more effectively. We will also reduce risk in the maritime domain

and improve the safety and readiness of all platforms through

sustainment, modernization, and conversion of aging legacy assets.

Mr. Chairman, as you know, between March and May of this

year we have been constructively and tirelessly engaged with the

Congress and the Administration to provide a revised Deepwater

implementation plan that provides sufficient detail regarding asset

delivery schedules and still recognizes the uncertainty of out-year

funding levels. We believe the final number of assets will, at a minimum, be sufficient to meet homeland security and Coast Guard

performance goals.

Mr. Chairman, the Coast Guard’s 2006 budget includes $966 million for Deepwater, a 33 percent increase over last year’s appropriations. This investment will make critical important contributions to our ability to defend this Nation from terrorist attack and

execute all Coast Guard missions more effectively. I urge this Committee and the Congress to support the President’s full request for

Deepwater funding.

Mr. Chairman, if I could, just one added piece of information, because I know it is of personal interest to you. Yesterday afternoon

the Commandant signed the order that will have the fishing vessel

TEXAS removed from Gardner’s Basin in Atlantic City.

Glad to be here today, sir.

Mr. LOBIONDO. Thank you. That is very good news.

Mr. Filner, go ahead and start off.

Mr. FILNER. Thank you, Mr. Chairman.

Thank you, Admiral, for being here today. As I said in my opening statement, it appears—and I will give you some specifics to
5

deal with—that there seems to be a fixed budget for a system that

needs to, in fact, improve its operational requirements after 9/11.

So we have to trade off, it seems, requirements for numbers in that

situation.

For example, your national security cutter, you have added requirements to that for homeland security. Has that increased the

cost? And what does that do for the numbers involved?

Admiral ALLEN. Yes, sir, added capability does come with a cost.

We are in the process right now of negotiating engineering change

proposals with our contractors. Most specifically, we are looking at

three areas of enhanced capability that are absolutely required in

a 9/11 environment for those cutters. The first one is the secure

compartment for the handling of intelligence information, radically

needed in a post-9/11 environment; the second is upgrade to the

weapons system, 57 millimeter gun and the mounts associated with

that.

And as we negotiate these engineering change proposals and define how much they are going to cost, there will be a cost increase.

There is money reserved in the budget for that that is unobligated

at this time, and we are actively negotiating that with ICGS at this

time, sir.

Mr. FILNER. So you are saying you don’t need to cut the numbers

of the force in any given category?

Admiral ALLEN. Sir, if you are referring to the range of NSCs

that are in the plan that is between six and eight, the notion there

is, as we deliver these cutters and bring them online, we need to

understand what kind of performance they bring in the operating

environment as we look at the final force structure. We are allowed

under the plan a range of cutters from six up to eight.

I think as we bring the first NSC online and test its operational

effectiveness, we will get a better view on how much more capable

that cutter is than the one it is replacing and can make a better

decision. At the end, the Coast Guard feels that, if we need it, we

need to go to the high end, which is the eight cutters, but we need

to demonstrate that in terms of performance as the assets are delivered, sir.

Mr. FILNER. It looks like, to me, when you look at the ranges

that you had for not only the NSC, but the offshore patrol cutters,

the patrol boats, the CAS aircraft, the range is less than we had

thought before 9/11. But you are going to increase all your older

aircraft. It doesn’t sound to me that a 21st century Coast Guard

to meet the 21st century post-9/11 world is being kept here. You

have fewer assets and they are older. How does that increase your

capability?

Admiral ALLEN. Sir, if I could make two comments in regard to

that. First of all, when the acquisition was started and the contract

was awarded in 2002, it assumed a baseline funding level of $500

million a year. That was extremely constraining at the time, and

as we have added capability and taken a look at the forestructure,

we have to have different types of assets with different types of capability. And we have been successful in raising the funding level

for Deepwater.

That said, as you raise capability and the assets become more expensive, you have to make tradeoffs within the funding stream that
6

is available that brings the best value to the Government, and that

is what we are trying to do. Even if we were to have all new assets,

it would be highly improbable we would have the amount of funding in one year to fund all of those platforms. So you have to sequence these things and trade them off, and that is what we have

been trying to do since the start, sir.

Mr. FILNER. Well, that is what worries me, that the tradeoff that

you are talking about is shortchanging our security. That is, it

seems to me that you should say what we need, and then see if we

can fund it, not to fit an amount of money and then you decide

what capability we are going to get. It just seems to me, after 9/

11, that that is not the way the Coast Guard in the new Department of Homeland Security should be working.

I mean, I look at some of the threats that we talk about, whether

it is, say, a high explosives ship attack on a cruise ship or a tanker.

I am not sure our coastal communities are well protected against

that. I also wonder about the fact that the Deepwater project is

aimed at operations, by definition, more than 50 miles offshore,

and yet the terrorist threat is probably a lot closer. So how are we

going to protect the United States against these kind of terrorist

attacks in our ports, our coastal communities, when you are dealing with Deepwater, by definition?

Admiral ALLEN. Yes, sir. You can well make the claim that

maybe we had a branding issue at the start. We said Deepwater,

but what we are really referring to is long-range of mobile assets

that can move up and down the coast or off the coast. These are

assets that are not tethered, as opposed to search and rescue stations and short-range helicopter that operates from a fixed base

and are basically fixed in an area of operation. We have Deepwater

assets operating very close to shore in the Aleutian Islands, where

there is nothing else there.

