[House Hearing, 113 Congress] [From the U.S. Government Publishing Office] MAINTAINING COAST GUARD READINESS ======================================================================= (113-74) HEARING BEFORE THE SUBCOMMITTEE ON COAST GUARD AND MARITIME TRANSPORTATION OF THE COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE HOUSE OF REPRESENTATIVES ONE HUNDRED THIRTEENTH CONGRESS SECOND SESSION __________ JUNE 18, 2014 __________ 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 ______ U.S. GOVERNMENT PUBLISHING OFFICE 88-351 PDF WASHINGTON : 2015 ----------------------------------------------------------------------- For sale by the Superintendent of Documents, U.S. Government Publishing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC 20402-0001 COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE BILL SHUSTER, Pennsylvania, Chairman DON YOUNG, Alaska NICK J. RAHALL, II, West Virginia THOMAS E. PETRI, Wisconsin PETER A. DeFAZIO, Oregon HOWARD COBLE, North Carolina ELEANOR HOLMES NORTON, District of JOHN J. DUNCAN, Jr., Tennessee, Columbia Vice Chair JERROLD NADLER, New York JOHN L. MICA, Florida CORRINE BROWN, Florida FRANK A. LoBIONDO, New Jersey EDDIE BERNICE JOHNSON, Texas GARY G. MILLER, California ELIJAH E. CUMMINGS, Maryland SAM GRAVES, Missouri RICK LARSEN, Washington SHELLEY MOORE CAPITO, West Virginia MICHAEL E. CAPUANO, Massachusetts CANDICE S. MILLER, Michigan TIMOTHY H. BISHOP, New York DUNCAN HUNTER, California MICHAEL H. MICHAUD, Maine ERIC A. ``RICK'' CRAWFORD, Arkansas GRACE F. NAPOLITANO, California LOU BARLETTA, Pennsylvania DANIEL LIPINSKI, Illinois BLAKE FARENTHOLD, Texas TIMOTHY J. WALZ, Minnesota LARRY BUCSHON, Indiana STEVE COHEN, Tennessee BOB GIBBS, Ohio ALBIO SIRES, New Jersey PATRICK MEEHAN, Pennsylvania DONNA F. EDWARDS, Maryland RICHARD L. HANNA, New York JOHN GARAMENDI, California DANIEL WEBSTER, Florida ANDREE CARSON, Indiana STEVE SOUTHERLAND, II, Florida JANICE HAHN, California JEFF DENHAM, California RICHARD M. NOLAN, Minnesota REID J. RIBBLE, Wisconsin ANN KIRKPATRICK, Arizona THOMAS MASSIE, Kentucky DINA TITUS, Nevada STEVE DAINES, Montana SEAN PATRICK MALONEY, New York TOM RICE, South Carolina ELIZABETH H. ESTY, Connecticut MARKWAYNE MULLIN, Oklahoma LOIS FRANKEL, Florida ROGER WILLIAMS, Texas CHERI BUSTOS, Illinois MARK MEADOWS, North Carolina SCOTT PERRY, Pennsylvania RODNEY DAVIS, Illinois MARK SANFORD, South Carolina DAVID W. JOLLY, Florida ------ 7 Subcommittee on Coast Guard and Maritime Transportation DUNCAN HUNTER, California, Chairman DON YOUNG, Alaska JOHN GARAMENDI, California HOWARD COBLE, North Carolina ELIJAH E. CUMMINGS, Maryland FRANK A. LoBIONDO, New Jersey RICK LARSEN, Washington PATRICK MEEHAN, Pennsylvania TIMOTHY H. BISHOP, New York STEVE SOUTHERLAND, II, Florida, LOIS FRANKEL, Florida Vice Chair CORRINE BROWN, Florida TOM RICE, South Carolina JANICE HAHN, California MARK SANFORD, South Carolina NICK J. RAHALL, II, West Virginia DAVID W. JOLLY, Florida (Ex Officio) BILL SHUSTER, Pennsylvania (Ex Officio) CONTENTS Page Summary of Subject Matter........................................ iv TESTIMONY Panel 1 Vice Admiral Charles D. Michel, Deputy Commandant for Operations, United States Coast Guard...................................... 3 Michele Mackin, director, Acquisition and Sourcing Management, Government Accountability Office............................... 3 Panel 2 Ronald O'Rourke, specialist in naval affairs, Congressional Research Service............................................... 19 James H. Offutt, national president, Navy League of the United States......................................................... 19 PREPARED STATEMENT SUBMITTED BY MEMBER OF CONGRESS Hon. John Garamendi, of California............................... 32 PREPARED STATEMENTS SUBMITTED BY WITNESSES Vice Admiral Charles D. Michel................................... 33 Michele Mackin................................................... 38 Ronald O'Rourke.................................................. 50 James H. Offutt.................................................. 62 SUBMISSIONS FOR THE RECORD Vice Admiral Charles D. Michel, Deputy Commandant for Operations, United States Coast Guard: Response to request for information from Hon. Duncan Hunter, a Representative in Congress from the State of California, regarding risk-based prioritization........................ 8 Response to request for information from Hon. John Garamendi, a Representative in Congress from the State of California, regarding what the U.S. Coast Guard requires to get the C- 27s fully operational, and a preliminary deployment schedule for the C-27s..................................... 12 ADDITION TO THE RECORD Government Accountability Office, Coast Guard Acquisitions: Better Information on Performance and Funding Needed to Address Shortfalls (June 2014)......................................... 68 [GRAPHIC] [TIFF OMITTED] MAINTAINING COAST GUARD READINESS ---------- WEDNESDAY, JUNE 18, 2014 House of Representatives, Subcommittee on Coast Guard and Maritime Transportation, Committee on Transportation and Infrastructure, Washington, DC. The subcommittee met, pursuant to notice, at 9:35 a.m. in Room 2253, Rayburn House Office Building, Hon. Duncan Hunter (Chairman of the subcommittee) presiding. Mr. Hunter. Good morning. The subcommittee will come to order. The subcommittee is meeting today to review the Coast Guard's major acquisition programs. After over a decade, the Coast Guard has finally taken delivery of critically needed new and improved assets. Unfortunately, just as the Service's acquisition program is starting to see success, the President is yet again proposing a budget that could doom it to failure. The President's budget cuts funding needed to acquire critically needed replacement assets by 21 percent. That is one-fifth of what is needed. This will further delay the delivery of new assets, increase acquisition costs for taxpayers, exacerbate growing capability gaps, and seriously degrade Coast Guard mission effectiveness. 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. A few weeks ago, the Commandant of the Coast Guard and the commanding officer of U.S. Southern Command, John Kelly, testified before us that one of the largest reasons why drug interdiction rates have fallen to historic lows in recent years is due to the Coast Guard failing legacy 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 last few budget requests, as well as the fiscal year 2015 through 2019 CIP, it appears the President refuses to make those investments. According to the Capital Investment Plan, the CIP over the 5 five fiscal years, annual funding for Coast Guard 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. As I have said for some time now, just since I have been the chairman here, so about 2 years, if the President is going to continue to send us budgets that fail to pay for the assets needed to meet Coast Guard mission needs, then it is time for him and to you to review the Coast Guard mission responsibilities. Fortunately, it appears that somebody may be listening. I understand the Coast Guard recently announced it intends to start a review of the Mission Needs Statement guiding its current acquisition program. While this is good news, I have two concerns. First, the revised MNS needs to be budget conscious. This means the administration either needs to identify what missions the Coast Guard will no longer do, or how they intend to pay for the increase in assets and capabilities needed to meet current and future missions. Second, it needs to happen quickly. The acquisition program is already so far behind schedule and over budget, we simply do not have the years to wait for this administration's plan for the program's future. I mean if things stay the way they are now--I have 4 more years as chairman. I am not going to wait for 2 of those to get the new Mission Needs Statement. OK? This subcommittee intends to move an authorization bill early next year, and we are going to see something from the Coast Guard by then. I thank the witnesses for appearing today, and look forward to their testimony. With that I yield to Ranking Member Garamendi. Mr. Garamendi. I am going to move very quickly here. I want to get on to hear the testimony. Very important subject. I will enter my statement into the record. I will note that the President's budget is a reflection of the Budget Control Act that the House of Representatives and the Senate passed. So, with that, let's get this underway. There is little doubt that the Coast Guard has done an admirable job since 2008, when it assumed full control of the largest recapitalization program in the Service's history. Nonetheless, problems are evident, and the oversight of this committee is important. I look forward to the testimony. My written statement will be, without objection, hopefully, entered into the record. Let's move on. Thank you. Mr. Hunter. Without objection, so ordered. On our first panel of witnesses today are Vice Admiral Charles Michel, Deputy Commandant for Operations of the United States Coast Guard, and Ms. Michele Mackin, director, Aquisition and Sourcing Management at the Government Accountability Office. Admiral Michel, I understand you have a long and distinguished history with our subcommittee. Welcome back. John put that in there. [Laughter.] Mr. Hunter. Welcome back, and thank you for your service. You are now recognized for your statement. TESTIMONY OF VICE ADMIRAL CHARLES D. MICHEL, DEPUTY COMMANDANT FOR OPERATIONS, UNITED STATES COAST GUARD; AND MICHELE MACKIN, DIRECTOR, ACQUISITION AND SOURCING MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE Admiral Michel. Well, Chairman Hunter, Ranking Member Garamendi, good morning. And thank you very much for the welcome, and thanks for the opportunity to testify today on Coast Guard readiness and the status of major systems acquisitions. My complete statement has been provided, and I ask that it be entered into the record, and that I be allowed to summarize my remarks. The Coast Guard faces increasing challenges in meeting its missions in a difficult fiscal environment, with rapidly advancing technologies employed by both legitimate maritime industries, as well as our adversaries. Our aging surface vessels are of particular concern, as they play a unique role in the Nation's layered security, and are often the Nation's sole method for asserting and protecting national imperatives in the offshore and coastal realms. As Alexander Hamilton recognized in creating the revenue cutter service in 1790, maritime interdiction is often the most efficient and effective method of protecting our citizens against transnational threats. In order to do this, Coast Guard assets must be able to compel vessels engaged in illicit activity to stop, which at times requires employment of force. In addition, our assets must be able to deliver personnel to take law enforcement or other appropriate action. Without such capabilities, our Nation may be unable to act against these threats before they reach land, where they become exponentially more difficult to track and achieve successful endgame. As the Coast Guard's Deputy Commandant for Operations, I understand the unique value that capable Coast Guard assets bring to the front line of defense for the American people, our allies, and our neighbors. I have also witnessed the devastating impacts when vessels are unreliable, obsolete, or simply out-classed by our adversaries or by the sea itself. Fielding and maintaining capital assets like ships and aircraft requires a national commitment. Our Nation, as a major maritime power, has traditionally and rightly relied upon the great oceans as not only vital trade routes essential to national prosperity and global engagement, but also as an inherent line of defense against foreign threats. To ensure these enduring national imperatives remain robust, the Coast