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76–149 PDF 2012

THE CHALLENGES THAT MAINTAINING LEGACY 

ASSETS POSES TO UNITED STATES 

COAST GUARD MISSION PERFORMANCE 

(112–105) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COAST GUARD AND MARITIME TRANSPORTATION 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

SEPTEMBER 20, 2012 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

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

committee.action?chamber=house&committee=transportation 

(II) 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JOHN L. MICA, Florida, Chairman 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

FRANK A. LOBIONDO, New Jersey 

GARY G. MILLER, California 

TIMOTHY V. JOHNSON, Illinois 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

SHELLEY MOORE CAPITO, West Virginia 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ANDY HARRIS, Maryland 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

JAIME HERRERA BEUTLER, Washington 

RANDY HULTGREN, Illinois 

LOU BARLETTA, Pennsylvania 

CHIP CRAVAACK, Minnesota 

BLAKE FARENTHOLD, Texas 

LARRY BUCSHON, Indiana 

BILLY LONG, Missouri 

BOB GIBBS, Ohio 

PATRICK MEEHAN, Pennsylvania 

RICHARD L. HANNA, New York 

JEFFREY M. LANDRY, Louisiana 

STEVE SOUTHERLAND II, Florida 

JEFF DENHAM, California 

JAMES LANKFORD, Oklahoma 

REID J. RIBBLE, Wisconsin 

CHARLES J. ‘‘CHUCK’’ FLEISCHMANN, 

Tennessee 

VACANCY 

NICK J. RAHALL II, West Virginia 

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 

ELIJAH E. CUMMINGS, Maryland 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

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 

STEVE COHEN, Tennessee 

LAURA RICHARDSON, California 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

FRANK A. LOBIONDO, New Jersey, Chairman 

DON YOUNG, Alaska 

HOWARD COBLE, North Carolina 

ANDY HARRIS, Maryland 

CHIP CRAVAACK, Minnesota 

BLAKE FARENTHOLD, Texas 

JEFFREY M. LANDRY, Louisiana, 

Vice Chair 

JOHN L. MICA, Florida (Ex Officio) 

VACANCY 

RICK LARSEN, Washington 

ELIJAH E. CUMMINGS, Maryland 

CORRINE BROWN, Florida 

TIMOTHY H. BISHOP, New York 

MAZIE K. HIRONO, Hawaii 

MICHAEL H. MICHAUD, Maine 

NICK J. RAHALL II, West Virginia 

(Ex Officio) 

(III) 

CONTENTS Page 

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

TESTIMONY 

Rear Admiral Ronald J. Ra ́bago, Assistant Commandant for Engineering 

and Logistics, United States Coast Guard ......................................................... 3 

Stephen L. Caldwell, Director, Homeland Security and Justice Issues, Government Accountability Office .................................................................................. 3 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Rear Admiral Ronald J. Ra ́bago ............................................................................. 16 

Stephen L. Caldwell ................................................................................................ 20 

SUBMISSIONS FOR THE RECORD 

United States Coast Guard, inserts for the record: 

Response to request for information from Hon. Rick Larsen, a Representative in Congress from the State of Washington, on the impact of 

sequestration on the Coast Guard’s ability to maintain its legacy assets, 

and how the Coast Guard would distribute cuts that would come from 

sequestration ................................................................................................. 11 

Response to request for information from Hon. Howard Coble, a Representative in Congress from the State of North Carolina, on the findings of the Ship Structure and Machinery Evaluation Board review 

of the Coast Guard’s Medium Endurance Cutter fleet .............................. 12 

iv 


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MEMORANDUM 

TO: 

FROM: 

RE; 

Members, Subcommittee on Coast Guard and Maritime Transportation 

Staff, Subcommittee on Coast Guard and Maritime Transportation 

Hearing on "The Challenges of Maintaining Legacy Assets Pose to United 

States Coast Guard Mission Pelfonnance". 

PURPOSE 

011 Thursday, September 20,2012,. at 2:00 p.m., in2167 Raybul11 House Office 

Building, the Subcommittee on Coast Guard and Maritime Transportation will hold a 

hearing to examine tile challenges the Coast Guard faces maintaining its legacy assets 

and how those challenges impact the Service's mission perf01111ance. 

BACKGROUND 

The Coast Guard began a process of replacing its aging vessels and aircraft in the 

late 1990's. The program's focus was those assets tilat cmTY out missions farther than 50 

miles fro111 shore, as well as the modernization of the information technology systems 

that the Service relies upon to coordinate its operations. The progranl was known as the 

Integrated Deepwater System (Deepwater). To manage the acquisition program, the 

Coast Guard contracted with a Lockheed Martin/Northrop Grumman team, called the 

Integrated Coast Gum'd System (lCGS). 

Deepwater encountered significant quality and cost issues. It was the subject of 

several hearings and an investigation by the Committee. It was also the subject ofreview 

by the Government Accountability Office (GAO) and the Department of Homeland . 
v 


Insert offset folio 2 here 76149.002

Security's Inspector General. Accordingly, the Coast Guard telminated the Deepwater 

contract with lCGS and is now performing the acquisition functions in-house. 

The problems with Deepwater led to considerable delays in the delivery of new 

and refurbished assets. The Service does not expect to complete its recapitalization of 

legacy assets until the mid-2030's, approximately ten years behind the 2004 Deepwater 

baseline schedule. In the meantime, the Service's legacy vessels and aircraft are either 

approaching, or have exceeded, their intended service lives. The age of the legacy assets, 

coupled with increased operations tempos, have led to increased rates of failure among 

the assets' parts and major systems. This, in turn, has increased scheduled and 

unscheduled maintenance costs and reduced patrol hours which have negatively impacted 

operational readiness and mission performance. 

Legacy Vessels 

The Coast Guard cun'ently operates a total of 77 legacy vessels. This includes: 

• 9378' High Endurance Cutters (HEC) with an average age of 42.8 years 

and an estimated service life of 40 years; 

• 13 270' Medium Endurance Cutters (MEC) with an average age of25 

years and an estimated service life of 30 years; 

• 14210' MECs with an average age of 45.3 years and an estimated service 

life of 47 years; 

• 41 110' Patrol Boats (PB) with an average age of23.1 years and an 

estimated service life of20 years. 

Condition of Legacy Vessels 

The Coast Guard regularly conducts a variety of inspections and assessments of 

the condition of its legacy vessel fleet. III its report entitled "Legacy Vessels' Declining 

Conditions Reinforce Need for More Realistic Operational Targets" (GAQ 12-741), the 

GAO reviewed these assessments and found systems critical to the operation of the 

legacy vessels has been increasingly prone to mission-degrading casualties. The most 

common mission degrading casualty for the legacy vessel fleet in fiscal years 2010 and 

2011 were the main diesel engines. 

Legacy Vessel FY 2010 Top Mission FY 2011 Top Mission 

Degrading Casualty Degrading Casualty 

378' HEC Main Diesel Engines Main Diesel Engines 

270' .MEC Diesel Generators Main Propulsion Control 

210' .MEC Main Diesel Engines Main Propulsion Control 

110' PB Main Diesel Engines Main Diesel Engines 

Coast Guard maintenance managers for the HEC and MEC fleets reported to the 

GAO that with the vessels nearing the end, or exceeding, their services lives, the 

2 
vi 


Insert offset folio 3 here 76149.003

peliol'mance of critical systems have been increasingly unpredictable. The GAO also 

noted that repairs to these systems have a relatively high rate offallure. For instance, in 

fiscal years 2009 and 2010, the Service spent approximately $200,000 to rebuild several 

HEC main diesel engines. However, some of the engines broke down within a short 

period of time because other palis of the engines, not included in the rebuild, failed. 

Incl'easing Maintenance Costs 

The Coast Guard uses two metrics to track annual depot level maintenance 

expenditures: scheduled and unscheduled maintenance. Scheduled maintenance denotes 

planned activities based on historical maintenance needs of the vessel class. 

Unscheduled maintenance specifies unplam1ed, episodic activities conducted in response 

to part 01' system failures which adversely affect the asset's ability to conduct missions. 

The Service also tracks defeJ'l'ed maintenance. Deferred maintenance is the value of any 

planned depot level maintenance that did not start on schedule and did not commence 

before the last day of the fiscal year. 

The GAO found that scheduled maintenance expenditlU'es generally rose for the 

legacy vessel fleet from fiscal years 2007 through 2011. From fiscal years 2008 to 2011, 

scheduled maintenance costs increased from $46.1 million to $61 million, a 32 percent 

increase. The GAO formd that unscheduled maintenance costs varied by legacy vessel 

class from fiscal years 2007 through 2011. However, with the exception of the PBs, 

unscheduled maintenance represented at least 20 percent of the total maintenance 

expenditures for the rest ofthe legacy fleet in fiscal year 20 II. Finally, while the total 

value of deferred maintenance for the legacy fleet has fallen in recent years, -largely due 

to Congress appropriating more than was requested by the administration - it continues to 

grow for the PBs (by 68 percent from fiscal years 2010 to 2011) and for the MECs (by 

112 percent from fiscal years 2010 to 2011). 

Increases in maintenance expenditures for the legacy fleet are largely the result of 

the age of the vessels. In addition to the increased frequency of part or system failures 

which comes with age, many pmis are obsolete and need to be l'eengineered by the Coast 

Guard or remanufactured by a supplier at considerable cost. 

Operating Below Target Levels 

The Coast Guard uses several metrics to track and assess whether its assets are 

operating at plarmed levels. 

Operational Percent a/Time Free o/lvJajor Casualty: 

The Coast Guard primarily uses the operational percent oftime free of major 

casualties (OpPOTF) as a measure of the physical condition afits legacy vessel fleet. 

After reviewing OpPOTF data for fiscal years 2005 through 2011, the GAO found the 

legacy fleet as a whole generally remained well below target levels. 

3 
vii 


Insert offset folio 4 here 76149.004

The Coast Guard has an annual OpPOTF pel'fOmlanCe target of 72 percent for 

HEC and MEC fleets, and a performance target of 86 percent for the PB fleet. From 

fiscal years 2005 through 2011, the HECs only averaged 44 percent OpPOTF, while the 

MECs averaged 59 percent OpPOTF. The OpPOTF for the PB fleet from fiscal years 

2005 through 2011 never exceeded 63 percent 

Lost Cutter Days: 

Each year, the Coast Guard tracks lost cutter days, which are the number of 

planned operational days that the HEC and MEC fleets are unavailable to conduct 

operations, typically due to tIDscheduled maintenance, Lost cutter days are a primary 

indicator of operational readiness. The GAO found that the HECs and MECs collectively 

lost 3,710 cutter days from fiscal years 2006 through 2011, an average of approximately 

618 lost cutter days per year. Specifically, the HEC fleet lost 2,791 cutter days from 

fiscal years 2006 to 2011. For fiscal years 2009 through 20 II, the HEC fleet lost 1,895 

cutter days, the equivalent of three HECs being out ofsel'vice each of those fiscal years. 

The MEC fleet lost 919 cutter days from fiscal years 2006 through 2011. 

Operational Hours: 

The Coast Guard sets targets for the number ofhollJ's each asset is expected to be 

operational on an annual basis. The GAO found the operational hours for the HEC, 

MEC, and PB fleets have generally declined since fiscal year 2005. For instance, in 

fiscal year 2011, the legacy fleet's cumulative target for operational holli's was 222,740, 

yet the actual number of operational hours achieved was 180,202, about 23 percent less. 

Specifically, the HEC fleet did not meet the Coast Guard's operational hotlr target in any 

year fl:om fiscal year 2005 through 2011, declining by about 32 percent from fiscal year 

2008 to 2011. The MEC fleet also generally did not meet its operational hour targets, 

with only the 270-foot MECs meeting their targets in fiscal year 2008, and the total 

operational hours of the 270-foot and 210-foot MEC classes combined declining nearly 

21 percent from fiscal year 2007 to fiscal year 2011. The 110-foot PB fleet did not meet 

operational hour targets in five ofthe last seven fiscal years, averaging 16 percent below 

targets, 

Impact on Operations 

Coast Guard officials reported to the GAO that the declining ability of its legacy 

fleet to meet operational performance targets has been the prime contributor to the 

Service's diminishing ability to meet its missiollneeds, including the interception of 

tlu'eats, such as illegal narcotics before they reach U.S. waters. The Coast Guard has 

noted that the failure of the HEC fleet to fulfill planned cutter days and meet its OpPOTF 

targets has reduced the Service's ability to conduct operations in Alaska and has reduced 

the hours spent conducting drug interdiction activities by 65 percent from fiscal years 

2007 through 2010. The Service also noted that the decline in the MEC fleet's 

operational hours has undermined its alien intel'dictionmissiol1, From fiscal years 2007 

through 2010, the number of operational hours spent conducting alien interdiction 

activities declhled by 40 percent and the nll1uber of migrants interdicted dropped by 

1,000. 