So what we are trying to create is a series of mobile assets that

can be employed where we need them to counter the highest risk

in the area of responsibility that our operational commanders are

charged with. And what we are also trying to look at is systems

performance. It is not just the asset itself, it is the maritime domain awareness, it is the intelligence that drives it, it is queuing

up actionable intelligence so our units can respond to it.

It is not just one asset, it is the accumulation of the assets and

their capabilities together that produce systems performance that

is the basis of the acquisition. And through layered defense we can,

and have, increased the security of the Country. We can always do

better and there are never enough assets, so you have to kind of

go to a risk-based decision method on how you are going to apply

those assets. But it is the system that we are trying to produce,

sir.

Mr. FILNER. All right. Well, I guess I feel good that the Aleutians

are protected. But I still have a lot of problems with our own ports,

one of which I represent.

I will come back to this, Mr. Chairman. Thanks.

Mr. LOBIONDO. Mr. Hoekstra, questions for Admiral Allen?

Mr. HOEKSTRA. Just a couple of questions.

I am wondering, I guess the Appropriations Committee and the Homeland Security bill only had $500 million in it, and one of the
7

reasons for that occurring was that the plan coming from the Coast

Guard that was going to request the $966 was delayed in getting

over to the Appropriations Committee. Can you explain why the

delay? I know Deepwater has been something you have been working on for a while. And what the impact would be if you only get

$500 million this year?

Admiral ALLEN. Yes, sir. There was a serious discussion inside

the Administration about the uncertainty of funding streams in the

future and needing to understand what would happen under various funding scenarios with the revised plan, so that when the

plans came up there would be, whether you want to call it trade

space or flexibility to handle potential constraints in the future.

That is what we were negotiating.

As a result of that, as was referred to earlier, there are four different scenarios that assume two different time frames and two different funding levels. That was hammered out within the Administration to be able to portray a viable course of action that would

produce this capability for the Country under different funding

streams as a risk mitigator.

Mr. HOEKSTRA. And what is the impact if you only get $500 million this year, instead of the $966?

Admiral ALLEN. It would be considerable. It would result in

descoping, moving of ship design schedules to the right, and significant delay in bringing that capability onboard which the Country

needs.

Mr. HOEKSTRA. Thank you, Mr. Chairman.

Mr. LOBIONDO. Mr. Baird?

Mr. BAIRD. Thank you, Mr. Chairman.

Thank you, Admiral, for your service. I am privileged to represent the Colombia River region, and I want you to know that

your folks out there at the mouth of the river do a great job under

difficult conditions.

I have been a long-time supporter of Deepwater, but I also have

a concern about the need for more rapid craft, particularly craft

that can obtain the go-fast boats that are in the field. I understand

you have the helicopter intercept program and the sharp-shooting,

but one of our concerns has been that we believe there is a need

for higher speed boats to operate in the literal zone and out in

more open sea, in fact, for several days, and have the speed and

flexibility to capture the go-fast kind of boats. I wonder what your

thoughts are on that as an adjunct to the Deepwater mission.

Admiral ALLEN. Well, there are two component parts to that, one

is the over-the-horizon boats that are going to be deployed with our

cutters, capable of speeds that can intercept the go-fast boats from

a mobile deployable base, if you will. From fixed base in the United

States, if that were a threat out there, we are in the process of selecting a responsible medium that will have the speed and capability to deal with the go-fast threat also.

But, as you said, the real trump card in this whole thing is airborne use of force, putting a helicopter overhead with the ability

to use warning shots and disabling fire. But we think we have a

pretty good portfolio of either ship-launched or shore-launched

boats that will be able to counter that threat, especially when the
8

Deepwater assets are deployed with over-the-horizon boats and the

long-range prosecutors and the short-range prosecutors.

Mr. BAIRD. When you refer to over-the-horizon boats, can you

discuss that a little bit?

Admiral ALLEN. These are boats that will be deployed off of the

offshore patrol cutter the national security cutter that are capable

of operating independently from the vessel at distances away, that

are faster than the vessel themselves, that are capable of intercepting go-fast boats. If you team that with aircraft helicopter capable

of airborne use of force, it is a fairly potent package, and we know

from our history in the Transit Zone right now that airborne use

of force and even over-the-horizon boats down there are effective in

stopping go-fast boats.

Mr. BAIRD. Can you describe the characteristics of the over-thehorizon vehicles?

Admiral ALLEN. So I wouldn’t make a mistake, I would offer to

provide that for the record. But they offer significant speed advantage over the cutters.

Mr. BAIRD. Okay. Could you have one of your staff brief us? I

would be interested in talking to you about this.

Admiral ALLEN. Happy to brief you, sir.

Mr. BAIRD. Because I think there is a significant gap in the vessels currently at your disposal, and would be interested in talking

to you.

Admiral ALLEN. We have a stepping type of a capability from responsible smalls that are currently at our stations after 9/11 clear

up to the deployable boats from the cutters. We would be happy to

give you a brief about that spectrum, sir.

Mr. BAIRD. That would be terrific. Thank you.

Thank you, Mr. Chairman.

Mr. LOBIONDO. Mr. Coble?

Mr. COBLE. Thank you, Mr. Chairman.

