U.S. GOVERNMENT PUBLISHING OFFICE

31–123 PDF WASHINGTON : 2018

COAST GUARD MAJOR ACQUISITIONS 

(114–17) 

HEARING 

BEFORE THE

SUBCOMMITTEE ON 

COAST GUARD AND MARITIME TRANSPORTATION 

OF THE

COMMITTEE ON 

TRANSPORTATION AND 

INFRASTRUCTURE 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

MAY 14, 2015 

Printed for the use of the 

Committee on Transportation and Infrastructure 

( 

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

committee.action?chamber=house&committee=transportation 

(II) 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE 

BILL SHUSTER, Pennsylvania, Chairman 

DON YOUNG, Alaska 

JOHN J. DUNCAN, JR., Tennessee, 

Vice Chair 

JOHN L. MICA, Florida 

FRANK A. LOBIONDO, New Jersey 

SAM GRAVES, Missouri 

CANDICE S. MILLER, Michigan 

DUNCAN HUNTER, California 

ERIC A. ‘‘RICK’’ CRAWFORD, Arkansas 

LOU BARLETTA, Pennsylvania 

BLAKE FARENTHOLD, Texas 

BOB GIBBS, Ohio 

RICHARD L. HANNA, New York 

DANIEL WEBSTER, Florida 

JEFF DENHAM, California 

REID J. RIBBLE, Wisconsin 

THOMAS MASSIE, Kentucky 

TOM RICE, South Carolina 

MARK MEADOWS, North Carolina 

SCOTT PERRY, Pennsylvania 

RODNEY DAVIS, Illinois 

MARK SANFORD, South Carolina 

ROB WOODALL, Georgia 

TODD ROKITA, Indiana 

JOHN KATKO, New York 

BRIAN BABIN, Texas 

CRESENT HARDY, Nevada 

RYAN A. COSTELLO, Pennsylvania 

GARRET GRAVES, Louisiana 

MIMI WALTERS, California 

BARBARA COMSTOCK, Virginia 

CARLOS CURBELO, Florida 

DAVID ROUZER, North Carolina 

LEE M. ZELDIN, New York 

PETER A. DEFAZIO, Oregon 

ELEANOR HOLMES NORTON, District of 

Columbia 

JERROLD NADLER, New York 

CORRINE BROWN, Florida 

EDDIE BERNICE JOHNSON, Texas 

ELIJAH E. CUMMINGS, Maryland 

RICK LARSEN, Washington 

MICHAEL E. CAPUANO, Massachusetts 

GRACE F. NAPOLITANO, California 

DANIEL LIPINSKI, Illinois 

STEVE COHEN, Tennessee 

ALBIO SIRES, New Jersey 

DONNA F. EDWARDS, Maryland 

JOHN GARAMENDI, California 

ANDRE ́ CARSON, Indiana 

JANICE HAHN, California 

RICHARD M. NOLAN, Minnesota 

ANN KIRKPATRICK, Arizona 

DINA TITUS, Nevada 

SEAN PATRICK MALONEY, New York 

ELIZABETH H. ESTY, Connecticut 

LOIS FRANKEL, Florida 

CHERI BUSTOS, Illinois 

JARED HUFFMAN, California 

JULIA BROWNLEY, California 

SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION

DUNCAN HUNTER, California, Chairman 

DON YOUNG, Alaska 

FRANK A. LOBIONDO, New Jersey 

BOB GIBBS, Ohio 

MARK SANFORD, South Carolina 

GARRET GRAVES, Louisiana 

CARLOS CURBELO, Florida 

DAVID ROUZER, North Carolina 

LEE M. ZELDIN, New York 

BILL SHUSTER, Pennsylvania (Ex Officio) 

JOHN GARAMENDI, California 

ELIJAH E. CUMMINGS, Maryland 

CORRINE BROWN, Florida 

JANICE HAHN, California 

LOIS FRANKEL, Florida 

JULIA BROWNLEY, California 

PETER A. DEFAZIO, Oregon (Ex Officio) 

(III) 

CONTENTS Page 

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

TESTIMONY 

Rear Admiral Bruce D. Baffer, Assistant Commandant for Acquisition and 

Chief Acquisition Officer, U.S. Coast Guard ...................................................... 3 

Michele Mackin, Director, Acquisition and Sourcing Management, U.S. Government Accountability Office ............................................................................. 3 

James H. Offutt, National President, Navy League of the United States .......... 3 

PREPARED STATEMENTS SUBMITTED BY WITNESSES 

Rear Admiral Bruce D. Baffer ................................................................................ 30 

Michele Mackin ........................................................................................................ 36 

James H. Offutt ....................................................................................................... 53 

SUBMISSIONS FOR THE RECORD 

Rear Admiral Bruce D. Baffer, Assistant Commandant for Acquisition and 

Chief Acquisition Officer, U.S. Coast Guard, responses to requests for information from the following Representatives: 

Hon. Duncan Hunter of California requested the history for each of 

the U.S. Coast Guard’s major acquisition program baselines since 2005 14 

Hon. John Garamendi of California requested information regarding the 

U.S. Coast Guard’s role in issuing drill permits and Shell Oil’s Arctic 

drilling operations ......................................................................................... 21 

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(1) 

COAST GUARD MAJOR ACQUISITIONS 

THURSDAY, MAY 14, 2015 

HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON COAST GUARD

AND MARITIME TRANSPORTATION, 

COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE, 

Washington, DC. 

The subcommittee met, pursuant to notice, at 10:37 a.m. in room 

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

Mr. HUNTER. The subcommittee will come to order. The subcommittee is meeting today to review the Coast Guard’s major acquisition programs. 

As this subcommittee has continually highlighted, the Coast 

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

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

environment, and ensure the safety of our waterways. Last month, 

the subcommittee held a hearing on Coast Guard missions and 

heard from the Service’s vice admiral in charge of operations who 

attributed much of the failure to meet mission performance goals 

to not having a sufficient number of modern assets. 

The only way to reverse the decline in the Coast Guard’s mission 

performance is to make the necessary investments to acquire new 

and improved assets. Unfortunately, based on the fiscal year 2016 

budget request, as well as the fiscal year 2016 through 2020 CIP 

[Capital Investment Program], it appears the President refuses to 

make those investments. 

The President’s budget cuts funding needed to acquire critically 

needed replacement assets by 17 percent. The budget also fails to 

guarantee the funding needed to begin detailed design for the Offshore Patrol Cutter. Failure to move into detailed design on the 

OPC by the end of 2016 could result in significantly higher costs 

and substantial acquisition delays. Moving this and other acquisitions further to the right will only further degrade Coast Guard 

mission performance. 

Unfortunately, the situation does not improve any time in the 

near future. According to the Coast Guard’s Capital Investment 

Plan, over the next 5 years, annual funding for acquisitions never 

exceeds $1.2 billion. That is approximately $1 billion less than the 

GAO and the former Commandant of the Coast Guard have testified is needed on an annual basis to keep the current acquisition 

program on schedule and on budget. The CIP is nothing more than 

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a roadmap to additional acquisition delays, increased costs for taxpayers, and ongoing mission performance failures. 

I have said this for some time now: If the President is going to 

send us budgets that fail to pay for the assets needed to meet 

Coast Guard mission requirements, then it is time for him and the 

Coast Guard to review their mission requirements. That is why, in 

the last bill that we passed, the Howard Coble Coast Guard and 

Maritime Transportation Act of last year, required the Coast Guard 

to submit a revised Mission Need Statement to this committee. The 

Mission Need Statement is the underlying justification for the 

Service’s acquisition program. It lays out mission requirements and 

helps identify gaps in capabilities. So, if you don’t have the assets, 

you are not going to get the assets unless you change the mission 

to match the assets. 

The Coast Guard has assured the subcommittee that we will receive the revised Mission Need Statement in July. At that time, I 

intend to hold a hearing to review it and determine whether the 

administration intends to continue the charade of expanding Coast 

Guard mission requirements without providing the Coast Guard 

the assets it needs to meet those requirements. 

In the interim I look forward to today’s update on the status of 

the Coast Guard’s current acquisition programs and the challenges 

the Service is facing—we got our gavel, now we can—now we are 

a real subcommittee, that is good. 

[Laughter.] 

Mr. HUNTER. And the challenges that the Service is facing in 

fielding these new assets. 

I thank the witnesses for appearing today and look forward to 

their testimony. 

With that, I yield to Ranking Member Garamendi. 

Mr. GARAMENDI. Chairman, thank you very much. And, to your 

staff, thank you for meeting our need for caffeine and coffee. Appreciate that. 

I appreciate the opportunity to once again assess the Coast 

Guard’s ongoing efforts to recapitalize its surface, air, and communications assets. And nothing should be more important to this 

subcommittee than our responsibility to ensure that our Nation’s 

multimission military maritime law enforcement authority has the 

tools it needs to meet the many challenges it faces, day in and day 

out, off our shores and around the world. 

The Coast Guard’s Capital Investment Program, or CIP, is essentially a roadmap. The Coast Guard provides this plan to Congress 

to help guide our decisions on what and how much we should invest annually to fulfill the largest recapitalization program in the 

Service’s illustrious history. 

Fortunately, the Coast Guard has been able to make some important progress in this effort. For example, it has begun on the eighth 

and last National Security Cutter. Once built, this final hull will 

complete the transition from the legacy fleet of High Endurance 

Cutters to a new, modern cutter fleet that is fewer in number, but 

far more technologically capable than its predecessors. 

However, there are concerns. Regrettably, the Offshore Patrol 

Cutter, the largest and most expensive acquisition in the entire recapitalization effort, still remains a concept on the naval architect’s 

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drawing board, and is far, far away from entering production. Even 

some of the new assets that have been provided to the Coast 

Guard, such as the 14 C–27Js, aircraft, that were authorized to be 

transferred from the Air Force to the Coast Guard—and, by the 

way, good work, making that happen, thank you—to bring these 

new assets online is far too slow, raising the potential for future 

operational gaps in the Coast Guard’s fleet of fixed-wing patrol 

craft. 