4 
viii 


Insert offset folio 5 here 76149.005

There has also been a growing amount of anecdotal evidence of the extent to 

which failing legacy assets are impacting operations. For example, in the aftermath of 

the Haiti earthquake in 2010, the Coast Guard reported that 10 of the 12 legacy vessels 

deployed to Haiti to assist in humanitarian relief operations suffered severe failures of 

pat1s or systems, which diminished their availability to deliver emergency aid and 

perform medical evacuations. 

Coast Guard Actions to Address the Situation 

The Coast Guat'd has implemented several strategies to improve the condition of 

its legacy fleet, reduce maintenance costs, and mitigate the impact lost operational 

capacity is having on its missions. 

New Maintenance Command Structure: 

In 2009, the Coast Guat'd reorganized its maintenance command structure with a 

focus on standardization of practices. Under the reorganization, the Service eliminated 

two commands which managed the maintenance and logistic for its legacy vessels and 

replaced them with a centralized command structure, the Surface Forces Logistics Center 

(SFLC). Under the SFLC, a single manager oversees. the maintenance of an entire class 

of vessels. This has improved the oversight of the condition of the vessels, provided 

tll1ified support to procure parts, and centralized maintenance plans and schedules fol' the 

fleets. Having better understanding of the conditions and status of the entire fleet enables 

the Service to prioritize preventive maintenance and identify maintenance trends. 

Mission Effectiveness Projects: 

The Coast Guard is nearing completion of Missiol1 Effectiveness Projects (MEP) 

for the MECs atld PBs which began in fiscal year 2005 atld cost $450 million. The MEPs 

are sustainment projects intended to impl'Ove the legacy vessels' operating and cost 

performance by replacing obsolete, tll1supportable, or maintenance-intensive equipment 

that had been key sources of degraded performance. 

The Coast Guat'd completed the MEP on the PBs in September 20 I O. The scope 

of the MEP for the PBs was considerable, but not all vessels in the fleet underwent 

sustainment work. The Coast Guat"d refurbished only 17 of the 41 PBs in the fleet. The 

Service replaced significant areas of hull plate and intemal structures where corrosion is 

present, overhauled the engines, upgraded the propulsion control systems, atld installed 

new generators, air conditioners, water makers, and fire suppression systems. The 

Service pla1111ed to conduct a MEP on 21 PBs, but scaled back the program in response to 

budget concerns and the acceleration of the Fast Response Cutter (FRC) acquisition (see 

below). 

The scope of the MEP for the MECs focuses on upgrading selected systems, 

rather than the almost complete overhaul that the PBs received. MEC work includes 

replacement of primary SOlU'ces of degraded equipment, such as the main propUlsion 

control and monitoring system, small boat davits, and air conditioning systems, but does 

not involve the replacement of main diesel engines. As of July 2012, the Service had 

5 
ix 


Insert offset folio 6 here 76149.006

completed work on all 14 210' MECs and six of the 13 270' MECs. The project is 

scheduled to be complete in fiscal year 2014. 

Fast Response Cutter Acceleration: 

Under the Deepwater program, lCGS proposed to extend the service life of the PB 

fleet by conducting an overhaul of the vessels, and improve the PB's capability by 

lengthening its hull by 13 feet and adding a stem launch system for small boats. The 

conversion ofthe PBs was supposed to extend its service life through 2020 when lCGS 

would begin fielding a replacement vessel made from a composite hull. In May 2007, the 

Coast Guard was forced to abandon the project and decommission the eight convelied 

PBs after the hulls buckled in operational testing. The U.S. government is still trying to 

recover from lCGS the $96 million spent on the project. 

With the failure of the conversion project and the loss of eight PBs, the 

operational houl's ofthe PB fleet suffered. In June 2007, the Coast Guard solicited 

industry for a replacement vessel for the PB. To reduce the time it would take to acquire 

the new asset, the Service stipulated that the design for the replacement would have to be 

a "parent-craft", meaning a vessel design already tested and in production somewhere in 

the world. In September 2008, the Coast Guard awarded a contract to Bollinger 

Shipyards of Lockport, LA, to build up to 34 FRCs based on a patrol boat design in use 

by the Netherlands. To date, tlu'ee FRCs are in service. 

The President's fiscal year 2013 budget request proposes to withhold up to $13 9 

million provided by Congress in fiscal year 2012 to construct six new Fast Response 

Cutters (FRC), opting instead to'construct four FRCs in fiscal year 2012. The Service 

then proposes to combine the withheld $139 million from the fiscal year 2012 

appropriations with an additional $139 million requested in fiscal year 2013 to constnlct 

four FRCs in fiscal year 2013. H.R. 5855, the Homeland Security Appropriations Act for 

fiscal year 2013 rejects the Administration's request to delay the acquisition of the FRC 

by directing the Coast Guard to build six FRCs in fiscal year 2012. The bill also provides 

funding to acquire an additional fom' FRCs in fiscal year 2013. 

High Tempo High Maintenance Operations: 

In response to growing operational hoUl' shortfalls in the PB fleet, the Coast Guard 

began the High Tempo High Maintenance (HTHM) operations in February 2007. Under 

HTHM, eight PBs were double crewed and received increased maintenance evolutions to 

keep the vessels operational for double the programmed operational hours (approximately 

14,000 hours). The President's fiscal year 2013 budget request proposes to terminate the 

HTHM program and retmu the eight PBs to pre-HTHM operational hours, which will 

exacerbate the growing gap in operational capacity. 

Accelerated Asset Decommissionings: 

In fiscal year 2011, in an effort to reduce growing maintenance expenditures, the 

Coast Guard began accelerating the decommissioning of certain legacy vessels before all 

of their replacements were delivered. To date, the Service has decommissioned 3 HECs, 

6 
x 


Insert offset folio 7 here 76149.007

I MEC, and 3 Navy-owned 179' patrol boats the Service had operated. The 

decommissionings saved the Service approximately $13 million in maintenance costs. 

The President's fiscal year 2013 budget request proposes to decommission an 

additional 2 HECs, as well as 3 PBs. These decommissionings would save the Service 

approximately $5 million in maintenance costs. 

Future Operational Capacity Gaps 

Delays in the delivery of replacement vessels, the accelerated pace of legacy asset 

decommissionings, and the growing rate oflegacy asset failures is exacerbating the 

operational capacity gap. The problem is especially acute in the MEC fleet. Under the 

Coast Guard's current recapitalization plans, the MECs will be in service into the mid2030's before the fleet will be fully replaced by the new Offshore Patrol Cutter (OPC). 

However, the MEP for the MECs will not extend the service life of the MECs until that 

time. The Coast Guard has informed staff it is convening a Ship Structure Machinery 

Engineering Board later this year to begin the process of evaluating the current condition 

ofthe MEC fleet and examine ways to extend the fleet's service life. H.R. 5855, the 

Homeland Security Appropriations Act for fiscal year 2013, includes $5 million to survey 

the condition of the MEC fleet in anticipation of an additional MEP. 

End of extended service He if ME}) provides lip t{,5 addiilonal years 

End of extended servicc lire tI MEP provides up to 10 ;:!ctditionr;l years 

End cr extef'\ded service Me if ME? provldes up to 

~ Proiecled delivery date Df OPe 

7 
xi 


Insert offset folio 8 here 76149.008

Other factors are affecting the operational capacity gap include: uncertain future 

funding levels for new and refurbished assets; the final numbers of new and re.ful'bished 

assets that will be acquired; as well as whether the Coast Guard will proceed with plans 

to implement a crew rotation system for the HEC's replacement, the National Security 

Cutters (NSC). The Service's five year Capital Investment Plan (CIP) does not include 

funding to acquire the planned ill and 81h NSCs. If these NSCs are not acquired or their 

deliveries are delayed, it is unclear how that would affect the decommissioning schedule 

for the HECs, and whether the Service would need to increase the planned buy of OPCs 

to cover the operational capacity gap. Furthermore, the program of record governing the 

acquisition of the NSC assumes eight NSCs will achieve more operational capacity than 

the 12 HECs they are replacing, but this is predicated on the Coast Guard operating the 

NSCs for 230 days a year. The only way to achieve 230 days away from homeport is to 

rotate the NSCs' crews on a regular basis. However, the Coast Guard is now 

reevaluating this concept over concel'l1S about cost and impact on servicemembers' 

morale. 

The Coast Guard tracks the impact on operational capacity of the transition from 

legacy assets to new and refurbished assets in the Transition Schedule charts below. The 

chart includes two horizontal lines which represent the operational hour goals for the 

assets based on a mission needs statement (MNS). The MNS helps the Service detelmine 

the amount of capability, including operational hours, it needs to get out of its assets to 

successfully conduct its 11 statutory missions. The red horizontal line represents the 

number of hours needed to meet the Service's mission demands in 1998. The blue 

horizontal line represents the number orhoUl's needed to meet the post-September 11 Ih 

mission demands. Both charts assume steady maintenance and acquisition funding for 

new assets, as well as the acquisition of all eight NSCs and the implementation of the 

NSC crew rotation concept. Even under those scenarios, the Service will fall tens of 

thousands ofholU's short of the operational hours needed to meet its post-September I11h 

mission demands. 

8 
xii 


Insert offset folio 9 here 76149.009

200 000 ~_~~~or Cutter Transition Schedule , 

150,000 F=~;;;;;;;;;;==;;;;;;;;;;==;;;;;;;;;;F=;;;;;;;;;;===;;;;;;;;;;;;;;;;;;;;====l 

100,000 -

50,000 

~ ::I 

o 

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lJ o 

1995 2000 2005 2010 2015 2020 2025 2030 J IIIWHEC-378 ONSC OWMEC·27Q I!lWMEC~210 ;-WMEC.282 OWMEC-230 IIIWMEC-213 mopc I 

Patrol Cutter Transition Schedule 

200,000 -,---------------,r-----------------. 

150,000 +------------t-------------------i 

100,000 

50,000 

!!l 

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" o 

~ '" 

GAO Recommendations 

The GAO report produced two recommendations for the Coast Guard. The first 

recommendation was for the Service to adopt the GAO's best practices for cost 

estimating its altnual depot-level maintenance expenditures. The Coast Guard concurred 

9 
xiii 


Insert offset folio 10 here 76149.010

with this recommendation and states it has already begun implementing these best 

practices with the use of its Fleet Logistics System and Asset Logistics Management 

Information System. 

The GAO also recommended the Coast Guard adjust legacy vessel fleet 

operational hour targets to levels that reflect actual capacity. The GAO contends this 

would ensure the Service can more efficiently allocate available resources and enable 

them to set achievable performance goals. The Coast Guard does not concur with this 

recommendation. The Service states that reducing the operational hour targets would fail 

to fully utilize those assets not impacted by maintenance issues. The Service further 

argues that from an operational plarming perspective, reducing the operational target 

would result in a "lost opportunity" for capital assets that are fully able to conduct Coast 

Guard missions. 

WITNESSES 

Rear Admiral Ronald J. Rabago. 

Assistant Commandant for Engineering and Logistics 

United States Coast Guard 

Mr. Stephen Caldwell 

Director 

Homeland Security and Justice Issues 

Govemment Accountability Office 

10 
(1) 

THE CHALLENGES THAT MAINTAINING 

LEGACY ASSETS POSES TO UNITED STATES 

COAST GUARD MISSION PERFORMANCE 

THURSDAY, SEPTEMBER 20, 2012 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COAST GUARD AND

MARITIME TRANSPORTATION, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 2:21 p.m. in Room 

2167, Rayburn House Office Building, Hon. Frank LoBiondo 

(Chairman of the subcommittee) presiding. 