Admiral, good to have you with us today. Mr. Filner put a question to you regarding a terrorist attack. Let me extend that a

minute, Admiral. Let us assume that intelligence indicates that a

particular ship en route to a U.S. port is a terrorist threat. Describe what the Coast Guard’s role would be versus the Navy’s role

(a); and, (b) how does the revised Deepwater system allow you to

deal with this potential threat, as compared to your legacy fleet.

Admiral ALLEN. Yes, sir, very happy to do that. The basic way

to deal with a threat from the start is maritime domain awareness,

and maritime domain awareness has several components . We tend

to think of it as sensors or maybe intelligence, but it is a spectrum

of information that allows you to deal with and have knowledge

about conveyance in the maritime environment.

If I would take a hypothetical example of a ship that is nearing

the United States as a potential threat on board, the potential cues

that the Coast Guard could receive would be some type of intelligence source from overseas; we could get information from tracking systems; we could get information from vessel sightings. But it

would come to our attention that a vessel is out there and we could

identify it.

In addition, following the events of 9/11, we issued a regulation

requiring 96-hour advanced notice of arrival. The vessel then pro-
9

vides us their intentions, what port they are going to enter, and we

have time to do an analysis on both the vessel, the crew, and the

cargo to see if it might prove any threat. If it did—and right now

we our acting authority is under law enforcement, as opposed to

Title X DOD operations—we could plan a response to that. And recently we have done responses very far offshore, up to 1,000 miles

if we think we need to do that, and sometimes that is with the cooperation of the flag states who are willing to cooperate with us.

If it appears that the threat out there is something that would

exceed the Coast Guard’s capabilities, we would be in active negotiation with the Department of Defense on what the right mix and

response to that should be. And if it appeared that we had the ability to declare hostile intent on the part of that vessel or that threat

that is approaching the United States, DOD would be employed to

defeat that threat at the farthest distance offshore. That could be

a Coast Guard unit with support from the Navy or it could be a

Navy unit with support from the Coast Guard under recent protocols that we have negotiated with U.S. Northern Command and the

Department of Defense. But there is an active negotiation, and

what you want to do is put the right capability on the threat to defeat it as far offshore as you can, sir.

Mr. COBLE. Well, how does the revised Deepwater system improve?

Admiral ALLEN. I can give you a good scenario, sir. First of all,

you have a cutter underway, say, 100 miles offshore doing fisheries

patrol, when they are alerted that you have a threat that is, say,

1,000 miles offshore. First of all, with the increased maritime domain awareness and command-and-control capabilities that are on

the upgraded cutters and the new cutters, we will be able to transmit what is called a common operating picture. That is a display

of all the vessels in the area, including identifying information.

And the common operating picture is both on a classified and nonclassified system, so you are able to put out the picture and creak

the threat environment out there.

Secondly, as you are moving in to do the operations, because we

now have put in secret internet protocol routers on all the ships enables us to have classified chat rooms, if you will. And if you remember trying to pass voice communications, try and find somebody to give you guidance during a breaking operations, we now

have a virtual chat room set up where people can be talking all the

time.

In a recent case for drug interdiction down in the Transit Zone,

what would normally take 15, 30 minutes for a fast-breaking case

to obtain a statement of no objection for warning shots and disabling fire was done in six minutes over a classified chat room. So

what you are doing is you are increasing your ability to sense what

is going on out there, you are increasing your ability to know what

is going on in your environment, and you are rapidly increasing

your ability to communicate in a covered system, sir.

Mr. COBLE. Thank you, Admiral.

Thank you, Mr. Chairman.

Mr. LOBIONDO. Mr. Gilchrest.

Mr. GILCHREST. Thank you, Mr. Chairman.
10

Welcome, Admiral and Mr. Giddens. So it sounds like as a result

of this whole—Deepwater started how many years ago, the concept,

six, seven, eight years?

Admiral ALLEN. You were chairman, Mr. Chairman.

Mr. GILCHREST. It started some time ago. And as a result of the

concept of Deepwater and the tragedy of 9/11, the Coast Guard and

an individual Coast Guard vessel has become more technologically

advanced and that individual cutter has become more versatile

with its ability to manage the Nation’s fisheries, to respond to a

drug interdiction or a terrorist alert, or any one of a number of

other things that have happened?

Admiral ALLEN. That is absolutely correct, sir. The ability to

sense what is going on, have rapid communications, to understand

and have quicker relationships with the higher echelon of command not only helps defeat terrorist threats, but absolutely enhances operations related to migrant smuggling, fisheries, and

counter-drug operations, search and rescue, environmental protection, all of our missions.

Mr. GILCHREST. You told Mr. Coble that you could respond to a

potential terrorist threat 1,000 miles offshore. First of all, is that

a Coast Guard response, is it coordination with a Navy ship that

might be in the area, helicopters, C-130s? And the potential to

know that that might be a terrorist operation going on board a vessel that is 1,000 miles offshore, is that because of better coordination with host countries from where these ships leave, or industry

that puts cargo on these ships, or the manifests of the captain?

Admiral ALLEN. It is all of those things, and that is really what

constitute maritime domain awareness. As I said earlier, it is not

just sensors that are fused together to tell you what is out there,

it is taking a look at cargo information, information on crews, information on the history of the flag, the owners of the cargo and so

forth, in cooperation with our

Mr. GILCHREST. That is extraordinary. I am just curious how has

that been coordinated, or how are you in the process of coordinating all of that kind of data and get that cooperation with the shippers, with the host country? Is that being worked through the IMO

or is it being worked through the State Department in some other

facet?