And then there are other unmet needs. We can go on with a 

lengthy list—and I will—of planned or unplanned needs. Recapitalization of the Coast Guard’s—you will like this, Mr. Chairman— 

polar icebreaker—I think we have heard that discussed here many 

times—of well more than $1 billion possibly being spent on that. 

How are we going to get the money for that? Additionally, there is 

substantial backlog of unmet shoreside infrastructure needs that 

was last estimated at over $1.4 billion. 

And, while we should be pleased that the Coast Guard was able 

to complete the Mission Effectiveness Program, MEP, to extend the 

service life of its legacy fleet of Medium Endurance Cutters, the 

delays in the production of the new OPCs will almost certainly require yet another round of Mission Effectiveness Projects. And that 

is the challenge for Congress. 

Mr. Chairman, you were speaking about the President’s budget. 

And, indeed, it is too little. However, it is reflective of this thing 

called the Budget Control Act, otherwise known as sequestration, 

which is our problem that—we need to break through that, and 

find a much more rational way of funding the necessary governmental programs. 

Well, moving back to the Coast Guard, anything less than a fullon effort by the Coast Guard to meet its capital requirements 

isn’t—will leave the Coast Guard far short of always ready, semper 

paratus. But a Coast Guard that is a hollow vestige of the proud 

maritime institution that has served this Nation for very long is 

not what we want. And we share the responsibility of making sure 

the Coast Guard has what it needs to be always ready. 

I yield back, Mr. Chairman. 

Mr. HUNTER. Thank the gentleman from California. Our first 

witness today is Rear Admiral Bruce D. Baffer, the Coast Guard’s 

Assistant Commandant for Acquisition, and Chief Acquisition Officer. 

Admiral, you are recognized. 

TESTIMONY OF REAR ADMIRAL BRUCE D. BAFFER, ASSISTANT 

COMMANDANT FOR ACQUISITION AND CHIEF ACQUISITION 

OFFICER, U.S. COAST GUARD; MICHELE MACKIN, DIRECTOR, 

ACQUISITION AND SOURCING MANAGEMENT, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; AND JAMES H. OFFUTT, 

NATIONAL PRESIDENT, NAVY LEAGUE OF THE UNITED 

STATES 

Admiral BAFFER. Thank you, Mr. Chairman. Chairman Hunter, 

Ranking Member Garamendi, members of the subcommittee, good 

morning. Thank you for the opportunity to speak on Coast Guard 

recapitalization. On behalf of the Commandant, as well as the men 

and women of the Coast Guard, thank you for your oversight and 

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continued support of our Service. My complete statement has been 

provided, and I ask that it be entered into the record. 

The Coast Guard’s acquisition directorate is tasked with man- aging an annual portfolio in excess of $1 billion to deliver the goods 

and services the coastguardsmen need to perform their missions in 

the field. To these ends, we continue to invest in our acquisition 

enterprise, attracting talented professionals to the Coast Guard, 

maturing military and civilian career paths, and providing training 

and certification opportunities to grow and retrain our highly capable acquisition workforce. We formalized and documented our processes and procedures, and we are applying lessons learned. 

I would also like to acknowledge the very effective working relationship we enjoy with the Government Accountability Office. Over 

the last 14 years, Ms. Mackin has applied her leadership through 

numerous audits, helping the Coast Guard realize our vision as a 

model acquisition enterprise. 

I would also like to recognize the Navy League for their strong, 

ongoing support of the Coast Guard, both at the national and the 

local chapter levels. 

In short, we have been busy. Over just the past few months, we 

completed the program of record for the Response Boat-Medium, 

with delivery of the 174th boat. We completed acceptance trials in 

the fifth National Security Cutter, and awarded a contract for the 

production of the eighth and final cutter in the NSC program of 

record. We issued a request for proposals for full and open competition for the remaining 26 Fast Response Cutters, and took delivery 

of the seventh and eighth C–130J aircraft. 

The Commandant continues to make recapitalization one of his 

highest priorities, and, recognizing the budget environment, we are 

maximizing every dollar. To this end, we are emphasizing competition and affordability across the portfolio by employing DOD’s Better Buying Power Initiative, particularly focusing on competition, 

early industry engagement, fixed-price contracts, and affordability 

as a requirement. 

As an example, our highest priority acquisition program, the Offshore Patrol Cutter, has been structured to formally meet the 

Coast Guard’s most pressing offshore mission requirements 

through the use of commercial standards, fixed-price contracts, and 

state-of-the-market technologies. We are employing an acquisition 

strategy that maximizes competition and promotes the domestic 

shipbuilding industrial base by removing the traditional barriers to 

enter the military shipbuilding market. We will select a single contractor in fiscal year 2016 to complete the detailed design, and ultimately construct the vessel. 

On the aviation side, the Coast Guard is regenerating 14 C–27J 

medium-lift aircraft, providing much-needed maritime patrol capability. This subcommittee played a crucial role in facilitating the 

transfer from the Air Force to the Coast Guard, injecting additional 

capabilities a year ahead of schedule, and minimizing costs to taxpayers. 

I know the subcommittee is particularly interested in our efforts 

to increase icebreaking capability. As we continue to develop requirements for a new heavy icebreaker, we are also beginning the 

preservation and evaluation process on Polar Sea. There is no 

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question that the cost of acquiring a new icebreaker and potentially 

reactivating Polar Sea poses a particular challenge in this current 

budget environment. 

In closing, I am extremely proud to lead the dedicated professionals working tirelessly to ensure the Coast Guard has the capabilities to safely and affordably carry out our 11 statutory missions. 

Successful programs such as the NSC, FRC, HC–144, C–130J, RB– 

M, and Rescue 21 are providing mission capability now, and will 

be for decades to come. I am absolutely certain the OPC will be 

equally successful in meeting all of our performance and affordability requirements. But none of these successes happen without 

this subcommittee’s foresight and commitment. 

Thank you for the opportunity to testify today. I thank you for 

your steadfast support of our Coast Guard. I look forward to answering your questions. 

Mr. HUNTER. Thank you, Admiral. 

Our next witness today is Ms. Mackin, the GAO’s Director of Acquisition and Sourcing Management. 

You are recognized. 

Ms. MACKIN. Thank you, Mr. Chairman. Good morning, Ranking 

Member Garamendi, members of the subcommittee. Thank you for 

having me here today to discuss Coast Guard acquisitions. 

As we have noted in our recent reports, the Coast Guard has 

made strides in its acquisition management capabilities. As the admiral mentioned, competition has been injected into recent procurements, and new assets are being delivered to the operators. Key 

test events are also taking place. 

I will briefly touch on three issues this morning. First, the C–27J 

aircraft transfer and overall status of fixed-wing flight-hours; second, observations on the major cutter fleet; and third, I will discuss 

what we view as the most pressing concern facing the Coast Guard, 

which is the affordability of its acquisition portfolio. 

As you know, the Coast Guard is receiving 14 C–27Js from the 

Air Force at no cost. Once operational, these aircraft will contribute 

to Coast Guard missions. But it will take time and money to transfer them from storage, assess their condition, establish a spare 

parts pipeline, and modify them to meet Coast Guard missions. 

The full fleet of 14 operational aircraft is anticipated in 2022, and 

about $600 million will be needed to operationalize the fleet. 

A broader observation regarding the fixed-wing fleet is that, 

under the Coast Guard’s current plan, even with the C–27Js, the 

Coast Guard will fall almost 20 percent short of its annual flighthour goal, which is currently 52,400 hours. The Coast Guard is in 

the process, as was mentioned, of revisiting its 2005 Mission Needs 

Statement, and conducting a fleet mix analysis that may result in 

a different flight-hour goal, or different mix of aircraft. However, 

the fleet mix analysis will not be complete until 2019. 

Regarding surface assets, all eight National Security Cutters are 

on-contract or delivered, and the ship recently completed operational testing. A general observation there is that the NSC was 

determined operationally effective and suitable, but with several 

major deficiencies. And we are currently doing a more detailed review of the test at the request of the subcommittee. 

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To touch on other cutters, the Coast Guard is preparing to recompete the remaining 26 Fast Response Cutters, and it is also 

pursuing a competitive acquisition strategy for the Offshore Patrol 

Cutter. The Coast Guard plans to award a contract for design of 

the first tranche of these ships next year. However, the Coast 

Guard faces a significant gap between the projected delivery dates 

of the OPCs and the end-of-service life for the legacy Medium Endurance Cutters these ships are replacing. The Coast Guard is 

studying how to make the legacy cutters viable for a longer period 

to close this gap, but no decision has been made. 

Finally, the Coast Guard faces affordability challenges that are 

not reflected in the 5-year Capital Investment Plan. The primary 

driver, of course, is the OPC, expected to cost $12 billion, which 

will take up over two-thirds of the Coast Guard’s acquisition funding while it is being built. Our concern is that the Coast Guard has 

not set forth a long-term acquisition plan for its surface and aviation assets, such as the 20-year plan we recommended last year, 

and which this subcommittee also calls for in its Coast Guard Authorization Act. Such a plan should include necessary tradeoffs 

that reflect budget realities. 

We have recommended, since 2010, that the Coast Guard conduct 

this type of assessment. We believe this approach would help ensure that all stakeholders, including Congress, understand the constraints the Coast Guard is facing long term, and what it can realistically acquire at expected funding levels. 

Thank you. This concludes my statement, and I will be happy to 

answer questions at the appropriate time. 

Mr. HUNTER. Thank you, Ms. Mackin. 

Our final witness today is Mr. James Offutt, national president 

of the Navy League of the United States. 

Mr. Offutt, you are recognized. 

Mr. OFFUTT. Mr. Chairman, Mr. Garamendi, members of the 

committee, thank you for the opportunity to appear before you on 

such an important topic. I would like to submit my full testimony 

for the record. 

Mr. HUNTER. Without objection. 

