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36–681 PDF 2007

DEEPWATER: 120-DAY UPDATE

(110–50)

HEARING

BEFORE THE

SUBCOMMITTEE ON 

COAST GUARD AND MARITIME TRANSPORTATION

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

JUNE 12, 2007

Printed for the use of the 

Committee on Transportation and Infrastructure

(

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

JAMES L. OBERSTAR, Minnesota, Chairman 

NICK J. RAHALL, II, West Virginia 

PETER A. DEFAZIO, Oregon 

JERRY F. COSTELLO, Illinois 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

BOB FILNER, California 

EDDIE BERNICE JOHNSON, Texas 

GENE TAYLOR, Mississippi 

ELIJAH E. CUMMINGS, Maryland 

ELLEN O. TAUSCHER, California 

LEONARD L. BOSWELL, Iowa 

TIM HOLDEN, Pennsylvania 

BRIAN BAIRD, Washington 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

JULIA CARSON, Indiana 

TIMOTHY H. BISHOP, New York 

MICHAEL H. MICHAUD, Maine 

BRIAN HIGGINS, New York 

RUSS CARNAHAN, Missouri 

JOHN T. SALAZAR, Colorado 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

DORIS O. MATSUI, California 

NICK LAMPSON, Texas 

ZACHARY T. SPACE, Ohio 

MAZIE K. HIRONO, Hawaii 

BRUCE L. BRALEY, Iowa 

JASON ALTMIRE, Pennsylvania 

TIMOTHY J. WALZ, Minnesota 

HEATH SHULER, North Carolina 

MICHAEL A. ACURI, New York 

HARRY E. MITCHELL, Arizona 

CHRISTOPHER P. CARNEY, Pennsylvania 

JOHN J. HALL, New York 

STEVE KAGEN, Wisconsin 

STEVE COHEN, Tennessee 

JERRY MCNERNEY, California 

VACANCY 

JOHN L. MICA, Florida 

DON YOUNG, Alaska 

THOMAS E. PETRI, Wisconsin 

HOWARD COBLE, North Carolina 

JOHN J. DUNCAN, JR., Tennessee 

WAYNE T. GILCHREST, Maryland 

VERNON J. EHLERS, Michigan 

STEVEN C. LATOURETTE, Ohio 

RICHARD H. BAKER, Louisiana 

FRANK A. LOBIONDO, New Jersey 

JERRY MORAN, Kansas 

GARY G. MILLER, California 

ROBIN HAYES, North Carolina 

HENRY E. BROWN, JR., South Carolina 

TIMOTHY V. JOHNSON, Illinois 

TODD RUSSELL PLATTS, Pennsylvania 

SAM GRAVES, Missouri 

BILL SHUSTER, Pennsylvania 

JOHN BOOZMAN, Arkansas 

SHELLEY MOORE CAPITO, West Virginia 

JIM GERLACH, Pennsylvania 

MARIO DIAZ-BALART, Florida 

CHARLES W. DENT, Pennsylvania 

TED POE, Texas 

DAVID G. REICHERT, Washington 

CONNIE MACK, Florida 

JOHN R. ‘RANDY’ KUHL, JR., New York 

LYNN A WESTMORELAND, Georgia 

CHARLES W. BOUSTANY, JR., Louisiana 

JEAN SCHMIDT, Ohio 

CANDICE S. MILLER, Michigan 

THELMA D. DRAKE, Virginia 

MARY FALLIN, Oklahoma 

VERN BUCHANAN, Florida 

(II)

SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION 

ELIJAH E. CUMMINGS, Maryland, Chairman 

GENE TAYLOR, Mississippi 

RICK LARSEN, Washington 

CORRINE BROWN, Florida 

BRIAN HIGGINS, New York 

BRIAN BAIRD, Washington 

TIMOTHY H. BISHOP, New York 

VACANCY 

JAMES L. OBERSTAR, Minnesota 

(Ex Officio) 

STEVEN C. LATOURETTE, Ohio 

DON YOUNG, Alaska 

HOWARD COBLE, North Carolina 

WAYNE T. GILCHREST, Maryland 

FRANK A. LOBIONDO, New Jersey 

TED POE, Texas 

JOHN L. MICA, Florida 

(Ex Officio) 

(III)

(V)

CONTENTS Page

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

TESTIMONY 

Allen, Admiral Thad W., Commandant, United States Coast Guard ................. 6

Skinner, Richard L., Inspector General, Department of Homeland Security, 

accompanied by Rich Johnson, Project Manager, Office of Inspector General, Department of Homeland Security ............................................................ 6

PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS 

Cummings, Hon. Elijah E., of Maryland ............................................................... 42

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Allen, Admiral Thad W. .......................................................................................... 44

Skinner, Richard L. ................................................................................................. 58

SUBMISSIONS FOR THE RECORD 

Allen, Admiral Thad W., responses to questions from the Committee ............... 55

vi


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(1)

HEARING ON DEEPWATER: 120 DAY UPDATE 

Tuesday, June 12, 2007

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

SUBCOMMITTEE ON COAST GUARD AND MARITIME

TRANSPORTATION, 

Washington, DC. 

The Subcommittee met, pursuant to call, at 11:00 a.m., in Room 

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

Cummings [Chairman of the Subcommittee] presiding. 

Mr. CUMMINGS. The Subcommittee will come to order. 

Today, the Subcommittee on Coast Guard and Maritime Transportation convenes to receive an update on the steps that the Coast 

Guard has taken over the past 120 days to continue strengthening 

the management of the $24 billion 25 year Deepwater procurement 

program. 

I note the significance of the 120 day time period. It is the time 

that has elapsed since I convened the Committee’s first oversight 

hearing on Deepwater in the 110th Congress, and it is the time period after which I promised the Subcommittee would reconvene to 

hear again from the Coast Guard’s Commandant, Admiral Thad 

Allen. 

This hearing continues our Subcommittee’s unwavering commitment to require strict accountability from the Coast Guard for its 

implementation of the Deepwater program and the expenditures of 

taxpayers’ resources. Since we met in January, our Subcommittee 

has examined the Coast Guard’s fiscal year 2008 budget, and the 

House is considering the appropriation for the Coast Guard on the 

Floor today. 

The Full Committee on Transportation and Infrastructure has 

also held an investigative hearing to examine the extent to which 

contractors working on the failed 123 foot patrol boat program complied with the requirements of the Deepwater contract. 

During that 120 day period, the Commandant has also announced important changes to the Deepwater program including 

promising the Coast Guard will assume the lead role as systems 

integrator for the program, that the use of third party certification 

will be increased and that the Coast Guard will contract directly 

with vendors when it is in the best interest of the service to do so. 

Further, the Coast Guard will stand up a new acquisitions directorate under the command of Rear Admiral Gary Blore on July 13. 

The principles and plans the Commandant has announced appear likely to set the Deepwater program on a steadier course. 

However, it is important that we understand how these principles 

2

will be translated into the specific practices that will insure the 

success of the program. 

The failures already registered in Deepwater are simply unac- ceptable. An approximately $100 million effort to lengthen 8 123 

foot patrol boats yielded only 8 buckled hulls. According to the Inspector General, the Coast Guard has obligated more than 100 million of money allocated to the development of the vertical unmanned aerial vehicle through fiscal year 2007, but this obligation 

has yielded little more than a pile of rubble and the first effort to 

design a Fast Response Cutter, which at just 120 to 160 feet is the 

smallest of the new cutters expected to be acquired under Deepwater, produced a failed design. 

As I have said before, what we expect from Deepwater is really 

quite simple. It is no rocket scientist stuff. We expect boats to float. 

We expect aircraft to fly. Yet, as simple as these goals appear to 

be, too frequently they have not been met in the Deepwater program, and this is simply intolerable. 

Unfortunately, there are problems with other ongoing procurements, most notably the National Security Cutter, the most expensive asset to be acquired under Deepwater. I had the opportunity, 

thanks to Admiral Allen, to visit the NSC last week in Pascagoula, 

Mississippi, and it is indeed, without a doubt, an impressive ship. 

However, like all of my colleagues on the Subcommittee, I am deeply concerned by lingering questions about the likely fatigue life of 

hulls 1 and 2. 

I believe that it is imperative and should be among the Coast 

Guard’s top priorities at this time to ensure that design changes incorporated into hulls 3 through 8 will yield ships that will fulfill 

all of the requirements of the Deepwater contract. For that reason, 

I believe that all proposed designs must be closely examined by the 

Navy’s Carderock Division. 

During today’s hearing, I also hope to understand the specific 

role that the Integrated Coast Guard Systems Team is currently 

playing in implementing the Deepwater procurements and how any 

future contract extension granted to that team will be structured 

to ensure that performance is based solely on the quality of work 

performed and the effectiveness of assets produced. 

In recent years, our great Country has unfortunately witnessed 

the troubled aftermath of incompetence in government, and the 

Congress has been too willing to tolerate mediocrity. Ladies and 

gentlemen, these days are over. We are the United States of America. We were not founded on mediocrity. We cannot stoop to it now, 

and we will no longer tolerate failures in the Deepwater program. 

Thus, while I continue to have the utmost confidence in Admiral 

Allen, our Subcommittee will also continue to expect the Coast 

Guard to meet the highest standards of performance. We look forward to hearing today from Admiral Allen and how he will put in 

place the systems and personnel that will ensure these standards 

are met. 

In addition to hearing from Admiral Allen, we will also hear from 

the Inspector General of the Department of Homeland Security, 

Richard Skinner. Inspector General Skinner has done an outstanding job in reporting on emerging problems throughout the 

Deepwater program, and it was his office that identified the hull 

3

fatigue life problems with the NSC. The Inspector General’s Office 

has been a critical partner to our Subcommittee as we have conducted our oversight over the Coast Guard. 

I look forward to Mr. Skinner’s comments today on the steps that 

the Coast Guard still needs to take to prepare to implement the reforms that Admiral Allen has announced. I also invite him to comment on the steps being taken to mitigate the problems with the 

NSC. 

Again, I want to reiterate my full confidence in Admiral Allen. 

Admiral Allen has earned our trust, not only from a standpoint of 

integrity and the highest integrity but also from the standpoint of 

the highest level of competence. 

And so, with that, I would like to now recognize my colleague, 

the Ranking Member of our Committee, Mr. LaTourette. 

Mr. LATOURETTE. Thank you very much, Mr. Chairman, for 

yielding and also for conducting this hearing. 

The Subcommittee, as you have indicated, is meeting this morning to continue its oversight of the Coast Guard’s Deepwater program. This Subcommittee has already held three oversight hearings to review the setbacks that have been encountered by the 

Deepwater program. 

Since our last hearing, the Coast Guard has proposed several 

modifications to improve its management of the acquisition process 

to address some of the issues that have caused previous problems. 

I know and I hope that Commandant Allen today will provide the 

Subcommittee with an update on the progress that has been made 

since we met in January. 

The Coast Guard has taken several promising steps to improve 

its management and oversight of the Deepwater contract. The 

Coast Guard has started and will continue to enhance its acquisition and contracting personnel levels and expertise. The service has 

also reasserted itself as the lead technical authority for all designs 

and design modifications of Deepwater assets. Lastly, the Coast 

Guard has committed to use the capabilities of the American Bureau of Shipping and other third parties to review and oversee the 

design and construction of Deepwater vessels. 

While I commend the Coast Guard for these actions, I continue 

to have deep reservations about the decision to take on the wideranging responsibilities of the lead system integrator for a project 

of this size and length. I am concerned that the Coast Guard does 

not have the resources, personnel or capabilities to fully take on 

this task. When the concept of Deepwater was first considered, the 

Coast Guard made the decision to utilize a private sector lead system integrator because the Coast Guard lacked the in-house administrative, technical and contracting expertise to carry out such 

a large multi-year project. 

While the Coast Guard is rapidly increasing its personnel and capabilities of the acquisition staff, the service does not presently 

have the necessary personnel or expertise in place. I hope to hear 

and I have confidence that we will hear how the Coast Guard plans 

to build on these capabilities while at the same time carrying out 

all of its other vital missions within the service’s limited resources. 

The Deepwater program and the assets that will be acquired 

under Deepwater are critical to the Coast Guard future mission 

4

success. The program remains at a critical junction, but I have confidence that under the leadership of Admiral Allen the program can 

be a success. The men and women of the Coast Guard carry out 

brave and selfless service to our Nation each and every day, and 

we all need to make sure that this program is delivering the aircraft, vessels and systems that are necessary to support their missions. 

I thank the witnesses for appearing and thank the Inspector 

General and his staff for their continued efforts to examine and approve this complex, wide-ranging program. 

In closing, the Chairman noted that during the consideration of 

the Homeland Security appropriations bill, that the Deepwater program was one of the line items contained in that bill. I am disappointed at the level in that bill, and I hope that Members of the 

Subcommittee will join me later during debate in expressing disappointment with the decision of the Appropriations Committee in 

that regard. 

I thank you, Mr. Chairman, and yield back my time. 

Mr. CUMMINGS. Before I yield to Mr. Larsen for an opening statement, I hope that the Admiral will comment on the level of funding 

in the appropriations bill so we can have some guidance from you 

as to how that fits with your program. 

Mr. Larsen? 

Mr. LARSEN. Thank you, Mr. Chairman. I will just try to be brief 

here. 

I think we all share the goal of the Coast Guard’s long term recapitalization plan, Deepwater, and I think we all share the goal 

that the purpose is critical to the security of the United States. We 

also, though, need to be sure to work with the Coast Guard to pull 

Deepwater out of the critical care that it still seems to be in. 