Admiral ALLEN. Internationally it is being worked through IMO.

A lot of the protocols and reporting requirements are as a direct

result of our efforts at IMO. A lot of it has to do with the legislation that was recently passed in the Maritime Transportation Security Act. A lot of it has to do with our great partnerships we have

inside DHS right now with Customs and Border Protection that operates a national targeting center out by Dulles Airport that takes

a look at that manifest data and is able, through pattern analysis,

be able to cue us to certain things. And we have done that.

Mr. GILCHREST. So instead of the Coast Guard being more focused on terrorism and some of the other roles that the Coast

Guard plays, whether it is search and rescue of fisherman in the

Aleutians or drug detection, which you mentioned, I guess either

in the Caribbean or the Gulf of Mexico, which a number of years

ago you were allowed to actually shoot at those fast boats, do you

feel that the Coast Guard’s mission in those areas has improved as
11

a result of these actions with Deepwater and the terrorism legislation and things like that, or at least have not diminished?

Admiral ALLEN. I believe that the capabilities we are putting into

our assets in a post-9/11 environment through the Integrated Deepwater System have significantly improved our ability to react to

any mission.

Mr. GILCHREST. And so?

Admiral ALLEN. Moving beyond that, how you employ those assets within an area of responsibility, which is the responsibility of

the district commanders and the area commanders, you have to go

through a risk-based decision-making process—I was the Atlantic

area commander on 9/11—and you have to make those decisions of

how to deploy your assets. But you also have to look at the performance that you are getting out of your system.

We have been able to dramatically improve our drug seizures in

the last couple of years without a significant amount of hours put

down there because we have better intelligence, better sensors, better command-and-control capability that allow us to execute those

statements of no objections for warning shots and disabling fire to

take down those go-fast boats.

Mr. GILCHREST. But you could be hurting if, somewhere along the line, we don’t make up that $400 million deficit.

Admiral ALLEN. We urge you to support the President’s request,

sir.

Mr. GILCHREST. Thank you very much, Admiral.

Thank you, Mr. Chairman.

Mr. LOBIONDO. Mr. Reichert.

Mr. REICHERT. Thank you, Mr. Chairman.

Good morning.

Admiral ALLEN. Morning, sir.

Mr. REICHERT. One of the interests I have has always been in

partnership.

Admiral ALLEN. Yes, sir, it does, on two accounts. Number one,

I think the contract has already demonstrated extraordinary flexibility and allowed us to generate a program gap analysis on post9/11 requirements and then include the capabilities that we require

in a revised mission needs statement and revised Deepwater plan.

Embedded in that plan, and always has been embedded in that

plan, is a series of technological refreshments when necessary and

upgrades of assets as they end their service life.

Now, the timing of those refreshments and upgrades has changed

as the plan has changed, and we have had to move some of those

assets to the left, if you will, because of the deterioration of our

current assets. But the current contract, as it stands right now, has

flexibility both for requirements and technological refresh.

And I would ask Mr. Giddens to comment further, if he would

care to.

Mr. GIDDENS. Yes, sir. Even when we established the first Deepwater contract, it was at that point a long-term recapitalization of

Coast Guard capabilities and capacities at that time, even as we

were in the source selection, at a 20-year plus effort. So we knew

from the beginning we had to establish flexibility in the acquisition

strategy to accommodate change. Whether that change was driven

by varying mission demands on the Coast Guard or other external
12

factors, we established from the beginning a systems approach with

the acquisition strategy to allow that flexibility to respond to the

Nation’s and the Coast Guard’s needs.

Mr. REICHERT. Thank you, Mr. Chairman.

Mr. LOBIONDO. Mr. Fortun ̃ o.

Mr. FORTUN ̃ O. Thank you, Mr. Chairman.

I just have a couple questions, Admiral. Welcome. Some questions regarding HH-65 helicopter. I would like you to give us an

update on the re-engining of project for said helicopters.

Admiral ALLEN. I am pleased to do that. At this point we have

five helicopters that have been re-engined. We have a full-up operating air station at Atlantic City, New Jersey. We have a helicopter

for training purposes at Mobile, and we are in the process of producing helicopters for the roll-out. The current planned air station

to get the next set of helicopters is Air Station Savannah.

We currently have 13 helicopters that are under upgrades at our

depot level facility in Elizabeth City, North Carolina. We are also

testing a business case to start a second line at a commercial facility in Columbus, Mississippi, and are doing analysis on whether or

not, based on the cost and the schedule impacts, whether it would

behoove us to open up that second line. We are on schedule right

now to complete the re-engining by February 2007. And it is the

highest priority of the Commandant right now to complete this reengining.

Mr. FORTUN ̃ O. Okay. Are there any other modifications planned

for the HH-65s?

Admiral ALLEN. In the near-term, our focus has been on safety

and reliability and improving the engine performance. We have had

problems with what they call torque splits, and that is uneven

matching of the engine performance that requires the pilots actually to simulate the loss of an engine and take action to preserve

the aircraft. We are, through the re-engining, attempting to improve the safety and reliability.

Under the larger Deepwater solution, there is a plan to evolve

the H-65 into a multi-mission cutter helicopter by looking at the

landing gear, the tail rotor, and some other equipment on board

that will make it more shipboard capable, more capable of airborne

use and vertical insertion. However, just with the re-engining itself

and the safety and reliability improvements that we gain, plus the

increased power, we were able to use these aircraft before they are

converted to multi-mission cutter helicopters for airborne use, of

course.