Mr. OFFUTT. I offer an abbreviated version now, and look forward 

to your questions. 

The U.S. Coast Guard is a very unique service, with military and 

civil responsibilities, and humanitarian missions. The Coast Guard 

has seen its area of responsibility grow to 11 statutory missions. 

But its budget growth has not kept pace with this increase, failing 

to match mission demand or be adjusted for inflation. 

Despite their incredible record of achievement, the Coast Guard 

faces many familiar but daunting challenges. Increased Arctic activity, increased maritime transportation goods, and increased 

human and drug trafficking all add demands on the Coast Guard. 

The Service will not properly be equipped to meet these challenges 

unless we make serious investments now. 

The Coast Guard has been clear that it needs an acquisition 

budget of $2.5 billion per year to fulfill its mission. Unfortunately, 

the administration continually requests an acquisition budget that 

hovers at or below $1 billion, with Congress providing the extra 

funding. The administration’s low-budget request for acquisition, 

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construction, and improvements, or AC&I, represent the bare-minimum funding for the Coast Guard to accomplish its missions. The 

Navy League notes with disappointment that the requested funding level for fiscal year 2016 is totally unsatisfactory. Given the fiscal climate, the Navy League recommends a budget of at least $1.5 

billion per year, as this committee has authorized, to help the 

Coast Guard achieve its recapitalization goals. 

The highest AC&I priority for the Coast Guard is to lay the 

groundwork for construction of the Offshore Patrol Cutter, which 

will replace cutters built in the 1960s and 1980s. The importance 

of the OPC cannot be overstated. It will function as a Service operational workhorse to carry out the Coast Guard’s primary missions 

over the next 40 years. Given the magnitude of the impending capability gap caused by the cutters, the Navy League believes Congress should fund the construction of two OPCs, annually. 

Facing more complex challenges and growing demand signal, 

Coast Guard will need Fast Response Cutters acquired at six per 

year. What a great ship. I visited one in Key West. The capabilities 

are multiple times the cutters that they are replacing. I am amazed 

at the bridge. The bridge has a very modern layout, makes the 

seakeeping very easy, and greatly reduces that seakeeping workload, and allows the crew to concentrate more on a mission. 

The National Security Cutter acquisition success story. These 

cutters work well in far-off regions, and provide better seakeeping, 

higher sustained transit speeds, and greater endurance and range. 

They also provide an increased array of mission versatility, among 

their other benefits. 

The Navy League is concerned with the increasing capability gap 

caused by the rapid decommissioning of operational assets before 

replacements are available. This cost-driven strategy is not in the 

best interest of homeland security. The answer is new ships sooner. 

The old ones cannot be run effectively. And, in some cases, can’t 

be run safely. 

On the aviation front the Coast Guard will begin using the C– 

27J aircraft acquired through the interservice transfer. It will save 

about a half a billion dollars in acquisition costs. It is a great example of interservice cooperation. 

In the near future, the Coast Guard will need to make significant 

investments in its unmanned aircraft systems. This will be a significant part of the total force package for major cutters. 

The Coast Guard still faces many of the same challenges that 

come with every major acquisition program, including increased 

costs, driven by material cost increases and less-than-optimum production runs. However, these increased costs have not been met 

with increased funds, meaning program delays which, in turn, increase costs for in-service vessel sustainment. This diverts alreadylimited funds from acquisition, further exacerbating the funding 

shortfall. 

Shore infrastructure repairs are estimated to cost $1.4 billion, 

but the Coast Guard has only been given about $40 million a year 

for this needed investment. The costs are increasing faster than the 

Coast Guard can pay—yet another devastating cycle. 

The need for a new polar icebreaker deserves special consideration. The Coast Guard must have a sustained presence there. We 

8 

need to invest more, but we cannot allow this investment to disrupt 

other planned capitalization. The top line of the acquisition budget 

must increase. The committee could also consider a special fund 

outside the normal AC&I budget for an icebreaker similar to the 

National Sea-Based Strategic Deterrence Fund, created for the National Defense Authorization Act. The alternative is not funding a 

new polar icebreaker, and is a U.S. abdication of Arctic influence 

and responsibility. 

All the major decisionmakers have agreed the Coast Guard’s recapitalization and modernization at current funding levels will not 

sustain the Coast Guard mission. We recognize the fiscal environment. But, given the role of the Coast Guard, saving American 

lives, safeguarding our national security, and contributing to economic prosperity by ensuring the free flow of commerce, we believe 

the Service deserves special consideration. 

In his annual address, the Commandant stated the Coast Guard 

has lost nearly 40 percent of our acquisition budget over the last 

4 years. This pattern can no longer continue. The lack of assets and 

presence where needed causes the Coast Guard to make tough decisions every day about which mission to support. 

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

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

shipmates to all of them, as they have been to every American. 

Thank you, sir. 

Mr. HUNTER. Thank you very much for your testimony. All of 

you, thank you very much. 

The point of this hearing is to get to how we get you the most 

stuff, with the least amount of money, on time. That is the point 

of this, I guess. And finishing, or piggybacking on what Mr. Offutt 

said, if the Coast Guard is making—and the GAO has said that the 

Coast Guard makes tradeoffs within the annual budget process 

every year. We have heard that from you before. It is not a good 

strategy, long term. And I would like you to tell us why, number 

one. 

And, number two, what does the Coast Guard risk by doing it 

like that every year? Thank you. 

Ms. MACKIN. Mr. Chairman, you are right. We have said that for, 

actually, a number of years now. What they risk by this every year, 

when the budget comes through, is, obviously, delaying some assets. We have seen that recently, with the Fast Response Cutter, 

which will lead to more costs down the road. 

What we would like to see, as we have said for a number of 

years, is a long-term plan that sets forth what is needed and, importantly, addresses these tradeoffs that can be made, so that everybody—there is transparency. Everybody can see what is coming 

down the pike, what is needed to pay for it, and what some of the 

tradeoff options might be. 

Mr. HUNTER. And again, what are the downsides? If they don’t 

do it through their CIP, and they do it every year, and react quickly to whatever the budget request is from the President and our 

authorization appropriations, what do they risk? 

Ms. MACKIN. The risk is that they had, for example, planned to 

buy six Fast Response Cutters a year. The budget comes in less 

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than they had expected. They have to stretch the procurement out. 

That is just an example. That could happen in any number of different programs. 

So, stretching out schedule means operators aren’t getting the 

assets on the schedule that they had expected them. And it can 

also lead to increased costs. 

Mr. HUNTER. Admiral, one question here. Based on the CIP that 

you have now, and kind of along this same line of thought, what 

programs of record, what acquisition items, will be delivered on 

time? 

Admiral BAFFER. We are delivering all of our acquisition programs on time right now. 

Mr. HUNTER. So everything? 

Admiral BAFFER. The problem is what is the baseline. When we 

have to change the schedule based on funding, then they get 

pushed to the right. 

So, if you look back at the original baseline, they are delayed. 

But if you look at what they require, based on that funding level, 

they are delivering on time. We are delivering on time and on 

budget. 

Mr. HUNTER. So you are saying—when you change the schedule 

to match the budget, then things are on time in the new schedule. 

If you use an old schedule, an original one, then things are no 

longer on time. 

Admiral BAFFER. Yes, sir. 

Mr. HUNTER. OK. 

Admiral BAFFER. That is correct. And what happens is, when we 

stretch them out, that lack of predictable funding increases costs 

for the program. Time cost money, especially on a major program. 

And, as we stretch them out, you still incur the overhead and the 

fixed costs that go along with that production. 

Let me just give you an example. We have got the same team 

building NSCs right now, where we have got four of them on contract that we did when we only had one on contract. So we are able 

to apply that same overhead, the same oversight, to a greater number of cutters, greater number of assets. So the per-unit cost is 

much more efficient when you can build them fast. When we 

spread them out it slows it down. And then that increases the perunit cost. 

Ms. MACKIN. I think what he said is absolutely right. It is that 

churn every year that, in the past, has led to having to do new 

baselines every year, which is not a small thing to undertake, to 

reflect the stretched-out schedules. That is just not the most efficient way to operate an acquisition program. 

Mr. HUNTER. So, fill me in, then. Out of ignorance—because I 

don’t know—how do you compare—if you are trying to compare 

whether you are on time or not, and whether programs are being 

delivered on time, how do you do that if your schedule—what baseline do you use? If you really wanted to get an accurate look at, 

originally, when are things supposed to be built, and being delivered, what baseline do you use? 

Admiral BAFFER. We use the currently approved APB, the Acquisition Project Baseline, that is approved by the Department. When 

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things get stretched out because of funding problems, that requires 

a new APB. Otherwise, you would go into breach. 

Mr. HUNTER. OK, so—but—right. But how do you tell if stuff is 

being delivered on time or not, based on—if you change the baseline every year, and you change the schedule to match the programs not being on time, but you change the schedule to match 

them, so that they are on time, how do you know which projects 

are really not on time? Meaning what is your—what original baseline do you use from 3 or 4 years ago? 

Admiral BAFFER. Well, it really—— 

Mr. HUNTER. Do you do that at all now? 

Admiral BAFFER. Well, yes, sir, we do. It comes down to what is 

the cause. If it is a funding delay or a contract delay, is it a program management problem or is it just—we didn’t have the funding to put it on contract? So, in the big picture, you would go back 

to the original baseline and say, we are behind in recapitalizing the 

Coast Guard because we haven’t built all these ships that we 

thought we were going to have built by this time, so we are behind. 

From a project manager’s point of view, contract management, 

what you bought, are you delivering, you know, within the contract 

that you said you were going to buy it to, you can manage to that 

and you are on time. But it is really—it is two separate timelines 

that you are managing to, and it is very difficult to keep them all 

straight. 

Mr. HUNTER. Got you. Thank you. 

Mr. Garamendi? 

Mr. GARAMENDI. Thank you, Mr. Chairman. I want to go to the 

heart of the question here. 