The U.S. Coast Guard will soon activate a directorate that will 

have responsibility for acquisition. This is a major positive step, I 

think. However, according to testimony, the Coast Guard currently 

lacks the number of acquisition professional necessary to handle 

the major acquisitions and has requested no funding for this. I 

would be interested in hearing from Admiral Allen how they plan 

to handle these major acquisitions in the short term while they 

build up for the long term. 

Second, numerous reports and testimony indicate problems with 

the testing and certification of the secured communication components of Deepwater, but the U.S. Coast Guard doesn’t address this 

problem in its testimony except to say it seems that it isn’t a problem. 

I don’t think that we can nor should we accept a he said/she said 

debate regarding this important national security element of the 

Deepwater program, and I would like to hear a little more detail 

from Admiral Allen exactly what he believes the problems are with 

the secured communication components and what is being done to 

address the problems in it based on the reports that we have 

heard, not just from individuals but from certainly qualified analyses from the IG and others. 

So with that, Mr. Chairman, I will yield back and look forward 

to the testimony. 

Mr. CUMMINGS. Thank you very much. 

5

Mr. Coble? 

Mr. COBLE. Thank you, Mr. Chairman. I will not use the full five 

minutes, but I thank you for having this hearing. 

I want to associate myself with your remarks in commending Admiral Allen. I think he has performed superbly. Gentlemen, many 

of these problems that currently plagued the Coast Guard are unfamiliar to some of us, but many of those problems were inherited 

by Admiral Allen prior to his appointment as Commandant. 

To coin an oft-uttered nautical phrase, they did not happen on 

your watch, Admiral. That doesn’t make them disappear. You are 

still stuck with them. But I am looking forward to hearing from 

you, Admiral. I think you are doing a good job. 

I still believe, Mr. Chairman, that the American taxpayer, these 

other problems notwithstanding, get the best bang for the buck 

with the Coast Guard, and I continue to believe that. 

I look forward to hearing from Admiral Allen today, and I yield 

back my time. 

Mr. CUMMINGS. Mr. Coble, as a response to what you just said, 

I agree with you. I think they get the best bang for their buck too, 

and that is why I want to make sure—and I know we all want to 

make sure—that they have the equipment that they need so that 

they can do the job that we have asked them to do. 

I want to thank you for your support. 

Are there any opening statements on this side? Mr. Higgins, did 

you? 

Thank you very much. 

We will now go to Mr. LoBiondo. 

Mr. LOBIONDO. Thank you very much, Mr. Chairman. I would 

like to commend you for vigorously pursuing the looking into of the 

Deepwater program and for holding this hearing. I really think it 

is imperative that we continue to pursue the particulars of the 

Deepwater program. 

I join with most of my colleagues in expressing my disappointment in the missteps and failures of the Deepwater program especially prior to the tenure of Admiral Allen. I think there are a lot 

of things we can look at and wish had been done differently and 

wish that we knew about. 

However, I am, like my colleagues, very pleased with the direction Admiral Allen has taken to rein in control of the program including taking the lead role of systems integrator. It is a very serious situation that needs to be fixed, and again I have full confidence in Admiral Allen. 

But as Mr. LaTourette mentioned a minute ago, I am concerned 

that the Coast Guard does not currently have the proper number 

of qualified acquisition personnel to properly manage the program, 

and I am also concerned that in the time it takes to establish that 

competency the procurement of desperately needed replacement assets may be further delayed. 

Mr. Chairman, I certainly look forward to working with you and 

the Committee to make sure that we move forward with reforming 

Deepwater and seeing that it is positively moving forward. 

Finally, I would like to remind my colleagues of what really 

Deepwater is all about, that the safety of the men and women of 

the Coast Guard and success of their mission are dependent on a 

6

replacement of these rapidly failing obsolete assets. We must see 

this program through, but it must be done right. 

Again, Mr. Chairman, thank you very much. 

Mr. CUMMINGS. Thank you very much. 

Admiral Allen, please. 

TESTIMONY OF ADMIRAL THAD W. ALLEN, COMMANDANT, 

UNITED STATES COAST GUARD; RICHARD L. SKINNER, INSPECTOR GENERAL, DEPARTMENT OF HOMELAND SECURITY ACCOMPANIED BY RICH JOHNSON, PROJECT MANAGER, OFFICE OF INSPECTOR GENERAL, DEPARTMENT OF 

HOMELAND SECURITY 

Admiral ALLEN. Thank you, Mr. Chairman. Chairman 

Cummings, Representative LaTourette, thank you for the opportunity to appear before this Committee as well as the other Members. 

Let me first say that the Coast Guard family expresses its deepest sympathy and regret at the passing of Representative 

Millender-McDonald. Our thoughts remain with her family, friends 

and loved ones. 

Mr. Chairman, in January, I committed to returning here and 

testify to the progress of the last 120 days in addressing the challenges associated with our Deepwater program. As I have stated 

previously, I am personally accountable to make the changes needed to move this program forward, and I am prepared to report before this Committee in another 120 days or at whatever interval is 

needed to ensure that you and the American public have confidence 

that we are on track. 

I have a brief opening statement. I would ask that my written 

statement be included in its entirety for the record. 

Mr. CUMMINGS. So ordered. 

Admiral ALLEN. My written statement contains an extensive list 

of actions taken in the last 120 days, but I will focus on a few important points, and I will be glad to answer any questions. 

Mr. Chairman, last week, you walked the decks of two Coast 

Guard cutters with me. 

The first one was 40 years old, the Cutter Decisive that was commissioned the year I entered the Coast Guard Academy, 1967. You 

saw the 24 person berthing areas with 3-high bunks and a single 

head. You saw the cramped operations spaces and the separation 

of communication and sensors displays in different compartments. 

You saw the flight deck where Commander Walker explained that 

just a few days earlier held over 200 migrants. 

Across the channel in Pascagoula, the Cutter Bertholf nears completion, and we anticipate in the new calendar year it will see successful acceptance trials. The largest berthing module in the 

Bertholf will house only six personnel in two-high bunks. Its propulsion and electrical systems are the most capable and versatile 

that have ever been built into a Coast Guard cutter. The flight 

deck is more capable than any Navy or Coast Guard vessel of similar size and requires no personnel on deck to launch or recover an 

aircraft. 

Mr. Chairman, you have seen our past and our future. When you 

addressed the crew of the Project Management Resident Office in 

7

Pascagoula, you gave them a charge. You told them, our children 

are the signals we send to a future we will never see. 

Your words were stunning then, and they remain so now. 

The aircraft, sensors and surface craft that Deepwater will provide to the Coast Guard are the signals we will send to a future 

Coast Guard that we will never see. For that reason, we are building an acquisition organization that can create a future for the 

Coast Guard. 

Rear Admiral Ron Rabago has relieved Rear Admiral Gary Blore 

as Program Executive Officer for Deepwater. Next month, we will 

stand up our new acquisition organization that will unify and 

strengthen program management, contracting and workforce development. Within another year, we will create a mission support organization that will unify our technical authorities with the acquisition organization under a single accountable senior flag officer. 

We are nearing completion of negotiations regarding the structural changes for the third National Security Cutter. We have been 

engaged in near continual negotiations for the past week and are 

close to an agreement. I hope to be able to report to you shortly 

NSC 3 is under contract. This will establish the technical baseline 

for changes needed to lock in the first two cutters and create a design baseline for the remaining hulls. 

This month, we will award the next term contract to Integrated 

Coast Guard Systems under a substantially changed structure. We 

will have the opportunity to award the contract for a period of 43 

months. We intend to limit any tasking to 18 months or less so 

that we can determine whether the level of performance justifies 

further awards. It is important that we retain our relationship with 

ICGS as we transition the Coast Guard to a lead role in systems 

integration and allow for our workforce to be brought on board and 

developed. 

I have met regularly with the CEOs of Lockheed Martin and 

Northrop Grumman, most recently in Pascagoula two weeks ago. 

The focus of that meeting was the need to develop a comprehensive, realistic, integrated schedule for the delivery of the first National Security Cutter to complete the consolidated contract action 

being negotiated as we speak this morning. 

Our next meeting will focus on aviation and logistics issues and 

will be held at our Aviation and Logistics Center in Elizabeth City, 

North Carolina. 

On the 22nd of June, we will issue a request for proposals for 

the Fast Response Cutter based on an existing design. We are moving at best speed to bring more patrol boat hours into the fleet. 

This vessel will be ABS classed. 

Every integrated product team in Deepwater is now chaired by 

a Coast Guard military or civilian employee, and the remaining accomplishments are listed in my statement for the record. 

Mr. Chairman, I would ask two things of you to assist me and 

the Coast Guard in continuing our progress. First, we are seeking 

through our appropriations request the ability to manage all Coast 

Guard personnel within a single funding account to create flexibility to respond in gaps and surges and needs associated with the 

Deepwater or other operations. Stovepiping personnel costs within 

appropriation inhibits the optimum use of resources. 

8

Second, I am in the process of adding 50 additional personnel to 

the Deepwater program management organization to the current 

year programmings and the fiscal year 2008 appropriations request. I have temporarily assigned four personnel to assist in meeting congressional reporting requirements. I am prepared to work 

with the Congress to consolidate the various information request 

and status reports to effectively and transparently communicate to 

you and other Committees. 

Prior to responding to your questions, I would close by assuring 

the Committee that as the Commandant, I am committed to the effective execution of all of our assigned missions. I have stated from 

the outset one year ago that mission execution is our first responsibility. That includes all of our missions. 

Security concerns in a post-9/11 environment present significant 

challenges as have the mandates provided by Congress. We are 

also mindful that the Country depends on the Coast Guard for 

safety and stewardship of our maritime transportation system and 

the Earth’s last global commons. The rapid growth of maritime 

shipping, the expansion of liquid natural gas facility permit requests, and the fragility and vulnerability of our ecosystems require a discussion and a prioritization of Coast Guard resources 

against assigned tasks. 

I look forward to the discussion. I would be glad to answer questions. 

Mr. CUMMINGS. Admiral, thank you very much. 

I want to go straight to the heart of matters. As you have heard 

the opening statements, there seems to be some concern about the 

systems integrator and the capacity of the Coast Guard to take on 

those responsibilities. So I am going to ask you some questions 

about that because I think we need to get that cleared up. 

I know you have carefully looked at your manpower and 

womanpower and tried to figure out exactly your experts in this 

and that and how you are going to run them and all that, but I 

want to make sure the Committee is satisfied but first of all understands exactly where you are going with this, and the capability 

questions must be brought up. 

The current award term for the contract for the ICGS expires in 

June, 2007. Can you describe in more detail the status of the next 

award and how it will be structured? 

Admiral ALLEN. Yes, sir. Based on the evaluation of the first 

award, the base award term, we are allowed to award a contract 

for up to 43 months, a sole source. We are not required to nor are 

we obligated to. There are certain support functions and integration functions that ICGS provides to us that are separate from the 

platform acquisitions that we can acquire under the contract. 

Our goal is to issue task orders regarding the ongoing operations 

including the operations of the Systems Integration Program Office 

which has the lead systems integration responsibility right now for 

a period not to exceed 18 months and to determine the level of performance before we proceed after that. So the first thing we are 

going to do is there will be no task order issued under the new contract that is longer than 18 months even though we could go 43 

months because we want to make sure we understand the level of 

performance. 

9

That also allows us to maintain a contractual relationship with 

ICGS regarding the systems integration and support functions they 

carry out as we make that transition. It can’t be an on-off switch 

where they do it one day and we do it the next day, and this will 

allow for that transition. 

We intend to take the current functions that are being carried 

out at the Systems Integration Program Office and move those to 

Coast Guard Headquarters as part of the larger acquisition organization, but that will take over the next six to twelve months to accomplish. 

To make sure that this is carried out in a timely fashion and we 

are ramping up with personnel at the same time we are slowly 

lessening our dependence on ICGS, we have, over the course of fiscal year 2007 and 2008, added approximately 50 new people to the 

Deepwater organizational structure. To give you an idea of the 

order of magnitude, when the contract was awarded in 2002, we 

had 245 personnel assigned to project management. As we sit here 

this morning, that number is 451 of which 50 more will be added. 

So there have been significant resources that have been added to 

this program. 

In addition, we have strategic agreements with Naval Sea Systems Command, Naval Surface Warfare Center at Carderock, 

SPAWAR for things like TEMPEST testing and so we can also 

partner and outsource to bring in some of that technical competency. At the same time, we have designated technical authorities for hull machinery and equipment associated with design, and 

we have emerging together a technical authority and program 

management that did not exist before. 

The challenge moving forward will be to take that same technical 

authority structure and apply that to the sensor systems with our 

Chief Information Officer, and we are in the process of doing that 

right now. 

Mr. CUMMINGS. How do we make sure? 

One of the things about the Coast Guard and we hear this. I 

have heard this from a number of folks, the heads of ports, and I 

have heard it from various people in the maritime industry. One 

of the things that they are concerned about is that people, they do 

certain things for a certain period of time and then they move on. 

I know that is the nature of the military. 

Admiral, say, for example, we train people to do these things 

that you are talking about. I know what you are trying to do is create a mechanism so that when Admiral Allen is fixing to retire, 

that systems are still in place, smooth transition is in place, so that 

we keep the strong expertise and personnel that we need, so that 

we don’t have to keep reinventing the wheel and keep borrowing 

from other people. 

Admiral ALLEN. Yes, sir, excellent point. 

Mr. CUMMINGS. How do you do that? Have you thought about it? 