Mr. FORTUN ̃ O. Would you say that once the re-engining program

is completed, that the safety issues with the HH-65s will be pretty

much taken care of?

Admiral ALLEN. They will be, safety and reliability. After that,

then we need to look at how you enhance capability as that asset

is integrated into the Deepwater family of assets. And the real

thrust of both of our helicopter programs, both the H-60 and H-65,

is to make them airborne use of force capable and capable of vertical insertion. Against that larger discussion of a system performance, that, combined with the new cutters and our small boat interceptors, is a potent package for dealing offshore with threats.

Mr. FORTUN ̃ O. Thank you, Admiral.
13

Thank you, Mr. Chairman.

Mr. FILNER. I think what Mr. Fortun ̃ o wanted to know is if a

Congress member would be able to fly in the aircraft when all this

is done.

Admiral ALLEN. I am aware that due to the flight restrictions imposed until the re-engining occurs, that we are restricted from carrying VIPs.

Mr. FILNER. Thank you.

Mr. LOBIONDO. Mr. Diaz-Balart.

Excuse me, Mr. Taylor, welcome. Are you ready? Do you want to

wait? Okay.

Mr. Diaz-Balart?

Mr. DIAZ-BALART. Admiral Allen, we have talked a lot about the

congressional mandate which resulted in the Coast Guard submitting the Capital Investment Plan that included a complete funding

projection and acquisition schedule beyond the first five fiscal

years. What I am interested in hearing about is, given the uncertainties in projecting legacy asset sustainment costs and out-year

acquisition costs, do you intend to reallocate the program’s longterm cost projections each year?

Admiral ALLEN. That is the basic business model that was established within the four plans. What it calls for, as you may be aware

of, is a certain amount of money that would be dedicated to new

assets and then a secondary amount of money that would be available for legacy asset sustainment and upgrades. The difference in

the two plans is one focuses on locking in the funding level for the

new assets; the second one assumes that within an investment

level there would be legacy asset sustainment, the difference being

that in the first one you would make year-to-year decisions based

on other funding priorities about how much money could be allocated into legacy asset sustainment. That is the difference in the

two plans, sir.

Mr. DIAZ-BALART. Also, when will decisions be made about which

of the four options the service intends to follow? And unless my

guess is wrong, you are going to be getting this question tomorrow,

too.

Admiral ALLEN. Yes, sir. Well, quite frankly, the Coast Guard, in

order to do its mission, would like the maximum capability and the

maximum forestructure we can buy. What you have is a high level

plan that is focused on $24 billion in 25 years and then graduated

steps down from that, which would be coping mechanisms to deal

with unknown out-year funding streams. I am sure the Commandant would like to be at the higher end of that, at the 24/25

level. As you back off from that, then you have to make risk-based

decisions regarding the assets themselves, the condition of the assets, the performance of the new assets you are bringing online.

As we bring the NSC on board or the FRC or the OPC, I think

we need to, through operational tests and evaluate, assess their impact on performance. We may be able to achieve some forestructure

reductions if these units are that capable in covering certain parts

of the ocean, as we discussed earlier, but that is going to have to

play out. We have established an envelope that would give us what

we need, and we are going to try to drive the capability we need.
14

But a lot of those decisions will be taken year-to-year on what is

available against other priorities, sir.

Mr. DIAZ-BALART. Are you going to be able to take the decisions

year-to-year indefinitely? I mean, at some point don’t you have to

come down on a particular plan?

Admiral ALLEN. Well, sir, if you noticed, after a five-year period,

after around 2011, to get the programs funded within the required

time frames, there is more money put on legacy assets, depending

on which plan you look at, or new production. Again, the focus

right now is on system performance and seeing how these assets,

once they are brought online, contribute to the overall performance

as one asset to the system and better inform what the ultimate

fleet size needs to be. We also need to take into account total ownership cost; not only the acquisition cost, but the increased cost of

operating these vessels, and that will also come into play, sir.

Mr. LOBIONDO. Mr. Taylor, are you prepared to start at this

point?

Mr. TAYLOR. Admiral, I am curious. Being from the area where

a lot of the ships are going to be built, I was obviously, as were

a lot of my constituents, a bit disappointed when I believe Chairman Rogers had some questions that he felt were unanswered and

therefore was holding up a good portion of the funding. My question is what were the questions that he had of you, and do you feel

like they have been sufficiently answered?

Admiral ALLEN. Well, I think the questions had to do with details on the asset delivery schedule and the cost per year. We believe we provided all of that. There are some issues that they have

been interested in. One of them is regarding the truncation of the

123 conversion program, where the future is a fixed-wing aircraft.

We provided issue papers to them in briefings to their staffs. We

think we have been responsive to that, and we look forward to collaborating in achieving the President’s budget.

Mr. TAYLOR. I am curious. I also, with several of my colleagues,

get to serve on the Armed Services Committee, and I really have

noticed a difference. The Navy almost always has a major program

in play and, therefore, you have an institutional history of young

guys starting off lieutenants working big programs, working their

way up to admiral and are in pretty good position to justify by the

time that comes.

It struck me that the Coast Guard has not had a major acquisition program, other than a few icebreakers, since the late 1960s,

early 1970s, when the 378s were built. I am just curious, did the

Coast Guard find themselves at a disadvantage not having any institutional memory as to how do you go make a pitch for that

money?