Guard is committed to responsibly recapitalizing our fleet, while managing risk to preserve the effectiveness of our frontline operations. I am pleased to update you today on key acquisition programs. Before I begin that, I am pleased to report that the fiscal 2015 to 2019 Capital Investment Plan, or CIP, was recently delivered to the Congress, and I am happy to answer your questions about this plan. The first three National Security Cutters, or NSCs, are operational and performing the full range of Coast Guard missions. Later this year we will commission the fourth NSC, which will be the first assigned to our Atlantic area, and will be home-ported in Charleston, South Carolina. The fifth and sixth NSCs are currently in production, and we are approaching the start of production for the seventh NSC. The fiscal year 2015 budget request and the recent House Appropriations Committee mark include funding for the eighth NSC, which will complete the full program of record for this cutter class. To illustrate the NSC's impressive capabilities just in the past 4 months, the three operational NSCs have seized more than 4\1/2\ metric tons of pure cocaine headed to our shores. In just six boardings, Mr. Chairman, these seizures amount to approximately 60 percent of all the cocaine seized by all the law enforcement agencies within the borders of the United States in a typical year, and is a nearly $100 million wholesale funding source that was taken from ruthless drug trafficking organizations. Further, this near pure cocaine, as well as the suspects and conveyances, were taken off the water before they reached the shore and spread waves of devastating crime, corruption, public health issues, and other effects against our citizens and our international neighbors. The NSC is a versatile asset. It protects U.S. natural resources in some of the harshest maritime conditions, conducts illegal migrant interdiction operations, and integrates with DOD forces. The NSC program has also provided our acquisitions enterprise with expertise in controlling risk and achieving stability in cost and schedule, laying the foundation for the successful acquisition of the Offshore Patrol Cutter, or OPC. As the committee is aware, on February 11, 2014, the Coast Guard awarded fixed price contracts to three contractors for the preliminary and design contract for the OPC. Following the award, two protests filed with GAO prevented the contracts from commencing. I am pleased to announce that on the 2d of June 2014 GAO upheld the contract award. This allows work to proceed on phase 1 of a 2-phase acquisition strategy. During this initial 18-month preliminary and contract design phase, three contractors will mature their designs and develop fixed-price incentive proposals. Following a thorough evaluation, the Coast Guard plans to down-select to a single contractor for the production of an initial segment of 9 to 11 OPCs. During phase 2, the selected contractor will complete their detailed design in preparation for production of the first OPC. We have begun activities in support of the polar icebreaker acquisition project, including the recent approval of acquisition decision event number one. This milestone, which validated the need for the project, allows the Coast Guard to move forward into the next phase, where we will develop a concept of operations, conduct an analysis of alternatives, create a life cycle cost estimate, and refine operational requirements. Since this is a unique national platform and truly a national asset fulfilling many vital national missions in the high-latitude regions, discussions with numerous Federal partners and the administration have commenced to develop the extensive requirements for polar ice-breaking capability. Further, it has been--since it has been about 40 years since the Nation last undertook building a heavy icebreaker, it will take specialized techniques and materials to construct a modern heavy icebreaker. The successful 2012 reactivation of the Polar Star has extended the Nation's polar icebreaking capabilities, and the Coast Guard is exploring the possibility of reactivating Polar Sea as a bridging strategy, until a new icebreaker can be constructed and is operational. In the aviation domain, we are anticipating delivery of the first of 14 planned C-27Js obtained from the Air Force, thanks in large part to the efforts of this subcommittee. This month we will establish the C-27J asset project office at the Aviation Logistics Center in Elizabeth City, North Carolina. Mr. Chairman, in closing, for over 223 years the Coast Guard has safeguarded our Nation's maritime interests. While our missions have not fundamentally changed, the challenges and opportunities for our maritime Nation constantly evolve. The Coast Guard will continue to maximize current mission accomplishment in this dynamic environment, while responsibly investing in the Nation's maritime future. Thank you for the opportunity to testify before you today; I look forward to hearing your concerns and answering your questions. Mr. Hunter. Thank you, Admiral. Ms. Mackin, you are recognized. Ms. Mackin. Chairman Hunter, Ranking Member Garamendi, members of the subcommittee, good morning. Thank you for having me here today to discuss Coast Guard readiness and its acquisition of ships, aircraft, and communication systems. My statement today is based on a report we are issuing today, work we did at the request of this subcommittee. As we note in our report, the Coast Guard has made strides in its acquisition management. It has maximized competition, for example, in procuring the Fast Response Cutter and the Offshore Patrol Cutter. It is delivering assets to the operators who are very pleased with the enhanced capabilities. And key test events are taking place. This testing is very important for ensuring that the assets are operationally effective. Today I would like to highlight what we view as a pressing concern facing the Coast Guard, and that is the affordability of its acquisition portfolio. This is especially important in light of significant remaining costs to complete the planned program of record. The Coast Guard still needs about $20 billion to complete the assets in the program of record--those formally part of the deepwater program. This is, in part, because costs have grown for some of the assets. For example, the National Security Cutter has experienced a $2.2 billion cost increase, and initial estimates for the Offshore Patrol Cutter have grown from $8 billion to up to $12 billion, in large part because the initial estimate was not rigorously developed. The fact is that the Coast Guard cannot afford its recapitalization program at current funding levels. Over the past 5 years the Coast Guard has received an average of less than $1.5 billion. Still, the Coast Guard has stated it needs $2 billion to $2.5 billion per year to carry out its planned program. Over the past 4 years we have recommended that the Coast Guard and DHS reassess the Coast Guard's acquisition priorities to better balance mission needs and affordability. Thus far, though efforts have been made, an effective reassessment has not occurred. Compounding the Coast Guard's affordability issues is the wave of costs. That is, an impending spike in funding needs. Key among these is the Offshore Patrol Cutter, which will consume about two-thirds of the Coast Guard's acquisition budget while it is being built. Other looming costs include a service life extension for the 270-foot Medium Endurance Cutters, a strategy to replace aging river buoy tenders, which itself could cost up to $1.5 billion, and a potential new polar icebreaker. These are serious challenges. Our prior work on best practices of commercial firms found that they place an emphasis on determining whether programs can be developed and sustained within existing resources. In short, best practices dictate that resources should be identified and maintained, or trade-offs explicitly made. If this is not done, programs will have to compete for available funding, and annual funding shortfalls must then be addressed by pushing costs into the future, cutting procurement quantities, or reducing capabilities. Our concern is that, rather than pursuing an affordable set of long-term needs, the Coast Guard is delaying and reducing its acquisition portfolio on an annual basis. This approach puts pressure on future budgets, and it also delays fielding capabilities to the end user, as schedules are pushed out, which, of course, can lead to increased costs. In essence, short-term budget decisions may not amount to a good long-term investment strategy. This is why we recommend in today's report that the Coast Guard develop a long-term fleet modernization plan. Such a plan, looking out 20 years and taking into account mission needs and expected funding, would illuminate what is feasible in the long term. Without such a plan, the Coast Guard is not well positioned to determine how it will meet mission needs. In the meantime, the annual budget process may be supplanting sound acquisition decisions. Mr. Chairman, Ranking Member Garamendi, this concludes my statement, and I would be happy to answer any questions. Mr. Hunter. Thank you very much to both of you. I guess, in this situation too, I will just play kind of the referee, and you guys can go back and forth. It would be kind of fun. I guess the first question that I have--this is just to help me understand--if you--you are now working on a new Mission Needs Statement, say, over the next year. And you have a Capital Investment Plan that matches your old Mission Needs Statement. And I am wondering how those two kind of fit together, how you have a CIP right now--if you are redoing your Mission Needs Statement, how do you really know what you need? It is like the Pentagon has never been audited, so how does it know what it spends in the first place to figure out what it needs later? So, how do you reconcile those? Admiral Michel. Well, sir, the current CIP is based on the Mission Needs Statement from 2004, which is our best estimate and remains our best estimate. As you note, we are actually re- looking at our Mission Needs Statement to make sure that it reflects today's realities, both---- Mr. Hunter. Which means it will change, because your old Mission Needs Statement didn't match the amount of money the administration has given you. And that is the problem. That is why we are having them--that is why we are asking you to redo the Mission Needs Statement, to match the budgetary environment that you are in. Admiral Michel. Well---- Mr. Hunter. So it is going to be different. Admiral Michel. I think maybe we have got a little bit of a different concept on what the Mission Needs Statement is. The Mission Needs Statement sets forth the mission requirements for the Coast Guard, and is not constrained by budget. Now, to actually bring the materials over here onto the Hill, there is obviously a budget aspect associated with that when you are talking about a capitalization plan. But the Mission Needs Statement sets forth the mission needs of the Coast Guard as in 2004, and as I anticipate the new Mission Needs Statement is going to, as well. Mr. Hunter. But what the problem has always been is that you can't complete your mission, because you have too many missions and not enough assets to do it. Right? Admiral Michel. Yes, sir. As Ms. Mackin notes, that is my serious challenge, and I live that every day, sir, is that there is more mission need for the Coast Guard than there is Coast Guard to actually go out and do the mission. So I have to manage that risk on a daily basis. And whenever I put inputs into the acquisition process on what I need out in the field as the Deputy Commandant for operations, you know, I have got to take the budgetary realities into account in actually fulfilling those mission needs. But the mission needs remain, just like they