Mr. LOBIONDO. The subcommittee will come to order. Mr. Larsen 

is on his way, and he gave us, in light of the delay because of the 

votes, the green light to get started with the committee. So I will 

start with my statement. 

The subcommittee is meeting this afternoon to review the challenges the Coast Guard faces maintaining its legacy assets and examine how those challenges impact the Service’s mission and performance. 

Findings by GAO and others over the years have accurately 

shown the rapid decline of legacy assets that is causing the Coast 

Guard to fall short of its operational targets, forcing the Service to 

spend too much of its tight budget on maintenance and undermining the success of its critical safety and security missions. This 

is a very serious problem that has me and, I believe, many others 

very deeply concerned. 

Rather than alleviate my concerns, the President-proposed fiscal 

year 2013 budget for the Coast Guard only makes the situation 

that much worse. The budget request would exacerbate the growing patrol boat mission hour gap by ending High-Tempo-HighMaintenance operations, and retiring vessels before their replacements arrive. The budget request would also slash funding for the 

critically needed replacement assets by $272 million, or 19 percent 

below the current level. Clearly unacceptable. 

This would significantly delay the acquisition of the critically 

needed replacement assets, including Fast Response Cutters, National Security Cutters, Maritime Patrol Aircraft, and Long Range 

Surveillance Aircraft. It also proposes to put off important upgrades to the Jayhawk helicopter fleet, and delay sustainment 

projects on Buoy Tenders. Fortunately, our colleagues on the Appropriation Committee have found the dollars to reverse these very 

draconian cuts. 

2 

However, the problem remains that as we are forced to pour 

more money into maintaining rapidly failing legacy assets, there is 

less available for replacement assets. And as we put off acquisition 

of new assets, we only increase the strain of legacy assets. Admiral 

Allen used to call this the death spiral. 

While the Coast Guard has taken steps to improve the conditions 

of its legacy fleet and the efficiency of its maintenance command, 

more needs to be done. There are many questions that need to be 

answered as a result of GAO’s latest study. The ballooning costs of 

scheduled and unscheduled maintenance are a major problem that 

needs to be addressed. So we are growing operational gaps in the 

legacy fleet. 

The Coast Guard continues to operate tens—and in some cases 

hundreds of thousands—of hours short of its operational targets. 

This means assets are not there for the Service to conduct drug 

and migrant interdiction, protect our environment, secure our 

ports, and ensure the safety of our waterways. I hope that Admiral 

Ra ́bago can tell us what the plan is to get out of this death spiral 

and ensure mission performance. 

I also look forward to hearing Mr. Caldwell’s insight into some 

of the key findings from the GAO report. 

I thank both of you for coming this afternoon. And with that I 

would like to yield to Mr. Larsen. 

Mr. LARSEN. Thank you, Mr. Chairman. And I appreciate that 

you found time before the House adjourns to reschedule this afternoon’s hearing regarding the status of the Coast Guard legacy assets. 

Throughout the course of this Congress I have stressed that we 

cannot expect the Coast Guard to do more with less at this time. 

The GAO’s new report of the crumbling condition of the Coast 

Guard’s legacy fleet provides perhaps the most conclusive evidence 

we have yet received that, in fact, the Coast Guard is being forced 

to do less with less. 

The GAO’s analysis highlights the dilemma that the Coast Guard 

now finds itself in as it struggles with insufficient budgets. On the 

one hand, the Coast Guard is struggling to overcome billions of dollars in cost overruns and years of scheduled delays in its effort to 

recapitalize its entire fleet of offshore cutters and patrol boats. Yet 

the very steep cost of recapitalization, along with the time table 

that has been pushed out far to the right by more than a decade, 

forces the Coast Guard to rely on its legacy assets which grow less 

reliable and more costly to maintain and operate yearly. 

Under the present circumstances, much of which the Coast 

Guard brought upon itself due to its failed deepwater program, the 

Coast Guard is caught between the proverbial rock and a hard 

place. For example, the GAO reports that the condition of each 

class of legacy assets is poor and generally declining, and that each 

class failed to meet key physical condition targets for the period between fiscal years 2005 and 2011. 

Additionally, depot-level maintenance expenditures for the legacy 

fleet have increased, and the prospect is that these costs will continue to increase as these vessels are pushed further and further 

past their life expectancies. 

3 

Worst of all, due to the declining condition of its legacy assets, 

the GAO concludes that the Coast Guard’s present operational capacity targets are unrealistic. In effect, the GAO is simply paraphrasing what I have been saying all along: the Coast Guard will 

be doing less with less. 

The Coast Guard is now forced to choose between two vital 

needs, either funding the construction of a new modern fleet of offshore vessels, or maintaining its aged and unreliable legacy assets. 

The end result will be diminished maritime security presence. 

Considering the gravity of the situation, I do want to commend 

the Coast Guard for the steps it has taken already to partially address these circumstances, especially its reorganization of its command structure and its timely implementation of a mission effectiveness project, or MEP, for the Medium Endurance Cutters and 

110-foot patrol boats. 

Yet knowing what we know now, I find it troubling the Coast 

Guard has still failed to develop new budget proposals for additional MEPs or for the service life extension projects to bolster the 

operational capacity of its legacy assets for the next 10 to 15 years. 

I hope Admiral Ra ́bago will address exactly where the Coast Guard 

is in this process to develop a budget proposal. 

The unfortunate truth is that we can no longer ignore the reality 

that the GAO has laid before us in the report. We can choose to 

devote additional resources to ensure the Coast Guard maintains 

its operational readiness throughout its lengthy transition to a new 

fleet, or we can continue the current path of budget cuts, which we 

know will risk the operational readiness of a Coast Guard—of the 

Coast Guard now, and well into the future. 

Present constraints leave us little choice but to examine carefully 

the assets and resources we devote to the Coast Guard. And certainly I am no advocate of blindly throwing money to solve the 

problem. We clearly are confronting a budget situation that means 

the Coast Guard might be less effective in drug interdiction at sea 

or might not respond as quickly to mariners in distress, or to communities devastated by natural disaster. I am suggesting that we 

can no longer continue to cut the Coast Guard’s budget as if it had 

no effect. We need to set aside differences to find a way to provide 

the Coast Guard with the resources it needs. And without that effort, we cannot expect the Coast Guard to maintain the same excellent services they now give our Nation. 

With that, I yield back. 

Mr. LOBIONDO. Thank you, Mr. Larsen. Our witnesses today are 

Coast Guard Rear Admiral Ronald Ra ́bago, assistant commandant 

for engineering and logistics, and Mr. Stephen Caldwell, director of 

GAO’s homeland security and justice issues team. 

Admiral, you are recognized. 

TESTIMONY OF REAR ADMIRAL RONALD J. RA ́ BAGO, ASSISTANT COMMANDANT FOR ENGINEERING AND LOGISTICS, 

UNITED STATES COAST GUARD; AND STEPHEN L. 

CALDWELL, DIRECTOR, HOMELAND SECURITY AND JUSTICE 

ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE 

Admiral RA ́ BAGO. Good afternoon, Chairman LoBiondo, Ranking 

Member Larsen, and other distinguished members of the subVerDate Aug 31 2005 13:52 Dec 04, 2012 Jkt 000000 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\CG\9-20-1~1\76149.TXT JEAN
4 

committee. I am privileged to appear before you today in my capacity as the Coast Guard’s chief engineer to address the many challenges of maintaining our aging assets—in particular, our service 

fleet. I also thank you for your continued strong advocacy for the 

men and women of the Coast Guard, and for your oversight. 

I would like to acknowledge the work of Mr. Stephen Caldwell 

and his team at GAO, who recently completed this comprehensive 

study highlighting the difficulties associated with sustaining operational availability of the Coast Guard’s cutter fleet. The external 

perspective provided by the GAO report not only underscores the 

challenges that our cutter crews and shoreside maintenance personnel face on a daily basis, but it also provides actionable recommendations to improve our cost estimating processes. 

The Coast Guard has taken these recommendations, and has 

begun a review of our vessel repair estimating procedures. Along 

other management improvements, which I will discuss in a moment, standardization of cost estimating will further strengthen 

our ability to deal with the highly unpredictable nature of maintaining an aging fleet. 

The Coast Guard is operating a fleet of cutters that are approaching or are beyond their designed service life. Periodic and 

substantial investments like our mission effectiveness project are 

critical to sustaining an aging fleet. The in-service vessel 

sustainment project and our capital investment plan will also enable us to institutionalize this strategic approach across multiple 

cutter classes in the coming years. 

However, despite periodic investments and the dedicated cutter 

crews, there is a point when it becomes too costly to repair aging 

cutters and/or to retrofit their particular systems. A good example 

of this is our 378-foot High Endurance Cutters, which were constructed in the 1960s. These cutters frequently deploy in a degraded state of mission readiness. Their obsolescences also contributes to increased repair times, while critical parts are repaired or 

even remanufactured because they are no longer available from 

suppliers. Obsolescence is also prevalent on our 140-foot ice breaking types, navigation fleets, and other cutter classes, which are fast 

approaching or well beyond their design service lives. 

Despite the declining condition of several classes of our fleet, our 

cutter crews somehow continue to overcome these significant challenges and remarkably respond when our Nation calls. In the recent weeks, inland navigation cutters the Saginaw and the Hatchet, average age 40-plus years, responded in the wake of Hurricane 

Isaac and helped restore vital commercial traffic on impacted waterways within days of the storm’s passage. 

As I noted earlier, over the last 3 years we have fundamentally 

reorganized the way we manage our surface fleet maintenance programs. We have centralized resources and governance to streamline and standardize support. We have established the surface logistics center to consolidate functions that were previously executed 

among three separate commands. 

Our regional industrial capabilities, including the Coast Guard 

yard in Baltimore, were brought under centralized programmatic 

oversight. We continue to make substantial progress working with 

the Department of Homeland Security to improve our financial 

5 

audit position. All of this has significantly enhanced our ability to 

manage costs and respond to operational priorities across the entire enterprise, including efficient management of our newest ships, 

the National Security Cutters and the Fast Response Cutters. 

In our new maintenance organization led by product line managers, we have emphasized first and foremost the completion of 

critical plan maintenance, and are appreciative of Congress’ support of our efforts to reduce deferred maintenance. This will improve the resiliency of our fleet and has enabled us to better support the operational commander’s requirements and ensure good 

stewardship of the resources that are entrusted to us. 

Maturation of our support network extends beyond the lifelines 

of the Coast Guard. We have expanded partnerships with the 

Navy’s Naval Sea Systems Command and the American Bureau of 

Shipping. Agreements with the Navy have enabled us to tap into 

their expertise for technical analysis, design, and peer review. We 

also regularly consult with ABS on a variety of technical areas that 

enable us to take advantage of their expertise and experience. 

Under our commandant’s leadership, we are carefully balancing 

resources to both sustain our aging fleet and to acquire much-needed new assets, thereby ensuring the Coast Guard can effectively 

execute its missions today and long into the future. 

Finally, there are no routine in-port periods for our aging fleet. 

The moment a cutter returns to home port from an operational 

mission, the crew begins extensive maintenance and repair efforts 

to ensure they are ready to sail for the next mission. Without the 

many dedicated and talented men and women working very long 

hours, our fleet would not sail. I could not be more proud of our 

cutter crews and shoreside maintenance professionals who work 

through these significant challenges to ensure your Coast Guard is 

always ready to perform its many missions. 

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

forward to answering your questions. 

Mr. LOBIONDO. Thank you, Admiral. 

Mr. Caldwell? 

Mr. CALDWELL. Chairman LoBiondo and Ranking Member 

Larsen, thank you for asking GAO to be here to talk about the legacy fleet. My written statement summarizes our July report, and 

it focused on the condition, cost, and performance of these legacy 

vessels. 

As noted, the key issue here is that the recapitalization program, 

formally known as Deepwater, experienced schedule delays that 

have required the Coast Guard to depend longer on the legacy 

fleet. And the recapitalization program has also experienced major 

cost escalation from the original estimates of $17 billion to current 

estimates of roughly $29 billion, which puts pressure on the Coast 

Guard’s overall budget and its ability to maintain and potentially 

upgrade the increasingly unreliable legacy fleet. 