It appears as though—Ms. Mackin, if you could help me with 

this—that the maximum money needed annually is somewhere 

north of $2 billion for the acquisition programs, for all of it. 

Ms. MACKIN. That is approximately right. Again, based on the 

current Mission Need Statement and program of record, which, in 

essence, is the Deepwater program. So that is why we are—the 

Coast Guard is now revisiting that Mission Need Statement. That 

is important. We are still dealing, to a large extent, with a very 

dated Mission Need Statement. 

Mr. GARAMENDI. In your analysis, and for all three of you, the— 

there are two ways to get at this. You adjust the Mission Need 

Statement to the available money, or you adjust the Mission Need 

Statement to the available needs of the 11 statutory responsibilities. Which are you suggesting be done, which of those two options? 

Ms. MACKIN. Well, what we would really like to see, and as this 

subcommittee has also called for in the Authorization Act, is a 

long-term plan that sheds some light on what is needed over a 20- 

year period, and indicates what these tradeoffs need to be. And 

that way, decisionmakers at DHS and Congress can see what those 

tradeoffs are. With the current 5-year CIP or annual budget process, you don’t have that long-term visibility that we think would 

really help the Coast Guard get what it needs to meet its missions. 

Mr. OFFUTT. If I may? 

Mr. GARAMENDI. Yes. 

11 

Mr. OFFUTT. I believe that the Mission Need Statement is a different statement that says, based on all of my statutory requirements and everything, if I were to fulfill all of those needs, here 

is what I would have to have, and that is the Mission Need Statement. 

Then you have perhaps this 20-year plan, which recognizes the 

budget realities, and shows, in essence, what I would call a working budget document, which most every business develops, says, 

here is where I think I am, and then you could compare the two 

and see what your gap is for your Mission Need Statement. But I 

wouldn’t want to take that Mission Need Statement, which takes 

all of your statutory authorities, you know, from Congress, administration, down through your interaction with DOD and change 

that—and I agree, that needs updated. 

So, I think what the problem is is getting this correct in your— 

CIP, you are calling it? Yes. 

Mr. GARAMENDI. Admiral, considering what the two have said, 

what is your response? What about the Mission Need Statement? 

How do we get there? Are we even trying to get a new Mission 

Need Statement? 

Admiral BAFFER. Yes, Ranking Member. We are doing a new 

Mission Need Statement this summer, as was mentioned earlier. 

And that is going to drive to a new CONOPS [Concept of Operations], and then we are going to be reevaluating the program of 

record, both across aviation cutters and everything else, because it 

is a balanced system. The number of cutters influences the number 

of aircraft, and the C–27Js have certainly thrown a new wrinkle 

into that program of record. So we do need to visit that. But you 

have to start with that Mission Need Statement. 

Whether we start with a constrained Mission Need Statement or 

an unconstrained Mission Need Statement, I think it needs to start 

with an unconstrained Mission Need Statement that says what is 

the mission we are required to do, but—and it also has to be adjusted for the budget realities. 

Mr. GARAMENDI. Therefore, it would seem to me that, for our 

purposes, we would need to see the unconstrained Mission Need 

Statement, and then compare that to the constrained Mission Need 

Statement, the latter being, really, a result of the inability of the 

administration and Congress to provide the wherewithal for the 

unconstrained Mission Need Statement. So, the two would then put 

pressure on us to address the differential. Am I correct here? Is 

that how this could be done? 

Now, when will you complete this process, so that we might actually be forced to make a decision? 

Admiral BAFFER. We are doing the Mission Need Statement this 

summer in the CONOPS, and we are going to be doing the simulations of potential fleet mixes, and measuring the effectiveness of all 

those potential fleet mixes throughout the year. And we are looking 

at the end of fiscal year 2016 of having all those potential fleet 

mixes figured out, where we have the mission effectiveness of those 

fleet mixes balanced against the cost of those fleet mixes. 

But it all starts with the Mission Need Statement that is coming 

out this summer, sir. 

12 

Mr. GARAMENDI. So we are really looking at the next Congress 

before we are going to be able to really drill down and address this 

fundamental challenge. I think that is, as I look at the timing, 

about the way it will be. Am I correct? I think so. 

Admiral BAFFER. It would be the fourth quarter of 2016. 

Mr. GARAMENDI. Well, that is the next Congress that will deal 

with it. 

In any case, Ms. Mackin, is there—in—I will ask all three of you. 

In looking at this, as you know it today, given the uncertainty because of the process not being completed, is there any reason to believe that we are not going to be looking at a number north of $2 

billion? 

Ms. MACKIN. I will just say that the last time the Coast Guard 

did a fleet mix analysis, which was a few years ago, it was not constrained, and it came in quite high, quite a bit higher than the program of record. At that point, the program of record was considered 

the floor. It could not be breached. What we would like to see is, 

you know, the realistic budget projections showing, as you indicated, what can you do in a more constrained environment, so that 

that can be transparent, and then the tradeoffs can be made in an 

informed way. 

Mr. GARAMENDI. I think what I am driving at, or want to drive 

at here, is that it looks to me as though, under any circumstance 

going forward, however this thing turns out, we could wait until 

the next Congress, a year and a half—actually, a little more than 

a year and a half from now, and then go back through it. Or we 

can begin to prepare ourselves today for the reality that we are 

going to have to look at something close to or greater than $2 billion a year, in order to meet even the minimum requirements. I 

can’t imagine a situation where it is going to come in less than 

that, unless you are adjusting the requirements to the constrained 

budget situation. Now, an additional $1 billion for the Coast Guard activities 

would seem to be impossible, until we consider all of the choices 

that the Congress makes about where to spend money. For example, Mr. Hunter and I have spent some time on the Armed Services 

Committee, where vast amounts of money are spent on projects 

that may or may not be as essential as the Coast Guard’s programs. 

So, my concern, as a Member of Congress, is that we look across 

the program lines—stovepipes, if you will—and say, maybe we 

should move $1 billion a year from some activity in the defense 

budget or in one of the social welfare budgets, over to the Coast 

Guard, so that the Coast Guard could have the assets that it needs 

to pluck surfers out of the surf on the beaches of California when 

they are in trouble, or all of the other missions that you have. So 

I think this is a challenge for us, and particularly a challenge that 

our budget committees ought to be looking at. 

Now, am I willing to wait until the next Congress, which I would 

hope to participate in but may not, to get at this? The answer is 

no. So I want us, in our role—and particularly, I think, Mr. Hunter 

and I, who play a role on both committees—to look at this in a 

more total-systems way. We know, for example, that the U.S. Navy 

cannot operate in the Arctic without an icebreaker. Yet we have no 

13 

money for the icebreaker in the Coast Guard budget. We know that 

the U.S. Navy must be prepared to operate in the Arctic. There is 

no question about that. 

So, how can we move money from one pot to another pot to 

achieve the purposes of addressing the United States Government’s 

responsibilities in the Arctic? And the answer is we could do that 

if we thought about this in a more holistic way. 

And that is the end of my speech on this matter, but I am intending to pursue that, and would need your help. I don’t want to 

wait until 2016, the next Congress. I would like to have an interim 

report along the way, as you develop your new approach to what 

is necessary. 

So, at the end of the summer, you expect to have the first stage 

done. Is that right, Admiral? 

Admiral BAFFER. Ranking Member, yes, sir. 

Mr. GARAMENDI. Are you prepared to deliver to us at that point 

the elements of the first stage, the results of the first stage? 

Admiral BAFFER. We are committed, being very open and transparent with Congress. And anything we can do to help—— 

Mr. GARAMENDI. Good. 

Admiral BAFFER [continuing]. We would be—we are—— 

Mr. GARAMENDI. We know how to find each other. 

Admiral BAFFER. Yes, sir. 

[Laughter.] 

Mr. GARAMENDI. Thank you. I will yield back. 

Mr. HUNTER. Thank the gentleman. 

And, Admiral, on that same thing, if you could get us—if you 

could just get us all of your major acquisition program of record 

projects, and all together would be nice, and I would like what you 

had for a baseline 10 years ago, maybe every 2 years, and I would 

like to see where it started, before I was even here, and then how 

it is proceeding, and how the baseline has changed to where it was 

to where it is. If you could do that, that is everything with an acquisition project baseline, right? 

Admiral BAFFER. Right. We can certainly do that, Mr. Chairman. 

[The information follows:] 

The tables below include the history for each of the U.S. Coast Guard’s 

major acquisition program baselines (APB) since 2005. 

14 

Revised Deepwater Baseline 

v1.0 

December 21, 2005 

Deepwater APB v1.1 

May 15, 2007 

Program-specific APB 

revision 1.0 

Program-specific APB 

revision 2.0 (if applicable) 

Program-specific APB 

revision 3.0 (if applicable) 

Number Comple- tion1 TAC ($M)1,

2

Number Comple- tion1 TAC ($M)1,

2

Approval 

Date 

Number Comple- tion1 TAC ($M)1,

2

Approval 

Date Number Comple- tion1 TAC ($M)1,

2

Approval 

Date 

Number Comple- tion1 TAC ($M)1,

2

SURFACE 

NSC ........... 8 2017 $2,875 8 2014 $3,450 Dec 2008 8 2016 $4,749 Jan 2014 8 2019 $5,504 ................ .......... ............ ..............OPC ........... 25 2027 $7,056 25 2021 $8,098 Apr 2012 25 2033 $10,523 Sep 2014 25 2034 $10,523 ................ .......... ............ ..............FRC ........... 58 2027 $3,277 58 2017 $3,206 Aug 2009 58 2022 $3,928 Oct 2012 58 2023 $3,928 ................ .......... ............ ..............110-123’ Conversion3 41 2021 $116 41 2022 $95 .................. .......... ............ .............. ................ ............ ............ .............. ................ .......... ............ ..............WMEC MEP3 27 2026/ 

2020 

$338 27 2016 $317 Dec 2008 27 2016 $296.8 ................ ............ ............ .............. ................ .......... ............ ..............