do in the 2004 Mission Needs Statement, which is our current statement of what we need in order to get the job done. Now, how you actually go about acquiring assets in order to fulfill those mission needs, that is the art, sir. Mr. Hunter. Well, I guess what I am curious, then, in seeing, is a real Mission Needs Statement. So you can have the one that is fluff in the sky, you can have that one that has everything, regardless of the budgetary environment, but then I would like to see the real one that you do, that you prioritize what you are going to do, day in and day out, based on what you have. I guess that is what I am curious in seeing, because so far in these hearings for the last couple of years it is, ``We are going to try to do everything. We can only get 75 percent of most things, and we are up here on these few things, and we keep failing and failing,'' by your own recordkeeping. And I understand that game, because if you say that you are failing, ``We need more money,'' then Congress goes, ``OK, we want you to succeed, we are going to give you some more money.'' But that is not going to happen any more. So, what we need is a real--what you look at, and what your prioritized Mission Needs Statement is in real life. That is constrained by the budget. And you can have your pie-in-the-sky Mission Needs Statement too that has everything. We would like to see the real thing where you say, ``This is what we can do. This is it.'' Admiral Michel. Yes, sir. Well, I wouldn't characterize our 2004 Mission Needs Statement as fluff. It is the best information that I can provide to you---- Mr. Hunter. What I mean is you have in it everything. I didn't mean it was fluff. What I mean is it has everything that you think the Coast Guard should do. Pie in the sky is a better---- Admiral Michel. Sir, you have my commitment that the Mission Needs Statement will reflect our very best estimate on the mission demands for the Coast Guard. And we need to bring that to your attention, sir, because we are having difficulty building a Coast Guard that can actually fill out the demand signals necessary. So what it requires is me and other members of the Coast Guard to address that on a risk-based format. And, you know, I would love to have a world where I could actually build a Coast Guard that could fulfill the demand signal for the Coast Guard. That is not currently the world that I live in right now. And I need to ensure that I bring those needs, that demand for the Coast Guard, to your attention so you can take a look at that. And then you can also take a look at the risk that the Coast Guard is incurring on these national missions with the assets that it currently has, and whatever it is building towards the future. But you have my commitment, sir. I am not interested in---- Mr. Hunter. That is what I would like to see. I would like to see the risk-based prioritization that you are doing. Admiral Michel. Absolutely, sir. [The information follows:] The Coast Guard is making difficult tradeoffs to best balance critical recapitalization and frontline operations. This strategy ensures we address the degraded condition of our legacy fleet, ensure capability for the future and provide frontline operations where the Nation needs it the most. The Nation faces risk across all our statutory responsibilities, and we seek to address the highest with available resources. One way we are addressing this risk is by recapitalizing our aging assets with more reliable and capable assets better suited for today's operating environment and the environment we expect to face in the future. The Coast Guard's highest risk remains in the offshore fleet and our Capital Investment Plan reflects this risk. We are also addressing other areas of risk, other parts of our fleet that need to be recapitalized to ensure we can provide the type of service the Nation needs and has come to expect in the future. For example, we are continuing our acquisition of Fast Response Cutters to address risk in the coastal zones as our legacy 110- foot patrol boats are removed from service. We are receiving and missionizing C-27Js to address maritime patrol gaps and risks in the coastal and off-shore zones. Our critical in- service vessel sustainment project is helping us address risks in other parts of our fleet, such as our aging buoy tenders. We have also engaged stakeholders across government and are moving out on requirements generation for the acquisition of a heavy polar icebreaker to meet whole of government requirements. Mr. Hunter. OK. OK, thank you. Let me get that first question, here, we will just ask a quick one. If the funding levels in the budget and the new CIP are enacted by Congress--so let's go right on to that--how does that affect your missions? And what missions will be affected the most? Admiral Michel. Well, it has a number of different effects. And, you know, as you mentioned, our Commandant has testified before that a more effective capital investment plan would be somewhere in the neighborhood of $2 billion. When you are pushing it down, as you correctly identified, into, you know, 1.2-ish, 1.1-ish, what it does is it forces everything to move to the right. It makes the assets harder to get in a timely manner, and it presses everything out to the right, which means I have got to, on a daily basis, use the assets that exist right now. Some of the assets are--like our 210-foot cutters--when I got off as my last commanding officer job in 2006 as the captain of the Coast Guard cutter Resolute, I told the crew that, you know, they were serving on a classic. That ship had been commissioned in 1966. I was 3 years old when that ship was commissioned. [Laughter.] Admiral Michel. And while that ship, you know, may have aged more gracefully than I have over the years, it--still, in 2006, that ship was 40 years old, and people had been living inside this metal ship, 7 by 24, operating out on the seas, doing all this--all these missions, operating helicopters, you know, navigating, and so on and so forth, on a ship that was 40 years old. And I almost couldn't believe that I was standing on the deck of a 40-year-old ship. There are very few countries in the world that would field something like that, particularly as a frontline asset. And yet, here we are in 2014, now the ship is 48 years old. And the OPC has been pressed further out to the right. That is its relief on station. So, I have got to manage those suboptimal assets for another many, many years. And that is what happens when you don't have, you know, a CIP that is responsive to the fleet that we have out there, and the recapitalization needs. Mr. Hunter. Last question, and tying in with the first question. Is the Mission Needs Statement going to be conscious of the CIP, of the funding levels in the CIP? Admiral Michel. Sir, you know, the funding levels in the CIP, very interesting. You know, I have been asked questions about how this is--compares to Navy shipbuilding, and things like that. Boy, I wish I had some funding stability like the Navy had, and could actually provide you with, you know, reasonable future projections on the availability of capital resources in order to do this type of stuff. But the--unfortunately, the history of this program---- Mr. Hunter. If you would have acquisitions like the Navy, you would have never had the big deepwater problem that you had, too. Admiral Michel. Well---- Mr. Hunter. It is good to look back and say things like that. I agree, wholeheartedly. Admiral Michel. Yes, sir. But one of the things that we got--we have to have in order for me to provide the predictability to you is a stable funding source, and we haven't had that. And while I am in agreement with GAO that, you know, a 20-year fleet plan may be of value--and that is actually one of the things that we are going to try to work on--the value eliminates very quickly, and it actually becomes deceiving if you don't take into account that--you know, the fluctuating funding streams that have been a part of this program almost from its inception. And I wish we could get some stability in funding to provide that type of predictability into the future. But you have my commitment, sir, that that mission statement is going to be my best--my, and the Coast Guard, and the Commandant of the Coast Guard's very--and the Secretary of Homeland Security, and anybody else who needs to sign off on that particular document--very best estimate on what the demand signal for the Coast Guard is, because these are national missions that you, the Congress, the American people through their representatives, have tasked the Coast Guard with performing these functions. And it is up to us to not dumb this down and not, you know, bring down the demand signal to some artificial level that gives you the impression that risk doesn't exist there. I would rather provide you with the raw truth on what the demand signal for the Coast Guard is, and let you take a look at the risk analysis that is being done by myself and others in the organization. Mr. Hunter. OK. And we will take it. Hey, with that, I am going to step out and go to the--there is a little secret brief on the Taliban detainees that were released. Thank you. And I will be back in a minute. I yield to Mr. Garamendi for his opening questions. Mr. Garamendi. Thank you, Mr. Chairman. As you leave, the discussion that just ensued reminds me very much of that very famous Pogo comment, ``We have seen the enemy, and it is us.'' Admiral, thank you for your testimony, and for your very forthright statement that you can only do what we allow you to do, and you can only have as your responsibilities what we have given you. The problem lies here, in the Congress. The problem is that this Congress has decided that a small Government is the best thing for this Nation. And that plays itself out in the Coast Guard, it plays itself out in the hospitals, it plays itself out in the Veterans Administration, and many other activities that the general population of the United States would like to see us do. But the reality is when you want a small Government you get the kind of problems that this committee is now trying to work its way through: a Mission Needs Statement that is now 10 years old, soon to be updated. When would that update be available? Admiral Michel. Sir, we are actually trying to complete that for our maritime patrol forces, which is the surface vessels that we are talking about, to actually coincide with the end of the P&CD phase for the OPC, because that will help inform that process as we down-select to the single contractor. But this is no easy effort. And, you know, the 2004 Mission Needs Statement was based on the integrated system. So it is very hard to pull apart individual assets from that 2004 Mission Needs Statement. Now that we have broken apart the project into individual segments, we are going to raise the level of maturity for that, but that is going to raise the difficulty in doing it, because we are relying on an integrated systems 2004 Mission Needs Statement. But we are trying to get that, sir, in conjunction with the completion of the P&CD phase for the OPC. Mr. Garamendi. So when? Admiral Michel. Eighteen months is our target, sir. Mr. Garamendi. From today? Admiral Michel. Yes, sir. Mr. Garamendi. OK. The mission is actually, as you just said in the previous discussion, set by the Congress. Is there any need to change the mission? And, if so, what? Admiral Michel. Well, I will go back to one of our older Commandants. And he was trying to justify sort of the reason for the Coast Guard, and he said, you know, ``You could break up the Coast Guard and take our 11 statutory missions and send them somewhere else, but they are still going to have to get done. These are enduring national missions. A lot of them have existed since 1790 and have to be done by somebody.'' The beauty of investing in the Coast Guard is you