The overall result of this situation factor is that the performance 

is dropping from the legacy fleet, which is degrading the Coast 

Guard’s ability to do its overall mission. Further, continued instability in the plans for the recapitalization fleet create additional 

uncertainties regarding mission performance. 

6 

For example, more than 10 years into the Deepwater recapitalization, there is still some uncertainty over the size of the new 

fleet, in terms of both the NSCs and the OPCs, and there is uncertainty over the Coast Guard’s commitment to use multiple crews to 

achieve 230 days away from home port for the new vessels. 

In preparing for this testimony, I looked through GAO’s many reports over the years on the Coast Guard’s fleet, both old and new, 

and I would like to share an overall observation. In general, the 

Coast Guard has been overly optimistic in its assumptions about 

its bridging strategies, and how well they will work to bridge the 

gap between the old and the new fleet. These assumptions have not 

proven valid in the face of time and budget realities. I would like 

to cite a few examples. 

In 2008 we reported on lost operational hours caused by the 

failed attempt to upgrade existing patrol boats to 123 feet. As part 

of its bridging strategy, the Coast Guard planned to use multiple 

crews in a High-Tempo-High-Maintenance, or HTHM, program, to 

increase operational hours from 1,800 to 4,000 hours per year for 

each of eight patrol boats. In doing our work in 2012 we learned 

the Coast Guard operational hours were as low as 1,200 hours for 

some vessels in some years, and only one boat had achieved or exceeded the 4,000 hours in 1 year during the several years of the 

HTHM program. 

As another example, in 2009 we reported delays in fielding the 

NSCs, and that the new vessels were being fielded without several 

of the originally planned capabilities. When asked how they 

planned to maintain performance in this situation, the Coast 

Guard at that time told us that they planned a major sustainment 

program for the legacy High Endurance Cutters, and that they 

would carefully manage the mix of these cutters and the NSCs to 

maintain a total of 12 major cutters until all the NSCs were fielded. During our 2012 report, and getting the update from the Coast 

Guard, we learned that the High Endurance Cutter sustainment 

program was never funded, nor are there plans at this time to do 

so. And now the Coast Guard has accelerated the decommissioning 

of the High Endurance Cutters. 

In 2012, the most recent report, we noted that the Coast Guard 

has expended considerable time and money to carefully pick which 

cutters of the Medium Endurance fleet it wants to upgrade through 

the MEP program and what order it wants to do so. Coast Guard 

was optimistic in that these medium cutters could provide several 

more years of service. Yet some of these vessels, such as the Northland, experienced multiple major system failures soon after they 

went through the MEP program. 

Because of delays in the acquisition of the OPCs, the operational 

gap that is of most concern is that of these Medium Endurance 

Cutters. And as shown on our July report on page 38, the gap is 

exacerbated by uncertainty as to whether the MEP will provide an 

additional 5, 10, or 15 years of service. 

My final example of Coast Guard optimistic assumptions relate 

to the current capital investment plan. As you know, this plan is 

subject to change every year, but the most recent plan in the President’s budget shows the NSC class acquisition stopping at six vessels. The Coast Guard continues to support the program of record 

7 

of eight NSCs. But, as we know, there is a shortage of at least $1 

billion in the capital investment program needed for those two additional vessels. 

In closing, I would like to say that lower expectations are probably in order here. As the Coast Guard continues its transition 

from the old to the new fleet, it is not likely to achieve the same 

performance that Congress may be expecting. I think that is already clear, based on your comments so far. 

And as Congress continues to deal with budget deficits through 

appropriations, Coast Guard is not likely to receive all the vessels 

with all the capabilities that it may be expecting. 

With that, I am happy to respond to any questions. 

Mr. LOBIONDO. All right. Thank you, Mr. Caldwell. Admiral, I 

got to say before I actually get into the questions, I find it stunning 

and very disappointing that you chose not to address the GAO report in your remarks. I don’t know how we don’t get into this at 

some point. 

The GAO recommends that the Coast Guard set an annual operational performance target based on actual capacity, actual capacity, of legacy vessels available to carry out their missions. The 

Coast Guard sets those targets based on the assumption that available assets operate 100 percent of the planned operating time, 

which, obviously, they don’t. 

It is clear that the aging High Endurance Cutters and the Medium Endurance Cutters and patrol boats will never meet that target. The Service adjusts its mission-performance targets annually, 

but does not adjust legacy vessel operational hour targets annually. 

Setting such targets annually would allow the Coast Guard to conduct more realistic planning, and allow Congress to more fully understand the impact of delaying both the maintenance and replacement of those assets. And that is key so that we, Mr. Larsen and 

I, can convince our colleagues that this is a very real problem. I 

am not sure the Coast Guard is presenting this the way they 

should. 

And, of course, we know it is a high priority of the Coast Guard 

to provide Congress with the most accurate, easily understood, 

transparent information regarding how it meets mission-performance targets. So can you shed some light on why does the Coast 

Guard oppose providing realistic mission target objectives by setting legacy operational hour targets annually? 

Admiral RA ́ BAGO. Yes, sir. The Coast Guard sets those operational targets based on the resources that are provided for the 

vessels. It is true that, in the aggregate, our fleet is not achieving 

those objectives, those targets. However, individual vessels, and in 

particular geographic areas, we are able to achieve that. We are 

able to achieve those targets. And we use those targets as a goal 

to decide where we want to put the resources. 

The operational commanders can express their prerogative to emphasize and apply resources or direct the maintenance manager to 

keep certain vessels in particular areas up to a higher level. In 

fact, they do that, and we have allocated resources, and some of our 

vessels do in fact achieve those targets in particular areas. However, as an aggregate, it is a true statement, sir, that we are not 

meeting the current targets. 

8 

In our MEP program, mission effectiveness program, which has 

been effective in terms of improving the reliability—and we get a 

third-party analysis of the results, and we have shown that the 

operational availability of that fleet has in some cases doubled, especially for the 110-foot. But also it showed up in the 210- and 270- 

foot vessels. So that project has, in fact, increased the operational— 

and now we are working to our targets. 

Where we achieve that, sir, we are battling the aging fleet. These 

vessels, as you know, sir, are 40 and some approaching 50 years 

old, and that is a continuing challenge. But the targets themselves 

represent something we are striving towards, and something that 

we follow the operational commander’s direction. And we can 

prioritize and achieve those targets, at least geographically, or 

within particular missions, if so directed by the operational commander. But not for the whole fleet. We are not doing that, as you 

mentioned, sir. 

Mr. LOBIONDO. Admiral, in 2010 Congress changed the law to require the Coast Guard’s newly acquired vessels to be classed by the 

American Bureau of Shipping, a standard all commercial vessels 

must meet. Classification ensures that vessel designs are safe, that 

vessels are built to the latest marine engineering standards, and 

reduces the likelihood of structural problems when the vessels are 

ultimately delivered. 

Once the Coast Guard takes delivery of the Fast Response Cutter 

and the Offshore Patrol Cutter, does the Service intend to maintain 

these vessels in class? And, if not, why not? 

Admiral RA ́ BAGO. We see great value in the classification at delivery. The standards that ABS has set for commercial vessels, 

some of which are directly transferable to Coast Guard cutters, 

have been very valuable in setting standards that we have designed our ships to. Certainly we have seen that with the FRC, 

which was delivered in class, as one of its contract requirements. 

And we are proceeding with that with the Offshore Patrol Cutter 

with the naval vessel rules classification standard. And, in fact, 

that vessel will be classed at delivery. 

The Coast Guard is—has a number of initiatives with ABS, 

where we use their expertise and experience after the vessels have 

been delivered. We have done this for many years, and we continue 

to value that. Whether we will keep the vessel in class or not is— 

we have tried that in the past. We have tried it with our 175 and 

our 225 vessels for a period of time, and at least for those vessels 

at that time it was not a—we didn’t get the reliability or additional 

value out of it for the expenditure of funds, and also for the hours 

and the people that were involved in the process of keeping it within class. 

So right now we do not anticipate keeping them in class. However, we continue to work with ABS to get a lot of value out of the 

things that they do provide us, which are areas of structure and 

other things which ABS sets the standards for, which we do conform to, because they are good maritime standards. 

Mr. LOBIONDO. Admiral, many vessels in the Medium Endurance 

Cutter fleet have exceeded their service lives, while others are fast 

approaching the end of their service life. The MEC replacement, 

the Offshore Patrol Cutter, has yet to be designed, and will not be 

9 

fully fielded until the mid-2030s, at the earlier. The Coast Guard 

is expected to complete its mission effectiveness project on the Medium Security Cutter fleet in fiscal year 2014. In previous testimony before the subcommittee, the Service indicated this would be 

the last overhaul needed by the MECs before the OPCs come in online. 

Is it still the belief of the Coast Guard that these Medium Endurance Cutters will last another 10, 15, maybe even 20 years past 

their life expectancy without another overhaul? 

Admiral RA ́ BAGO. Sir, as we complete the mission effectiveness 

project, we are going to be taking those vessels through a process 

called the Ship Structure and Machinery Evaluation Board. This is 

an evaluation process that we have used for many years. It puts 

out very, very good information. And it will tell us what the expected life of the particular systems and also the structure of the 

ship. 

When we complete that, we will be able to project whether or not 

we need to have another mid-life or some sort of a life extension, 

or another mission effectiveness project for particular systems for 

those vessels. And once we learn that information, I will be able 

to answer that question more fully. It is a number of years until 

the OPCs will replace the current MEC fleet. But we will evaluate. 

We conduct these SSMEBs periodically to assess the fleet, because 

we realize that things change, especially on older vessels. So we do 

this to gain a good baseline, and then project whether we need to 

make other investments, including follow-ons to the mission effectiveness project. 

Mr. LOBIONDO. Mr. Caldwell, I have a couple questions for you, 

but I would like now to turn to Mr. Larsen, and then I will come 

back to you. 

Rick? 

Mr. LARSEN. Mr. Chairman. And actually, I will start with Mr. 

Caldwell. 

You assert in your written statement the operational percentage 

time free of major casualties for the Coast Guard legacy assets are 

well below target levels, and that looming in the immediate future 

is a growing gap in the Coast Guard’s operational capacity. Concerning that finding, and the increasing trend in the difference between target levels and actual performance as expressed in figure 

10 of your report, is it reasonable to assume that gap will continue 

to increase in the absence of any acceleration in the delivery of new 

assets or substantial new increase in the Coast Guard’s maintenance budget for its legacy assets? 

Mr. CALDWELL. The biggest gap that we see right now is maybe 

10 or 12 years out. That is when the medium-endurance fleet— 

which is the furthest out in terms of replacement—will have the 

biggest problems. That is when those ships are going to be the oldest, and the OPCs will be coming in at a rate of maybe two a year, 

but potentially far behind the rate that MECs may have to be decommissioned. And those still in service are certainly going to be 

operating at lower than optimum rates. 

We have a chart in our report that shows this period of 2024 to 

2033 may be the peak of that gap. So we are not there yet, but it 

is going to get worse. 

10 

Mr. LARSEN. Well, and that gets to the point. Do you assume a 

certain—a constant rate of—I won’t say ‘‘failure,’’ that is a strong 

word, but a constant rate of maintenance, as opposed to an acceleration rate, acceleration rate of maintenance necessary for the 

MEC? 

Mr. CALDWELL. The assumption that we made in our report is 

that the current MEP will provide either 5, 10, or 15 years of additional life to those vessels. In some cases, you know, you may get 

lucky, and a ship has good systems and will work, and in some 

cases a ship won’t. And those ships won’t perform well and will 

have to be decommissioned earlier. 

I am not an engineer, I don’t quite understand this, but the surprising thing for me in doing this review is that once you get to 

an older ship, there is a great deal of imprecision in determining 

how long a major repair will last. So we went to the Coast Guard 

with various estimates and settled on using those three assumptions, 5, 10, and 15 years. But it would be based on the current 

MEP. We have no assumption of a new MEP, because there is not 

a new MEP in the budget. 

Mr. LARSEN. Sure. So I was a little surprised to read in your 

statement that the Department of Homeland Security objected to 

your recommendation that the Coast Guard adjust legacy vessel 

fleet operational hour targets to reflect actual capacity, as appropriate by class. Can you explain the DHS’s concern with your recommendation to address operational hour targets? 