Admiral ALLEN. Yes, sir. You have to bootstrap it and build it 

from the ground up, and these things don’t happen overnight. We 

are looking at some very innovative career entry level opportunities 

where we can engage college students with the right technical capabilities while they are still in school—internships, co-ops, bring 

them in and stairstep, let us say to GS-7, 9, 11, offer them a career 

10

progression fairly early on, get them into the organization and then 

create that work structure, that pyramid that we had lost over the 

years. 

A fundamental part of the Blueprint for Acquisition Reform in 

the Coast Guard is the workforce development portion of that. We 

have new direct hiring authorities regarding bringing contract specialists on board, and we will continue to partner and find other 

ways to meet those gaps, but we have to grow this workforce ourselves and make sure that it can be sustained. 

In addition to that, we have to have blue-suiters, active duty 

military folks that go in and out of program management as they 

go back to sea and do the things that they are expected to do 

throughout a career that ultimately culminate in them being a 

project manager and very similar to the operation you saw down 

in Pascagoula. We have extensive experience down there as we 

briefed you on it. We need to create that kind of competency 

throughout the acquisition organization, and you do that with 

human resources first, sir. 

Mr. CUMMINGS. Similarly, let us go back. In April, you announced that the Coast Guard will expand the role of the American 

Bureau of Shipping, and I was very excited about that. But you 

went on to say, or other third parties as appropriate to increase assurances that Deepwater assets are properly designed and constructed in accordance with established standards. 

That is what you said. 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. What exactly does that mean? Just be fair, will 

you now ensure that every cutter you acquire in the future will be 

classed by the ABS or another appropriate third party? 

Admiral ALLEN. Yes, sir. The issue involving the American Bureau of Shipping is they have a series of what they call Naval Vessel Rules which are an interpretation of the old military specifications to more commercial standards, and they are actually rules 

specifically related to what they call a high speed craft which is 

what the new Fast Response Cutter will be. 

We intend to bring ABS as part of the solicitation process, part 

of the proposal review and have them involved throughout the construction of the vessel and have the vessel classed by the American 

Bureau of Shipping, sir. 

To the extent we need other technical support, we have the 

Naval Surface Warfare Center at Carderock that can provide us 

engineering support, and we have SPAWAR that can provide us 

support related to TEMPEST inspections. As you saw when you 

were in Pascagoula, about one-third of our inspection force down 

there is people that have 15 to 20 years experience working for the 

Navy Supervisor of Ships in Pascagoula, sir. 

Mr. CUMMINGS. I was very impressed with the folks down there. 

Let me go back for just one moment to the ICGS. One of the 

things I think our Committee has been very concerned about—and 

I am sure the American people, when they found out about this, 

are concerned about—is whether we are overspending with regard 

to this project. Let me show you where I am going. 

You just talked about the increase in personnel with regard to 

acquisitions, is that right? The overseeing contracts, is that right? 

11

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. As we increase, is there a decrease on the other 

end? Do you understand what I am saying? 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. I would hate to see us increasing our folks in the 

Coast Guard and then the integrated team folks, Lockheed Martin, 

Northrop Grumman are staying a certain level. How does that 

work and how do we make sure we are not increasing our costs? 

I mean there may be some costs associated that may have to be. 

Admiral ALLEN. There is some because of the overlap. 

Mr. CUMMINGS. Right, but I just want to make sure that we are 

not increasing our costs overall and then we end up paying twice. 

What are you doing to make sure that we have that one goes up 

and the other one goes down effect? 

Admiral ALLEN. Yes, sir. That is exactly what is happening, and 

I can give you a three year answer for the record if you like on the 

amount of money that has gone into the ICGS contract for program 

management and systems integration. That is tailing off, and ours 

is being ramped up. We can give you those exact numbers. 

Mr. CUMMINGS. Fine. I would appreciate that. 

Admiral ALLEN. That is exactly what is happening, sir. 

Mr. CUMMINGS. I am going to get ready to go to Mr. LaTourette, 

but I wanted to say that I really do appreciate the visit down to 

Pascagoula and also down to Houston. 

I think that going back to something Mr. Coble said a moment 

ago. I tell you when I stood there and I spoke to two groups of our 

Coast Guard’s folks, I could not have been more proud of them and 

to just let them know. Mr. Coble, I made it clear to them that we 

are their number one fans and that we are going to do every single 

thing in our power to help you provide them with the very best 

that our Nation can provide and that how we proud we are. I tell 

you it was just a wonderful opportunity to address them. 

To the Committee, I can’t tell you how much they were appreciative of knowing of our interest and our support of what they 

were doing, and I appreciate the opportunity. 

Mr. LaTourette? 

Mr. LATOURETTE. Thank you very much, Mr. Chairman. 

Commandant, when you, in your opening remarks, talked about 

the appropriations bill that is on the Floor and you talked about 

stovepiping, I just want to be clear because that bill is on the Floor 

today. Were you referring to the request that you made to transfer 

personnel devoted to overseeing and supporting acquisitions to operating expenses, that $82 million? Is that what you were talking 

about? 

Admiral ALLEN. I was, sir. 

Mr. LATOURETTE. Can you tell me because the bill that is on the 

Floor today denies that request and says that at least the Appropriations Committee feels that it is better if it stays in the AC&I 

account as opposed to going to the ONE account? 

Can you explain the basis of that and why you think that money 

should have been transferred to the ONE account? 

Admiral ALLEN. I can, sir. For many years, personnel costs associated with a particular appropriation, in other words, executing 

those funds was required to be funded out of that appropriation. 

12

In fact back when I was a commander at Coast Guard Headquarters, we had a GAO desk audit where they came and they 

said, for an engineer, how much work do you do that utilizes operation expense fund and how much of your work is entailed in designing capital investment expenditures out of AC&I? Actually, we 

had a couple of anti-deficiency issues arise because of that, so everything was stovepiped. So you are limited in the amount of personnel you can put toward a problem set in a particular appropriation. 

For several years now, we have proposed to take our personnel 

account and put it one particular funding source which is not inconsistent with the way the other military services do it. That allows you to do a couple of things. If you have a surge or a gap, you 

can readdress within your own operating base personnel to cover 

that. 

It wouldn’t be just a problem regarding acquisition. It might be 

an operational situation regarding a mass migration or type of a 

surge operation, long term surge operation following a natural disaster. It provides flexibility. 

We are willing to be transparent, provide reports on where our 

personnel are assigned and so forth, but we just think it will allow 

us to be more responsive to the oversight being provided by the 

Congress in how we are applying human resources to the acquisition issue. 

Mr. LATOURETTE. Thank you, Commandant. 

The Chairman, in his opening remarks, referenced a number of 

the hearings, and one of the hearings that we had was an oversight 

hearing, an investigative Subcommittee, I guess, done with the Full 

Committee. I am sorry you couldn’t have been with us until 11:30 

that night. We had a good time. 

But there were some reports that followed that hearing, and I 

think that those reports were at least disturbing to me because 

some of the things that were in those reports were not what I came 

away from at that hearing. The reports suggested that secure communications installed aboard the lengthened 123 foot patrol boats 

failed the TEMPEST inspections and that the use of these vessels 

could have and some suggested did expose national security information to unauthorized persons. 

Were you made aware of those allegations at that hearing and 

what response do you have to that? 

Admiral ALLEN. I am aware of the allegations, sir. 

To state this very briefly, I know the hearing had exhaustive 

treatment of this issue but to summarize before I make a statement. A TEMPEST certification is divided into both a visual inspection and a test of emanations that might come from the cables. 

There has been exhaustive information provided to the Committee 

on how that came about, changes that were made regarding the 

equipment, a lack of a waiver procedure for the Coast Guard, all 

of those which have been put into effect since the lessons learned 

from the 123s. 

To my knowledge, and I have talked extensively with my staff, 

we have no indication there were ever any insecure emanations 

made from those vessels while they were operating. 

13

I would also add that to the extent there are questions, and I 

noted earlier this sometimes becomes a he said-he said-she saidthey said regarding whether or not there is compliance. I would 

submit to the Congress that I would request that you call the National Security Agency and have them testify, and I think they 

would be the experts of record because they own this program for 

the Federal Government. 

Mr. LATOURETTE. Thank you, Commandant. 

Lastly, one of our hearings touched upon the fact that there were 

some rulemaking projects that the Coast Guard was undertaking, 

and staff tells me that that may be 100. Could you just give us an 

update of where you are with these rulemaking projects? 

Admiral ALLEN. Yes, sir. It is of some source of concern to me 

and has been for a while even before I assumed the duties as Commandant. To give you an example, I will give you a rough order of 

magnitude, and we will give you an exact answer for the record. 

But I believe around 9/11 we had about 50 or 51 rulemaking 

projects that were backlogged that we were working on, anywhere 

from invasive species on the Great Lakes to alternate tonnage, a 

wide variety of issues that impact maritime transportation security 

and safety and, quite frankly, facilitation of commerce, if you will. 

That backlog is over 90 right now. A lot of these have been generated by new legislation, the Maritime Transportation Security 

Act, SAFE Port Act and so forth. 

We are working on these now, but basically have roughly, with 

some modest increases, the same workforce that we had before 9/

11. It is of significant concern to me that I have raised it in meetings with Members, and we are looking at a way to prioritize these 

things, come back and communicate to the Committee. 

We are going to have to do one of two things. You have to 

prioritize what you can do with the resources you have or you have 

to look at resources. 

One of the things I am concerned about right now is the proliferation of requests for permits for liquid natural gas facilities 

that require extensive Coast Guard oversight for waterway suitability assessments. Then if there is a suitability assessment that 

says that a plant can be operated with certain security or safety 

safeguards, I am not sure if there has been an adequate enough 

public discussion about who should provide those resources. 

Is that something that should be passed on to the consumer 

through the price of goods? Is this a local responsibility, a Federal 

responsibility? I think that needs much, much more discussion, sir. 

Mr. LATOURETTE. Thank you very much, Commandant. I know 

that the Chairman would be happy if maybe you didn’t do that waterway survey up at Sparrows Point and take care of that. 

Thank you, Mr. Chairman. I yield back my time. 

Mr. CUMMINGS. Thank you very much, Mr. LaTourette. 

Mr. Larsen? 

I am sorry, Mr. Bishop, and then we will come back to you. 

Mr. BISHOP. Thank you, mr. Chairman. Thank you very much for 

holding this hearing. 

I want to pick up on where you just left off on the LNG issue. 

There is an LNG platform proposed in my district. The captain of 

the port issued a report, a waterway suitability report that said 

14

that the facility would be acceptable, would not impair the waterway but that the Coast Guard would need significant additional resources, and he specifically indicated that one of the things that he 

needed would be a new 110 foot cutter. 

Now given the difficulties with the 110 foot cutters that we currently have that we all have discussed, the IG’s report says that 

the ability of you, of the Coast Guard to close its patrol gap is compromised by the shortfall of cutters. 

How do you see the Coast Guard going forward with respect to 

dealing with this issue of securing LNG platforms? There are 42 

some platforms I believe proposed all over the Country. 

So given, if you will, the juxtaposition of Deepwater which admittedly has not gone the way any of us would like it to go and now 

a new demand that perhaps was not foreseen at the time Deepwater was conceived, how do you see this playing out? 

Admiral ALLEN. Yes, sir. First of all, I thank you for the question. 

When we look at a requirement for security or safety or any mission requirement for the Coast Guard, it is always better to look 

at the requirement. In this case, if there is a requirement for a certain number of hours for a patrol boat to be operating there, that 

doesn’t necessarily presuppose that 110 foot cutter would be the 

right cutter. In fact, most of the cutters that operate in and around 

Long Island Sound are 87 foot cutters, and there is one that is 

home-ported in New London, Connecticut. 

We have, with supplemental money provided by the GWOT supplement that was just passed, placed on order with Bollinger Shipyard a request for 4 87 foot patrol boats. There are many places 

at the lower end of the operating spectrum of 110 foot patrol boats 

where we can use those patrol boats to do the same thing, and the 

type of patrols in and around an LNG facility would be something 

that would be suitable for an 87 footer. 

So we are able to mitigate the gap that is currently existing right 

now while we bring the new Fast Response Cutter online through 

a number of way crewing 110 foot cutters down south. We are buying 4 additional 87 foot patrol boats, and we have negotiated with 

the Navy to retain their 179 foot patrol boats they had transferred 

to us through 2011. Three of those will be stationed in Pascagoula. 

But I would separate out the requirement to have a presence on 

sea to meet the conditions of the waterway suitability assessment 

and how that source. I would add, as I stated earlier, I think there 

needs to be a public discussion on whether or not that is a Federal 

role or not. 

Mr. BISHOP. Thank you. Thank you for that. 

One more question, if I may, the VUAV acquisitions project, and 

I am going to reference Mr. Skinner’s testimony which I don’t know 

whether you have seen or not. 

Admiral ALLEN. I have. 

Mr. BISHOP. If I have this correct, we will spend approximately 

$198 million of the $500 million that had been originally contemplated for 45 VUAVs. We will spend $198 million and take 

ownership of only 2 VUAVs if I understand the IG’s testimony correctly which would suggest that we will have committed 40 percent 

15

of the at least expected expenditure for this project but only have 

5 percent of the assets. 

So my question is, the VUAV program, if we are going to carry 

it forward, are we likely to see significant cost overruns or is this 

a program that may not realize the potential that you first? If that 

is the case, what does that do to the NSC capability? 

Admiral ALLEN. Yes, sir, a fair question as well. 

Just a general statement for all the Committee Members, what 

we are doing right now as part of the Deepwater program is take 

a look at every single platform, going back and revisiting the business case, where we are at, is the current solution the right solution, is there enough competition, and what is the best way forward. 