get one organization that you can go to that has a platform like the OPC that isn't just designed to do drug interdiction, but it does drug interdiction, it does fisheries work, it can act as a command and control platform in situations like Hurricane Sandy, it can operate---- Mr. Garamendi. So the answer--excuse me, we are going to be quickly out of time, and I should probably attend that hearing---- Admiral Michel. Yes, sir. Mr. Garamendi. The issue, then, is the mission is defined by Congress, and the Coast Guard has interpreted that mission and brought it forward as, ``Here are the things we need to do, and here is what--here are the things we need to do the mission that Congress has specified.'' OK. Your earlier testimony indicated that you are not given the resources. The chairman was speaking to this issue, but he was incorrectly identifying where the problem lay. The problem is here. The problem is with this Congress not providing the resources necessary. The Budget Control Act and other sequestration issues are at play here. So, if--am I correct in suggesting that, in order for the Coast Guard to be able to carry out in the very best possible way the missions that have been given to the Coast Guard by the United States Congress, you are going to need money? Is that correct? Admiral Michel. Yes, sir. The Coast Guard doesn't have any appropriations authority. Mr. Garamendi. OK. Now, the question for this committee is what are we going to do to make that money available. Your Capital Investment Program, your CIP program, I think it is important for the Coast Guard to come forward with the need to--excuse me the would like to and the need to. In other words, the prioritization. The reality is that, in the current state of affairs here within Congress, there isn't going to be money available. We will be, in the next couple of days, voting on tax reductions, which will pass the House of Representatives, which will make less money available in the future. So we need to have the nice to and the need to, the absolute have to have, versus what we would--you and us, you and I and perhaps the other members of this committee, would like to have. That is what we are going to have to have in order for us to do our job and to assist you. I don't believe the mission is going--the mission statements are going to change. And you are going to have to help us help you figure out exactly what needs to be done. There is a series of questions I have about the C-27, how it is coming along, what you need to do to put that into effect. Apparently, it was a high-priority issue. You are correct in saying this committee and the members of it assisted you and the Coast Guard in making that available. We are pleased to have done that. Now what do you need, need to, must have, in order to get that operational? Admiral Michel. Yes, sir. Well, this is the induction of an entire new airframe into the Coast Guard system. So not only the infrastructure pieces need to be put in place, but training, maintenance, all those type of things. And we are stepping out smartly on that. The standup of the asset project office, which Congress helped us with with some funding, is going to be a step in the right direction, it is going to be working on the training manuals, maintenance pieces, how we are going to integrate this in the air fleet, make some recommendations on where these things should best be sited. The good thing about these aircraft is they are actually military standard aircraft, and they have got things like secure communications system---- Mr. Garamendi. Excuse me. Admiral Michel. Yes, sir. Mr. Garamendi. I am out of time, and would you please be very specific in writing to the committee as to exactly what you need, when you need it, in order to get these things up and operational? I understand that they are now being over somewhere in North Carolina. And then also where you intend to deploy them, and the schedule for the deployment, if you could, give that to us in writing. Admiral Michel. Sure. [The information follows:] IMPLEMENTATION OF THE C-27s C-27s Requirements: The Coast Guard continues to develop requirements associated with transfer, induction, missionization, and deployment of the C-27 aircraft authorized in the 2014 NDAA. The C-27 Asset Project Office, established this month at the Aviation Logistics Center in Elizabeth City, NC, will further refine cost estimates and implementation schedules. Current estimates for the C-27 AC&I project, as displayed in the FY15-19 Capital Investment Plan, are as follows: ------------------------------------------------------------------------ FY14 FY15 FY16 FY17 FY18 FY19 ------------------------------------------------------------------------ $24,900 $15,000.... $130,000.. $100,000.. $30,000... $40,000 ------------------------------------------------------------------------ Preliminary operations and maintenance cost estimates are made based on limited Air Force O&M provided C-27J APO operations, as well as Coast Guard experience operating C-130 and HC-144 aircraft; but definitive O&M data will need to be refined as the aircraft enters active service at full programmed flight hours. The Coast Guard anticipates stand up of the first C-27 operational unit in FY16. Deployment Schedule of C-27s: Estimated Acquisition Schedule through Completion (based on initial BCA estimates) ------------------------------------------------------------------------ ------------------------------------------------------------------------ 2014............... Commission APO, receive first aircraft, establish contracts for aircraft restoration and Contractor Logistics Support (CLS) 2015............... Continue stand up of APO, receive 3 aircraft from AMARG, \1\ Contractor Logistics Support (CLS) 2016............... Continue APO operations, receive 4 aircraft from AMARG, start missionization NRE, initial issue spares, CLS, stand up first operational unit 2017............... Continue APO operations, receive 4 aircraft from AMARG, contract for operational & maintenance training devices, missionize first aircraft 2018............... Receive 2 aircraft from AMARG, missionize 2 aircraft 2019-2026.......... Complete Logistics, Missionize remaining aircraft, stand up second operational unit, stand down APO ------------------------------------------------------------------------ \1\ AMARG: Aerospace Maintenance and Regeneration Group--aircraft storage facility at Davis-Monthan Air Force Base Mr. Garamendi. Now I have a question for the GAO. You have pointed out the problem. And I would like to have your analysis---- Mr. Southerland [presiding]. Mr. Garamendi? I am sorry. I mean we have got--I know we have got other gentlemen. Your time, as you just so noted, has expired. So we can come back for more questions, I am fine with that. But Mr. Rice, 5 minutes. Mr. Rice. I think I heard you say that your current budget is how much, 1-point what? Admiral Michel. This is in--the President's budget request for AC&I is about 1.1. Mr. Rice. 1.1? Admiral Michel. Yes, sir. Mr. Rice. What did the administration ask for in their budget, do you know? Admiral Michel. Excuse me. One more time, sir. Mr. Rice. What did the administration ask for in the President's budget for this year. What did he ask for, funding level? Admiral Michel. 1.084, 1.1. Mr. Rice. So that is not what Congress asked for; that is what the President asked for. Admiral Michel. That is the President's 2015 budget request for the AC&I account for the Coast Guard. Mr. Rice. Right. And what did you say it would take to fulfill all of your--I mean if you--to carry out every mission, your absolutely wish list, what would it take to carry that out on an annual level funding basis? Admiral Michel. Well, I wouldn't want to characterize it as a wish list, because, as an operator, my wish list is pretty long. Mr. Rice. OK, OK, so---- Admiral Michel. But our prior Commandant has testified that a responsible and adequate capitalization account for the Coast Guard would be somewhere in the neighborhood of $2 billion for AC&I. Mr. Rice. So about double what the President has proposed for this year. Is that correct? Admiral Michel. Yes, sir. Mr. Rice. All right. Now, as a result, when was the last time that you received the full amount that you would need on an annual basis to fully fund all of these requirements that you have dictated? When was the last time that happened? [No response.] Mr. Rice. That would be never? [Laughter.] Admiral Michel. Sir, you can go back in the program. I don't think we have ever had a $2 billion CIP. I can go back and take a look. I can't remember way back in the history, but I am pretty sure we have never had one of those. Mr. Rice. OK. What are the biggest, most glaring holes that we have now, as a result of never having been funded to the extent that you think it would be required? Admiral Michel. Sir, the--I can tell you the number-one priority is on surface vessels and the recapitalization of the surface fleet. Mr. Rice. So we got some old boats running around there. Admiral Michel. Old ships. Yes, sir. Mr. Rice. Yes. Now, have any of those sank recently, or do we have any problems with getting them in and out, or---- Admiral Michel. Thank goodness none of them have sunk, which is good. But there have been quite a number of casualties, and I can provide you data on the breakdown rates of these ships. We have gone through some---- Mr. Rice. You say ``casualties.'' Are people being killed? Admiral Michel. Sir? Mr. Rice. You said ``casualties.'' Are people being killed? Admiral Michel. No, sir. That is a term for a machinery---- Mr. Rice. OK, got you. Admiral Michel [continuing]. Fault, a machinery casualty. Mr. Rice. OK. Admiral Michel. Not personnel, sir. Mr. Rice. Right, OK. How does our Coast Guard stack up with the coast guard or coastal protection with other countries? I mean England, France, Italy, all those others. Admiral Michel. Coast guards vary throughout the world. I would say for the coast guards that look sort of like the U.S. Coast Guard, our fleet is amongst the oldest. I will give you an example. We just yesterday met with the head of the Chinese Coast Guard, the China Coast Guard. And their recapitalization program, at least as they laid out, is massive. I mean they are talking in the neighborhood of 400 patrol boats to fulfill the missions, as well as some of the larger things. So, we have got an old fleet, we are very proud of it, and we keep it in the best shape that we possibly can, but it needs to be replaced, sir. Mr. Rice. How many patrol boats do we have? Admiral Michel. We have got--I think we have got forty-nine 110-foot patrol boats, although they are coming in and out, so there may be one or two different, because they are actually being replaced by the Fast Response Cutters, or FRCs, and we have got, I think, our 9th and 10th ones of those that are actually in or near in service. That will eventually build up to a program of 58 for the Fast Response Cutters. Mr. Rice. I would like to ask you a couple questions, if I could. Ms. Mackin. Yes, please. Mr. Rice. Have you reviewed the--I don't want to call it a wish list. What would--how would I characterize it? I don't want to say anything that is wrong. Admiral Michel. I would say the requirements as expressed in the Mission Needs Statement. Mr. Rice. OK. Have you reviewed that in the Mission Needs Statement? Is there anything--he answered earlier that we don't need to change the mission of the Coast Guard. Have you reviewed that to see if there is anything that you would suggest taking out of the mission, or---- Ms. Mackin. We--you know, we have been reviewing the deepwater program for over 10 years. I personally have been involved in many of those audits. And the current MNS, the current Mission Needs Statement, reflects the deepwater program of record. So that is what it is. And we certainly agree it needs to be revised. Was