Patrol Boat Sustainment3 ........ .......... ............ .............. 17 2013 $117 Dec 2008 20 2013 $179.7 ................ ............ ............ .............. ................ .......... ............ ..............

AIRCRAFT 

HC-130H Sustainment3 ........ 16 2015 $383 16 2017 $610 Jun 2009 16 2017 $690 ................ ............ ............ .............. ................ .......... ............ ..............HC-130J Missionization3 .......... 6 2008 Not 

Specified 

6 2009 $11 May 2009 6 2010 $163 ................ ............ ............ .............. ................ .......... ............ ..............

LRS ............ .......... ............ .............. .......... ............ ............ July 2012 22 2026 $2,761 ................ ............ ............ .............. ................ .......... ............ ..............HC-144 ...... 36 2017 $1,590 36 2016 $1,706 Feb 2009 36 2020 $2,222 Oct 2012 36 2025 $2,756 ................ .......... ............ ..............

15 

C-27J ......... .......... ............ .............. .......... ............ ............ APB will be developed prior to ADE 2A/2B ................ ............ ............ .............. ................ .......... ............ ..............H-60 .......... 42 2016 $456 42 2019 $451 Aug 2009 42 Not 

Specified 

$451 Nov 2012 42 2015 $466.6 ................ .......... ............ ..............

H-65 .......... 95 2016 $549 102 Not 

Specified 

$741 May 2009 102 2017 $901.2 Feb 2011 102 2019 $929.4 Mar 2014 102 2021 $917.4 

OTHER 

C4ISR ........ Not 

Specified 

Not 

Specified 

$3,481 Not 

Specified 

Not 

Specified 

$1,353 Feb 2011 Not 

Specified 

2026 $1,353 Nov 2013 Not 

Specified 

2026 $1,053 Dec 2014 Not 

Specified 

2026 $1,053 

1 Objective figures shown for all completion dates and total acquisition costs. 2 All funding amounts shown in then-year dollars. 3 Program completed or cancelled. 

16 

NonDeepwater 

Original Baseline APB revision 1.0 

(if applicable) 

APB revision 2.0 

(if applicable) 

Program-specific APB 

revision 3.0 (if applicable) 

Program-specific APB 

revision 4.0 (if applicable) 

Approval 

Date 

Number Comple- tion1 TAC ($M)1,

2 Approval 

Date 

Number Comple- tion1 TAC ($M)1,

2

Approval 

Date 

Number Comple- tion1 TAC ($M)1,

2

Approval 

Date 

Number Comple- tion1 TAC ($M)1,

2

Approval 

Date 

Number Comple- tion1 TAC ($M)1,

2

RB-M .... Apr 

2005 

180 2013 $401 Jul 

2010 

180 2015 $610 Nov 

2013 

170 2015 $576 ............ .......... ............ .......... ............ .......... ............ ..........

Polar IB APB will be developed prior to ADE 

2A/2B 

............ .......... ............ ............ ............ .......... ............ .......... ............ .......... ............ .......... ............ .......... ............ ..........

Rescue 

21 ..... Apr 

1999 

46 2005 $200 Nov 

1999 

46 2005 $240 Mar 

2002 

46 2005 $475 May 

2005 

46 2007 $641 Apr 

2006 

46 2011 $730 

R21 

(cont.) ............ .......... ............ ............ May 

2008 

39 2012 $1066 Nov 

2014 

37 2017 $845 ............ .......... ............ .......... ............ .......... ............ ..........

NAIS ...... Jan 

2007 

58/11 2013 $276.8 Nov 

2014 

58/11 2016 $111.9 ............ .......... ............ .......... ............ .......... ............ .......... ............ .......... ............ ..........

FMSII ..... Jul 

2014 

Not 

Specified 

2020 $54.7 ............ .......... ............ ............ ............ .......... ............ .......... ............ .......... ............ .......... ............ .......... ............ ..........

1 Objective figures shown for all completion dates and total acquisition costs. 2 All funding amounts shown in then-year dollars. 

17 

Mr. HUNTER. OK. That would be great. 

Mr. Graves? 

Mr. GRAVES OF LOUISIANA. Thank you for being here this morning. I appreciate your testimony. It was very helpful, all three of 

you. 

Admiral, the initial Mission Need Statement with the acquisition 

schedule back in 2005, in retrospect, was that flawed? 

Admiral BAFFER. That was done during the Deepwater era. The 

program of record was pretty good. All of our studies since then 

have validated that program of record, and that is why we have 

stayed with it. Some of the scheduling and funding requirements 

were probably flawed, but the actual program of record itself was 

actually a good piece of work, and it has been validated many 

times over the course of the years. 

Mr. GRAVES OF LOUISIANA. You are a law enforcement agency, 

and I am going to take a guess that you have received a speeding 

ticket or something at some point in your life. You look like maybe 

no. All right, well—— 

[Laughter.] 

Mr. GRAVES OF LOUISIANA. I sure have. But let me ask you. I 

mean if you were a cop, and you pulled somebody over, and that 

person goes back to the speed limit sign and says ‘‘no, no, no, it 

actually isn’t 60 miles an hour, it is 80 miles an hour, and so I am 

fine now,’’ you know, you can’t change the rules in the middle. 

And, you know, you indicated that the Mission Need Statement 

in 2005 was largely appropriate. But it sounds like, as you were 

answering questions before, that you guys have repeatedly revised 

the schedule in accordance with funding availability. And I am trying to discern—and I think, going back to the previous questions— 

what kind of problems is that causing, if you are continuing to 

move the chart to the right, move your schedule to the right? 

You know, look, this was obviously put together with the idea 

that you were going to be able to deliver certain services and perform certain duties. Are you still able to fulfill your mission? 

Admiral BAFFER. Congressman Graves, it—as we move schedules 

to the right, it is very disruptive to the programs and the projects. 

It is very inefficient. Major acquisitions have a lot of mass momentum. The contracts are structured for a certain schedule. When you 

deviate from that schedule, it is very difficult to change that, and 

it causes a lot of disruption and a lot of inefficiency, both on the 

Government side and the contractor side. 

One of the things we are trying to do now, and we are doing it— 

you see with the NSCs—is get on annual efficient production rates. 

We had a big gap on the NSC between the third and fourth and 

the second and third, and that caused us a lot of reduced learning 

and cost problems at the yard. Now we are on an annual rate between four, five, six, seven, and eight, and we are seeing the increased efficiency. We are going down the learning curve, and we 

are seeing the cost benefits of doing that. We are trying to do that 

with all of our—the remaining programs. 

OPC is structured to be as efficient as possible, and to be able 

to stay on that original baseline, and not deviate as we go. Because, once you deviate as you go, and you have a delay, delays 

18 

tend to cause more delays. They tend to cascade on you, and it all 

costs additional funds. 

Mr. OFFUTT. Mr. Graves, may I comment? 

Mr. GRAVES OF LOUISIANA. Sure, please. 

Mr. OFFUTT. Two quick comments. One, you asked if they could 

perform the mission. All the services will perform their mission to 

the best of the ability they have with all the assets they have. 

There is absolutely no question about that. So the answer is yes, 

they will do the missions that are in front of them to the best of 

their ability. 

The question about Deepwater, which hasn’t been raised, is that 

the program of record still looks fairly good, based on what you 

knew in 2005. Remember, in Deepwater there was a management 

scheme chosen that just didn’t work out, for a lot of number—for 

a number of reasons. And so, the changing of that management 

scheme, taking the—you know, taking—getting rid of a prime contractor and bringing it back into the internal Government and 

Coast Guard actually has probably helped a lot. But, remember, 

that was one of the major perturbations in that program, even 

though it—— 

Mr. GRAVES OF LOUISIANA. Which—sure. And so you would expect, as a result of that change, that you would perhaps go back 

and revisit schedules. But it seems like that some of the budget requests that we are seeing right now are compounding schedule 

problems even more than that evolution from Deepwater to the 

changes. 

But let me pivot over to the OPC. As I understand, that is the 

Coast Guard’s number-one acquisition priority. Yet there is no 

funding in the budget request this year for that vessel. Are you 

ready to go to detailed design this year? 

Admiral BAFFER. We are—well, we will be awarding detailed design in 2016. We just finished preliminary design. We are—couldn’t 

be happier with the progress that the contractors are making. All 

three contractors have moved to the contract design phase, and we 

are going to be ready to award detailed design this summer, and 

pick the final contractor. 

Mr. GRAVES OF LOUISIANA. Last question. What are the negative 

implications of delays on schedules for the OPC, in—you know, 

you—at previous hearings we had, joint hearing with the HASC 

[House Armed Services Committee], you know, the Coast Guard 

has a mission that is zippered in with the Navy and other services 

in many cases, and, of course, domestic missions with drug interdiction, alien interdiction, and others. Could you address that? 

Admiral BAFFER. Certainly, sir. The OPC was designed for affordability. The whole acquisition strategy was designed for affordability. And that requires us staying on schedule, getting to twoper-year production. We are not looking for innovative designs, in 

terms of technology. We are looking for innovation, in terms of production efficiency. 

So, it is designed for production efficiency. That is how we are 

going to make it affordable, and using the competition to get there, 

but we need to stay on schedule so that the contractors get the two 

per year, where they can run down that learning curve and accrue 

19 

all the benefits that accrue by having a steady, stable, predictable 

funding stream. 

Mr. HUNTER. Thank the gentleman. The gentlelady from Florida 

is recognized. 

Ms. FRANKEL. Thank you very much. Thanks, Mr. Chairman. 

So—from south Florida, so, obviously, the Coast Guard plays a 

very important role for our economy and our security. I just wanted 

to follow up on Mr. Graves’s question, because we got a memo here 

that said that there was not money in the budget for the work that 

needs to be done on the OPC. So where is the money going to come 

from? 

Admiral BAFFER. There is a general provision in the budget request to allow the Department to reallocate funding to provide the 

detailed design, the $70 million, basically, hole that we have in our 

budget for detailed design to make that award in 2016. 