Mr. CALDWELL. It is somewhat convoluted. What we and the 

Coast Guard agree upon is that the Coast Guard has been unable 

to meet these operational targets, and we also agree that while collectively not meeting these targets, some of the individual vessels 

do meet those targets. 

In our discussions with Coast Guard and DHS, there was a concern that by lowering those targets, the Coast Guard was lowering 

the expectations of what are statutory required missions. We would 

not object to them having an ‘‘objective’’ target of what levels they 

would want those operational hours to be. And if they do adjust 

those operational hours to show the reality of recent years and recent history, they could certainly ramp those back up to that desired level as appropriate. 

When facing the losses that frequently number in the tens of 

thousands of hours on an annual basis, the exceptional output of 

some individual vessels is not a good reason for holding to what are 

unrealistic and unachievable targets. By adjusting those hours annually to reflect the capacity as evidenced by the historic and actual performance, as opposed to the desired capacity of the ships, 

the Coast Guard would more realistically be setting its annual targets, and even those for individual vessels and commands that are 

in charge of those vessels. 

Mr. LARSEN. Admiral, a little change of subject. And it has to do 

with sequestration. Based on my review of the OMB report that 

was released last week, the Coast Guard is facing about a $430 

million cut to line items. I won’t go into the details, but it is about 

that amount. A lot of focus around here has been on the Defense 

Department, but obviously there is a lot going on on the domestic 

side, which you all fall into, in some respects. 

11 

So, can you talk about the impact of sequestration on the Coast 

Guard’s ability, then, to maintain its legacy assets? And how—is 

there discussion about how the Coast Guard would distribute cuts 

that would come from sequestration? 

Admiral RA ́ BAGO. Sir, I am not prepared to talk about how we 

would distribute across our entire Coast Guard budget. We can certainly provide that information for the record, sir. 

Mr. LARSEN. Please do so. 

Admiral RA ́ BAGO. I will let our budget folks provide that. 

Mr. LARSEN. I am sure they will enjoy providing that information. 

[United States Coast Guard insert for the record follows:] 

The Coast Guard does not have a specific plan on how reductions would be distributed under the potential sequestration, or identify which programs, projects or activities 

would be impacted, and to what degree. Overall, the strategy would be to allocate available resources in a manner 

that prevents disruptions to our workforce; preserves the 

most essential operations, activities, and services; and prevents long-term detrimental impacts to the Service, including the ability to maintain our legacy assets. 

Admiral RA ́ BAGO. The—with regards to the budget that I have 

today to take care of the fleet of today, as well as the new ships 

that are coming on, I am not yet satisfied that I am able—I am 

obviously not reaching the targets that we would like to reach for 

all of the vessels. Our newer ships are, and we use those targets 

for our newer ships. And after—certainly we have seen the results 

of what MEP is providing, in terms of increased reliability of the 

systems, which is what the essence of MEP was. 

But for us, we—the money that we have today, it is my charge 

to make sure that I spend it very wisely with the existing assets 

that we have. The changes that we made to our maintenance organization, which I did talk about in my opening statement, or my 

written statement, is ways to make sure that—number one is that 

we know exactly what—where every dollar is going, in terms of 

how it applies to maintenance, and how that maintenance translates into operations. 

We have recently strengthened a new metric in the last two or 

so years, which is our cost to operate, where I can provide information to the operational commander. And again, this becomes a decision process and the prerogative of the operational commander, 

where I can say what things actually cost, what is the cost of operating that 210, that 270, that 110, and provide that operational 

commander information to make good decisions about how to allocate the operational resources based on cost. And we are continuing 

to improve that. It was mentioned in the GAO report. It is one of 

our key metrics. And it allows, I think, operational commanders to 

make good decisions. 

So, regardless of where our budget ends up in the future years, 

or with some form of sequestration or whatever may come, we are 

best positioned to give the operational commanders the choices 

they need to choose what assets that they want to run, what the 

12 

costs are going to be, in order to achieve the operational effect that 

is required to execute our missions. 

Mr. LARSEN. Well, just one more question. The chairman was 

trying to touch on this—why haven’t you revised mission performance targets to account for the current legacy fleet? Because, you 

know, from where we sit, it looks like you are trying to paper over 

a problem when it is pretty clear you’ve got plenty of paper that 

tells us there is a problem. 

Admiral RA ́ BAGO. Sir, right now we are keeping operational targets where they are. We certainly read the information in the report and recognizing that we are not achieving those targets. Those 

targets, over time, and the changes to what the Nation may require 

of us still are valid targets and what the Nation should expect out 

of those ships, in terms of—as capital assets that we make investments in. 

Challenging us, of course, is the age of those ships and their capabilities that they have, that if we don’t recapitalize them they get 

more and more expensive. And therefore, we are allocating money 

to maintenance activities that we would just as soon spend to do 

other things that produce more operational capabilities. But that is 

a consequence of an aging fleet. 

In the end, the best choice is to recapitalize particular assets 

when they reach a certain age. 

Mr. LARSEN. Thank you. 

Mr. LOBIONDO. Just before I got to Mr. Coble, with all due respect, Admiral, if it is what the Nation expects, but it is not what 

is happening, and the cost—we know we need to recapitalize, but 

we are not matching up our needs versus our cost and what, realistically, we are doing and how we are doing it. 

So I mean I have got to agree with Mr. Larsen that I think that 

the Coast Guard has got to be more realistic about this, and we are 

going to have to get our heads together, since obviously high brass 

at the Coast Guard doesn’t think so. 

Master Chief Coble? 

Mr. COBLE. Thank you, Mr. Chairman, appreciate it. Admiral, 

good to have you all with us today. Admiral, I am told that 4 years 

ago the Coast Guard assured the subcommittee it was conducting 

a condition survey of the HEC fleet. Was such a survey ever, in 

fact, conducted? 

Admiral RA ́ BAGO. Yes, we have conducted the SSMEB, which is 

a Ship Structure and Machinery Evaluation Board, on that fleet. 

We determined the exact condition of it. We have actually made 

some modest amount of work to keep those ships operating. But we 

have not made a large investment, nor do we intend to. 

Mr. COBLE. Well, has the subcommittee received the copy of the 

report, of the survey? 

Admiral RA ́ BAGO. I don’t know, sir. I will find out and make sure 

that you have it. 

[United States Coast Guard insert for the record follows:] 

The Coast Guard completed a Ship Structure and Machinery Evaluation Board (SSMEB) review of the 378-foot Medium Endurance Cutter (WHEC) fleet and held a WHEC 

13 

Sustainment Conference in 2008 resulting in findings of 

the SSMEB in 2009. 

During the sustainment conference, it was determined 

that the Coast Guard needed to conduct a comprehensive 

hull assessment and structural survey to better assess the 

true condition of the fleet. The Naval Surface Warfare 

Center performed hull corrosion and piping system surveys 

from 2009 through 2010 report. This effort indentified numerous structural and engineering system deficiencies that 

require extensive repairs and further validated the Coast 

Guard’s on-going strategy to replace these aging assets 

with National Security Cutters. 

Mr. COBLE. I thank you for that. 

Admiral RA ́ BAGO. Yes, sir. 

Mr. COBLE. Admiral, let me ask you this. How many days away 

from port are NSC 1, 2, and 3 currently achieving? 

Admiral RA ́ BAGO. NSCs 1 and 2 have exceeded 200 days away 

from home port, and our goal is to continue to increase that number until we reach the 230, which is the designed days away from 

home port for that class of ships. 

Mr. COBLE. Thank you. Thank you both for being with us. I yield 

back, Mr. Chairman. 

Mr. LOBIONDO. OK. Thank you there, Master Chief. 

Mr. COBLE. Yes, sir. 

Mr. LOBIONDO. Mr. Caldwell, the Coast Guard is nearing completion of the mission effectiveness project for the MECs and the patrol boats which began in fiscal year 2005 and cost $450 million. 

Was the mission effectiveness project a wise investment, given that 

we will not fully bridge the MEC and OPC delivery, and there is 

no guarantee regarding how long the mission effectiveness project 

will extend these vessels’ service lives? 

Mr. CALDWELL. Whether it could have been cheaper another way 

or whether that money maybe should have gone into moving the 

newer assets up sooner, I can’t answer that question. But I think 

the situation probably would have been worse if we didn’t have 

that MEP. In terms of the patrol boats, those boats are going 

through a much larger overhaul, so the reliability you would get 

out of them may be better spent. 

With the MECs, it is more difficult, because they are just replacing the most distressed elements or systems within those vessels. 

So it is much less predictable, as to what we are getting out of 

those particular vessels in the medium to long term. 

But as I said, the Medium Endurance Cutter gap is the worst 

one we are facing right now. So we are between a rock and a hard 

place, sir. 

Mr. LOBIONDO. For future mission performance, the GAO report 

notes that the problems with maintaining the legacy vessel fleet is 

only expected to worsen in the future, and will have consequences 

on mission performance. Could you identify for us the Coast 

Guard’s greatest challenge regarding sustaining the legacy fleet 

and meeting mission requirements? 

Mr. CALDWELL. They are having to rob Peter to pay Paul with 

the resources they have. The challenges are, making those deciVerDate Aug 31 2005 13:52 Dec 04, 2012 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6633 P:\HEARINGS\112\CG\9-20-1~1\76149.TXT JEAN
14 

sions in terms of which missions they are going to pursue, and at 

what locations. For example, you have got very rough seas off Alaska, the Bering Sea, only certain vessels are actually capable of 

doing missions there. They would be pulling vessels from, say, the 

Caribbean and drug missions and other missions there, which is reducing the effectiveness and performance in the Caribbean. 

And then other missions are falling by the wayside, or being ignored, at least in the short term, because of those other priorities. 

These missions might include the fisheries enforcements and the 

other missions where life and limb are not at risk. 

Mr. LOBIONDO. Thank you. Mr. Larsen? 

Mr. LARSEN. Admiral, can you cover for us a little bit more about 

how you see the positives of the command maintenance structure, 

since it has been in place now for a couple of years and you have 

some experience? Give us some feedback on that. 

Admiral RA ́ BAGO. Yes, sir. Thank you for the question. Our maintenance organization previously was an east-west maintenance organization. So decisions were sometimes different between the two 

coasts, and even in the same fleet of vessels. By consolidating in 

2009 and setting up our surface forces logistics center, we were 

able to be able to approach the fleet as a single enterprise. It allowed us to make tradeoffs, in terms of where the priorities are. It 

allowed us to create a concept called the product line manager, 

which is a single point of accountability for a particular asset class, 

and have a conversation with the operational commander about 

priorities. 

Additionally, what it did is we had those three commands I mentioned in my opening statement. We separated supply away from 

maintenance. In the new organization, a single point of accountability, the product line manager oversees all maintenance and 

supplies. So decisions that are made with maintenance that do 

have an impact on what spare parts you have and the system that 

you want to support and how you want to support it can all be 

made holistically. 

And again, we no longer have an east-west, we have a one Coast 

Guard approach to taking care of our fleet. That has allowed us to 

do a couple of things. One is it is the most effective and efficient 

way to use the dollars we are given, in the sense that we can make 

sure that they are applied with the priorities we get from the operational commander. 

Secondly, it allows us to gather data that is—we can use to make 

good decisions about the priorities. And those are some of the new 

metrics, the cost-to-operate metric, which we could not have gotten 

before, now allows us to decide and provide options to Coast Guard 

leadership, and particularly the operational commander, as to exactly where they want us to put our resources when it comes to 

maintenance. And again, that can vary based on geography, or it 

can be based on mission. Whatever the operational commander decides is the highest priority, we are able to leverage those resources 

into those assets to answer that and that particular requirement. 

Additionally, the other efficiencies in the sense of overseeing our 

entire industrial enterprise previously, that was done very geographic, very local. By standardizing our business process across 

the way, we were able to actually redistribute resources across the 

15 

enterprise to provide a much more even support so that we have— 

we don’t have haves and have-nots when it comes to taking care 

of our fleet. We want to take care of all of our ships with intent 

and purpose, and we want to do it with a data-driven methodology. 

Mr. LARSEN. That is fine. Thank you. 

Mr. LOBIONDO. Admiral, thank you very much. Mr. Caldwell, 

thank you very much. The subcommittee stands adjourned. 

[Whereupon, at 3:05 p.m., the subcommittee was adjourned.] 