The solution that was offered for a vertically launched UAV, 

which is part of the larger system for both the National Security 

Cutter and the Offshore Patrol Cutter to increase their effectiveness, if you will, to be able to allow us to reduce the number of vessels that are operating out there, assumed that we would operate 

with vertically launched UAVs. At the time the contract was 

awarded, there were only two out there that might be viable, a helicopter drone and a tilt rotor type drone which is what was offered 

to us by ICGS. 

In the last year since I became Commandant, we have had a 

technical evaluation done that tells us there is risk associated with 

proceeding forward with the vertically launched UAV that was offered by Integrated Coast Guard Systems. We have stopped at this 

point and are looking at other alternatives. We do not want to proceed forward and make another mistake that results in the same 

type of first article failures we have had before, so we are calling 

an all-stop, assessing where we are at and if there are other solutions to providing that type of surveillance with the National Security Cutter package. 

We do recognize as the IG has stated, however, that if you deploy 

that vessel without the proper aviation assets with it, you will not 

get the mission effectiveness that was advertised in the proposal by 

Deepwater. 

So I would tell you that we probably in the next three to four 

months owe this Committee a way forward on VUAVs. Everything 

has been kind of queued up with the National Security Cutter and 

the 123s being at the top of the triage list, I would say right now. 

But we do not anticipate any further action on the vertically 

launched UAV task order that we have got in place right now until 

we clarify the way forward for the aerial assets to be with the NSC. 

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

Mr. BISHOP. Thank you. 

Mr. CUMMINGS. Thank you. 

We are very pleased to have the Ranking Member of our Full 

Committee, Mr. Mica. 

Mr. Mica? 

Mr. MICA. Thank you and thank you for conducting this important follow-up hearing. I think it is very important that we proceed 

as Mr. Cummings and I worked very closely together for a number 

of years, and I appreciate his thoroughness on this important responsibility he had inherited. 

16

I had some questions. As you know, Admiral Allen, I was a little 

bit concerned about sort of the stampeding of the Coast Guard into 

becoming the systems integrator and not having the capability to 

do systems integration in these large projects. 

First of all, I have to say looking at the history of the Deepwater 

problems, you inherited most of this and you have done a great job 

in trying to resolve some of the problems that you inherited. Many 

of these decisions go back long before you took your current position. 

I still have some questions, though. Now it is my understanding 

that the contract, the ICGS contract, is going to continue with a 

maximum of 43 months but 18 months, is that what you said, for 

any one assignment? 

Admiral ALLEN. Yes, sir, that is correct. 

Mr. MICA. Also, you talked about the number of personnel. The 

thing that concerned me about the Coast Guard becoming the systems integrator is the ability, one, to attract the personnel that you 

need to do that kind of job. 

I think the mistake they made was not having a third party. You 

have Northrop Grumman and Lockheed, who have formed this consortium, are doing the whole enchilada. We should have had somebody else. Someone writes the specs. Someone conducts the systems, oversees systems integration and some oversight responsibility. 

You also said you went from 240 to was it 400 and some? 

Admiral ALLEN. Four hundred and fifty-one, yes, sir. 

Mr. MICA. How many of those are enlisted Coast Guard personnel versus civilian employees? 

Admiral ALLEN. Right now, I can give you a rough approximately. I would be glad to answer for the record. 

Mr. MICA. Of the added personnel. 

Admiral ALLEN. It is about one-third military, one-third civilian 

and one-third contractor, sir. 

Mr. MICA. With that combination, you feel you can have in-house 

the expertise to perform? 

Admiral ALLEN. I would say to begin the transition, sir. As I 

mentioned earlier, we are going to need to build a larger workforce. 

We have time to do that. In the meantime, we need to partner with 

the Navy and other folks to provide some of this expertise and capacity that we need, but we have to build ultimately an organization. 

Mr. MICA. Are the contractors an en bloc number that you retained someone or you hired them individually? 

Admiral ALLEN. We retain a third. 

Mr. MICA. You said a third are your personnel. 

Admiral ALLEN. Yes, sir. We can give you a breakdown on it, but 

it is usually a contractor that we award a contract, and they provide the personnel, a support contractor. 

Mr. MICA. See, I don’t think you can hire in-house all the expertise that you need and retain them. I mean your average enlisted 

person probably is in and out in how many years? 

Admiral ALLEN. Well, we don’t have very many enlisted people 

doing this. If they are, they are usually senior, sir. 

17

Mr. MICA. I know. I know, but I am just saying your average 

Coast Guard person. Even with a Commandant now you get a fouryear slot. 

Admiral ALLEN. Yes, sir, I am term-limited. 

Mr. MICA. And you are cleaning up the mess from the last one. 

But these programs do take a long time. This started over four 

years ago. 

Admiral ALLEN. Yes, sir. This is building for the future. 

Mr. MICA. Exactly. Then a lot of this is contingent on Congress 

providing additional money. What was the figure that you need to 

have the personnel and have the additional physical capability of 

putting in place the component to do this job? 

Admiral ALLEN. Well, we actually have requested increased personnel as part of the fiscal year 2008 request, but the other issue 

was having the ability to have more expanded use of all personnel 

funds in the Coast Guard so you can surge if you need to do that. 

Mr. MICA. I think that there were some problems that a Member 

relayed. 

Admiral ALLEN. Yes, sir. 

Mr. MICA. But did you have a dollar total figure? 

Admiral ALLEN. The entire amount of personnel applied to the 

acquisition, construction, improvement portion of our budget is 

around $82 million. 

Mr. MICA. Around $82 million. 

Admiral ALLEN. Eighty-two million, yes, sir. 

Mr. MICA. On an annualized basis. 

Admiral ALLEN. Yes, sir. 

Mr. MICA. All right, well, again we will watch this. I know you 

are trying to clean it up, and you have done as good a job as possible in trying to put in place, something, a mechanism and a protocol so that we don’t have the same problem. 

Thank you. I yield back. 

Mr. CUMMINGS. Thank you very much. 

Before we go on to Mr. Larsen, let me just follow up one real 

quick question. 

The one-third military, one-third contract and one-third civilian, 

do you anticipate, Admiral, that those percentages remain the 

same or is there an effort to, say, reduce the contractors and increase the civilians or increase the military and what have you? 

Admiral ALLEN. I think we need to increase our civilian workforce and diminish the number of contractors. I am not sure what 

that right balance is because you always need a margin just because of the ebb and flow of work. Civilians provide us continuity 

across changes in military assignments as was mentioned earlier. 

But one of the things we are going to have to do is create a pyramid so there is career growth. One of the challenges we have currently in the Coast Guard is with being largely military and only 

having about 6,000 civilians. In some specialties, there is not a 

broad enough pyramid or base, if you will, to be able to support upward mobility, and we need to take a look at that. That is the reason the structure of some of these ratings is going to be important. 

But we have had success, believe it or not, in wooing some of the 

folks that are working for our contractors to come on over once we 

18

get those positions established on the civilian side. My goal is to 

diminish somewhat the contracting force but not entirely, sir. 

Mr. CUMMINGS. Mr. Larsen? 

Mr. LARSEN. Thank you, Mr. Chairman. 

Admiral, regarding the C4ISR issue that I mentioned in my 

opening statement, the OIG reported in their testimony—I think 

you indicated you had read the OIG testimony—on page seven of 

the OIG testimony talked about them reviewing the efforts to design and implement C4ISR to support the Deepwater program, lack 

of discipline and changed management processes provided little assurance that requirements remain up to date or effective and meet 

program goals. Certification and accreditation of C4ISR equipment 

was difficult to obtain and so on. 

Your statement discusses that and your written and oral testimony indicates to the best of your knowledge there was no compromise of classified information and suggests that we look into 

that, and I am sure we will. 

But I think what I gather from the OIG’s comments wasn’t so 

much whether classified information was compromised or not but 

that there were problems with certification and accreditation regardless of the outcome on the other end. 

So I was wondering if you could address the issue the OIG brings 

up, that is, the challenges of the certification and accreditation and 

then what steps you are taking to address those challenges. 

Admiral ALLEN. I am happy to do that and thank you for the 

question, sir. 

The way the Coast Guard’s technical community is structured 

right now is really in two different offices. One, we have the CG4 shop which is a civil engineering, naval engineering and aviation 

engineering and ocean engineering. The electronics engineering 

and censor part of our technical world comes underneath the CIO 

shop in the Coast Guard which is the CG-6 organization. 

Early on when I became Commandant, it was clear that the technical authority vested in CG-4, even if it was not explicit, was not 

good enough to make sure that the contractors were adhering to 

standards. We officially designed the CG-4 shop as a technical authority for all those engineering disciplines that they own. 

We are in the process now of doing exactly the same thing for 

the CG-6 shop, the CIO, and make them the responsible technical 

authority not only for issues like TEMPEST certification and dealing with the National Security Agency, SPAWAR and so forth but 

to have the technical authority reside in them for certification and 

accreditation for C4ISR systems, sir. 

Mr. LARSEN. Well, before that, was the authority to do that floating around the Coast Guard? 

Admiral ALLEN. I am not sure it was floating around, but it 

wasn’t explicitly delegated in terms of a written instruction to me, 

saying you are accountable and there is going to be a person that 

is, for instance, for an air search radar. This is the one that certifies that the requirements are being met, and that is what we are 

doing, sir. 

Mr. LARSEN. Okay, so that is how you are addressing that. 

Admiral ALLEN. Yes, sir. 

Mr. LARSEN. Can I ask a question about helicopters as well? 

19

In your written testimony, you start off, and I encourage everyone to read early on in your testimony, some great stories about 

the results of some of the investments including the great story in 

Washington State of this high altitude rescue—you call it daring, 

I think—and the video from this rescue, of this high altitude rescue 

at 7,000 feet in my home State of Washington State. It is, in fact, 

pretty compelling and pretty exciting to watch, and that was on a 

helicopter with new engines or re-engined engines, some great stories. 

However, there is always a but in this. Again, the OIG indicates 

that after some recommendations were made, the Coast Guard did 

not concur with any of the agency’s 65 recommendations that it 

had made. It goes on to say that Coast Guard officials said that 

ICGS minimized operational legal costs and contract performance 

risk associated with re-engining. 

Can you address the OIG’s comments? Those are on page seven 

of the OIG’s testimony with regards to helicopter re-engining. 

Admiral ALLEN. I can, but I would just make a general comment. 

There were a number of decisions that were taken over the last 

three or four years in the course of Deepwater that were senior 

management decisions that were not documented to the level that 

there was an audible or traceable record on which the IG could determine how the decision was made. For instance, we merely 

issued the DTO for the construction of the NSC because it required 

no more affirmative action than to do that, but the lack of a business case on the subject and the basis for the decisions brings into 

question whether or not terms are being dictated to the Coast 

Guard. 

I was present and understood when the decision was being made 

to re-engine the helicopters that it was done to mitigate risk. We 

knew there was a cost premium associated with that. We knew 

that we could have ordered the work directly to our logistics center 

in Elizabeth City, North Carolina, but the decision was taken, 

maybe not documented to an audible trail level of specificity, but 

that was the decision that was taken. 

We could have gone other ways through a sole source contract or 

a sole source award through our own logistics function. But we 

were mitigating risk and, at that point, we considered the additional cost associated with going through ICGS was worth the 

value achieved in reducing the risk to the acquisition. 

That was the decision that was taken. Whether or not there was 

an adequate business case to support that, that is up to question. 

But I was there. I was privy to it. That was the decision taken. 

Mr. LARSEN. Thank you. 

Thank you, Mr. Chairman. 

Mr. CUMMINGS. Thank you very much. 

Mr. Coble? 

Mr. COBLE. Thank you, Mr. Chairman. 

Admiral, thank you for your testimony today. Let me put a two 

part question to you, Admiral. 

As you know, the problems of Deepwater have been widely reported in the media and closely scrutinized by the Congress. In 

fairness to you, I would like for you to tell us some of the segments 

of the program that are succeeding, number one. 

20

Number two, what, if anything, can be salvaged from 123 conversion and what can be done to recoup some of the monies expended 

on that project to assure that similar situations do not subsequently occur? 

Admiral ALLEN. Yes, sir. A couple of successes: the retrofitting of 

our Legacy Cutters with new sensor and communication equipment 

has been very successful. We have the ability now to come up and 

classify what we call SIPRNET, secure internet protocol router 

chatrooms. Where we used to have to relay requests up the chain 

of command for permission to do something, everybody is on the 

circuit at once, if you will, negotiating how the resources do apply 

to what the problems are that are out there. 

The Coast Guard Cutter Sherman recently set a maritime record 

seizing nearly 20 tons of cocaine off Panama just a matter of weeks 

ago. That whole operation, including the pursuit into Panamanian 

waters under the bilateral agreement with Panama, was facilitated 

through SIPRNET chat that did not exist before the Legacy equipment was put on the old cutters. So the ability to operate these old 

cutters with a higher level of efficiency is a significant win, and our 

commanding officers out there love this equipment. 

We are happy with where we are going with the Casa 235 aircraft. We are in the process now of testing the mission palate. That 

is the integration of the sensor suite in the back of the aircraft. We 

have achieved connectivity with that first palate in the C4ISR Center of Excellence in Morristown, New Jersey. 

We need to finish the tests and evaluation of that to make sure 

that the new palate integrates with the aircraft. We are ready and 

into full production on the airframe itself. Once we are sure of the 

integration on that, then we need to pull that forward as fast as 

we can. 