Ms. FRANKEL. So you have that. Then how long does it take after 

that? What is the timeline, once that is done? 

Admiral BAFFER. Once we down-select to a contractor, there is an 

18-month detailed design period. And during that design period, 

they also order the material. And as soon as we are done with the 

detailed design, we will be starting construction. 

Ms. FRANKEL. And is there money for that? 

Admiral BAFFER. There isn’t money for that, but we don’t need 

that yet, because that will be an option on the contract. So we will 

need that, you know, in future years, in the out-years. 

Ms. FRANKEL. So, what is your estimate, your best estimate, as 

to actually when those assets will be delivered? 

Admiral BAFFER. They will start delivering in 2021, ma’am. 

Ms. FRANKEL. Oh, OK. What—so what happens to the assets 

that we are using in the meantime? Are they going to last? 

Admiral BAFFER. That is what our concern is. Some of the assets 

that are being replaced are 50 years old, the oldest one being the 

Coast Guard Cutter Reliance—is 51 years old. It is currently getting the job done. But, as you put Band-Aids on them, at some 

point there is nothing for the Band-Aid to stick to. Those assets 

need to be decommissioned and replaced. 

The other class that the OPC will replace is the 270-foot class, 

and they are 30 years old now. We just finished the MEP, the Mission Effectiveness Project, on them, and that bought us a few 

years, and we are evaluating their condition right now to see what 

we have to do to those ships to extend them a little bit longer. Our 

goal is not to spend any more money than we have to on the legacy 

fleet, but to make sure we can cover our capability gaps until the 

OPCs replace them. 

Ms. FRANKEL. So what are the potential consequences of this 

gap, and not getting our—the current fleet up to standards, while 

we wait for the new fleet? 

Admiral BAFFER. If we maintain our current schedule, the gap is 

not that large. It is manageable. The concern is, if we don’t get 

started on OPC, the gap could be very large. And then it causes 

the question: What is our offshore mission capability in the future? 

Ms. FRANKEL. So, could you be more specific as what would be 

potential consequences? 

20 

Admiral BAFFER. Drug enforcement, marine environmental protection. These cutters perform the whole host of Coast Guard missions off our coasts and in our EEZ [exclusive economic zone]. So, 

depending on what part of the country you’re in, it is the fishery 

stocks up in New England; it is migrant interdiction down in the 

Caribbean; drug interdiction in the Caribbean and also in the Eastern Pacific; LMR [living marine resources] up in Alaska. That is a 

big concern for us. Our fishery stocks are very important to us, and 

we need to be able to manage them in the future. 

Ms. FRANKEL. OK. Thank you. Thank you. I waive the rest of my 

time. 

Mr. HUNTER. I thank the gentlelady. I want to go back really 

quick. 

You are getting $70 million for the final design review, or the 

final design. That is going to come from within the Department, 

meaning it hasn’t been—it is not authorized, it is not—it is maybe 

probably not going to be appropriated. The way you are doing it 

right now is DHS just says, ‘‘Hey, we had some—we had 70 million 

bucks in our general fund that was unaccounted for, and we would 

like you to have it.’’ 

Admiral BAFFER. Mr. Chairman, I would be—— 

Mr. HUNTER. Is that what it is, or—— 

Admiral BAFFER. General provision—— 

Mr. HUNTER. I was trying to mischaracterize it, but I didn’t. That 

was the actual—— 

[Laughter.] 

Mr. HUNTER. So that is what is happening? 

Admiral BAFFER. In short, yes, sir. 

Mr. HUNTER. So what happens if they don’t give you the $70 million? I mean what if something else breaks in some other department, and they have to spend the money for that? 

Admiral BAFFER. Well, we have—you know, this is the Coast 

Guard’s number-one priority. The Secretary is very interested in 

Coast Guard recapitalization, and he is certainly making it one of 

his priorities. And we are working with DHS to make sure that we 

have the money available when we want to make the award this 

summer. 

Mr. HUNTER. OK. Ms. Mackin, could you help? Explain to me, because I am fairly new here, right? How does that work? If the 

money is not authorized and it is not appropriated, it just comes 

out of the Department, could you explain that to me? I mean how 

do you—when it comes to tracking, and when it comes to having 

foresight on these things, and scheduling, how does that work? 

Ms. MACKIN. To be honest, I don’t have any more details than 

you do on this. We saw what you did, which was the general provision that was referenced that directed DHS to transfer the money 

to the Coast Guard. I am not quite sure how that will work, in 

terms of the mechanics. Sorry. 

Mr. HUNTER. Would it hurt—what happens if the money is appropriated from Congress, as opposed to a handshake deal with 

DHS? Anything? Or the money is the money, it doesn’t matter? 

Admiral BAFFER. On the acquisition side, we are in the execution 

business. We execute the funds that are provided to us, wherever 

they come from. 

21 

Mr. HUNTER. So it doesn’t matter, really. 

Admiral BAFFER. Not to us, no. 

Mr. HUNTER. Mr. Graves, you have any more questions? 

Mr. GRAVES OF LOUISIANA. I do. 

Mr. HUNTER. Mr. Graves is recognized. 

I am sorry, Mr. Garamendi is recognized. Sorry. 

Mr. GARAMENDI. That is OK, Mr. Chairman. Mr. Graves had 

some very good questions, and I want to yield just a few minutes 

at the end of this to my colleague, who has a question that she will 

ask. 

But I got to—as a whole series of questions I think we need for 

the record, and we will make those available to you—the Fast Response Cutter engine problem, we need to have some information 

on that. The C–27Js, while you do have seven or eight of them, are 

they operational? What is going to be necessary to make them 

operational? What additional work needs to be done on that? 

This question is about operational testing, the effectiveness of 

that whole program. We will get you the specifics on these, and if 

you could preset those to us in writing for the record, it will save 

some time here. 

I do have just one very specific question, probably because of my 

history dealing with this issue. The Department of the Interior recently this week issued a permit for Shell Oil to drill off the Arctic 

coast. Was the Coast Guard involved in that? And how do you propose to provide the necessary—or the potential support for that 

drilling? I know it is not acquisition, but—— 

Admiral BAFFER. Well, Ranking Member, I know we are currently involved with the Department of the Interior and BSEE [Bureau of Safety and Environmental Enforcement], and, you know, 

and the partnership, because it is—we are all involved in those 

communications and those deliberations—— 

Mr. GARAMENDI. And, for the record, because—and it is really 

not your turf—I would like to know a specific involvement of the 

Coast Guard in providing the support. The last time Shell attempted to drill in that area they had a problem that required a 

lot of support from the Coast Guard. And I want to know how the 

Coast Guard intends to work on that. 

But my next question—so, for the record, if you can—— 

Admiral BAFFER. Be happy to provide that, sir. 

[The information follows:] 

To fulfill our mandated missions in the region, the Coast Guard’s presence 

in the Arctic will remain active during the summer operational window 

starting in June and ending in October. The Coast Guard’s role in the Arctic is not solely for the purpose of oversight of Shell’s drilling operations, 

if approved. Operation Arctic Shield 2015 will provide the Coast Guard 

with much broader Arctic domain awareness and an enhanced opportunity 

to respond to maritime safety and security incidents, including fulfillment 

of our spill response oversight and direction role as the Federal On-Scene 

Coordinator if a spill were to occur. 

The Coast Guard has cooperated closely with the Department of the Interior, in particular with Interior’s Bureau of Safety and Environmental Enforcement (BSEE) relative to their role in ensuring offshore operations are 

properly permitted and conducted in a safe and efficient manner, with industry Oil Spill Response Plans and associated equipment and personnel at 

the ready. For Shell’s 2015 Arctic operations, predesignated resources are 

available and on scene during drilling operations in order to ensure the 

22 

most rapid response possible in the Arctic’s challenging environment. The 

Coast Guard coordinated with BSEE on their review and approval of the 

Oil Spill Response Plan for Shell’s Arctic exploratory drilling to ensure adequacy for Arctic operations. 

Mr. GARAMENDI. Thank you. This is a question for the Navy 

League. 

You have made a proposal here that there be some sort of a special account for the recapitalization of the icebreaker. Could you expand on that and tell us how that might work? 

Mr. OFFUTT. I am sorry, I keep forgetting. Since both of you were 

on the Armed Services Committee, and we actually proposed a long 

time ago, I think—I don’t know if the idea originated with Navy 

League, or it came somewhere else—that the replacement program 

also—— 

Mr. GARAMENDI. Take credit or blame, as the case might be—— 

Mr. OFFUTT. Fine, whichever. 

[Laughter.] 

Mr. OFFUTT. We will take the credit, OK. We have been proposing something like that in our maritime policy, which we develop annually, for a long time. And it has come to fruition. I just 

think it is a great way—part of the problem we have in Government is getting our different agencies to work together. And we 

ought to look and see who this benefits. And, quite frankly, there 

are five or six different agencies that could, in fact, participate in 

this program of a superfund, if you want—maybe that has got a 

bad taste in my mouth, but a different—a strategic fund that would 

contribute to the icebreaker problem. 

And, you know, one is not enough. As we have said before, it is 

somewhere in the three to six region, if we are going to cover our 

responsibilities, both in the Antarctic and the Arctic, with what we 

are seeing with icecap retreat, and some of those kinds of things. 

So—and I would leave it to your counsels to figure out how that 

fund could get set up. That is what lawyers are for. 

Mr. GARAMENDI. So there was the National Sea-Based Strategic 

Deterrent Fund, which are submarines. 

Mr. OFFUTT. Yes. 

Mr. GARAMENDI. And that was set aside. So you are suggesting 

something similar to that. 

Mr. OFFUTT. Correct, I am. 

Mr. GARAMENDI. Well, we need to work on that. And I have already talked about the cross—across these two budgets. 

I would like to yield the remaining—my time to my—— 

Ms. FRANKEL. I will wait. 

Mr. GARAMENDI. OK. Very good. Then I will just let it go at that. 

Thank you, Mr. Chairman. 