16 


Insert offset folio 11 here 76149.011

U. S. Department:.,.4 Homeland secu,;. Commandant 

United States Coast Guard 

2100 Second Street, S.W. 

Washington, DC 20593-0001 

Staff Symbol: CG-0921 

Phone: (202) 372-3500 

FAX: (202) 372-2311 

TESTIMONY OF REAR ADMIRAL RONALD J. RABAGO 

ASSISTANT COMMANDANT FOR ENGINEERING AND LOGISTICS 

ON 

"A REVIEW OF THE CHALLENGES MAINTAINING LEGACY ASSETS POSE TO 

UNITED STATES COAST GUARD MISSION PERFORMANCE" 

BEFORE THE 

HOUSE TRANSPORT A TION AND INFRASTRUCTURE SUBCOMMITTEE 

ON COAST GUARD AND MARITIME TRANSPORTATION 

SEPTEMBER 14, 2012 

INTRODUCTION 

Good morning Mr. Chairman, Ranking Member Larsen, and distinguished members of the Subcommittee. 

It is an bonor to appear before you today to provide an update on the U.S. Coast Guard's efforts to address 

the challenges of maintaining our aging fleet of cutters and aircraft. The Coast Guard's ability to save 

lives, enforce laws on the high seas, facilitate maritime commerce, and protect our ports, waterways, and 

natural resources is highly dependent on maintaining a reliable and capable fleet of vessels and aircraft. 

On behalf of the men and women ofthe Coast Guard who pursue mission excellence each day onboard our 

fleet of cutters, boats, and aircraft, I thank you for your continued advocacy and oversight of our Service. 

Balancing the acquisition of new assets with the maintenance demands of the existing fleet is a pivotal 

factor in continued mission success and the Coast Guard's ability to continue to provide truly outstanding 

value to the American taxpayer. The FY 2013 President's budget strikes the optimal balance between 

sustaining current operations and investment in future capability. It supports the Coast Guard's FY 2013 

priorities to Responsibly Rebuild the Coast Guard, Preserve Front-line Operations, Strengthen Resource 

and Operational Stewardship and Prepare for the Future. 

CHALLENGES OF MAINTAIl'o'1NG AN AGING FLEET 

The recently completed Government Accountability Office (GAO) audit regarding the status of the Coast 

Guard's vessel fleet provides valuable insight into the many challenges faced by the Service due to our 

reliance on aging surface assets to execute our missions. The challenges of maintaining such a fleet include 

technical obsolescence of systems and components, increased incidents of unscheduled maintenance, and 

increased maintenance demands on cutter crews and support personnel. Additionally, growth in unplanned 

maintenance due to casualties potentially increases the number of lost scheduled cutter operational days for 

an asset as it ages and becomes more difficult to support due to relative unavailability of repair parts. I 

greatly appreciate the Subcommittee's interest in the Coast Guard's continued efforts to address the 

challenges in maintaining our legacy assets in the current fiscal environment. 
17 


Insert offset folio 12 here 76149.012

NEW ACOIDSITION ESSENTIAL TO CONTINUED SERVICE READINESS 

As outlined in the Fiscal Year (FY) 2013 President's Budget, the Coast Guard is committed to responsibly 

rebuilding the Coast Guard and efficiently preserving front-line operations. This strategy is essential to 

address the condition of our fleet in order to continue to provide exceptional service to our Nation. 

Through the support of Congress, the Coast Guard recently made great strides in both surface and air asset 

recapitalization. Later this month, we will take delivery of the cutter WILLIAM FLORES, the third Fast 

Response Cutter (FRC) of a planned fleet of 58. This cutter, along with its recently delivered predecessors 

BERNARD WEBBER and RICHARD ETHERIDGE, are the lead hulls of the new Sentinel class of cutters 

that will replace the 110' Island Class Patrol Boats, which are reaching the end of their designed service 

lives. These cutters provide larger and more stable platforms from which to conduct operations, safer small 

boat launch and recovery in heavy seas, the ability to detect threats at longer range, remotely operated 

weapons to protect the crew, and the capacity to remain on station at sea for longer periods of time. 

The Legend-class National Security Cutter (NSC) replaces and improves upon the capabilities of our 378-

foot High Endurance Cutter fleet, which are more than forty years old. The NSC provides the Coast Guard 

with the necessary capabilities to maintain an extended presence to execute Coast Guard missions in critical 

offshore environments, including the North and East Pacific Oceans, drug transit zones, and the expanding 

ice-free zones of the Arctic. The Coast Guard recently commissioned the third NSC, STRA TION, to join 

the BERTHOLF (NSC # I) and WAESCHE (NSC # 2) which have already attained "Ready for Operations" 

status and demonstrated enhanced capabilities during recent patrols in the Eastern Pacific and the Bering 

Sea. Fabrication of HAMILTON (NSC # 4) began last summer with the keel-laying scheduled this August. 

Fabrication for the JAMES (NSC # 5) is also underway. The FY 2013 President's Budget Request includes 

full funding for NSC # 6. 

A Request for Proposal is planned to be issued prior to the end ofFY 2012 that will lead to an award of 

three Preliminary and Contract Design contracts for the Offshore Patrol Cutter (OPC). This cutter class is 

intended to replace the Coast Guard's aging fleet of medium endurance cutters, most of which are between 

25 and 40 years old. 

We have just accepted our 14th HC-144 Ocean Sentry, Maritime Patrol Aircraft (MPA), out of a planned 

fleet of 36. This turboprop aircraft provides increased medium range surveillance and rescue response in 

the maritime domain and replaces the HU-25 Falcon jet aircraft, which is at the end of its service life. The 

HC-144 offers a number of advantages over its predecessor that improve mission performance. These 

include vastly improved endurance, improved fuel economy, superior cargo capacity via a stern ramp, better 

low altitude and low speed search capability, and a state-of-the-art mission system pallet which integrates an 

upgraded radar system, secure communications and an electro optical infrared camera. 

BALANCING NEW ACOUISITION WITH SUSTAINMENT PRIORITIES 

While acquisition of new assets is an essential part of ensuring the Service's ability to operate in current and 

future environments, effectively maintaining our existing assets cannot be understated. It is our challenge 

and duty as careful stewards of taxpayer dollars to effectively balance the needs of today with the needs of 

tomorrow in order to provide safe and reliable assets to our front line forces. 

2 
18 


Insert offset folio 13 here 76149.013

To maintain operational capacity until delivery ofFRCs and OPCs, the Coast Guard embarked on a Mission 

Effectiveness Project (MEP) for its 110' patrol boats and 270' and 210' medium endurance cutters. This 

Acquisition, Construction, and Improvements funded program was designed to cost effectively provide 

selected equipment upgrades and enhancements to increase cutter reliability, address technical 

obsolescence, improve mission effectiveness, and reduce future maintenance costs. The last 210' cutter 

completed MEP in FY 2010 and the finalll0' patrol boat completed its MEP in July 2012. MEP on the 

270' cutters is scheduled to be complete in FY 2014. MEP has resulted in significantly improved reliability 

of several systems installed onboard the medium endurance cutter and patrol boat fleet. 

Numerous cutter classes are at or beyond their designed service lives. Others are reaching their mid-life 

period and require major system recapitalization to mitigate technical obsolescence issues that can drive 

maintenance costs up and operational availability down. For those surface assets at or beyond service life 

and with no replacement programs on the immediate horizon, Service Life Extension Projects (SLEPs) are 

considered to mitigate operational gaps, such as the 140' Icebreaking Tugs funded in the FY 2012 enacted 

budget. For others, major mid-life availabilities are intended to optimize mission readiness and stewardship 

of funds over the remaining lifecycle of the assets. 

The In Service Vessel Sustainment (ISVS) program in the Coast Guard's Capital Investment Plan, started in 

FY 2012, is the mechanism to address these needs within the surface fleet. The Coast Guard's Naval 

Engineering program administers a rigorous process of periodically evaluating the materiel condition of 

service assets. This process, known as a Ship Structure and Machinery Evaluation Board (SSMEB), 

provides a detailed evaluation of a cutter or boat class and its estimated remaining service life. 

Output from SSMEBs and lessons learned during MEP in recent years informed the first major project to be 

managed under the ISVS umbrella, the 140' lcebreaking Tug SLEP. Funding for preliminary engineering 

work was made available in FY 20 II and design for this project is well underway. The project funding 

appropriated in FY 2012 specifically funds completion of detailed design work, materials purchasing and 

initial production for the first 140' Ice Breaking Tug (WTGB) Service Life Extension Project (SLEP). The 

entire fleet of nine 140' WTGBs are planned to undergo SLEPs with the first vessel scheduled to start in late 

FYI4.. A major mid-life availability project is also planned for the 225' sea-going buoy tenders, with 

funding appropriated for engineering design work beginning in FY 2012. A 270' medium endurance cutter 

SSMEB is ongoing with a follow-on Sustainment Conference scheduled for September 2012 and will be a 

basis for determining future sustainment projects. Likewise an SSMEB for the 210' cutters will be 

completed in FY 2013. Using the information obtained from these post-MEP SSMEBs, the Coast Guard 

will formulate a plan to maximize the operational lives and mission effectiveness of these cutters until the 

OPCs are delivered. 

POSITIVE EFFECTS OF MODERNIZED STRUCTURE AND PROCESSES 

As part of a service-wide modernization and restructuring effort, the Coast Guard created the Surface Forces 

Logistics Center (SFLC) in 2009. This new command consolidated functions that were previously executed 

among three commands: Maintenance and Logistics Command (MLC) Atlantic, MLC Pacific, and the 

Engineering Logistics Center. Additionally, the Coast Guard Yard in Baltimore was aligned under the 

SFLC's command structure. This reorganization has allowed the Coast Guard maintenance community to 

manage all surface assets under a single enterprise and make several positive changes in surface fleet 

maintenance planning and execution. 

3 
19 


Insert offset folio 14 here 76149.014

Elimination of the two MLCs enabled the creation of a single point of accountability for the management of 

maintenance pertaining to any asset class. This organizational structure uses Product Line Management and 

derives its benefit from the standard processes and procedures associated with a single set of management 

priorities across multiple classes of cutters and boats. Additionally, each Product Line Manager now has 

responsibility for funding all routine maintenance, unplanned maintenance, system upgrades, and spare 

parts. Convergence of maintenance and supply funding, coupled with fleet-wide metrics, enables each 

Product Line Manager and the SFLC Commander to best address the maintenance priorities of operational 

commanders within hislher base of resources. 

Product Lines and the Coast Guard Yard arc both under the SFLC command umbrella to streamline 

decisions regarding the use of organic labor and facilities versus commercial services, thus achieving best 

value for the Service in the execution of both planned and unplanned depot level maintenance. 

Additionally, the Coast Guard recently unified 21 different industrial sites into a National Industrial 

Enterprise organization. This effort will improve the planning of industrial projects and management of 

industrial resources enabling efficiency through standard practices, processes, and management plans and 

will aid in the efficient mobilization of capabilities to deliver mission support services during contingency 

operations or major targeted maintenance activities. 

CONCLUSION 

The Coast Guard works to execute its missions with distinction. It is critical that we provide our service 

members with the safest, most reliable assets to carry out those functions. 

Recent years have provided a challenging operational environment as a result of both planned and 

contingency operations. The structure of the Coast Guard engineering and logistics community 

continuously evolves to meet the maintenance needs of an aging fleet. Through a vigilantly administered 

acquisition plan, a carefully prioritized maintenance strategy, the dedicated work of Coast Guard service 

members and civilian employees, and the continued support of Congress, the Coast Guard is positioned to 

meet the significant challenges of maintaining its fleet into the next decade. 

Thank you for the opportunity to testifY before you today. r look forward to answering your questions. 