Where we do achieve success, I think we need to selectively accelerate those things and pull them forward. If there is not an 

issue with first article performance, let us buy that out and get it 

off the table because we have other problems we have to deal with. 

Regarding the 123s, we have revoked acceptance of those cutters. 

That is the first step in the process of recouping the Government’s 

interest in the money that was invested there. There is some residual value related to the short range prosecutors, the boats that 

were delivered with the boats, the sensor suites that are on the 

boats and the engines that are in the boats. 

Ultimately, we will come up with a fair value that the Government should receive in consideration for this, and we will take that 

to ICGS and request that money be returned. At that point, we will 

move on to whatever legal remedies are required after that. 

Mr. COBLE. You can keep the Committee up to speed on the 

progress to that. 

Admiral ALLEN. I would be happy to do that, sir. 

Mr. COBLE. Thank you, Admiral. 

I yield back, Mr. Chairman. 

Mr. CUMMINGS. Mr. LoBiondo? 

Mr. LOBIONDO. Thank you, Mr. Chairman. 

Admiral, you just referenced the drug bust with the improved capability for communication. Can you just briefly say what implicaVerDate 0ct 09 2002 11:38 Apr 11, 2008 Jkt 000000 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 P:\DOCS\36681 HTRANS1 PsN: JASON
21

tions that would have for homeland security, how that would 

apply? 

You told us how it applied in the drug bust. 

Admiral ALLEN. Maybe I can give you a better example. There 

are some cases where there is a threat approaching this Country, 

and it could be a migrant or a drug boat but where you may have 

cause to want to use warning shots or disabling fire. 

Traditionally in the Coast Guard, that starts at the unit level 

with the commanding officer, goes up maybe through the local sector to the district command centers, sometimes to headquarters for 

interagency consultation regarding the country that is involved and 

the particular situation where we are trying to negotiate what we 

call a Maritime Operational Threat Response. 

To be able to do that in parallel at the same time and not sequentially reduces a process that could be a half hour to an hour 

to hours. In some cases, we have been able to reduce that down to 

15 minutes or less, that allows the commanding officer on the scene 

to be able to react to the threat, in some cases before they might 

enter the territorial sea or actually get involved in an illegal operation because we had not gotten the permission to use warning 

shots or disabling fire. 

Mr. LOBIONDO. So pretty invaluable. 

Admiral ALLEN. It is. 

Mr. LOBIONDO. Admiral, your statement indicated that you will 

be releasing a request for proposals to build the interim Fast Response Cutter B in the next couple of weeks. The cutter will replace the rapidly failing 110 patrol boats and the failed 123s. My 

concern and I think a concern of the Committee is the time it will 

take to field the Fast Response Cutter B. I understand the first one 

will not be in the water until 2010, is that correct? 

Admiral ALLEN. The proposal has that right now. I have been 

working hard with our folks to try and incentivize us to make it 

sooner than that, sir. We can’t get these boats soon enough and if 

I can get them before 2010, I will, sir. 

Mr. LOBIONDO. There is still a delay here. Meanwhile, the readiness gap, I think, is at about 25,000 hours—if my information is 

correct—25,000 hours annually and will be expanding. How do you 

plan to make up the gap? 

Admiral ALLEN. Yes, sir, I will give you a qualitative breakdown 

of where that is at, and we can give you an answer for the record 

as to actually the hours we are accumulating right now. 

About half of those hours have been recouped by taking the eight 

crews and the maintenance money associated with the 123s that 

were taken out of service and double-crewing 8 boats, 4 in Miami 

and 4 in St. Pete. So we are basically recouping close to 50 percent 

of those hours by just using the crews on other vessels and operating the vessels at a higher tempo. We are taking the maintenance money associated with the 123s and supporting those higher 

maintenance costs with that. 

This is not unlike the operations we are running in the Persian 

Gulf with the six patrol boats over there that have been serving in 

superb fashion for a number of years now because we have the 

right maintenance processes in place. That is one. 

22

Two, we are making better use of maritime patrol aircraft down 

there as far as taking the search out of search and seizure or 

search and rescue. We are also using multi-mission hours that are 

available to us through our buoy tender fleet or the cutter fleets 

to fill in those other hours, and we can give you a detailed breakdown of where those hours are coming from, sir. 

Mr. LOBIONDO. Thank you. 

One more question, Admiral, can you explain if there will be any 

impact on the schedule for the replacement of the Legacy assets 

from the service’s efforts to build an acquisition staff and assume 

the role of systems integrator and what steps are you taking to 

mitigate that potential? 

Admiral ALLEN. Well, I think we have to almost on a yearly 

basis, and I think we need to be up here talking with you folks 

about how the organization is being stood up. 

We are going to be making one by one decisions on every one of 

these platforms. In other words, how are we going to continue with 

the Casa 235? Where are we going to go with the FRC, the NSC, 

the Offshore Patrol Cutter? Each time we make a decision to bring 

a new platform on, we are going to have to balance that with the 

capacity, capability and competency needed to execute that in a 

lead systems integrator role. 

There have been a lot of requests for status from a number of 

Committees this year. I think we need, on an annual basis, to say, 

here is the plan. Here are the platforms that are coming on board. 

Here is the human resource plan that supports that, the workforce 

development plan that support it. Where there is a gap, it will be 

filled by ABS certification, agreements with the Naval Sea Systems 

Command, putting supervisor ship inspectors into our Project Management Resident Offices, and that plan needs to be transparent 

to you, sir. 

Mr. LOBIONDO. Thank you. I will just close, Admiral, by saying 

thank you for your outstanding leadership at this very critical 

time. 

Thank you, Mr. Chairman. 

Mr. CUMMINGS. Thank you. 

Let me just ask a few wrap-up questions because the IG is going 

to come up and I want to make sure that I address some of the 

things that the IG may be addressing so that you will have an opportunity to do that. Not all of these things but I am going to try 

to go through a little list of things that I am concerned about. 

The 123 program, first of all, I was very pleased and I am sure 

all of us were pleased that you rescinded the delivery of the 123s. 

It just made sense. 

But there is a piece of that that really interested me, and I have 

expressed these concerns to at least Lockheed Martin. I want the 

American people to get every dime, not every dime, every penny of 

the money that they are due as a result of not getting what they 

were supposed to get, and I want to know where are we on that 

piece. It is one thing to rescind. It is another thing to make sure 

that the American people get their money. 

I just want to know. What is the status of that? As a lawyer, I 

know that you are not necessarily going to get every penny, but I 

just want to know where that stands. 

23

Admiral ALLEN. The next step is for the Coast Guard to issue a 

letter to ICGS, saying, here is the dollar amount, we would like it 

back. 

Mr. CUMMINGS. You have already done that? 

Admiral ALLEN. We are in the process of finalizing that number, 

yes, sir. 

Mr. CUMMINGS. And so, you are going to ask for a certain 

amount of money. Can you share that with us later if you can? We 

don’t want to interfere with your negotiations. 

Admiral ALLEN. Yes, sir. I would have to check with my contracting officers and my attorney if it is allowable. 

Mr. CUMMINGS. Fine. I understand. I understand. 

We just want to make sure that the American people get their 

due. I just don’t think that you can have a situation like this, Admiral. It sends a bad message to a whole lot of people. 

Admiral ALLEN. Sir, it sends a bad message for the Coast Guard. 

Mr. CUMMINGS. Yes, but what I am saying is that we teach our 

kids that you keep a commitment. You deliver what you say you 

are going to deliver. Then we see a situation, as I have used the 

example, where you go and buy, for example, a $375 lawnmower 

that doesn’t cut a blade of grass, and then the United States of 

America’s taxpayers’ dollars are being spent on that. We can’t have 

that. 

A lesson must be sent. I mean the word must go out that when 

you do that to the American people, the American people want 

their money back. It is just simple, basic accountability. 

But I want you, if you can, to just keep us apprized of that. We 

know that you are working with your lawyers and everything. I am 

just glad that it was a two part statement. 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. We rescind. We want money back. 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. Now let me go to some of the things that the IG 

may be concerned about. First of all, when do you anticipate taking 

delivery of NSC 1? 

Admiral ALLEN. My best guess, this is caught up in the current 

negotiations because one of the things is we can’t close on the current contracting arrangements right now until we both agree on 

how many hours it will take to finish NSC 1 and then establish the 

cost to be able to settle all the claims associated with that, and 

that is where we are about now. 

I would tell you that the hull and machinery portion, the stuff 

that you saw below decks, will probably be ready sometime before 

the end of the calendar year. The sensor suite, while it may be 

there, it may be after the end of the calendar year. So I would err 

on the side of conservatism and tell you that acceptance trials probably after the first of the year, sir. 

Mr. CUMMINGS. What, if any, are the systems that will not be 

fully operational and mission-ready when you accept delivery of the 

ship? Do you anticipate such? 

Admiral ALLEN. That is another great question. 

Since we are going to retrofit certain portions of that ship, we 

have to agree on what is the NSC that will be delivered because, 

as we know, once we issue the construction order for NSC 3, we 

24

will establish a technical baseline that we have to go back and 

change 2 and 1. Knowing that will happen at a later date than acceptance, we have to define what is acceptance and what is that 

hull at acceptance, and that is the basis for the current contract 

negotiations that we are about to close, sir. 

Mr. CUMMINGS. Do you anticipate the ship will be TEMPEST certifiable when delivery of the ship is made? 

Admiral ALLEN. Yes, sir. We spoke when you were down there. 

We showed you the cabinets and the cables, sir. 

Mr. CUMMINGS. If you recall, when I was down there, there was 

that issue of nine feet. 

Admiral ALLEN. Nine feet versus twelve feet, yes, sir. 

Mr. CUMMINGS. So you all anticipate you will be able to address 

that. 

Admiral ALLEN. Yes, sir, as you remember, the 12 feet was a 

standard that was developed many, many years ago that was based 

on the fact that there would be physical separation of visual inspection and then an emanation inspection. We are waiting for the results of the test, and we will provide that to you as soon as we have 

it, sir. 

Mr. CUMMINGS. Now let me just ask you a few more questions 

about the life, fatigue life of NSCs 3 through 8. 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. Before you begin construction on NSC 3, will you 

have implemented a new design to strengthen the hull fatigue life 

and, if so, can you describe that design? 

Admiral ALLEN. Yes, sir. In fact, the basis for the entire what we 

call a consolidated contracting action is to decide what the baseline 

is moving forward from NSC number 3. Once you do that, then you 

know what you have to change in 1 and 2. So the very first decision that is being negotiated right now is the changes related to 

the NSC 3 design and what are we going to do. 

My statement for the record has a schematic, and we can answer 

in a lot of detail. But as we explained when we were down in 

Pascagoula the other day, the biggest change will be to make a separation between the two superstructures so that stresses associated 

with the ship when it is hogging and sagging can’t be transmitted 

back and forth through the ship and create a way to absorb the 

stresses. There are some other areas regarding transitions between 

certain areas of the structure that will be strengthened and reinforced. 

These are based on an agreement between our technical authority that has now been designated for hull and machinery and the 

program manager, that that is the fix that will guarantee the service life of the ship that is being designed as NSC 3, sir. 

Mr. CUMMINGS. What you just told me, has the Navy Surface 

Warfare Center at Carderock gone over that, what you just said? 

Admiral ALLEN. The changes that were recommended by our 

technical authority were based on a finite element analysis conducted by Carderock Surface Warfare Center that were subject to 

previous hearings, sir. 

Mr. CUMMINGS. Perfect, perfect. I want to make sure we are 

learning from our mistakes. 

25

Admiral ALLEN. Yes, sir. In fact, before Carderock did the finite 

element analysis, this was just a supposition on the part of our engineers based on their experience that there might be problems just 

based on their knowledge of how structures work. The Carderock 

finite element analysis basically corroborated what our engineers 

believed to be the case on fatigue life, sir. 

Mr. CUMMINGS. Do we have any idea about how much that design will cost? 

In other words, we are making some changes. We had anticipated a certain amount the NSC 3 costing. 

Admiral ALLEN. Yes, sir. In a matter of days, as soon as that 

NSC 3 task order is awarded, we will be able to tell you the costs 

for NSC 3 and the following hulls, sir. 

Mr. CUMMINGS. Are you confident that the new design will enable NSC 3 through 8 to be underway for 185 days per year in the 

general Atlantic and north Pacific sea states without experiencing 

hull buckling or cracking? 

Admiral ALLEN. Yes, sir. It will allow them to be away from 

home port 230 days and approximately 180, 185 days in the operational environments that were exposed under the finite element 

analysis that Carderock conducted, sir. 

Mr. CUMMINGS. To what extent does the ICGS team or Northrop 

Grumman now believe that there is a problem with the fatigue life 

on the NSC and to what extent will Northrop Grumman assume 

responsibility for the cost of strengthening hulls 1 and 2, if you 

know? 

Admiral ALLEN. Sir, the difference between Northrop Grumman 

and the Coast Guard on this issue is as follows and, not being a 

naval engineer, I will extend revised comments if I could for the 

record. 

Mr. CUMMINGS. Yes, you may. 

Admiral ALLEN. To the best of my knowledge, the construction 

standards used by Northrop Grumman to develop the design of the 

National Security Cutter were based on something called design 

data sheets and general specifications that are used to build military vessels. That is a different type of a design approach than our 

engineers used to assess the fatigue life. 

In other words, we accepted the design offered by Northrop 

Grumman for the National Security Cutter based on the technology 

they had at the time, military specifications. We are applying a different standard to assess fatigue life. 

Northrop Grumman feels they have met the requirements of the 

contract with the technical basis for their designs. We believe they 

have not. Therefore, it is a Government-requested change, sir. 