Mr. HUNTER. Mr. Graves? 

Mr. GRAVES OF LOUISIANA. Thank you, Mr. Chairman. 

Going back to OPC, if you can’t award the contract in 2016—and 

going back to the somewhat tenuous funding—what is the impact 

to the Coast Guard folks in the fleet? 

Admiral BAFFER. Well, Congressman, the biggest impact to the 

fleet will be that gap that we talked about, and having to spend 

additional funds on ships that probably aren’t worthy of those additional funds. 

23 

The—just a quick aside, I was assigned to the Coast Guard Cutter Reliance, which is the oldest, the first ship that this OPC will 

be replacing. When I first graduated in 1984 from the Academy, it 

was 20 years old at the time, and it was already late for its midlife. 

The ship was not safe to sail. And I kind of still carry some—harbor some resentment to the leadership of the Coast Guard, that 

they asked us to sail on that ship that could not make water, 

where nothing worked, where it was full of lead paint and asbestos. 

And when Challenger blew up in 1986 we couldn’t get underway, 

even though we were right there, in Port Canaveral, for the recovery efforts, because our exhaust stacks were cracked, and we would 

fill the ship with carbon monoxide every time we lit the engines off. 

Admittedly, the ship is in much better shape now. 

Mr. GRAVES OF LOUISIANA. Sounds like college. 

[Laughter.] 

Admiral BAFFER. We took it, and it had to be—you know, the 

Coast Guard took it, and it moved it up in the midlife cycle, and 

that was part of the recovery process for that ship. And I visited 

it while I was at the Coast Guard yard a couple years ago. It is 

in much better shape now. But, again, you get to the point where 

we just can’t ask our young folks to get underway any more on 

ships like that. We went 2 years without showers at sea because 

we couldn’t make water. Those kind of conditions I wouldn’t put 

my son, who is in the Coast Guard, on a ship like that, and I 

wouldn’t put other people’s children on a ship like that. 

So, we are getting to the point where we need to do something 

on the OPC, or we are going to have to put people’s children on 

ships like that. 

Mr. GRAVES OF LOUISIANA. I thank you very much. I appreciate 

the feedback there. That is very helpful. 

Pivoting over to the FRC acquisition, there is—going smoothly 

from your perspective? I heard Mr. Offutt talk about the—how 

much he enjoyed those boats. 

Admiral BAFFER. It is—we have the RFP on the street right now 

for the remaining 26. We have 32 on contract on the first phase. 

They are very successful operational platforms. They are down 

working the Caribbean. They were very busy this spring, with the 

changing of the relationship with Cuba. And there was some misinformation on the potential change in what—immigration policies, 

and they were very busy. But, because they were there, and they 

took care of business, and—we didn’t have a large migration effort, 

or a large migration incident because of that. 

It has been a very successful program for us. The ranking member mentioned the engines. We have had some warranty issues 

with the engine. It is a firm, fixed-price contract with a rock-solid 

warranty, so the engine manufacturer has been very forthright in 

fixing those things, and taking care of those things, but we have 

had more issues than we would expect on the—with that particular 

engine. But we are working our way through it, and we anticipate 

more on-time and on-schedule deliveries for that cutter class. 

Mr. GRAVES OF LOUISIANA. Which would be awarding 26 in April 

of next year? 

Admiral BAFFER. It will be awarded in 2016. Yes, sir. 

24 

Mr. GRAVES OF LOUISIANA. OK. Last question for Ms. Mackin 

and for you, Admiral, on the Arctic and Antarctic capabilities, icebreaker capabilities. 

In comparing U.S. capabilities to other countries, do you think 

we are where we need to be? Yes or no? 

Admiral BAFFER. Well, I mean, obviously, I am biased. We, obviously, are not where we need to be. 

Mr. GRAVES OF LOUISIANA. It has been a—somewhat of a tortured process, watching for the last 10-plus years, this whole decision on Polar Sea, Polar Star. Where do we go from here? You are 

asking for additional funds to do another condition assessment and 

chart a path forward. Could you just try and paint a—paint your 

vision on what the appropriate path forward is for us to get where 

we need to be, in regard to icebreaking capabilities? 

Again, Ms. Mackin, I would love to hear your thoughts on that, 

as well. 

Admiral BAFFER. First we are going to have to build a new polar 

icebreaker. Polar Star, it would be a potential bridging—I am 

sorry, Polar Sea would be a potential bridging gap. But, at the end 

of the day, we are still going to have a ship, if we reactivate her, 

that has fuel against the hull, that doesn’t meet Clean Air Act requirements, that doesn’t have the environmental capabilities that 

current ships need to have, especially working in a pristine environment, like we see in Antarctica and up in the Arctic. 

So, it only delays the inevitable. We still need to build a new icebreaker. The problem with a new icebreaker is it has such a long 

lead time. It is a very significant asset. The design is very unique. 

The construction is very unique. It is going to take a long time to 

build. So we need to get started with that, whether or not we reactive Polar Sea, or not. 

Reactivating Polar Sea is a very interesting question, because 

the hull is pretty good. But if we tried to take everything out of 

the hull and rebuild it from the top, it is a very expensive shipbuilding evolution. Modern ships are built in blocks, not in—stick 

built, from the ground up. So whether we would actually be costeffective or feasible in reactivating Polar Sea in that way remains 

to be seen. And we have got some significant engineering work that 

we have to do to make a smart decision on that. 

Mr. HUNTER. Thank the gentleman. Ms. Frankel—— 

Ms. FRANKEL. Thank you. 

Mr. HUNTER [continuing]. Is recognized. 

Ms. FRANKEL. Well, it does sound like there was a—I put it politely—a planning error, probably on the part of, probably, Congress, but I don’t know. Because—with this gap. 

I was going to say how much is it going to cost, do you think, 

to do these repairs during the gap period? 

Admiral BAFFER. Ms. Frankel, it would depend on how big the 

gap is, what our new program of record comes out to be, in terms 

of how many cutters we need, and what that new Mission Need 

Statement says. Our goal would be not to spend any more on old 

ships than we have to. And we probably wouldn’t have to do all of 

them. It would be: take the best couple, and do what we have to 

do to them to carry ourselves across. 

25 

But at this point, until we come up with a new program of 

record, and we finish our engineering work on assessing what the 

270s would take, we really can’t provide a number. 

Ms. FRANKEL. Well, I mean, do you think it is going to be in the 

millions? 

Admiral BAFFER. Oh, yes, ma’am. Definitely in the millions. I 

mean it is very significant. If it wasn’t—— 

Ms. FRANKEL. Yes. 

Admiral BAFFER [continuing]. We would just be doing it. 

Ms. FRANKEL. OK. All right. Let me—I am going to go to another 

subject. That sounds like it is a touchy subject for you. But sure 

we didn’t help you much with this. 

I have a problem with bridges. I don’t know whether you have 

anything to do with bridges, but south Florida—maybe you have 

heard of this issue—we have—it is a—down in Broward County, 

Fort Lauderdale, there is what I call a train bridge. There is a 

bridge that, in order for the trains to go back and forth, the bridge 

goes down, and then there is no boats—I mean not even—I don’t 

even—I have been there—not even a canoe. I mean you would have 

to sort of lie flat in a canoe to even get under it. 

And we literally have hundreds of businesses that cater to boats 

and yachts, and so forth, but there is no way to get from the intercoastal—from the east part of the bridge to the west part of the 

bridge under that bridge when it is down. And there are going to 

be lots more trains going back and forth, and this is a very slow 

bridge, getting up and down. 

So, I am just—do you get involved with these kinds of bridges? 

Admiral BAFFER. I use bridges, but I am not part of the regulatory process of bridges. And we would be more than happy to 

take a question for the record, and—— 

Ms. FRANKEL. Well, do you know—— 

Admiral BAFFER [continuing]. Address that, specifically. 

Ms. FRANKEL. Is there a budget for bridges? Does the Coast 

Guard have—— 

Admiral BAFFER. Well, we regulate the bridges, and we permit 

them, and we are certainly involved in them. I don’t suspect that 

we pay for all the bridges out of the Coast Guard budget. 

Ms. FRANKEL. I will yield to—— 

Mr. GARAMENDI. If I recall correctly, within the law there is such 

a program, unfunded for many, many years now. 

Mr. GRAVES OF LOUISIANA. Truman-Hobbs Program. And, yes, 

this administration has not funded it, but it deals in impediments 

to navigation, yes. 

Mr. GARAMENDI. So go find some money. 

Ms. FRANKEL. Impediment to navigation, OK. Thank you. We 

will submit the question. 

Admiral BAFFER. Yes, ma’am. We would be happy to answer 

that. 

Mr. HUNTER. Thank the gentlelady. 

Mr. Curbelo? 

Mr. CURBELO. Thank you, Mr. Chairman. And thank all of you 

for your time this morning. The fiscal year 2016 budget request, $340 million to acquire six 

Fast Response Cutters, these are very important to our area, cerVerDate Aug 31 2005 10:50 Sep 05, 2018 Jkt 000000 PO 00000 Frm 00035 Fmt 6621 Sfmt 6633 P:\HEARINGS\114\CG&JOI~1\2015\5-14-1~1\31123.TXT JEAN
26 

tainly, in south Florida. And this would be the first order under the 

recompeted contract that the Service expects to award by April 

2016. Do you still expect to award the recompeted contract for the 

remaining 26 FRCs by April? 

Admiral BAFFER. Yes, sir, we do. The RFP is on the street now. 

We are answering questions from potential vendors. And we see no 

reason why we would have any problems meeting that date. 

Mr. CURBELO. That is wonderful. I commend you on that, and I 

will hold you to it, because, in my visits down to Key West and 

Miami, we all know how critical these vessels are. So I appreciate 

it. 

That is all I got, Mr. Chairman. Thank you. I yield back. 

Mr. HUNTER. Thank the gentleman. Hey, on the OPC, let me see. 

Before you award next year, OMB wants you to do an alternatives 

analysis. Is that right? Of different types of ship designs? 