very happy to see that the Coast Guard is working on that, and that DHS is going to do a portfolio analysis of Coast Guard acquisitions, taking into account affordability, which is very important. Funding levels are not what the Coast Guard would like to have, but they have not actually fluctuated that much over the past 5 years. So we think that the Coast Guard can have a realistic idea of what it can expect. We had a chance--if I may just comment on the CIP, the current CIP that was released this week--we had a chance to review it. And in many cases, program baselines are not reflected in the CIP. In other words, for the Fast Response Cutter there is a $100 million shortfall in the CIP every year, give or take. That means either the Fast Response Cutter baseline is going to need to be revised again. Is the schedule going to be delayed again? That will increase costs. So, we would really like to see the CIP be more in line with the acquisition baselines for the individual projects, or the Coast Guard, which is already having some readiness issues, obviously, it is going to only get worse. Mr. Southerland. The gentleman's time has expired. Mr. Rice. Thank you. Thank you for what you do, thank you. Mr. Southerland. I recognize the gentleman from Florida. Mr. Jolly. Thank you, Mr. Chairman. I appreciate the comments, appreciate the testimony. And I understand that having to balance limited resources among your air and sea assets, I appreciate that. I learned from my predecessor early on that the Coast Guard is one agency that does more with less than just about any other agency in the Federal Government. So thank you for what you do. I appreciate it. I have a question unrelated to air and sea assets. I know you work through balancing limited resources there. Facilities, infrastructure, quality of life for your men and women in uniform is a concern of mine always. We have three facilities in my district. I recently was out at Sector St. Pete, and in the off hours some of your guys are laying tile in a new dining hall, and painting the walls, and doing drywall, and then in the gym, you know, overnight, they are working other issues. Can you speak to--as you are balancing air and sea assets, you also have facilities and infrastructure that ultimately affect quality of life of those who put on the uniform. Just a general question: Can you comment on the state of that--of those priorities? Admiral Michel. I think it is a great question from a number of different angles, and I share your concerns about our Coast Guard people. And I don't know the guys laying tile, but that is typical Coast Guard stuff, very proud of what we do but, you know, we do with what we are given or sometimes can scrape together. But the point that you raise is the AC&I account for the shore infrastructure competes directly with the other accounts. And it is a matter of prioritization. Again, if I had a wish list, I would wish for lots of things to bring better quality of life, better housing to our Coast Guard personnel, better facilities that they can take care of. But right now, it has got to compete directly with our surface assets. And our surface assets are just a bleeding wound, and they impact our citizens every day, they impact our neighbors every day, and we need to get that fixed. So, I have got--sir, I appreciate your concern, because that is on my radar, as well. But, you know, I have to rack and stack these---- Mr. Jolly. No, I understand, and it is really not a criticism. I guess maybe--correct me if my assessment is wrong--it seems to have--it comes in last right now because it probably has to. Would you--I mean I guess what projects actually make it, get funded? Is it really when the roof is collapsing at this point, in terms of how you have to prioritize? Or are there quality of life enhancements that there are funds available for at this point? Or is it just not enough resources? Admiral Michel. At this point you--there is a line item for our shore AC&I. Mr. Jolly. Right. Admiral Michel. It is woefully inadequate. Mr. Jolly. Right. Admiral Michel. Obviously, if a roof is falling in, or something like that, we are going to have to re-rack and stack things. Mr. Jolly. Right. Admiral Michel. But we have got a process where we run through the highest priorities to try to buy down the things at the top of the list. When it comes down to sort of quality of life things, those typically don't get prioritized. We are talking about basic things like making sure that the power can remain on, and making sure that you don't have a collapsed roof. I mean that is kind of where we are in the shore AC&I account. Mr. Jolly. I appreciate it. Again, thank you for what you do. Appreciate it. Mr. Southerland, no further questions. Mr. Southerland. Thank you, Mr. Jolly. I have just some prepared questions I wanted to ask, and then I have got a comment I would like to make. I know, under the CIP, the--your acquisitions would not receive more than $1.2 billion over the next 5 years. That is approximately, you know, $1 billion less than the GAO and the former Commandant have testified is needed. And you have stated that. The GAO has stated that the Coast Guard needs to consider trade-offs. And again, I have not been here for the entire testimony today. So if you have addressed this already in specificity, I apologize. But what are the trade-offs that the Coast Guard is considering, you know, to make its acquisitions more affordable? You are having to make some hard decisions now. But, obviously, it seems like, you know, your maintenance, you know, you mentioned housing, you mentioned the tiling and, I mean, what else are you considering, going forward? Admiral Michel. Well, I think the point of affordability you raise is spot on. And we have got to actually systemically include that in our processes. And I will give you an example. Our biggest acquisition, as GAO knows, is the looming Offshore Patrol Cutter acquisition. That is going to be the biggest line item acquisition that we have got, and sort of the entire effort that we have got here. And we have specifically designed affordability into that contract. First of all, there is actually a competitive process going on underway, so I am a little bit restricted in the amount that I can say here. And anything that I can say here that I say here that is inconsistent with that, the legalities of that particular project, obviously, that controls. But affordability specifically designed here--we have been in about a 2\1/2\-year discussion with potential competitors for this particular project to try to set affordability cost targets, and that is actually built into the project, itself. This also will be a fixed price incentive-type contract, which can also help with the affordability aspect. And we have also built in a number of off-ramps that, if the project becomes unaffordable, then we have got some second- and third-order choices that we can make in that particular piece. But I think actually learning the lessons of the NSC and the FRC has allowed us, on this latest acquisition, to actually systemically include the affordability aspects, and make them kind of legally actionable, for lack of a better term, through the contracting mechanism. So, we have built that into this particular class of ship, which is, again, the looming acquisition that we have got. Mr. Southerland. The--are there any parts of your mission-- I mean you are asked to do a lot. It seems like there are some items that probably have higher degree of necessity than others. I mean are there any parts of your mission that you would say are--would not be--rise to the other issues that are very, very important? I mean I didn't word that right, but what is nonessential? Admiral Michel. Boy, that is a very difficult question, since Congress, you know, the American people through their representatives, have statutorily tasked us with all these mission sets now. We have a---- Mr. Southerland. But, I mean, you are on the inside. OK? You are there. You have to be going, ``Are you kidding me? Really? I mean, we got to do this? This is critical to the safety of the American people, and Congress has given us this.'' It is obvious that the right hand might not know what the left hand is doing. I have been here 3\1/2\ years, and I am telling you, man, that is a disease here. So, my point is, from someone who has your responsibility, you know, what is critical, what is good? What is the difference between good and best? Admiral Michel. I will give you an example, sir. This is the type of decisions that I have to make as to whether to send one additional ship a year down--that is 20 metric tons of cocaine that will be removed from the system. Through long, historical averages, every one of those ships I send down there that works for a year is 20 metric tons of cocaine. That is almost triple what is seized within the border of the United States on a typical year. And if that 20 metric tons--if I don't send that ship down there, that 20 metric tons is likely to get into Central America and Mexico, and create all the problems that it has down there, as well as public health issues for our citizens. And I have got to balance that risk against a foreign fishing vessel incursion, against antipiracy work, against migrant interdiction work, against pangas that work their way around our borders every day. I mean the decisions that we are forced to make, because the mission need exceeds our ability in the Coast Guard to fulfill that, I mean, they are--and I don't want to make this hyperbole, but I mean, they are very serious considerations on the national security of our Nation, as well as our neighbors, and very difficult to rack and stack, you know, safe passage of a vessel in a port with protection of fisheries work, with drug interdiction work, or migrant interdiction work, or search and rescue. All those things are enduring national missions and have huge national consequences, and I wish there was more Coast Guard. It would allow me to have a little bit of a more favorable risk interpretation. Mr. Southerland. Right. Thank you very much. I certainly have other questions, but to be consistent in controlling the time, I will forego those questions. So it seems to be me. I know we have got a second panel. I would like to thank you all for being here, and we will take a quick break while the second panel comes forward. Thank you. [Recess.] Mr. Southerland. Our second panel of witnesses today includes Mr. Ronald O'Rourke, specialist in naval affairs at the Congressional Research Service, and Mr. James Offutt, national president of the Navy League of the United States. Mr. O'Rourke, you are recognized. TESTIMONY OF RONALD O'ROURKE, SPECIALIST IN NAVAL AFFAIRS, CONGRESSIONAL RESEARCH SERVICE; AND JAMES H. OFFUTT, NATIONAL PRESIDENT, NAVY LEAGUE OF THE UNITED STATES Mr. O'Rourke. Mr. Chairman and distinguished members of the subcommittee, thank you for the opportunity to appear before you today to testify on Coast Guard acquisition. With your permission, I would like to submit my statement for the record, and summarize it here briefly. As a starting point, it can be noted that the Coast Guard's program of record includes, by the Coast Guard's calculation, roughly 60 percent of the cutters and 50 percent of the aircraft that would be needed to fully perform the Coast Guard's statutory missions in coming years. In this sense, not completely fulfilling the program of record would deepen a capacity shortfall relative to projected future mission demands that is already built into Coast Guard plans. Coast Guard testimony earlier this year suggests that the delay in submitting the fiscal year 2015 CIP was due largely to a disagreement between the Coast Guard and OMB about future funding levels in the AC&I account, with OMB apparently supporting a level of roughly $1 billion a year, and the Coast Guard apparently