Admiral ALLEN. I think we do have institutional memory and

have had shipbuilding programs, albeit not on the scale of Deepwater nor the complexity of Deepwater. I think it is safe to say

Mr. TAYLOR. Certainly not of this scale, right.

Admiral ALLEN. I think it is safe to say this is a precedent-setting acquisition for the Coast Guard, and maybe for the Country.

But the people that are populating our program offices and working on these things do have a history of working in programs of acquisition. I have myself. The real paradigm shift
15

Mr. TAYLOR. Where were you in 1968, Admiral?

Admiral ALLEN. Where was I in 1968?

Mr. TAYLOR. Yes.

Admiral ALLEN. I was in the U.S. Coast Guard Academy.

Mr. TAYLOR. All right.

Admiral ALLEN. But following the production of the 378s, we

built our 270-foot medium endurance class, we have had two very

successful procurements of large and medium buoy tender projects,

we had a very successful program on our 47-foot motor lifeboats

barrier launch on responsible medium. So there is continuity of experience and corporate knowledge in the Coast Guard regarding

project management and acquisition.

But as I said, I think anybody probably grant you that the Deepwater program, in its complexity and scope, is something that is

unprecedented, but we are bringing the best and brightest to bear

on it that we have.

Mr. TAYLOR. I hate to throw a monkey wrench into this mix, because I have seen, unfortunately, over at Armed Services, how the

Navy, by changing the game plan and moving the goal post on the

DDXs I think put that program in jeopardy. But I am curious, and

I have got to ask as a citizen and a taxpayer, given the huge price

and increase in the price of fuel since this program started,—I

know you have worked towards minimizing maintenance, I know

you have worked towards minimizing crew size—to what extent

has fuel efficiency been a factor in this next generation of cutters?

Admiral ALLEN. Well, we are always looking for a best value, especially in the density of the propulsion plants that we are buying.

I think that is of a technical nature. I am going to throw it over

to Greg Giddens, the program officer, and let him take a stab at

it.

Mr. GIDDENS. Good morning, sir. From all classes of cutters that

has been a factor in the design, from combining up a gas turbine

with diesels, the number of diesels that is needed to meet the maximum speed, and then our ability to operate more efficiently on one

or two of those diesels. It is also a factor, as I suggested, their competitive process determines propulsion in power systems. They look

for power density against the weight to try to make sure we get

the most efficient engines that we can for their volume, as well as

their efficiency in terms of input-output, fuel intake versus power

output.

Admiral ALLEN. If I could add one comment, you almost have to

have a bias towards fuel efficiency for the national security code

and the OPC, which have a range of 12,000 and 9,000 miles, respectively.

Mr. TAYLOR. On your smaller vessels, I noticed just a few years

back, when the price of gasoline was fairly inexpensive, there was

a move on a lot of your smaller vessels away from diesels and back

towards outboards. How is that affecting your operations? Do you

find yourself having to cut back on operating hours because of the

shift? At the time I pointed out to some people I thought it was

kind of shortsighted.

Admiral ALLEN. Well, any reduction in operations we have in the

past weren’t necessarily related to fuel cost, they were related to

larger budgetary issues and stressers on the Coast Guard’s operat-
16

ing base. In regards to small boat and cutter operations, though,

we have tried to rationalize those systems over the years where, for

instance, the boats that are operating off of cutters, trying to migrate them where they are using the same type of fuel the cutter

does, rather than having to carry gasoline.

But on the shore side, based on the requirements, they tend to

be gasoline-driven engines, so it kind of falls into two camps, what

you are trying to support from a cutter and what you are trying

to support from a shore station. And we have tried to make those

as consistent across those two separate worlds of work as we can.

Mr. TAYLOR. What has it done to your operating cost as a rule

from your shore stations? Have you seen a doubling in your fuel

bills? And how do you respond to that?

Admiral ALLEN. Separate from the subject of the hearing at hand

today, there are extraordinary fuel costs that we are dealing with

this year. We have, in the operating side of the budget, taken a

look at how we can mitigate and mediate the impact of those. We

have got some extra resources through supplemental funding and

so forth. But we do have this year, and are likely to have next year,

a shortfall in energy funding in the Coast Guard, and it is one of

those issues where you have to manage your base.

Mr. TAYLOR. Thank you, Mr. Chairman.

Mr. LOBIONDO. Admiral Allen, I want to talk a little bit about

the 110s.

Admiral ALLEN. Yes, sir.

Mr. LOBIONDO. I think almost by anyone’s standards they have

experienced unexpected levels of problems. In the schedule for

what we are proposing for Deepwater and where these 110s come

in, sort of at the end, I don’t understand how we are going to sustain the 110s and what the plan is by the Coast Guard as we continue to experience higher failure rates.

Admiral ALLEN. Yes, sir. I would say following the H-65 challenge, which is our number one pressing safety and reliability problem, I think following right behind that would be the 110 issue, 123

conversion. Under the original Deepwater plan, we had scheduled

to an extension of the 110s to 123s as a bridging strategy, not for

a new asset.