Mr. CUMMINGS. I see. And so, you feel confident that your recommendations are better than Northrop Grumman’s. In other 

words, it will serve our purpose better. 

Admiral ALLEN. I think that is a better way to say it. 

Mr. CUMMINGS. The purpose of the Coast Guard. 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. I am not trying to get you to beat up on Northrop Grumman. 

Admiral ALLEN. No. I talked to them. 

26

Mr. CUMMINGS. Again, I am trying to make sure that we are 

clear as to what we are bargaining for, and I want us to be clear 

as to what performance is, and I want to be clear as to making 

sure that we have the kinds of equipment, i.e., ships to do the job 

that the American people expect us to do. 

Admiral ALLEN. Yes, sir. We are in violent agreement, sir. 

Mr. CUMMINGS. Let me ask you this, and this will be my last 

question. When you look, I just want you to do a little crystal ball 

thing for me and try to tell us. 

You have what, about a year and a half left, two years left? 

Admiral ALLEN. In my term, sir? 

Mr. CUMMINGS. Yes. 

Admiral ALLEN. Three. 

Mr. CUMMINGS. Three years? 

Admiral ALLEN. About three years. 

Mr. CUMMINGS. What do you want to see? 

Everybody up here just about has expressed tremendous confidence in you, and it is not too much that we all agree on. I can 

tell you. But that says a lot. So I want to know. 

Now, you can’t tell me exactly, but every morning when you get 

up, you must say, at the end of my three years, I want to have accomplished this. 

I just want to know, what is this? Do you follow what I am saying? 

Admiral ALLEN. Yes, sir. It is an organization that is positioned 

to execute its mission to the standards that the American people 

have come to expect of us especially in a post-Katrina environment 

and having the mission execution and mission support structure 

that allows us to do that effectively but also allows us to adapt to 

change and changing external environments. 

As I stated in my State of the Coast Guard speech—and you 

were there, sir—we have been acting like a small business when 

we are a Fortune 500 company. We have got to get our business 

processes, command and control, and the organizational structure 

of this Coast Guard to be more flexible, agile and adaptable including human resources and technology and everything. 

I consider myself a transition commandant trying to reposition 

the service for success far after I am gone, sir. 

Mr. CUMMINGS. I take it that with all that has happened, there 

were plans before and those plans had to be changed to a certain 

degree. Can you give us a new schedule? 

Admiral ALLEN. Are you talking about the National Security 

Cutter? 

Mr. CUMMINGS. I am talking about now with regard to Deepwater, period. In other words, you expect certain things to be happening at a certain time. 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. I am just wondering, can you submit to us? 

I don’t want a situation where we have to keep, not have to but 

keep bringing you to the Hill to tell us where things are. I think 

that you realize the reason why we did this, this time, is because 

we were in a critical situation. 

27

I personally think that this Committee has been very helpful in 

helping you to do the things that you have been trying to do. 

Again, we are your number one fan. 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. We are just trying to make sure that things are 

the best that they can be. I guess what I am trying to get at is exactly because of the problems we experienced, we learn from them 

and we go forward. 

I am just asking, can you get a new schedule as to when you see 

certain things being completed? 

Admiral ALLEN. Yes, sir. I think on an annual basis because 

there are certain things that impact a schedule: contractor performance that you are observing, the level of funding you may get year 

to year that may not be what was anticipated early on that impacts 

the number of units you can produce on any particular platform. 

This is almost going to have to be a year to year presentation to 

you across all platforms. We come with a budget. Here is what we 

are requesting this year. Here is what we got last year. Here is the 

progress we have made. Here is where I think we are going. 

I would tell you that I haven’t compiled them all side by side and 

sat down and looked at them. If you look at all the pending provisions that have either been included in the GWOT supplemental or 

are being considered right now, collectively, I think give you that 

information. 

As I mentioned in my opening statement, I would like to work 

with the Congress to create a transparent way to give you that information on a real time basis so we hold it, you know it and there 

are no surprises, sir. 

Mr. CUMMINGS. Last but not least, then I will go to Mr. LoBiondo 

if he has anything, and I understand Mr. Larsen has a follow-up 

question, but let me ask you this. 

You mentioned a few moments ago that you said there were Government changes, is that right, I think with NSC with regard to 

3? You said there were Government changes. 

Admiral ALLEN. Yes, sir. 

Mr. CUMMINGS. Who pays for that? 

Admiral ALLEN. We do, sir, if we ask them to be done. 

Mr. CUMMINGS. Okay, very well. 

Mr. Larsen? 

Mr. LARSEN. Thank you, Mr. Chairman. 

Just a quick couple of questions, regarding the FRC B, the off 

the shelf model, has the initial failure of a composite hull model 

soured the Coast Guard on composite hulls as you move forward? 

Admiral ALLEN. I am not sure we are soured on composite hulls, 

and I think composites have shown themselves to be successful in 

other areas, particularly the superstructures and naval vessels and 

reducing the weight and long term durability and lower maintenance cost. 

I think, in our case, applying that technology to a high speed 

craft of that size had not been demonstrated before, and we had 

done two things that weren’t done early on when we started pursuing a composite variant. 

Number one was just plain business case analysis. How much is 

it going to cost to do this because to achieve a certain speed and 

28

certain requirements, it requires a certain amount of horsepower 

that drives the parameters of the boat? The second one was the 

technical issues and the risks associated with producing the boat. 

Both of those told us that this was a high risk and we needed to 

take a look at mitigating the risks associated with that. 

While all that has been going on, you can’t wait for all that to 

be done to fill this patrol boat gap as we talked about earlier. So 

we elected to proceed with the FRC B instead. 

Mr. LARSEN. Right. Finally, in your oral testimony and in our 

questions, we have focused on the 50 or so folks that you plan to 

hire for acquisition, but you mentioned 4 people that you have assigned specifically to respond to various requests probably from us 

here. 

Admiral ALLEN. That is correct, sir. 

Mr. LARSEN. If those four weren’t responding to our requests, 

what would they be doing? 

Admiral ALLEN. They would be applied somewhere else in the organization, working on the problems that have been discussed, sir. 

Mr. LARSEN. Pardon me? 

Admiral ALLEN. They would be applied somewhere else in the organization, working on the problems that have been discussed, sir. 

Mr. LARSEN. Thank you. 

Thank you, Mr. Chairman. 

Mr. CUMMINGS. Thank you. As we let you go, the NSC 3, you 

said something that just kind of ricocheted back into my mind. Apparently, with the NSC 1 and NSC 2, the Coast Guard was not satisfied with the Northrop Grumman design. Is that an accurate 

statement? 

Admiral ALLEN. Our engineers were not satisfied that the design 

that was offered by Northrop Grumman would meet the fatigue life 

of the vessel, sir, our engineers, and they notified senior management in 2004 of their concerns, sir. The decision was made to go 

ahead and proceed with construction because of the implications for 

cost of stopping, redesigning and starting again with the knowledge 

we would have to retrofit whatever solution that was developed 

into hulls 1 and 2. 

Mr. CUMMINGS. Okay, now, let us put a pen in that and rewind. 

What has been done to address those issues that you just stated 

with regard to 1 and 2 because we are going to have Coast Guard 

men and women on those ships? They are going to be trying to do 

the things that you are mandated to do. 

So just tell me what has been done to make sure that those, 1 

and 2, are okay. 

Admiral ALLEN. It starts with establishing the technical baseline 

for the entire fleet with NSC 3 which will have the changes to meet 

the fatigue life designed in. 

The second step then is to go back and look at 1 and 2. As you 

know, more work will have to be done to institute those changes 

on 1 because it is over 70 percent complete. There may be an opportunity to make those changes earlier as they sit in the shop and 

other places with NSC 2 which is somewhere between 20 and 30 

percent done at this time. 

So the type of retrofit for both the first two hulls will have to be 

depending on where those ships were at when the baseline was esVerDate 0ct 09 2002 11:38 Apr 11, 2008 Jkt 000000 PO 00000 Frm 00038 Fmt 6633 Sfmt 6633 P:\DOCS\36681 HTRANS1 PsN: JASON
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tablished. That is the reason it is so incredibly important to get the 

baseline established for NSC 3, sir. 

Mr. CUMMINGS. So it is possible. It is possible—I didn’t say probable—possible that we could end up scrapping 1 and 2? 

Admiral ALLEN. Not in the vaguest realm of my imagination, sir. 

Mr. CUMMINGS. You see where I am going with this, right? 

Admiral ALLEN. Yes, sir. I understand the issue with the 123s. 

The issue with fatigue life of the NSCs is different on what is going 

to happen 15, 20 or 30 years from now, not what is going to happen 

tomorrow. In fact, we are offered the opportunity to do some 

forensics on the hull 1 that we have never been able to do before, 

and that is to put strain gauges on the ship—it has not been 

changed yet—and see who is right. 

Mr. CUMMINGS. Okay. 

Admiral ALLEN. This is not an immediate safety problem, sir. I 

would not put my people to sea in this ship if I thought it was. 

Mr. CUMMINGS. Say that one more time. 

Admiral ALLEN. I would not put my people to sea in this ship if 

it was a safety problem. 

Mr. CUMMINGS. I take it that that was the same thinking, what 

you just said—what you just said—with regard to 123s, in other 

words, the last sentence or two that you just said. You said I would 

not put my people on a ship that whatever you just said. 

Admiral ALLEN. That is the reason I laid them up, sir. 

Mr. CUMMINGS. Right. I just wanted to make sure we were on 

the same page. 

Admiral ALLEN. In my view, by the time we laid the 123s up, it 

ceased to be a technology issue. It became a leadership issue. 

Mr. CUMMINGS. Finally, with regard to that, how do we make 

sure when we know that there is a disagreement? 

We know it because you just said it, that there is a disagreement 

with regard to the design of the NSC 3, the proposed design, and 

what we have done with NSC 1 and 2. Do we then put and are we 

now putting NSC 1 and 2—I guess I am just trying to do some prevention stuff here—under a microscope where we make sure that 

every single inch is right? 

I think we are making great progress. I really do. I think we are 

moving forward. The last thing we need is for one of these NSCs 

to get out there and then we discover we have got problems. 

Admiral ALLEN. I don’t believe that will happen. The issues associated with fatigue life which could produce cracking based on the 

repeated stress of wave action on the hull that is repeated over a 

period of time and doesn’t happen immediately when the ship is 

launched. 

Mr. CUMMINGS. Right. 

Admiral ALLEN. You have got to bend that paper clip quite a few 

times before it finally breaks. We will be able to test the strain on 

the hull with instrumentation at the same time we are developing 

on how to retrofit those hulls. But we are not talking about an immediate safety problem, sir. 

Mr. CUMMINGS. I understand, but I am also concerned. You used 

some of my words in your opening. We are talking about a future 

we will never see. You and I, hopefully, will be having tea up in 

heaven, and we want to make sure these ships are still doing okay. 

30

Admiral ALLEN. Yes, sir. Well, I hope I am there with you. 

[Laughter.] 

Mr. CUMMINGS. I guess I am being kind of presumptuous. 

Admiral ALLEN. Sir, let me make a comment about Coast Guard 

culture because I think this needs to be said. We rejected technical 

solutions offered by Deepwater in the aviation community because 

the aviation community would not stand for it. We originally offered an extended-range Casa 235 and an AB-139 helicopter, neither of which we are using in the aircraft solution for Deepwater. 

I would tell you that the technical competency mind set, configuration control union, if you will, of our aviation engineers held the 

line. 

Mr. CUMMINGS. Good. 

Admiral ALLEN. I think the traditional notion of service operators, and I am one. I have got a cutterman’s pin. I am I have been 

the commanding officer of a ship. We tend to be more independent, 

less organized. I think there are a lot of issues related to the two 

cultures that played into this, and I think we are going to solve 

some of those by going to a standard maintenance concept for the 

entire service, sir. 

Mr. CUMMINGS. Very well. Could you try to get us just a general 

idea at some point of where you expect to be in the next six 

months? I am not going to bring you back up here, but I would like 

to have that so I can hold you to it. 

Admiral ALLEN. Sir, I will come back as often as you want. I will 

be glad to communicate. I suggest maybe, if you have never seen 

acceptance trials, you might like to see that ship underway, sir. 

Mr. CUMMINGS. I will. I will. 

Any other comments, questions? 

Admiral, we have the full confidence. The things that I said 

down there in Pascagoula and down in Houston, I hope that you 

make sure that your men and women know that we really mean 

that. We are so very, very proud of them, and we want to do everything we can to support them. 

Admiral ALLEN. Yes, sir. Your hope has made it throughout the 

Coast Guard, sir. 

Mr. CUMMINGS. Thank you very much. 

Inspector General Skinner? Mr. Skinner, how are you? 

Mr. SKINNER. Fine, thank you. 

Mr. CUMMINGS. Thank you very much for being with us. 

Mr. SKINNER. It is my pleasure and thank you and good afternoon, Mr. Chairman and Members of the Committee. 

Today, I have with me, Rich Johnson who is our Project Manager 

providing audit oversight for our Coast Guard operations, and I am 

pleased to have Rich next to me to answer any technical questions 

you may have about any of our work. 

When I last appeared before this Subcommittee over three 

months ago, I talked about our acquisition management concerns 

associated with the Deepwater program and how they affected the 

modernization of key Coast Guard assets and systems. 

I would like to take this opportunity today to talk about the 

Coast Guard’s ongoing and future challenges in their efforts to improve the management of this very important and complex acquisition initiative. 

31

We previously identified several problems in our audits of assets 

and IT systems being acquired under the Deepwater contract. 