advocating a higher figure of perhaps $1.5 billion per year or more. The difference between these two positions represents a major fork in the road for the Coast Guard. The previous Commandant, Admiral Papp, stated on multiple occasions that recapitalizing the Coast Guard's ship and aircraft fleets on a timely basis, while also adequately funding other AC&I programs, would require a funding level of $1.5 billion to $2 billion a year. A sustained funding level of about $1 billion per year, he testified last year, would almost create a death spiral for the Coast Guard. The newly submitted CIP, which I received from the Coast Guard on Monday afternoon, averages about $1.1 billion a year, which is a bit more than the $1.0 billion per year in the fiscal year 2014 CIP, but still well below the $1.5 billion per year of the fiscal year 2013 CIP. The new CIP includes the total of $230 million for a new polar icebreaker, most of which is in fiscal year 2017 and fiscal year 2019. The timing of the procurement of this ship has become less certain in this budget submission, and Coast Guard testimony earlier this year suggests that if the AC&I account remains at about $1 billion per year, the Coast Guard would view this ship as something like an unfunded requirement. Regarding the NSC program, as the acquisition of these ships approaches its end, it can be noted that they could have been acquired less expensively if they had been awarded at a more even rate, and if at least some of them had been acquired with a form of multiyear contracting. Regarding the FRC program, the phase 2 contract offers a potential opportunity for using multiyear procurement or a block-buy contract. A multiyear contract might result in acquisition costs that are lower than those possible under the options contract that the Coast Guard appears to be planning to use. One option for the subcommittee would be to understand the potential savings that might be realized through multiyear contracting. The subcommittee, for example, could consider asking the Coast Guard or the Navy to develop an estimate of the potential savings. Turning to the OPC program, the new CIP defers the bulk of the funding for the first OPC from fiscal year 2017 to fiscal year 2018, suggesting that the start of procurement for this program will be delayed a year, compared to last year's submission. Section 215 of H.R. 4005, the Coast Guard and Maritime Transportation Act of 2014, provides authority for using multiyear procurement contracts in the program. Based on experience with Navy shipbuilding programs, this authority may not be usable until construction of the first OPC is completed in 2021 or 2022, because completion of the lead ship has been the standard in Navy shipbuilding programs for demonstrating that the program has a stable design, which is one of the requirements of the statute that governs multiyear procurement. If Congress wants to employ multiyear contracting in the OPC program prior to completion of the lead ship in the program, it could do so by authorizing block-buy contracting. A block-buy contract could achieve much of the savings that would be possible in a multiyear procurement contract, particularly if it includes authority for making batch order purchases of long-leadtime components. Mr. Chairman, this concludes my statement. Thank you again for the opportunity to testify, and I look forward to the subcommittee's questions. Mr. Southerland. Thank you, Mr. O'Rourke. Mr. Offutt, you are now recognized. Mr. Offutt. Thank you, Mr. Chairman, for the opportunity to appear before you today on such an important topic. I am grateful for your introduction and for your leadership in bringing this topic to the Nation's attention. My full testimony has been submitted for the record. I offer an abbreviated version now, and look forward to your questions. The U.S. Coast Guard is truly a unique Service. With military and civil responsibilities and humanitarian missions, the extraordinary broad mission portfolio continues to serve the United States well. But we, as a Nation, have not treated the Coast Guard as well as we should have. Since 9/11, the Coast Guard has seen its area of responsibility grow to 11 statutory missions, but its budget growth has de-accelerated, failing to match mission demand or meet inflation adjustment. We must fund the Coast Guard properly, with an operating budget of no less than $6.8 billion, and an acquisition, or AC&I budget, in excess of $2 billion, so that the Service can continue to provide protection on the seas from threats delivered by sea, and of the sea itself. I believe that this is a generational opportunity, and that the recapitalization of the Coast Guard is absolutely essential. Completing the National Security Cutters in the approved program of record is, in my opinion, the Coast Guard's most critical acquisition goal. As the replacement vessel for the current fleet of 12 High Endurance Cutters, the NSC will provide a highly capable vessel, and a robust command and control platform, even in harsh operating conditions. However, at the rate the new cutters are coming online and older ships are being decommissioned, there will be an unavoidable gap that will pose significant risk to America's security. Some of that gap in the coastal areas will be met by Fast Response Cutters, or FRCs, that are currently being constructed. The President's request for production funding to conduct two more FRCs in fiscal year 2015 is the minimum necessary to improve the Coast Guard's waning operational, and we at Navy League believe that the actual number should be four per year, or one per quarter. Highly important for the Coast Guard's operations is to begin construction of the Offshore Patrol Cutter, which will replace the MECs, or Medium Endurance Cutters, built in the 1960s through the 1980s. While the OPC is less capable than the MEC, it will still function as an operational workhorse to carry out the Coast Guard's primary mission. The Coast Guard must move forward smartly with reviewing the preliminary design for the OPC and very soon begin construction. Given the magnitude of the attending capability gap, and the significant economies of scale to be realized, Navy League believes Congress should fund the construction of at least two OPCs annually. Aviation assets are also key to the Coast Guard's future. One of the more pressing aviation projects is the acquisition of HC-130J Long Range Surveillance Aircraft, and the HC-144A receives operation and maintenance funding in fiscal year 2015. Coast Guard received authority to accept 14 C-27Js from the Air Force. Coast Guard needs acquisition construction and improvement funding of at least $15 million to continue that acquisition program office. Finally, in looking at the future scope of the Coast Guard's areas of responsibility, one geographic area of operation is the Arctic. In recent years, as ice over the Arctic gap has diminished and rich new sources of energy are believed to be more likely, the Coast Guard must ensure continued capability in the Arctic icebreaking. Currently, operating with one operational heavy icebreaker and one medium icebreaker, the Coast Guard must initiate a heavy icebreaker acquisition now, if a new capability is to be brought online this decade. This necessary acquisition must be seen as a national priority, and it must be funded in addition to the Coast Guard's already meager acquisition budget. Recently commissioned assets will also require operational maintenance funding of at least $72 million. As with all mobile forces, presence is the key. The only limiting factor to how much our Coast Guard can accomplish is how many ships and aircraft they have, and how much training they receive. We have had the chance to notice a direct correlation, through the budget reduction of recent years. Coast Guard, after having a $200 million cut by sequestration, saw a 30-percent reduction in drug interdiction. And I believe the vice admiral referred to that with the presence of one ship making a difference in the Caribbean. If the Coast Guard remains unfunded, national leaders will have to decide what missions they want unfulfilled. Coast Guard cannot do more with less into perpetuity. As fast-paced operations continue, the Coast Guard must be effective not only through near-flawless mission, but also efficiently manage its existing assets. In my role of national president of Navy League, I am privileged to visit several different ships, particularly a 110-foot patrol boat commanded by a young lieutenant and a Coast Guard station headed by a senior enlisted petty officer. I am thoroughly convinced that these young men are well prepared to carry out our mission. Their dedication and sense of service and devotion to this country inspire and awe me. To carry out their missions it is our job to ensure they have the means to do so. The Navy League would like to thank this committee for its leadership and thank Congress for being supportive of the Coast Guard and ensuring they have the resources they need. We must be good shipmates to them, as they have every American. Thank you, and I await your questions. Mr. Hunter. Thank you very much for both of your testimonies. We will turn now to Member questions. And I would like to recognize the gentlelady from California. Ms. Hahn. Thank you. I am sorry I missed the first panel. I was speaking on the floor on an issue, but I certainly want to thank you all for being here today, and big--I am a big supporter of our Coast Guard, and am always troubled by, frankly, the funding levels that we give to our Coast Guard for your--for the missions that we expect from the Coast Guard. Very happy to report that I was just in Los Angeles a couple weeks ago when we had a change of command, and the first-ever woman will be the commanding officer and the captain of the port for Long Beach and Los Angeles. That was actually a very exciting moment. We are taking over the world one port at a time. [Laughter.] Ms. Hahn. But in your testimony you noted that the Coast Guard may view the polar icebreaker as a joint agency goal, as the National Science Foundation and Department of Defense share a need and desire to have the icebreaker available. We don't relate to having icebreakers out on the west coast, but do know that it is a big part of what you do. And you mentioned that the Coast Guard may even depend on resources of those agencies to support the cost of an icebreaker. In the budget of these agencies, is there a capability to support even a portion of the cost of making an icebreaker a reality? Mr. O'Rourke. Yes, I did address that point in my testimony. The Coast Guard, both in its testimony at hearings and in its budget justification documents, describes the polar icebreaker as something they would like to fund on an interagency basis. Ms. Hahn. Right. Mr. O'Rourke. The rationale being that other agencies, such as the National Science Foundation or DOD, gain significant direct benefits from the operation of these icebreakers. There is some precedent for funding a polar icebreaker somewhere else in the Federal budget outside the Coast Guard's budget. The Coast Guard's polar icebreaker Healy was funded in the Navy shipbuilding account in fiscal year 1990. Even so, this is an uncertain funding strategy for the polar icebreaker, because these other agencies are facing their own challenges right now in trying to meet their own program needs within available resources. So, the Coast Guard can certainly appeal to these other agencies. Whether these other agencies are going to find the spare wherewithal within their own budgets to help fund that ship I think is another question. Ms. Hahn. OK, thank you. Thank you. Oh, you don't look like Steve Southerland at all. Mr. Hunter [presiding]. Botox and exercise. [Laughter.] Ms. Hahn. Really? Mr. Hunter. It is amazing. Ms. Hahn. Look away for a moment, and the Republicans have