Admiral BAFFER. Of different sea state-type sizes. One would be 

a modernized MEC, if we took the existing capabilities of the existing MEC fleet of a 270, modernized it to current conditions, what 

would that cost. 

Mr. HUNTER. But do you—meaning how much is it going to cost 

you to do the design alternatives? Do you have to take a lot of 

money to do that, to do ship design, or—you don’t have to go as 

far on it, so it is not as expensive, or what? 

Admiral BAFFER. Yes, Mr. Chairman, it is not a complete design. 

It was just a kind of a concept using parametric figures on—for 

costs, and what would that ship look like, if we tried to build it 

today to modern standards. And then, what would be a parametric 

rough order of magnitude cost of that. It is not a complete design 

study. 

Mr. HUNTER. But your RFP that is out there now—right? The 

RFP that is out there now has a specific design to—or no, not at 

all? Or—— 

Admiral BAFFER. What we have out there is we have performance requirements that—it is required to meet the naval vessel 

rules. It has also got a Coast Guard addendum, which applies 

many commercial specs to the NVR. 

So it is not a Navy ship and it is not a commercial ship, it is a 

Coast Guard cutter. It is designed to be a specific Coast Guard cutter. It is not plans and specs on how to build a ship. It is not like 

what is out on the FRC right now, because each contractor is designing their ship, their product, to be built efficiently in their 

yard. So they have got to meet all the requirements, and all the 

NVR specifications, and everything that we required. It is a pretty 

thick, lengthy specification, because we have been operating ships 

like this a long time. We know what we need. But they have to 

meet those performance requirements. And then that is what they 

are submitting. That will be evaluated and awarded. 

Mr. HUNTER. OK. Could you get us—could you get this committee the alternatives that you are looking at, just the—like the 

210 MEC change, and whatever other alternatives you guys have 

in mind? 

And you are not doing that—I am just having a hard time understanding you. Are you doing that for fun? 

Admiral BAFFER. No, we are doing it just—— 

27 

Mr. HUNTER. Because you are not really going to use it, you are 

just doing it. 

Admiral BAFFER. It is a cost excursion, it is somewhat of an academic exercise, just to make sure that our program of record is the 

most optimum program that we are doing, and we get the greatest 

bang for the buck from the cost-benefit perspective that meets the 

mission need, at what cost. It is all part of our affordability program for the OPC. 

Mr. HUNTER. OK. Last month, Admiral Michel said that the recompete for the FRCs that is going on right now, he said that they 

made some changes. The subcommittee was unaware that you were 

going to put in different design requirements for the second batch 

of FRCs. And he said no, that is the way it was supposed to be, 

all along. 

So, I would like to ask Ms. Mackin. When it comes to changing 

specs, can they—because Admiral Michel was very straightforward 

and said this will not raise costs, or it will not make it go over 

schedule, either. He goes, ‘‘It is just a few changes, and it will be 

fine.’’ On the Armed Services Committee and other acquisition 

stuff, there is no such thing as a few changes and it will all be fine. 

[Laughter.] 

Mr. HUNTER. So, I would just like your point of view on that, on 

them changing specs, minimum—they are doing small changes, 

nothing crazy. But, still, how do you think that is going to affect 

the schedule and the budget for the FRC, the second tranche of 

buys? 

Ms. MACKIN. Well, it is correct, this was always the plan, to recompete the second part of the FRC buy, and we definitely think 

competition—and, especially in a firm, fixed-price environment like 

the FRC, will drive prices down. It is infinitely better than a solesource environment. So, from that perspective, we certainly do support the Coast Guard strategy. 

That said, I think you are right, they will have to be careful 

about managing their requirements, scrutinizing what the contractors may come back with, to make sure that costs do stay under 

control. 

Admiral BAFFER. Sir, if I could, because we are competing it, and 

because you had an incumbent shipbuilder, if we just said, ‘‘Here 

are the plans and specs, build the exact same ship,’’ that would 

have a negative effect on competition. Because who could come in 

and compete with a shipyard that is already building the exact 

same ship? 

So, when we went out to industry and we asked them in our industry engagement, we realized that we were going to have a lack 

of competition if we did say, ‘‘Build the exact same ship.’’ We like 

the same—we would like to get the same ship. We like the ship. 

And, from a life-cycle perspective, that is the way to do it. On the 

other hand, in order to get the competition to drive down acquisition costs, as Ms. Mackin mentions is the way to do that, we want 

to open up as much as the ship as we can. 

The performance requirements are all the same. It has to meet 

all the same performance requirements. We took the things that 

were really important to us to have standardized, because we have 

got a large infrastructure associated with it in terms of training, 

28 

and things like that, spare parts, so we specified things like electrical switchboards, engines, things that they couldn’t change. And 

then the other things we said, ‘‘OK, outside of these things, you can 

change, if you like.’’ And that was done to, hopefully, increase competition, and let alternative vendors come in and then—— 

Mr. HUNTER. OK, let me ask it this way. I am all for competition, 

but—and maybe, Ms. Mackin, you can answer this, or maybe Mr. 

Offutt, too. If you have a batch where you make 20 ships—let’s just 

say you got a company that makes 20 ships. You then change a few 

specs on it and then you now say, ‘‘We are going to recompete this 

as a brandnew thing, we are going to put it out there on the market and see who can bite at this,’’ I don’t know how anybody could 

still match the company that made the first 20 ships. 

No matter what you do, by changing requirements to try to get 

the competition out there, I don’t understand how that works. 

Right? Because they don’t have—you already have a pipeline, they 

already have their employees, they already have everything for 

those 20 ships. And to have a new company come in and say, ‘‘Hey, 

we can do it cheaper,’’ how? Because, usually, that is not the case 

in real life. Right? 

Ms. MACKIN. I think it—the supply chain is a factor, but you 

know, the incumbent contractor might also sharpen his pencil, now 

that there is competition out there. And, with the trade space that 

other potential vendors have, they might be able to get a better 

price. It is possible, just by the basis of their own supply chain, the 

relationship with their vendors and suppliers. 

So, as I said, though, the Coast Guard will have to manage the 

requirements and make sure that the costs don’t increase, as a result of this. 

Mr. HUNTER. OK. How likely do you think that is, that costs will 

not increase as a result of this? You are dealing with a brandnew— 

let’s say somebody brandnew gets this contract, right? You are 

dealing with a brandnew contractor that you might not be familiar 

with, a—different design specs in certain ways, but nothing crazy. 

Right? You said the majority is staying the same. How do costs not 

go up? 

I am just not understanding. Knowing how Government works, 

and acquisition stuff—at least on the armed services side—there is 

no way that costs don’t go up. 

Admiral BAFFER. The major thing is it is a firm, fixed-price contract. The contractors are bidding at a firm, fixed price that they 

are going to build that ship to meet those performance requirements at a fixed price. There is no share line. It is firm, fixed price. 

So that is really our—not guaranteed, but that is our warranty 

against the prices going up. It is not a cost-plus contract. You 

would certainly not want to do this with a different type of contracting vehicle. 

Mr. HUNTER. All right. Anybody else? 

Mr. GARAMENDI. You have raised some very important questions, 

Mr. Chairman, and the answers are almost complete. 

The word ‘‘life-cycle cost’’ was used in this discussion a moment 

ago. And it is possible that the next tranche of ships—20-plus— 

could be different in significant ways. And that could affect the lifecycle costs. You now have two different maintenance systems that 

29 

you are going to have to have, and two different operational systems. 

The question, therefore, is are you considering the life-cycle cost 

in the equation on the cheapest, best deal? 

Admiral BAFFER. Ranking Member, not in terms of our selection 

criteria, but in terms of how we picked what items have to be the 

same, and what items could be changed. Those have the life-cycle 

cost—— 

Mr. GARAMENDI. So in the—— 

Admiral BAFFER [continuing]. Attributes. 

Mr. GARAMENDI. At the outset you have taken into account the 

change that could occur in the life-cycle cost, and you have tried 

to eliminate those factors, or those issues, equipment, whatever, 

that would have an affect on the life-cycle cost. Is that correct? 

Admiral BAFFER. That is absolutely correct, Ranking Member. 

Mr. GARAMENDI. Ms. Mackin, do you agree? 

Ms. MACKIN. Our understanding of the situation is as the admiral described it. 

Mr. GARAMENDI. And you will be watching closely as this—— 

Ms. MACKIN. We will be very interested to see how this turns 

out. 

Mr. GARAMENDI. I said earlier that this is an ongoing process. 

We were talking about the OPC at the time, but it is an ongoing 

process. And, as one member of the committee—and I suspect not 

the only member—as the process goes forward, I would like to 

know, at the critical stages, how is it going, and not wait until it 

is a done deal and then call you up here annually and find out why 

it didn’t work out as we thought. 

Ms. MACKIN. We would be happy to track that. 

Mr. GARAMENDI. Thank you. That is my—I yield back. 

Mr. HUNTER. The gentlelady from Florida is recognized. 

Ms. FRANKEL. Just follow up on that question. Are you required 

by law to take the cheapest bid? Or do you look to see what is the 

best quality? 

Admiral BAFFER. These are—we use best value contracts. 

Ms. FRANKEL. Best value, OK. 

Admiral BAFFER. Yes, ma’am. 

Ms. FRANKEL. All right. That is it. Thank you. 

Mr. HUNTER. I think that is it. I would just like to just keep us— 

please keep us informed when the—when Secretary Johnson gives 

you a check for $70 million or so. 

[Laughter.] 

Mr. HUNTER. Let us know when that happens, please. And we 

are going to try to keep working that here. So, just in case something else comes up and they don’t do that, there is still maybe a 

possibility for a different funding stream, so that the whole schedule is not put off. 

But thank you all for being here. Appreciate your testimony. And 

I think we have learned a lot today. And we will just—we will stay 

on it. The hearing is adjourned. 

[Whereupon, at 11:53 a.m., the subcommittee was adjourned.] 

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