These deficiencies contributed to schedule delays, cost increases 

and assets designs that did not meet minimum Deepwater performance specifications. 

As you heard today from Admiral Allen, the Coast Guard recognizes these challenges and, through its recently published Blueprint for Acquisition Reform, is taking aggressive action to 

strengthen program management and oversight. The Blueprint, 

among other things, outlines the Coast Guard’s plans for reorganizing and rebuilding its acquisition workforce. We are encouraged 

that the Coast Guard recognizes these challenges and is beginning 

to take aggressive action to strengthen its acquisition management 

capabilities. 

However, many of these corrective measures will take time, such 

as building a procurement workforce to manage the broad scope 

and complexity of the program. There is considerable risk associated with the Coast Guard assuming the lead systems integrator 

role at this time before having fully implemented its Blueprint for 

Acquisition Reform. If all goes as planned, the Coast Guard’s Blueprint will not be fully implemented until fiscal year 2010. 

In the meantime, this month, the Coast Guard is planning to 

move ahead with the second phase of the Deepwater contract which 

will entail the estimated expenditure of more than $3 billion over 

a 43 month period. We believe the Coast Guard should exercise 

caution and take a slower or phased approach to assuming the systems integrator role, taking advantage of all the tools at its disposal to mitigate risk and to avoid future problems. 

At a minimum, the Coast Guard needs to develop a performance 

baseline, that is, something against which they can measure the 

progress being made to achieve the goals outlined in the Blueprint. 

These include the specific numbers and types of acquisition professionals needed, when they are scheduled to arrive on board and the 

financial costs associated with the realignment, reorganization, retraining and rebuilding of its acquisition workforce. 

We are also concerned that the Coast Guard may have difficulty 

resolving the structural design and performance issues associated 

with National Security Cutters 1 and 2. For example, the Coast 

Guard stated that it plans to go ahead with construction of cutter 

3 before it determines the actual cost of the structural modifications to cutters 1 and 2 as well as cutters 3 through 8 and the impact these modifications will have on its operational performance 

requirements. 

Consequently, there is a possibility that the required changes to 

all eight cutters could be cost-prohibitive or result in a reduction 

in operational capability. The cost and operational impact of structural modifications to all of the cutters should be identified and 

evaluated fully before the Coast Guard authorizes any future construction. 

Finally, we continue to identify other issues that may impact 

Deepwater costs and inhibit the Coast Guard’s ability to perform 

its mission. The Coast Guard’s acquisition of a vertical unmanned 

aerial vehicle is a case in point. Originally, the Coast Guard intended the VUAV to significantly increase the aerial surveillance 

32

of the National Security Cutter from 13,800 square nautical miles 

to 58,000 square nautical miles, a four-fold increase in surveillance 

capability. Acquiring the VUAV was also a major reason why the 

Coast Guard elected to build eight versus twelve cutters. 

To date, the Coast Guard has obligated over $114 million to the 

project with very little to show for it. It is not yet clear exactly 

when the VUAV will come online and how the Deepwater system 

of systems approach to acquisition will make up for this lost capability. 

Another concern that we have deals with the needed modifications to the HH-65 helicopter fleet to enable the helicopters to deploy and be stowed safely on the National Security Cutter. The 

Coast Guard estimates that it could take as long as 5 years and 

an estimated 55 million to install such a system on the entire fleet. 

Again, this is an integral part of the cutter’s system of systems capability. 

To date, however, no funding has been available for this project. 

Consequently, the Coast Guard will be unable to fully test the 

interoperability of the ship’s systems with the HH-65 when National Security Cutter 1 undergoes builder sea trials and operational tests that are scheduled to begin, as you heard, early next 

year. 

In conclusion, the Coast Guard is to be commended for the steps 

it has taken to regain control of the Deepwater program and the 

improvements it is making to its acquisition management function. 

When fully implemented, these actions should mitigate many of the 

cost, schedule and performance risks identified with the Deepwater 

program. 

Nevertheless, we must keep in mind that these changes are in 

their infant stage. A lot can go wrong before they are fully implemented. The Deepwater program will continue to require the highest levels of planning, coordination and oversight to be fully successful. 

Mr. Chairman, Members, this concludes my remarks. I will be 

happy to answer any questions. 

Mr. CUMMINGS. Thank you very much, Mr. Skinner, and I want 

to thank you for your very thorough work. We really appreciate it. 

You have been extremely, extremely helpful. 

Let me ask you this. I think we all know the problem generally. 

On the one hand, you have got the Coast Guard that is trying to 

get this contract complete to get performance. They are also coming 

under a lot of pressure from the Members of Congress, and they 

need this equipment. 

So we have got the ICGS. We see what the problems have been 

with them. I guess what is happening is that the Coast Guard is 

saying, okay, things didn’t work out. So now we are going to do it. 

I am just trying to figure out, on the one hand, I think almost 

all of us have concerns, the same concerns that you have. Are they 

ready to do this, even in the time period? 

As I listened to the Admiral and I didn’t get a chance to ask him. 

I didn’t think of it until after he left actually. If we are bringing 

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ians, to do this oversight of the contracts, the question becomes, 

who are we bringing? 

In other words, are those people going to be really qualified to 

do this job or is there a steep learning curve? You may not even 

have the answers to these questions. 

But then on the other hand, on the other side of it, Mr. Skinner, 

you have a situation where they are saying, well, we just can’t keep 

doing what we are doing because what we have been doing doesn’t 

work. 

I think that is the problem. They are trying to say get away from 

the ICGS because there has been embarrassment. There have been 

problems and whatever. But then the question is becoming, are 

they moving too fast into taking it over themselves? 

Is that a fair statement? 

Mr. SKINNER. That is correct. That is one of the concerns, and 

that is one of the issues we have discussed with Admiral Allen and 

his executive team. We agree that a transitional period moving 

from the ICGS to the Coast Guard assuming the integrator role is 

probably a wise decision. However, we need to proceed with caution. 

I think we are seeing what the Coast Guard is currently doing. 

They are, in fact, proceeding with caution. For example, the Admiral that they are bringing in the Navy to fill in some gaps, operational gaps, management gaps. 

They are using the integrator, the ICGS, that is, to continue to 

work on those contracts that are currently in place without giving 

them necessarily new contracts. Instead of providing task orders, 

which they did in the past for five years, in this case 43 months, 

they are providing them task orders for 18 months so that they can 

better manage and control how the ICGS continues to do the work 

that it now has responsibility for or any future work that it may 

have responsibility for. 

But it is something that needs to be closely monitored. It is 

something that requires the highest level of management attention 

as we move forward. 

Are we moving too fast, that is, are we tasking our contractors 

to do more work than we are able or faster than our ability to manage them? That is something that needs to be taken into consideration every time they issue a tasking order or a task order. 

Mr. CUMMINGS. Now, considering what you just said, what would 

make you feel more comfortable? 

I understand what you are saying is maybe we need to slow 

down this process a little bit. Maybe we need to be a little more 

careful. Do you see a role, let us say under ideal circumstances, 

while making that transition? Do you see a significant role for the 

ICGS team or would you have something else in place to try to 

make sure that things still flow nicely while we are building up 

within the Coast Guard? 

Mr. SKINNER. There is no question there is a continuing role for 

the ICGS. 

Mr. CUMMINGS. What would that be? 

Mr. SKINNER. They have contracts, for example, outstanding 

right now. In actually systems integration, for example, there are 

things that they have been heavily involved in, and they probably 

34

can do a better job at this point in time than anyone in Government can do. We don’t want to halt that work. 

There are some successes under this Deepwater program. Unfortunately, those get overshadowed by all the failures that we have 

had. The systems integration work, for example, is something they 

can continue to do. We just don’t want to cut them off, and there 

may be other work that they might be able to do. I don’t want to 

speculate what that could be or what that would be or what they 

couldn’t do. 

But, nonetheless, each time there is a tasking, I think the Coast 

Guard needs to be more intricately involved in the decision-making 

as to whether we want to go sole source with the ICGS or whether 

we want to look outside ICGS to procure those assets, for example, 

the FRC B. I think they are going outside the Deepwater program. 

Mr. CUMMINGS. Yes. 

Mr. SKINNER. I think that is probably a wise decision. 

Mr. CUMMINGS. Has the Coast Guard, to your knowledge, experienced challenges recruiting and retaining qualified acquisitions 

professionals? 

Mr. SKINNER. Like I said, this initiative in acquisition management, this program, is in its infant stages. It is too early to tell 

whether they are going to see challenges. If they experience anything like what we have experienced in other parts of the department, in CBP, for example, or in FEMA as another example or, for 

that matter, Government-wide, they are going to experience considerable problems in bringing the right mix of expertise to the table 

that can do these jobs. 

Mr. CUMMINGS. Earlier, I talked about some problems that have 

been experienced by the Coast Guard with regard to Deepwater. It 

seems as if while we know that there have been some successes, 

we also know that there have been a number of things that have 

been touched in this process that simply have not worked. I think 

that we as human beings expect that there are going to be failures. 

That is part of life. 

But when you see them over and over and over again, then you 

have to begin to ask the question, is there something wrong with 

the system or the systems? Is there something wrong with the personnel? Is there something wrong with the leadership? 

The question is with the Admiral having done all the things that 

he has stated. I know his intentions are great. We believe in him. 

Do we still have the elements of whatever caused us to get to 

where we are? With the mistakes and the problems, are they still 

present? 

Does that make sense? 

Mr. SKINNER. Yes, it does. I think I understand where you are 

going. If we don’t continue to focus on the management of this program—it is a 24, 25 year program—we can revert back and start 

experiencing the same problems that we experienced in the first 5 

years. 

A lot of it has to do with leadership and a commitment to manage, and Admiral Allen, I believe, has made that commitment. But 

like we all know, that is a four year appointment. That commitment needs to be carried forward to ensure that the resources are 

35

maintained to provide the oversight and the management of this 

initiative or we could revert back to where we were. 

We are making progress. We are in an infant stage. There is a 

long way to go before we can say that we have this Deepwater program under control. 

Mr. CUMMINGS. You heard my questions of Admiral Allen, as a 

matter of fact, my last set of questions with regard to NSC 1, NSC 

2 and then NSC 3. I was concerned because it sounds like there 

are some issues with NSC 1 and 2. 

Can you comment on some of the things that he said? I mean the 

things they are doing, for example, to mitigate any problems that 

there might be with NSC 1 and 2. 

Mr. SKINNER. Yes. 

Mr. CUMMINGS. And do you have concerns? 

Mr. SKINNER. We have concerns. Admiral Allen’s comments, I believe, were at the 30,000 foot level, and the devil is in the details. 

Our concerns are, one, they say the Coast Guard has an engineering solution to mitigate or to fix cutter 1 and cutter 2. Our concern 

is what impact is that going to have on your operational performance capability and also how much is it going to cost? 

When I say operational capability because these ships are going 

to have to be taken offline. They are going to have to be taken offline for an extensive period of time somewhere down the road, 

probably within their first four or five years. When they start retrofitting these ships, they are not going to be in operation. 

We are only going to build eight of these cutters. We are taking 

two offline in the first five years. That leaves us with six, and that 

raises concern. 

Mr. CUMMINGS. Where do you get the five years from? Why do 

you say five years? 

Mr. SKINNER. I believe it is our understanding that generally a 

new ship that goes out to sea is usually brought back in for maintenance and repairs and just to check to see how it is operating at 

sea, and generally that is done in four or five years. That may be 

a Navy standard. 

Mr. CUMMINGS. I got you. 

Mr. SKINNER. Somewhere along the way, someone within the 

Coast Guard in their engineering area has told us that. 

Mr. CUMMINGS. Okay. 

Mr. SKINNER. It could be sooner. 

Mr. CUMMINGS. I understand, but you raised a very, very significant issue. 

When I was talking to Admiral Allen, as best I can remember, 

he was talking about immediate safety problems, and you are talking about not necessarily immediate safety problems but definite 

problems. He, I think, was trying to distinguish that with regard 

to long term fatigue. I think that is what he was trying to do. 

Mr. SKINNER. Yes. 

Mr. CUMMINGS. So what you are saying, though, is that there are 

concerns because they are going to bring them back in and they are 

going to probably be in some kind of trouble. That is going to take 

them offline, and then we are going to have to start over again, at 

least do some serious work. 

36

Then we are going to have another bill, by the way. Let us not 

forget the bill where folks are going to make some decent money 

and the American people are going to pay. 

Is there something that you all would recommend different than 

what he said? 

Mr. SKINNER. What we are suggesting is that I think the Coast 

Guard needs to step back, analyze what the total costs are associated with retrofitting 1 and 2 to ensure that they meet the performance specifications and the costs associated with the design 

changes to 3 through 8, plus look at the operational limitations 

these design changes may or may not have on their performance 

capability as well as the impact it will have on their operational 

capabilities when 1 and 2 are taken offline for extensive repairs 

somewhere down the road, anywhere from 2 to 4 or 5 years. We 

have heard different figures from different sources. 

Once they are equipped with that knowledge, then they can 

make an informed decision or have a business case as to whether 

they want to proceed with the construction of 3 through 8 or look 

for other alternatives. 

Mr. CUMMINGS. I will have some more questions. 

Mr. LoBiondo? 

Mr. LOBIONDO. Thank you, Mr. Chairman. 

Mr. Skinner, thank you for being here. 

You asked some of the questions, Mr. Chairman, that I had outlined. 

Mr. Skinner, Admiral Allen has proposed and is in the process 

of implementing significant modifications to the Deepwater program which will establish the Coast Guard as the lead system integrator and reassert the Coast Guard technical authority over Deepwater projects and hopefully enhance the Coast Guard’s oversight 

over all facets of the program. 