This gets back to the constrained funding level, how you have to

operate in a portfolio over a number of years. It was anticipated

that we would go to the fast response cutter around 2018, and as

a result of the experience we have had with the 110 to 123 conversions, we are attempting to accelerated the FRC 10 years and bring

that online by 2008, subject to successful competition in the budget

this year and follow on years. What we try to do is remove the

bridging requirement, where we are having problems with the converted 123s both structurally.

And they were only intended to replace 1998 type capability in

terms of their sensors, communications, and so forth, so that ability

to exert command-and-control have a common operating picture

and utilize Cypronet chat rooms is something we will get in the

FRC but is not present in a post-9/11 123. So there are two things:

one is sustainability of the hull itself, the ability of those hulls to

operate, but the second one is the capability we put into them as
17

a bridging strategy doesn’t reflect the true requirements we are

going to need in a post-9/11 environment, sir.

Therefore, the reason the FRC needs to move to the left and

probably—if you look at the priority of any shortfall that exists in

the $966 right now, it is to be able to complete the design and build

the first FRC, sir.

Mr. LOBIONDO. Let me switch for a minute to the HC-130Js.

Admiral ALLEN. Yes, sir.

Mr. LOBIONDO. Can you tell us a little bit about where we stand

with this? What is the cost of missionizing these? What can they

do without the upgrades? Where do we stand with this whole situation?

Admiral ALLEN. Happy to do that, sir. We currently have six C130Js. They are operating out of an aviation program office in Elizabeth City in North Carolina. That is not the permanent home

base, that is where we brought them on board and got them operational. An APO is usually used to transition to the permanent air

station where they are going. Since we have got the C-130, several

things have happened.

First of all, we were appropriated $120 million to missionize

them and make them capable for Coast Guard use. We had an unsuccessful first try with Lockheed Aero, where the price to integrate the missionization of those aircraft into the airframe was

deemed too high by the Coast Guard. We have gone back and

asked ICGS for a more simpler solution and have them basically

giving us an estimate to cost at $120 million to missionize those

six aircraft.

What has been challenging for those aircraft is that we have six

and they are unique. They look like a C-130 on the outside, but on

the inside it is a totally different aircraft in terms of the avionics

and the computer systems that are in there. They are not like the

rest of our C-130s. And prior to recent events, we were looking at

whether or not C-130Js were something that should remain in the

Coast Guard inventory of assets.

A couple of things have affected that. Number one, as you may

be aware of, the entire C-130 fleet around the world has been impacted by the discovery of cracking in the wing boxes that are producing problems and potential structural failures in C-130s. We are

in the process right now of waiting for a service bulletin from Lockheed Martin that will allow us to inspect these aircraft and find

out whether or not we have true problems. We have two types of

C-130Hs, separated from the Js. We have 1500 series. There are

five of those, which are much older than the 1700 series. These

need to be inspected and we need to ascertain the condition of the

wing boxes before we make a decision.

So what we are playing off is the six C-130s that are unique, the

need to missionize those, and then how they play against the remaining C-130s we have in the overall fixed-wing fleet and where

we want to be at an end state for Deepwater. The variable right

now that we are waiting for is the Lockheed Martin technical bulletin to allow us to assess the conditions of those airframes. Then,

after that, we are going to have some decisions to make inside the

Coast Guard about the disposition of the C-130s and the overall
18

makeup of the C-130 fleet that we finally want in the Deepwater

asset mix.

Mr. LOBIONDO. What do you use them for now?

Admiral ALLEN. Right now, pending missionization, they are

used for logistics flight. And that does relieve the requirement from

other aircraft so they can be used for maritime surveillance and

other missions. So they are being used and they are adding value

to the Coast Guard right now. They could add more value with

proper radar workstations that would allow them to be maritime

patrol aircraft to help us go out there and detect go-fast boats and

so forth.

Mr. LOBIONDO. Do you have any idea when you might hear back

from Lockheed what the time frame is to determine if they are

going to be able to do the upgrades with the resources that are

available?

Admiral ALLEN. Integrated Coast Guard Systems presented us a

proposal yesterday, and we are reviewing that and the price attached to it now, and I can tell you right now it is the Commandant’s desire to make a decision as fast as we can on that, sir.

And as soon as there is anything available on that, we will pass

it on to you, sir.

Mr. LOBIONDO. Thank you.

Mr. Filner?

Mr. FILNER. Just one additional question, if I might. I talked sort

of in an abstract way and you answered abstract. Let me just bring

it down to the Port of San Diego, which I represent.

Admiral ALLEN. Yes, sir.

Mr. FILNER. There may be in the port at any one time two or

three cruise ships, two or three nuclear carriers, dozens of destroyers and other craft. And in joint operations meetings that I have

been at, people say that the biggest terrorist threat to that mixture

there is as simple as a high speed recreational vessel loaded with

high explosives, like we saw in the Kohl, for example. So what does

Deepwater do to stop that threat to the coastal ports that many of

us represent here?

Admiral ALLEN. Well, I would give you a couple of scenarios, sir.

Based on the current Coast Guard planning for securing this Country, we have different maritime security levels we employ, and they

are called MarSec I, MarSec II, and MarSec III. We are continually

at MarSec I right now, which would roughly correspond to the yellow status of the threat in the Country right now.

As those threat levels go up, we take more protective action in

our ports and harbors, up to and including bringing large cutters

close in to increase command-and-control, maritime awareness, and

our response capability. So at higher threat levels, Deepwater assets can be employed in and around ports and harbors to increase

the layered protection there, increase maritime domain awareness,

and create a response capability.