changed. Mr. Hunter. Excuse me. Good morning, gentlemen. I guess my first question is this. I was thinking--were you here in the last panel? Mr. O'Rourke. Yes. Mr. Hunter. So I guess we always get after the military for not giving a nonbudget risk assessment. I mean you want a risk assessment based on how the world is, not what we can afford, right? And as I was walking back and forth in between my other hearing and this, I realized I was asking the Coast Guard to give us a--I guess not a--I wasn't asking for a risk assessment, but a Mission Needs Statement that is based on the budgetary environment. So, I don't want to get those two confused. We still want a unbiased risk assessment from the Coast Guard that just says, ``If we had trillions of dollars every year, here is how you mitigate 100 percent of the risk, and it is going to cost you $1 trillion a year.'' That is what we want from the military, too, and then it is up to us to make those decisions. So, I guess our question is more about prioritization and how they come to their risk-based assessment. So I guess my question, Mr. O'Rourke, for you, is if they don't get more assets, and they don't get more money, how do you evaluate their mission set, just in general? Mr. O'Rourke. I think the answer is that we will continue to do what we have been doing for years and years, which is not completely fulfilling any number of these missions. What you wanted was a fiscally constrained understanding of missions--that would be the term that I would use for it--and I think one way for the subcommittee to go about getting that would simply be to review the records of what the Coast Guard has done in recent years concerning mission performance across the 11 statutory missions. The Coast Guard has been making choices, as the admiral indicated, about which things to do and not do on a daily basis. That establishes a pattern, a record, that the subcommittee can examine to see what is being done and what is not being done. I think the evidence is there already, it just needs to be compiled and presented to the subcommittee. Mr. Hunter. And the admiral was talking about multiyear procurement. Mr. O'Rourke. Well, I was. Mr. Hunter. You were, but he mentioned that, too. Mr. O'Rourke. Oh, OK. Mr. Hunter. He said take it out of his stable funding source and know what they are getting a few years out--do that. What is the impediment to doing that? Is it how it scores? Mr. O'Rourke. The Coast Guard has statutory authority to use multiyear procurement in pretty much the same way that the Department of Defense does. The Coast Guard is mentioned in the same statute that grants the authority to DOD. So I don't see any statutory impediment to the Coast Guard using multiyear procurement authority. Congress also has the ability on its own to authorize block-buy contracting authority for the Coast Guard, if it so desires. There is no statute that governs it. Congress can simply do it on its own. It seems to me that if there is an impediment to the Coast Guard doing it, it has been simple lack of familiarity with these contracting mechanisms, and no prior history of having done it. But I do think the Coast Guard is beginning to become more familiar and more comfortable with it, and that is one reason why I am emphasizing it as an option for Congress to consider. The Navy makes extensive use of these authorities, and has been successful, as a result, in being able to buy more ships for a given amount of money than would have been possible under more conventional contracting strategies. Mr. Hunter. So how much could they save? Just--let's say that they used it for their OPCs and the FRCs. If they just used it for those big buys, let's just say---- Mr. O'Rourke. For the ships that are under that contract, it can save upwards of 10 percent. So if you have a 25-ship OPC program, we are talking about getting two of those ships, basically, for free. Mr. Hunter. Got you. Mr. O'Rourke. If you were to apply it across the entire program. And you could do it across the entire program by starting with a block-buy contract for the first few ships, and then proceeding to a multiyear procurement contract once the program met all the statutory requirements for MYP. Mr. Hunter. Thank you. Mr. Offutt? Mr. Offutt. Sir, I would like to emphasize that I believe that a Mission Needs Statement with a full-blown understanding of what the Coast Guard is being asked to do by the American people through the Congress and through the administration is essential. Then you---- Mr. Hunter. But they have that now. They already have that. Mr. Offutt. And they are going to develop a new one. Mr. Hunter. Right. Mr. Offutt. So I would not ask you to tell them to physically constrain that MNS, the MNS. I would ask that, as Mr. O'Rourke suggested, that they do an assessment of the risk involved in that. And, quite frankly, looking at their history, it is probably a very statistically valid way of figuring out what it is they can't do and can do. But I believe that we need that---- Mr. Hunter. I guess what we are asking for from them is---- Mr. Offutt [continuing]. Last for 10 years. Mr. Hunter [continuing]. A QDR. Mr. Offutt. I believe that we need that. Mr. Hunter. We are asking for a QDR from the Coast Guard. That is kind of what--a risk assessment-based, what do you see happening in the next 5 years, what are your threats, how are you going to counter them. I guess that is what we are asking for. Mr. Offutt. Well, we still have DOD strategic guidance and other documents that are similar to the Mission Needs Statement. And I agree with you, what you are asking for is a physically constrained what-can-I-do type of document. Again, you know, they are working on the Mission Needs Statement, and it will just take them a little bit longer to dig through that other process, too. But I am sure they can provide it for you. Can't speak for the Coast Guard---- Mr. Hunter. I guess how do you separate out--I guess the question is, too, how do you separate out their Capital Investment Plan and the shortage of money and how those assets tie in to fulfilling their mission needs set. I guess that is the big crux of this, right? Because we have their Mission Needs Statement. We know that they don't have enough money to build and buy all the assets that they need in the time that they need them in. So--and I understand the game in DC, too, is to always be short, and then you can always say, ``Well, we are short, we need more.'' But at some point you have to ask for what you can get, and then only say that you are going to build what you have the money for, which they are not doing right now. They are saying, ``We want to build this. And, by the way, we are going to set in stone our plan to build this much stuff, but we only have this much money. And we understand that that is always going to be that way, so we are always going to be-- there is always going to be a delta of what we plan for and what we can actually do.'' That leads for bad planning. When you are talking about building ships, not necessarily what the American people through Congress have asked them to do, their mission set, but the actual building of ships, has to tie in with how much money they get at some point. And it is not right now. So how do you fix that? Mr. O'Rourke. I will give you an option for the subcommittee to consider, and it goes back to the testimony that the first panel gave about putting together a 20-year plan. If something like that were to be done, I think the committee could give consideration to asking the Coast Guard to doing three different versions of it, a version at $1 billion per year in the AC&I account, another at $1.5 billion per year, and other at $2 billion per year. That way, we can see what the resulting force structure is over time, and what the impact on the performance of various missions is. We seem to be, right now, in my view, in the midst of a debate about this fork in the road, about the future of the Coast Guard, about whether we are going to have a Coast Guard of a certain size and capability and capacity, or a Coast Guard of a different size and capability and capacity. And I would not want a 20-year plan to, in effect, short-circuit the debate as to what that funding level should be, by presenting only one scenario because, if you were to do that, it could limit people's sense of options and possibilities, and it also doesn't provide them with any understanding of how these things might change if you were to depart from that one funding level, either upward or downward. So, one way to get around that would be to ask the Coast Guard, if they were to put together a 20-year plan showing how things would be bought, what the resulting force structure is, and what the consequent mission performance is, to do three versions of that: one at $1 billion a year, another at $1.5 billion, and another at $2 billion, because these seem to be the numbers that are at play in the current debate over the AC&I account. And that way we could all walk into this situation with our eyes open about what we are paying for, what we are getting, and what the mission impact, consequently, will be. Mr. Hunter. Great, we will do it. That is a great idea. What do you think--you know what the 11 statutory missions are of the Coast Guard? Mr. O'Rourke. I don't have them listed here. Mr. Hunter. But as you have gone through them, what do you think about those in general? Do you think they are too broad? Think they are too narrow? There ought to be 20? Mr. O'Rourke. The missions, as stated, are stated broadly enough that they can be defined to result in a demand for mission assets that can be somewhat variable. Now, does that mean that we should try and narrow down the language on the performance of those missions? That might not be so easy. But there is some leeway in the way the missions are stated right now for someone of good faith, looking at that language, to define it one way, and someone else of equally good faith to look at that mission and define it in a different way and say, ``Well, no, I think it means performing it to a different level.'' Mr. Hunter. When you look at it right now, for instance, you have--the Coast Guard pulled, I think, how many of their ships from SOUTHCOM? Remember how many ships they pulled? Three? They pulled three ships from SOUTHCOM. So when the Coast Guard comes in and they talk about--the best statement they always have is, ``We can catch more or interdict more drugs in 1 year than the entire law enforcement presence of the interior of the United States catches,'' meaning they can get 10 times as much. It is already at 60 percent with the one at sea hauling in, I don't know, six or seven catches, right? So, the question is, then, you have their Mission Needs Statement, you have what they always come in and talk about, which is giant drug busts and SOUTHCOM, yet that is where they pull their assets out of first when there is a problem. So I guess my question would, from your analysis, if you have looked at this, do they need to pull--did they need to pull those assets from SOUTHCOM? Mr. O'Rourke. Well, they don't have---- Mr. Hunter. Were there areas where they could have reduced risk and kept those assets working the drug interdiction cases? Mr. O'Rourke. Could they have deployed more assets into the drug mission? Mr. Hunter. Yes. Mr. O'Rourke. To some degree, yes, I think so. Other missions would have suffered. I mean it is a rob Peter to pay Paul situation at this point. Several of the missions are not going fulfilled fully right now. The degree to which they are not being fulfilled varies. The protection of fisheries, particularly in certain parts of the western Pacific, is going not very much fulfilled, would be one way of putting it. And so we are not protecting our own waters and our own marine resources out there right now. So that would be another one. I don't think