4 
20 


Insert offset folio 15 here 76149.015

GAO 

For Release on Delivery 

Expected at 2:00 p.m. EST 

September 20, 2012 

GAO-12-934T 

United States Government Accountability Office 

Testimony 

Before the Subcommittee on Coast Guard 

and Maritime Transportation, Committee 

on Transportation and Infrastructure, 

House of Representatives 

COAST GUARD 

Mission Performance 

Challenged by the 

Declining Condition and 

Rising Costs of its Legacy 

Vessel Fleet 

Statement of Stephen 1. Caldwell, Director 

Homeland Security and Justice Issues 

GAO 

Accountability'" Integrity .". Reliability 
21 


Insert offset folio 16 here 76149.016

Chairman LoBiondo, Ranking Member Larsen, and Members of the 

Subcommittee: 

Thank you for the opportunity to discuss the condition of the Coast 

Guard's legacy vessel fieet, and challenges the Coast Guard faces in 

sustaining these vessels and meeting mission requirements. The Coast 

Guard, within the Department of Homeland Security, is the principal 

federal agency responsible for maritime safety, security, and 

environmental stewardship. The legacy vessel fleet is critical for 

executing Coast Guard missions, which include defense operations; 

search and rescue; and securing ports, waterways, and coastal areas. My 

comments will focus on the legacy 378-foot high endurance cutters, 270-

foot and 210-foot medium endurance cutters, and 110-foot patrol boats, 

and are based on findings from the report we released in July 2012.' 

The legacy high endurance cutters, medium endurance cutters, and 

patrol boats are either approaching the end of or are past their originallyexpected service lives, with a number of these vessels having entered 

into service in the 1960s and 1970s. Coast Guard officials report that 

these legacy vessels have become increasingly costly to maintain and 

their degraded condition has negatively affected the Coast Guard's 

operational capacity to meet mission requirements. The Coast Guard is in 

the midst of a long-term recapitalization plan that could cost as much as 

$29 billion to replace legacy vessels, aircraft, and other related systems. 2 

However, since beginning the acquisition program in 1996, the Coast 

Guard has experienced cost, management, and oversight problems that 

have led to considerable delays in the delivery of new vessels-by as 

much as 13 years. In turn, delays in delivery of the replacement vessels 

have created uncertainties regarding how the Coast Guard will sustain its 

legacy vessels and meet mission requirements. 

1 Our published report provides additional details on the sizes and capabilities of each of 

these vessels. See GAO, Coast Guard: Legacy Vessels' Declin;ng Conditions Reinforce 

Need for More Realistic Performance Targets, GAO-12-741 (Washington, D.C.: July 31, 

2012). 

2 The Coast Guard's asset recapitalization plan includes projects to build or modernize 

five classes each of vessels and aircraft and undertake procurement of other capabilities, 

such as improved command, control, communications, computers, intelligence, 

surveillance, and reconnaissance. This report focuses only on the legacy vessel fleet For 

more information on the recapitalization effort as a whole, see GAO, Coast Guard: Action 

Needed As Approved Deepwater Program Remains Unachievable, GAO-11-743 

(Washington, D.C.: July 28, 2011). 

Page 1 GAO-12-934T 
22 


Insert offset folio 17 here 76149.017

My testimony today summarizes the findings of our July 2012 report and 

addresses (1) how the physical condition of the Coast Guard's legacy 

vessel fleet changed from fiscal years 2005 through 2011, and key 

actions the Coast Guard has taken related to the physical condition of its 

legacy fleet; (2) key annual maintenance expenditure trends for the 

legacy vessel fleet, and the extent to which the Coast Guard's cost 

estimating process has followed established best practices; and (3) the 

operational capacity of the legacy vessel fleet and the extent to which the 

Coast Guard faces challenges in sustaining the legacy vessel fleet and 

meeting mission requirements, 

For our report, we analyzed Coast Guard data from fiscal years 2005 

through 2011 on the legacy vessels' condition, cost, and operational 

performance, We interviewed relevant Coast Guard headquarters officials 

and conducted site visits to five Coast Guard field locations where legacy 

vessels were based or undergoing maintenance, We also compared the 

documentation that the Coast Guard uses to compute its annual legacy 

vessel maintenance cost estimates against established best practices,3 

We reviewed Coast Guard documents and other evidence that outlined 

challenges the Coast Guard faces in sustaining its legacy vessels and 

meeting mission requirements given delays in deploying replacement 

vessels, Further, we evaluated the Coast Guard's actions against Office 

of Management and Budget guidance,4 We conducted this work in 

accordance with generally accepted government auditing standards, Our 

July 2012 report provides further details on our scope and methodology, 5 

3 GAO, GAO Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs, GAO-09-3SP (Washington, D.C.: Mar. 2, 2009). 

4 Office of Management and Budget, Program Assessment Rating Tool Guidance Number 

2007-2, (Washington, D.c.. Jan, 29, 2007). 

5 GAO-12-741, 

Page 2 GAO-12-934T 
23 


Insert offset folio 18 here 76149.018

Legacy Vessel Fleet's 

Condition Is Poor and 

Generally Declining 

Despite Coast Guard 

Maintenance Efforts 

From fiscal years 2005 through 2011, the physical condition of the Coast 

Guard's legacy vessels was generally poor. A primary Coast Guard 

measure of a vessel's condition-the operational percent of time free of 

major casualties-shows that the high endurance cutters, medium 

endurance cutters, and patrol boats generally remained well below target 

levels from fiscal years 2005 through 2011.' For example, over this 7-

year period, the operational percent of time free of major casualties 

averaged about 44 percent for the high endurance cutters and about 65 

percent for the medium endurance cutters versus a target of 72 percent; 

and the patrol boats averaged approximately 74 percent versus a target 

of 86 percent Other evidence, such as our review of vessel condition 

assessments and inspections the Coast Guard conducts of the legacy 

vessels, also shows that the condition of the legacy vessel fleet is 

generally declining. For example, a variety of Coast Guard assessments 

show that legacy vessels' critical operating systems-such as main diesel 

engines-have been increasingly prone to mission-degrading casualties. 

In addition, Coast Guard senior maintenance officials and vessel crew 

members we interviewed noted increased maintenance challenges 

because of the advanced age of the legacy vessels. In particular, the 

maintenance managers for both the high endurance and medium 

endurance cutters reported that the performance of critical systems on 

these legacy vessel classes has become increasingly unpredictable and 

refurbishments of these vessel classes' least reliable systems have 

brought limited returns on the investments. Maintenance officials and 

vessel crew members also reported devoting increasing amounts of time 

and resources to troubleshoot and resolve maintenance issues because 

some systems and parts on these legacy vessel classes are obsolete. 

The Coast Guard has taken two key actions to improve the condition of its 

legacy vessels. First, in 2009, the Coast Guard reorganized its 

maintenance command structure to focus on standardization of practices. 

Under this reorganization, the Coast Guard eliminated its two 

Maintenance and Logistics Commands and replaced them with a 

centralized command structure-the Surface Forces Logistics Centerwhereby a single product line manager oversees the maintenance of 

6 A major casua!ty is a deficiency in mission essential equipment that causes the major 

degradation or loss of a primary mission. 

Page 3 GAO·12~934T 
24 


Insert offset folio 19 here 76149.019

similar classes of vessels. 7 Coast Guard officials reported that this 

change was made to enable better oversight of the condition of entire 

classes of the vessel fleet, reduce the workload on vessel crews by 

providing centralized support for procurement of replacement parts, and 

implement centralized maintenance plans to address commonly occurring 

casualties. 8 Second, Coast Guard officials also reported that the Coast 

Guard was on schedule to complete a 10-year, almost half-billion dollar 

set of sustainment projects to refurbish selected patrol boats and upgrade 

medium endurance cutters, known as Mission Effectiveness Projects, 

which are intended to improve legacy vessel operating and cost 

performance. Our July 2012 report provides additional information 

regarding these actions but, as noted in the report, the condition of these 

legacy vessels continues to decline despite these efforts. 

7 The Coast Guard established the Surface Forces logistics Center under which Coast 

Guard vessels are grouped into five product lines whose mission support, maintenance 

procedures, priorities, and funds are overseen by a single product line manager. The 

product lines are the (1) Long Range Enforcer (which includes the high endurance Gutter 

and the national security cutter); (2) Medium Endurance Cutter; (3) lee Breaker, Buoy 

Tender and Construction Tender; (4) Patrol Boat (which includes the 110-foot patrol boat 

and fast response cutter); and (5) Small Boat. 

a According to Coast Guard officials, vessel crews had previously been responsible for 

managing procurement of replacements for minor casualties. According to these officials, 

doing so could be time consuming for crews. Under the reorganization, the Surface 

Forces Logistics Center manages a greater share of the procurement of replacement 

parts and systems to both reduce the workload of crews and provide better oversight 

across the vesse! fleet Additionally, the new organization is structured to provide a stngle 

point of accountability (the product line manager) for aU maintenance, system upgrades, 

and supply functions for a vessel class. 

Page 4 GAO·12·934T 
25 


Insert offset folio 20 here 76149.020

Maintenance 

Expenditures Have 

Recently Increased, 

and the Process for 

Estimating Costs 

Does Not Fully Meet 

Best Practices 

Expenditures for the two key types of legacy vessel annual depot-level 

maintenance-scheduled and unscheduled maintenance-declined from 

fiscal year 2005 to fiscal year 2007, and then rose from fiscal year 2007 

to fiscal year 2011.9 For example, scheduled maintenance expenditures 

rose from about $43 million in fiscal year 2007 to about $70 million in 

fiscal year 2011. Coast Guard officials attributed the increase in 

scheduled maintenance expenditures to better identifying maintenance 

needs, increasing the prioritization of completing all scheduled 

maintenance, and the receipt of supplemental funding. In contrast, 

unscheduled maintenance expenditures varied by vessel class from fiscal 

years 2005 through 2011, but the high endurance cutter fleet consistently 

incurred the greatest share of unscheduled maintenance expenditures. 

For example, high endurance cutters accounted for 86 percent of all 

unscheduled maintenance expenditures in fiscal year 2011. Coast Guard 

officials attributed the comparatively high unscheduled maintenance 

expenditures to the high endurance cutters' advanced age and size. '0 

Further, annual depot-level maintenance expenditures often exceeded 

the Coast Guard's budgeted funds for depot-level maintenance for the 

legacy vessels-known as Standard Support Levels-from fiscal years 

2005 through 2011. For example, actual depot-level maintenance 

expenditures for the high endurance cutters were about 3.6 times higher 

than Standard Support Levels in fiscal year 2009-$55.5 million 

compared with $15.5 million. The Standard Support Levels have 

generally remained unchanged over decades and do not reflect the rising 

costs to maintain the legacy vessels as they have aged." Senior Coast 

Guard vessel maintenance officials cited this funding gap as a challenge, 

9 Depot-level maintenance is vessel maintenance that is beyond the capability of the 

operating units. 

10 Coast Guard officials told us that major casualties on three high endurance cutters-the 

CHASE, DALLAS and GALLATIN-contributed disproportionately to these expenditures in 

fiscal years 2010 and 2011, The Coast Guard has since decommissioned the CHASE and 

DALLAS on May 13, 2011 and March 30, 2012, respectively. 

11 According to Coast Guard officials, Standard Support Levels are established when a 

vessel class enters service or undergoes a service life extension program. For example, 

the Coast Guard reset the Standard Support Level for the high endurance cutters after 

conducting a service life extension program between 1987 and 1992-the Fleet 

Renovation and Modernization Program-but has not reset the Standard Support Levels 

for the medium endurance cutters or patrol boats. Coast Guard officials indicated that the 

Coast Guard increases Standard Support Levels using non-pay inflation, but it has not 

done so every year. 

Page 5 GAO·12·934T 
26 


Insert offset folio 21 here 76149.021

noting that supplemental funding had been critical to enable the Coast 

Guard to fund necessary maintenance for the legacy vessel fleet. Our 

July 2012 report provides further information regarding the Coast Guard's 

annual depot-level maintenance expenditures. 

Our review found that the Coast Guard's process for estimating legacy 

vessel annual depot-level maintenance costs does not fully reflect 

relevant best practices. GAO's Cost Estimating and Assessment Guide 

states that a high-quality and reliable cost estimate includes certain best 

practice characteristics. We detenmined that the three characteristics 

relevant to the Coast Guard's cost estimation process are that the 

process should be (1) well-documented, (2) comprehensive, and (3) 

accurate. Our assessment showed that the Coast Guard's legacy vessel 

maintenance cost-estimating process partially met the three 

characteristics, as follows: 

Partially comprehensive: The Coast Guard's process for estimating 

annual legacy vessel depot-level maintenance costs defines the 

program, among other things, but does not document all costinfluencing ground rules and assumptions (e.g., inflation rate). 