What, in your mind, are additional steps that the Coast Guard 

can take to further improve its management and oversight of the 

program? 

Mr. SKINNER. Incidentally, these things that you just referred to 

are things that we recommended in prior audit reports. Thank you 

for the question. 

It goes beyond more than just reorganizing which is something 

that we think they need to do, reasserting a technical authority. 

But there are things like they need to ensure that we have third 

party certification of our designs as we move forward. We should 

not be self-certifying. We should have third party or an independent. 

Mr. LOBIONDO. Excuse me. What would an example be? 

Mr. SKINNER. You can go to Carderock, for example. There is the 

private sector as well that can provide such certification but 

Carderock for dealing with the ships, the national cutters and any 

others that we may be bringing in that are state of the art, first 

line cutters in the out years. 

There is the self-certification, technical authority. The acquisition 

reorganization, of course, is something that we talked about. 

There is also the contract itself needs to be rewritten to ensure 

that the Coast Guard. Now I understand these are the things that 

were told, that these are the things that are going to be written 

37

into the new contract or the Phase 2 contract for the 43 month contract that we referenced earlier that will give the Coast Guard additional authority, that will clearly define what we expect. We can 

do a better job of defining our specifications and ensuring that the 

contractor in fact meets the performance requirements. 

There is a whole series of things that goes along with just the 

reorganization. It is the management of the contracts. It is the way 

the contract is written. It is the definition, the specificity that we 

have in our taskings so that when we to back, we can say this is 

not what we asked for. 

We found ourselves in trouble with the 123 retrofits because we 

were not that specific. When we went back and said this is not 

what we ordered and we looked at the requirements of the contract, it was so vague. We couldn’t hold the contractor accountable. 

Mr. LOBIONDO. What do you see as the risks associated for the 

Coast Guard with taking on the role of lead system integrator in 

the middle of the 25 year acquisition process? 

Mr. SKINNER. It is highly risky, and that is why we suggest that 

they take a deep breath and they proceed with caution and they 

do it in a very phased approach. This is something that I believe 

Admiral Allen and the Coast Guard recognize that it can be very 

risky if they move too quickly. 

They are now using. They are not just going to eliminate the 

ICGS. They are going to phase them out over time, and in the interim they are also going to rely very heavily on resources from the 

Navy, for example, to fill any gaps in management or oversight, 

give them the oversight capability of any new taskings that may 

be coming down the road. 

But if we don’t do it in a very phased, cautious manner, we could 

get in trouble. It is too early now to predict whether we are moving 

too fast. Our assessment right now is that we are in fact moving 

in a very cautious manner. 

Mr. LOBIONDO. How do you see the potential liability for costs 

associated with delays, modifications and potential asset failure to 

be shared between the parties under the new arrangement? 

Mr. SKINNER. It is very important that the Government clearly 

defines what it is asking for. If we clearly define what we are asking for and before we take delivery of any products, we obtain expert certification that this is what we were asking for, then I believe that the contractor has 100 percent responsibility to give us 

that. If they don’t, they need to be held liable. 

Our biggest problem now is or has been that we don’t clearly define what we are asking for, up-front, before we issue the tasking 

or at the time we issue the task order. So, therefore, when delivery 

is made, we are not in a position to hold the contractor accountable. 

Mr. LOBIONDO. Mr. Chairman, do I have time for a couple more 

questions. 

Mr. CUMMINGS. Please. 

Mr. LOBIONDO. Mr. Skinner, the Coast Guard obviously is in the 

process of significantly increasing its acquisition and contracting 

staff to carry out the increased responsibilities associated with the 

assumption of the lead system integrator role. What do you think 

about the Coast Guard having the resources necessary to carry out 

38

this buildup without negatively impacting other acquisitions and 

operations? 

Mr. SKINNER. I don’t think it should impact. For one thing, under 

the reorganization, acquisition is going to be under one directorate. 

That is one thing. 

Secondly, this buildup should not have an impact on any other 

of their acquisition functions. If anything, it would complement any 

other acquisition activities they may have ongoing outside of Deepwater. But I wouldn’t see that having any type of negative impact. 

Our concern is you are not going to be able to build up that capability easily. It is not just a matter of hiring people. It is a matter 

of hiring the right mix of people, getting them, training them and 

retaining them. 

Mr. LOBIONDO. That leads to my next question. What do you 

think about the Coast Guard’s ability to attract and retain the tremendously qualified acquisition and contracting personnel that 

Deepwater requires? 

Mr. SKINNER. It is going to be very, very difficult. We are experiencing these problems in other parts of the Department of Homeland Security, most notably in CBP, Customs Border and Patrol, 

and within FEMA. It is going to be a difficult task. 

We are competing not only with ourselves in the Department, 

but we are also competing with other Federal agencies which also 

are strapped and are short of acquisitions types, and we are also 

competing with the private sector. It is not going to be an easy 

task. 

Mr. LOBIONDO. Having the continuum of information and background is going to be critical along with the expertise, isn’t it? 

Mr. SKINNER. Yes. You can bring in contracting officers that have 

contracting experience but not necessarily the type of Coast Guardrelated experience, but nonetheless that expertise is invaluable as 

well. You need people to come in that have not necessarily Coast 

Guard experience but naval military or the type of acquisition experience associated with buying, retrofitting or building ships, airplanes, things that are necessary to modernize the Coast Guard’s 

fleet. 

The IT area is another area that is going to be very challenging 

as well, there primarily because of the competition we have with 

the private sector, we in the Federal Government, that is. You 

don’t necessarily have to come through the ranks of the Coast 

Guard to have an appreciation for systems communications and 

things of that nature. Those things can be learned on the job. 

Mr. LOBIONDO. Mr. Chairman, it seems to me that is real critical 

point. I am not sure if Admiral Allen addressed that. I might respectfully request that you consider asking him about not only attracting the top-flight people that are necessary but the plan to 

keep them on board so that while the best laid plans are there, if 

we have gaps in service, we could experience further problems. 

Mr. Skinner, thank you very much. 

Mr. Chairman, thank you. 

Mr. CUMMINGS. Thank you. I will do that. 

I am going to go back to what I started with because we have 

got a little bit of a dilemma here, I think, and I want some clarity. 

39

On the one hand, we have a team that has been in place doing 

this, that the results of their efforts have not been stellar. Is that 

a fair statement? 

Mr. SKINNER. Yes. 

Mr. CUMMINGS. On the other hand, we are trying to get to a 

place where the Coast Guard can do the work of the integrator 

team. Is that a fair statement? 

Mr. SKINNER. Yes. 

Mr. CUMMINGS. This is a piece that I found interesting, and I 

don’t know whether you find it interesting or not. We just heard 

the Admiral provide testimony about rescinding the 123s and to my 

knowledge—to my knowledge—nobody has ever told me anything 

different. We scrapped I guess more than about $100 million 

worth? How much was that? 

The scrapping process, how much did we scrap? Do you know 

what that was worth? 

Mr. SKINNER. No, I don’t. 

Mr. CUMMINGS. Okay, well, millions, tens of millions. 

Mr. SKINNER. Yes. 

Mr. CUMMINGS. Do you know whether anybody in the present 

team was fired or demoted, the present team? 

Mr. SKINNER. Not that I am aware of. We have to understand 

when we talk about the present team and the performance was not 

stellar, we have to understand that oft times their hands were tied 

because of the terms and conditions on the contract under which 

they were operating which left the ICGS, giving them ultimate authority to make final decisions as to go, no go. 

Mr. CUMMINGS. I got you. 

Mr. SKINNER. And so, it is not the people within the Coast Guard 

per se. Matter of fact, there were some very good people who came 

forward and complained to us about this which brought it to our 

attention, some of the problems. 

Mr. CUMMINGS. Is it a good idea to leave things as they are then 

or as they have been? 

Mr. SKINNER. No, no. 

Mr. CUMMINGS. Why do you say that? 

Mr. SKINNER. The Coast Guard needs to assume control over the 

program. As I testified, I believe three or four months ago, they 

were content to ride shotgun and turn over the reins to the integrator, allowing them to define what your requirements are and to 

deliver, make the ultimate decisions as to what we are going to deliver, when we are going to deliver it, how much it is going to cost 

and who is going to deliver it to you. 

The Coast Guard just relied too heavily on the integrator to 

make its decisions for them, and that is where we need to turn the 

pendulum. The Coast Guard needs to get more actively engaged in 

making those decisions. 

Mr. CUMMINGS. Right now, because that is what we have got to 

deal with, we are trying to figure out where we are going to be, 

where we are proceeding in the next year. What do you see as 

being the role of the integrator team once again? 

See, it sounds like you are saying on the one hand. I don’t what 

to misunderstand you. 

40

On the one hand, the Coast Guard needs to slow down. On the 

other hand, we have got the integrator team over here saying, 

okay, I am just hypothetically saying, well, things may not have 

gone right, but we will stay in the ball game, coach. 

I am just trying to figure out what role would they be playing 

while we are slowly proceeding and carefully proceeding to take 

over, that is, the Coast Guard take over? 

Mr. SKINNER. Yes, and there is where the devil is in the details. 

We have an acquisition blueprint, the Blueprint for Acquisition Reform. That is a strategic plan. We need, you need detail. The Coast 

Guard needs detail. 

Now, it is my understanding, and I think Admiral Allen did allude to it at the end of his testimony, that they are developing an 

operational performance baseline plan which will set forth: these 

are the things we intend to do. These are the people that are going 

to do it. These are the things that are going to remain with ICGS, 

for example, some of its IT capabilities or the NSC capabilities. 

These are the things that we are going to take outside of the Deepwater, and these are the things we are going to keep in Deepwater 

but we are going to do ourselves. 

We don’t have that right now. 

Mr. CUMMINGS. I guess it sounds like this 18 month proposal as 

opposed to 43 months that the Admiral talked about, is that a good 

idea in that it gives you a shorter assessment time? 

In other words, you see how things go, how we are doing. Then 

you go back and say, okay, this is what we do. Instead of waiting 

43 months which is about, what, three times the time? 

Mr. SKINNER. Yes. The first time I heard about the 18 month 

thing was today, and I think that is an excellent idea because that 

gives the Coast Guard an exit ramp or an exit clause to say, we 

don’t like where you are headed here, and so therefore we are just 

going to sever this particular. We are just going to take away from 

you, this particular tasking. 

It is somewhat modeled after what we are doing in the SPINET 

program. Instead of entering into a three to five year contract, we 

are doing this in a very incremental basis and a phased approach. 

And so, at any point in time, in a short period of time, if we don’t 

like the progress we are making, you can pull out without penalty. 

Mr. CUMMINGS. Based upon what you just said—I guess this 

might be difficult to answer—do you have any idea when the Coast 

Guard might be ready to take over as the full integrator? 

Mr. SKINNER. It would only be speculation. 

Mr. CUMMINGS. Yes. 

Mr. SKINNER. It is going to some time. I don’t think it is anything. It is going to happen in the next two to three years because 

they are going through a major reorganization. It is also a cultural 

shock for many people in the Coast Guard. 

It is not the numbers so much that we are concerned about. It 

is the mix of expertise that you have to ensure continuity, to ensure continuity on the integrated project teams. You don’t want 

people coming in and out every two years. You want people, civilians that are in there that can lend continuity to this whole thing, 

and it is going to take time, two to three years at a minimum. 

41

Mr. CUMMINGS. Let me say this, and then I am finished. One of 

the things I think that has concerned me over and over again, and 

I said it in my opening statement, is as far as I am concerned this 

is the greatest country in the world. 

I tell you when I went to see the 123s. I am not a ship guy, but 

when I went to see them and I saw the buckling and whatever, I 

have seen yachts that were bigger. I said to myself, how in the 

world couldn’t we get this right? We send people to the moon. 

Then today when I listened to the Admiral, I must admit that 

I had some flashbacks because I thought about the NSC 1 and NSC 

2, and really not under our watch do I want to see us go backwards. Under our watch, I want to see us go forward. 

That is why your testimony and the work of your staff, and I 

hope you will convey this to them, has been incredible. So often, 

our public servants do not get their due, but I really mean it. You 

all have been working with our staff. You have been absolutely 

great, and I just want you to know. 

Again, I know there are people working behind the scenes that 

we never see. I know that. 

Mr. SKINNER. Yes, and one of them is sitting next to me at the 

moment. 

Mr. CUMMINGS. Mr. Johnson, thank you very much and your 

team back there. The reason why I say that is because we couldn’t 

have done a number of things that we have been able to do without 

you. 

We are going to stay on top of this, and I am trying to stay away 

from a political thing because I think it is so much bigger than 

that. This is about our national security. 

I am very pleased. Mr. LoBiondo cannot imagine. I know he 

chaired this Committee, and his support and both sides have been 

great because I think we are all looking at the big picture, and I 

think everybody is trying to be fair across the board. 

But, in the end, we want to make sure that the Coast Guard has 

what it needs to do the job and that our personnel are safe on these 

vessels and these planes and these helicopters. 

Mr. LoBiondo, did you have anything? 

Mr. LOBIONDO. No, thank you, Mr. Chairman. 

Mr. Skinner and Mr. Johnson, thank you. 

Mr. CUMMINGS. Thank you very much. That ends this hearing. 

Mr. SKINNER. You are welcome. 

[Whereupon, at 1:14 p.m., the Subcommittee was adjourned.]

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36681.027
64


36681.028
65


36681.029
66


36681.030
67

Æ


36681.031