that the mathematics of this are that complicated. If you do more in one mission, you are going to have less available for doing other missions, particularly if those other missions are geographically separated from the one that you are putting more assets into. Mr. Hunter. That is rough. Mr. Offutt. Couldn't say it better. Mr. Hunter. OK. Ms. Hahn, do you have any more questions? Ms. Hahn. Yes, thank you, Mr. Chairman. You know, again, I know it is unfortunate that we have these funding levels. And to be prepared. Because I think, a lot of times, we are unable to foresee some of the threats to our Nation's homeland that we are depending on the Coast Guard to counteract. I don't think we, on the west coast, really prepared for the panga boats, and when I think about Terrell Horne, who lost his life one night off the coast of California going against these panga boats. So I think there is a lot that it would be nice to match funding with, you know, what we need, and try to do a better job, but I think there is a lot of threats that we are not really quite sure of, but when they happen we expect the Coast Guard to defend us against that. One of the things I was thinking about is the Coast Guard was unable to classify any of their activities as nonessential. And what we are talking about today, with a lack of funding, you know, maybe we have to do a better job of prioritizing. And just didn't know if either one of you saw any of the responsibilities within the Coast Guard Mission Needs Statement as nonessential, or if not nonessential, a lower priority. Mr. O'Rourke. If you can trace things in the Mission Needs Statement back to the 11 statutory missions, those 11 missions are a statement from Congress as to what is essential. And so, if you can provide a strong link translating from the 11 statutory missions to what you have in the Mission Needs Statement, then what it does is it brings it back to Congress to consider what the statutory missions might be. And rather than trying to tighten up the language, which could prove to be very difficult, what you would want to get is a better understanding from the Coast Guard as to how they look at those 11 statutory missions, and translate them into narratives of what they think needs to be done. And then the Congress can decide whether they agree or disagree with that translation process. Mr. Offutt. I have a slightly different point of view, and that is you have these 11 statutory missions, and you have raised and trained a Coast Guard that is highly qualified. By the time you reach leadership position in the Coast Guard, you have spent well over 20 years there. We have relied on their expertise and their training. And so, I say that through the guidance the Congress gives--and, of course, they get a lot of guidance from the administration and from DHS--I believe, truly believe, that the professionals in the Coast Guard understand what all of their requirements are, and that they are able to prioritize those requirements, based on the assets they have, based on their training, understanding, and personal experience. So, I am, again, very satisfied with what I see as the performance of the Coast Guard, not only at the senior leadership, but--what amazes me is the youngsters we see out there doing a job. We see JGs commanding ships. I saw a JG who was the only female on a ship as the XO of a 110 commanded by a lieutenant. And they were spending 24/7 at sea in the Mediterranean, doing their missions. And they understood their missions, and they went after them all the time. So I think that what we end up relying on is the personal ability and training and experience of our professional Coast Guard, both military and civilians, to actually sort through all of these missions and figure out which ones they can do and which ones are the most important. And it is just--quite frankly, in most Government agencies today, in the environment we are in, that is what is happening, you know. Our experienced folks in those agencies--it certainly is happening in DOD. We certainly see, you know, a prioritization of missions in all of the other four armed services. And then the Coast Guard, as well. I think we need to rely on our professionals. Ms. Hahn. And I don't know if either of you have a comment on this, but you know, after 9/11 Congress passed H.R. 1, I think, which was 100 percent scanning of containers coming into our ports. We are not even close to that. We are at about 2 or 3 percent. We have this layered approach, trying to be more strategic. That is what still keeps me up at night, is what will come through our ports and create a disaster. But how much more is the Coast Guard expending in resources to participate in this layered approach, assess containers at risk, than if we actually were scanning these containers, so we actually knew what was in them? Would that be--is--I mean they are always talking about how it is too expensive, and other reasons why we can't scan containers. I disagree with all that, and I always want to go on the record saying I think our ports are still our most vulnerable entryway into this country. But what if we actually were scanning? And, by the way, the technology exists today to scan these containers in a way that would not slow commerce. And would that in some way relieve the Coast Guard of tremendous resources in trying to participate in this layered approach to security? Mr. Offutt. Well, I agree with you---- Ms. Hahn. A question. Mr. Offutt. I agree with you that it is a risk. However, I think that the feeling of certainty for what is in a container involves more than just scanning it, because we actually--when you go back to port of origin, we actually have bills of lading and everything, so we know that they are there. I have found Coast Guard in my travels around the world to visit my Navy League Councils, I have found Coast Guard folks in the funniest places, and a lot of them are there primarily because that is a container shipping port. Qatar is a good example. There were some Coast Guards there, and that is their primary job, was to look at bills of lading, and understand what was coming to the United States, and how that operates. So, the question is, you know, I think they are doing that mission to the extent they can. And could we do the mission better? Could we apply more technology? Could we scan things better? I agree with you. But I think it is being done to the extent that the professionals believe is necessary to ensure some sort of high percentage of reliability. Ms. Hahn. So you don't think it would change if we began scanning 100 percent of our containers. You still think that it is an important, particularly at the port of origin, to---- Mr. Offutt. Yes, I do. Ms. Hahn [continuing]. Look at the manifest---- Mr. Offutt. I believe you could scan, but I believe that the port of origin and invoicing, or bill of lading process, is just as important as the scan. Ms. Hahn. It is a big, wide ocean. Mr. Offutt. Yes. Ms. Hahn. And a lot can happen---- Mr. Offutt. A lot can happen. Ms. Hahn [continuing]. Between the port of--the point of origin and when it lands at one of our U.S. ports. That is all I am going to---- Mr. Offutt. So you are familiar with AIS, though, the tracking of ships at sea? So, I mean, that is another part of the verification process. Yes, Mr. Chairman? Mr. Hunter. Plus CBP, not the Coast Guard, does most of the scanning. Customs and Border Protection. Mr. Offutt. Right, Custom and the border patrols out there. Mr. Hunter. Not the Coast Guard. Ms. Hahn. True, but I do think their resources are changed a little bit with their--you know, they now board the ships when they come into port. I just wonder if we are using their resources now in a way that we wouldn't have to---- Mr. Hunter. I agree. Ms. Hahn [continuing). If they were actually scanned. Mr. Hunter. It only takes one, anyway, correct? Yes. You know, I would agree with you if I think that every single person in every military service could be trusted to use their best professional opinion and their personality to ensure the job getting done. What you are admitting is there is a bad system. You said-- so basically you are saying there is systemic problems, and we rely right now upon the personality and direct intervention of those professionals with experience to determine the best course of action. That is a recipe for disaster, because all you need is one bad player who doesn't have the right experience, or takes a wrong turn, and the system then is--since it is broken, and you are relying on one personality, you get one bad personality, and it all goes to hell. That is a problem with relying on just people making--with their best intentions, trying to make decisions that are not based on analytics of the system. Mr. Offutt. Well, I would not like to characterize it as one person. We have team approaches, we have technology to assist us, we have interagency, we have lots of backups to that one person. And when you see the decision process, which you are familiar--I mean, you know, the way the joint chiefs--the way the Coast Guard--the way it starts right from the top of the military and works its way down is a team approach. I wouldn't characterize it as one person's decision as to--for that kind of large error---- Mr. Hunter. Well, let's take this, for example. Mr. Offutt. OK. Mr. Hunter. Let's take the President just extended in the Pacific the marine sanctuary area that is, like, 50 miles out from different islands. He said he is going to quadruple it. OK? The only way you keep people from fishing in a marine sanctuary is Coast Guard patrols. That is the only way. So, while the President cuts the Coast Guard's budget, their mission needs requirements and statements remain the same. He gives them a four times the area to patrol, while still not having enough assets in the--in SOUTHCOM's AO to interdict drugs. That doesn't seem like a very cohesive system from the top down. So he has given the Coast Guard four times more to patrol, while they have fewer assets, less money, and are pulling assets from SOUTHCOM. Sounds like they got the wrong personality in there somewhere. Mr. Offutt. No, somebody has to make a decision as to how-- what is the--or how often---- Mr. Hunter. Well, the President did. He said it is going to be four times, and you have to---- Mr. Offutt. Well, no, I am talking about now. So they are given---- Mr. Hunter. You are talking tactics now? Mr. Offutt. No--yes, I am talking tactics now. Mr. Hunter. So, like, Lieutenant JG---- Mr. Offutt. But that is not my expertise. But then there is the tactics of how soon or how often do we make a patrol through that increased area just to show presence. Mr. Hunter. Well, sure. Mr. Offutt. So, I mean, so that is not---- Mr. Hunter. Well, if the Coast Guard just had---- Mr. Offutt. I leave that up to professionals. Mr. Hunter. If the Coast Guard just had one ship, I guess a professional could say, ``This one ship is going to be present at any one place throughout the year.'' But what I am saying is you got to have a system in place so that it is not all based on professionals and personality. Mr. Offutt. And I believe it is. Mr. Hunter. General Mattis called that Handshake Con. Mr. Offutt. Right. Mr. Hunter. Handshake Control, which works well---- Mr. Offutt. No, I agree. That is what is in place. Mr. Hunter [continuing]. Until you got bad hand-shakers. Mr. Offutt. Right. Mr. Hunter. And then it stops working. Any closing statements? Mr. Offutt. No. I just want to thank you, Mr. Chairman. And it has been my privilege to brief two generations of distinguished---- Mr. Hunter. Of Hunters? Mr. Offutt [continuing]. Chairmans. So---- Mr. Hunter. He was a real chairman; I am a little chairman. [Laughter.] Mr. Hunter. But thank you. And, with that, the hearing is adjourned. [Whereupon, at 11:02 a.m., the subcommittee was adjourned.] [GRAPHIC] [TIFF OMITTED]