Partially well-documented: The Coast Guard's process for 

estimating annual legacy vessel depot-level maintenance costs 

discusses the technical baseline description, and the data in the 

baseline are consistent with the estimate; however, the Coast Guard 

did not provide documentation that discusses key cost estimating 

factors, such as how the data were normalized or the reliability of the 

data. 

Partially accurate: The Coast Guard's process for estimating annual 

legacy vessel depot-level maintenance costs contains few, if any, 

minor mathematical mistakes and is regularly updated to reflect 

significant program changes and current status. However, we 

assessed the cost estimate as being not fully accurate because Coast 

Guard officials could not provide us with documentation that would 

allow us to assess the reliability of the historical data used, the 

accuracy of the calculations, the relationship of the data to the 

historical contractor bids, or the final estimates for all maintenance 

costs. 

To address these issues, in our July 2012 report, we recommended that 

the Secretary of Homeland Security direct the Commandant of the Coast 

Guard to ensure that the Coast Guard's annual depot-level maintenance 

Page 6 GAO-12-934T 
27 


Insert offset folio 22 here 76149.022

Declining Condition 

of the Legacy Vessel 

Fleet Makes 

Operational Capacity 

Targets Increasingly 

Unachievable 

cost estimates conform to cost estimating best practices. DHS concurred 

with this recommendation and described actions the Coast Guard has 

taken or plans to take, but these actions may not fully address the intent 

of this recommendation. For example, DHS noted that given current fiscal 

constraints, the Coast Guard will focus on improvements that do not 

require additional resources. While we agree that federal resources are 

limited, aligning the cost estimating process for legacy vessel 

maintenance with best practices would not necessarily require an 

increased investment of resources. Rather, having a well documented 

cost estimating process and using accurate historical data should enable 

the Coast Guard to operate more efficiently. 12 

The operational capacity of the Coast Guard's legacy vessel fleet 

declined from fiscal years 2006 through 2011. In particular, while 

performance varied across the legacy vessel classes, two key Coast 

Guard metrics-operational hours and lost cutter days-show that the 

legacy vessels did not meet their operational capacity targets and lost 

considerable planned operational time. For example, the high endurance 

cutters and 21 O-foot medium endurance cutters did not meet any of their 

operational hour targets from fiscal years 2006 through 2011, and the 

270-Ioot medium endurance cutters met their targets only in fiscal year 

2008. Specifically, operational hours lor the high endurance cutters 

declined by about 32 percent from fiscal year 2008 to 2011,13 and the 

combined operational hours of the 210-foot and 270-foot medium 

endurance cutters declined nearly 21 percent from fiscal year 2007 to 

fiscal year 2011.'4 In addition, Coast Guard data show the high and 

medium endurance cutters, collectively, averaged about 618 lost cutter 

days per year from fiscal years 2006 through 2011. Further, the number 

of lost cutter days for the high endurance cutters has been nearly 

July 2012 report for more information on DHS's comments and our evaluation 

13 Coast Guard headquarters officials reported that two high endurance cutters were 

decommissioned 'In fiscal year 2011 for a total reduction of 3,330 operational hours from 

that achieved in fiscal year 2010. 

14 Coast Guard officials attributed declines in the medium endurance cutters' capacity 

primarily to increased unscheduled maintenance. However, the officials also reported that 

because medium endurance cutters were taken out of service on a rotating basis to 

undergo the Mission Effectiveness Project, doing so may have also decreased the 

medium endurance cutters' operational hours by as much as 9,900 hours annuaUy. 

Page 7 GAO·12·934T 
28 


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equivalent to three high endurance cutters being out of service for an 

entire year in each of the last 3 fiscal years. Moreover, lost cutter days for 

both the 210-foot and 270-foot medium endurance cutters combined 

more than doubled, from 122 lost cutter days in fiscal year 2006 to 276 

lost cutter days in fiscal year 2010. '5 Coast Guard headquarters officials 

reported that the declining operational capacity of its legacy vessel fleetparticularly the high and medium endurance cutters-has been a prime 

contributor to the Coast Guard's declining ability to meet mission 

requirements and intercept threats beyond U.S. territorial waters. 

Coast Guard officials also reported that delays in the delivery of 

replacement vessels will require the Coast Guard to continue to operate 

its legacy vessels beyond their originally-expected service lives and result 

in a widening operational capacity gap.'S As a result, these officials 

expect the Coast Guard's legacy vessels to become increasingly 

unreliable, have increasingly diminished operational capacity, and be 

increasingly costly and challenging to maintain. In the next few years, the 

operational capacity gap that exists for the high endurance cutter and 

patrol boat fleets is expected to increase because of actions the Coast 

Guard plans to take to better balance the needs of the legacy fleet with 

the acquisition of replacement vessels. For example, by the end of fiscal 

year 2012, the Coast Guard plans to end the "High Tempo/High 

Maintenance" program for eight of its patrol boats. 17 Then, in fiscal year 

2013, the Coast Guard plans to decommission the next two most 

degraded and costly high endurance cutters, as well as three patrol 

boats. While these actions will reduce legacy fleet expenditures, they will 

Coast Guard officials attributed the majority of the high endurance cutter lost cutter 

days to propulSion system casualties. For example, the Coast Guard reported that 

catastrophic engine failure rendered the high endurance cutters DALLAS, CHASE, and 

GALLA TIN inoperative for 1 year, 1 year and 5 months, and 2 years, respectively, during 

this time period. As stated previously, the Coast Guard has since decommissioned the 

CHASE and DALLAS. 

16 The Naval Engineering Manual defines remaining seNies life as the time period during 

which no major expenditures will be required for hull and structural repairs or 

modernizations, or for machinery or system modernizations based solely on the vessel's 

capability to meet existing mission requirements, 

17 The "High Tempo/High Maintenance" program was designed to mitigate the loss of 

eight patrol boats to hull failure and six to deployment to Bahrain by doubling the 

operational hour output of eight patrol boats through the use of double crews and 

increased maintenance. Coast Guard officials reported that these eight patrol boats will 

return to normal operations at the end offisca! year 2012. 

Page 8 GAO-12-934T 
29 


Insert offset folio 24 here 76149.024

also increase the vessel fleet's operational capacity gap because the 

Coast Guard will not receive sufficient numbers of replacement vessels 

during this time period to make up for the lost capacity. 

The ongoing delivery of replacement vessels is expected to help mitigate 

the existing operational capacity gap for the legacy high endurance cutter 

and patrol boat fleets. However, Coast Guard officials reported, and our 

analysis of Coast Guard documents confirms, that the medium endurance 

cutter fleet will be most affected by delays in delivery of replacement 

vessels. The Coast Guard is refurbishing its medium endurance cutters 

through the Mission Effectiveness Project to increase these cutters' 

reliability and reduce longer-term maintenance costs, and third-party 

assessments show that the performance of those medium endurance 

cutters that have completed the project has improved. 18 Even if the most 

optimistic projections were realized, though, and the Mission 

Effectiveness Project was to extend the medium endurance cutters' 

service lives by 15 years, the medium endurance cutters would remain in 

service increasingly beyond the end of their originally-expected service 

lives before full deployment of their replacement vessels-the offshore 

patrol cutters. In particular, according to current plans, some of the 270-

foot medium endurance cutters are to remain in service as late as 2033-

up to 21 years beyond the end of their originally-expected service livesbefore they are replaced. Coast Guard officials reported that a further 

refurbishment of the medium endurance cutters will be necessary to meet 

operational requirements and that the Coast Guard is in the early stages 

of developing plans for addressing the expected gap between remaining 

medium endurance cutter fleet service lives and the delivery of the 

replacement offshore patrol cutters. 

Coast Guard efforts to sustain its legacy vessel fleet and meet mission 

requirements until the replacement vessels are delivered are also 

challenged by uncertainties regarding the future mix of vessels, as well as 

the implementation of a rotational crew concept for the replacement 

vessel for the high endurance cutters, known as the national security 

Coast Guard has contracted with the Department of Transportation, Research and 

Innovative Technology Administration's Volpe National Transportation Systems Center to 

conduct annual assessments of the effectiveness of the Mission Effectiveness Project. 

Page 9 GAO·12·934T 
30 


Insert offset folio 25 here 76149.025

cutter. 'S The Coast Guard's fiscal year 2013 to 2017 5-year Capital 

Investment Plan does not allocate funds for the acquisition of the last two 

replacement national security cutters, as called for by the program of 

record, and it is unclear how this could affect the decommissioning 

schedule of the high endurance cutters, the last of which the Coast Guard 

currently plans to decommission in fiscal year 2023,20 

The Coast Guard has established operational hour targets for the number 

of hours its vessels are expected to conduct operations or missions each 

fiscal year and uses these targets to inform planning decisions, such as 

setting performance targets and corresponding resource allocations, 

Although senior Coast Guard headquarters officials reported considering 

various factors when setting overall mission performance targets 

annually, these officials reported doing so based on the assumption that 

vessel class assets will achieve 100 percent of their operational hour 

targets, Our analysis of Coast Guard data, though, makes it clear that the 

Coast Guard's legacy vessel fleet has increasingly fallen below 

operational hour targets in recent years, and this trend is expected to 

continue, In addition, Coast Guard officials reported that the decline in 

legacy vessel operational capacity has challenged the Coast Guard's 

ability to meet its mission performance targets, Further, Coast Guard 

operational commanders reported taking actions to mitigate the effect of 

declining legacy vessel capacity, such as diverting vessels tasked to 

other missions to help complete operations, Nevertheless, the Coast 

Guard has not revised legacy vessel operational hour targets because, 

according to Coast Guard officials, doing so would lower its mission 

perfonmance targets, However, these targets have gone unmet because 

of the declining operational capacity of the legacy vessel fleet Because it 

sets mission performance targets and allocates resources on the 

assumption that legacy vessels will achieve 100 percent of operational 

hour targets, the Coast Guard's allocation of resources is not realistic, 

Further, because the Coast Guard uses vessels' operational hour targets 

19 The Coast Guard's program of record assumes that the new national security cutter 

fleet wi!! achieve more operational capacity than the legacy high endurance cutter fleet by 

implementing a rotational crew concept in which the Coast Guard would have fouf sets of 

crew staff and operate three national security cutters on a rotating basis to increase the 

vessels' operational time. 

20 The Coast Guard recently revised the high endurance cutter decommissioning schedule 

to delay the decommissioning of the last high endurance cutter from 2020 to 2023 in its 

fiscal years 2013·2017 Capital Investment Plan. 

Page 10 
31 


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GAO Contact and 

Staff 

Acknowledgements 

(441093) 

to set agency-wide performance targets and to allocate resources, 

consistent achievement of its performance targets is at increased risk. 

In our July 2012 report, we recommended that the Secretary of Homeland 

Security direct the Commandant of the Coast Guard to adjust legacy 

vessel fleet operational hour targets to reflect actual capacity, as 

appropriate by class. DHS did not concur with this recommendation and 

noted, among other things, that reducing the operational hour targets 

would fail to fully utilize those assets not impacted by maintenance 

issues. We disagree with DHS's position because, as noted in the July 

2012 report, while senior Coast Guard officials reported that the Coast 

Guard adjusts its mission performance targets annually, it does not also 

adjust legacy vessel operational hour targets annually. These officials 

also stated that the Coast Guard's mission performance targets are 

based on each vessel class's capacity, with the assumption that each 

vessel will operate at 100 percent of its planned operating time. Thus, we 

do not believe that reducing the operational hour targets would result in a 

failure by the Coast Guard to fully utilize assets not impacted by 

maintenance challenges and continue to believe that this 

recommendation has merit. 21 

Chairman LoBiondo, Ranking Member Larsen, and members of the 

subcommittee, this completes my prepared statement. I would be happy 

to respond to any questions you may have at this time. 

For questions about this statement, please contact Stephen L. Caldwell at 

(202) 512-9610 or caldwells@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this statement. Individuals making key contributions to this statement 

include Christopher Conrad (Assistant Director) and Michael C. 

Lenington. Additional contributors include Jason Berman, Chloe Brown, 

and Lara Miklozek. 

21 See the July 2012 report for more information on OHS's comments and our evaluation 

of them. 

Page 11 GAO·12·934T 
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