I can tell you, as the Atlantic commander on 9/11, I immediately

diverted larger cutters and actually put them into ports just to

make sure that we didn’t have a problem that we didn’t know

about. For instance, within five miles of New York Harbor, I had

three medium endurance cutters clear up to the Statue or Liberty

with their guns uncovered. You hope you never have to do that
19

again, but we have the capability to move these assets around because they are floating command-and-control, maritime domain

awareness platforms.

Now, having said that, in the normal everyday life in the Port

of San Diego, we won’t have a cutter sitting in the port, because

the threat level won’t be that high. The answer there then moves

away from Deepwater and focuses on maritime domain awareness,

the standup of the new Coast Guard sector commands. And I might

add, the benchmark, the gold standard for operations in a port is

joint harbor operation center in San Diego, where we have co-located with the Port Authority, the Navy, and our terrorism force

protection folks and the Border Patrol to increase surveillance, including the radar out of Point Loma importing that back, sir.

Mr. FILNER. Thank you. I am still worried about that small vehicle.

Admiral ALLEN. As are we, sir.

Mr. FILNER. Thanks.

Mr. LOBIONDO. Admiral Allen, on the 110s, since we are not

going to be pursuing the 110s to the 123s, House appropriators

have $89 or $90 million to be used for either vessel acquisition or

110 sustainment. Which of these options do you intend to pursue?

Admiral ALLEN. Sir, it is our desire to take any unused money—

and we don’t know what the excess costs are regarding the 123

conversions. There is $30 million for that particular purpose in the

budget right now. We know there are probably going to be some

excess costs associated with that, request for equitable adjustment

and so forth. But our desired position would be to take all of the

available money regarding patrol boats and put it into the design

and construction of the first fast response cutter, number one priority of the Commandant, sir.

Mr. LOBIONDO. Different topic. On the fuel, does the Coast

Guard buy fuel on its own or in conjunction with the Navy for

economies of scale, or how does that work?

Admiral ALLEN. Works a couple of ways. Mostly, for the large

cutters, work off the Defense fuel contracts that we are part of

every year; down at the local levels we may have contracts with

local marinas. I could give you a more in depth answer about how

we do it, but it probably varies by region. But for the very large

cutters we work off the annual Defense fuel contracts.

Mr. LOBIONDO. Okay.

Mr. Taylor? Mr. Reichert?

Mr. REICHERT. I have one more question. Approximately

Admiral ALLEN. Sir, I believe the question was how much funding has the Coast Guard obligated against the $2 billion to date,

sir.

Mr. REICHERT. Yes.

Admiral ALLEN. The answer is we obligated about 95 percent of

that. And as we sit here this morning, the unobligated balance is

about $105 million. That is broken down in the following three elements: we are reserving $61 million for the changes on the national

security cutter that I mentioned earlier that have to do with the

construction of the skiff on board it and the increases due to chemical, nuclear, and biological detection capability; there is another

$30 million that is in reserve right now that I just spoke to Chair-
20

man LoBiondo about that was reserved for the 123 conversions

that we would like to see applied to the fast response cutter; and,

finally, there is $14 million identified to be used on a covert aircraft.

We are in the process of developing an operational requirements

document right now and we intend to execute the solicitation for

that test aircraft through the U.S. Air Force Big Safari program,

and we are working to best speed on that. Again, the total is about

$105 million.

Mr. REICHERT. Thank you.

Mr. LOBIONDO. Mr. Filner?

Admiral Allen, Mr. Hoekstra talked about this a little bit, and

that was in reference to the unfortunate scenario that we proceed

with the $500 million number, and not are able to raise that, we

know that it is devastating to the program, but can you give us

some details in terms of time delays? Does this push us to a 40-

year program if that were to be pushed out? Can you give us some

sense? You know, you talked about some of the decisions in actual

asset acquisition and upgrade, but I am more interested in time

line references from you, if you can.

Admiral ALLEN. Well, I will make a general comment and then

I will ask Greg Giddens to comment. One would find it hard to

imagine that you could build any more than one type of cutter per

year, if that, under this funding scenario, especially given some of

the legacy asset issues that we are dealing with. I think almost everything would push to the right. We have a national security cutter that is already under construction. We are in the process of designing, but have not started, on the OPC or the FRC.

So those would be very difficult decisions that would have to be

made and most likely would move them to the right. Then what

you get is it moves beyond a death spiral, where you are trying to

maintain legacy assets without the new ones there. You probably

are going to start seeing obsolescence and vessels taken out of service with any capability replacement and a complete performance

gap while you work your way through it.

We would be glad to give you some scenarios for the record and

talk to the staff, but it would be significant, sir.

Greg, do you want to comment?

Mr. GIDDENS. Just to add, indeed, it would be significant. It

would push development efforts out to a year or two. If it reset the

baseline for Deepwater funding, it would put us at a level that was

a pre-9/11 level and create definite performance gaps and capacity

gaps. As Admiral Allen indicated, we would likely have to decommission some of our assets.

Admiral ALLEN. It would probably question the viability of the

current contracting vehicle.

Mr. LOBIONDO. Thank you.

Mr. Taylor? Mr. Filner? Mr. Reichert? No?

Well, Admiral, thank you very much. Good luck tomorrow. That

is an important one.

Okay, meeting is adjourned.

[Whereupon, at 11:03 a.m., the subcommittee was adjourned.]
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