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PLEASE NOTE: The following transcript is a portion of the official hearing record of the Committee on Transportation and Infrastructure. Additional material pertinent to this transcript may be found on the web site of the Committee at [http://www.house.gov/transportation]. Complete hearing records are available for review at the Committee offices and also may be purchased at the U.S. Government Printing Office.






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MAY 19, 1998

Printed for the use of the

Committee on Transportation and Infrastructure


BUD SHUSTER, Pennsylvania, Chairman

THOMAS E. PETRI, Wisconsin
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HOWARD COBLE, North Carolina
JOHN J. DUNCAN, Jr., Tennessee
JAY KIM, California
STEPHEN HORN, California
BOB FRANKS, New Jersey
JOHN L. MICA, Florida
SUE W. KELLY, New York
RAY LaHOOD, Illinois
FRANK RIGGS, California
CHARLES F. BASS, New Hampshire
JACK METCALF, Washington
ROY BLUNT, Missouri
JOSEPH R. PITTS, Pennsylvania
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JOHN R. THUNE, South Dakota
CHARLES W. ''CHIP'' PICKERING, Jr., Mississippi
JON D. FOX, Pennsylvania
J.C. WATTS, Jr., Oklahoma

NICK J. RAHALL II, West Virginia
ROBERT A. BORSKI, Pennsylvania
ROBERT E. WISE, Jr., West Virginia
BOB CLEMENT, Tennessee
ELEANOR HOLMES NORTON, District of Columbia
PAT DANNER, Missouri
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JAMES E. CLYBURN, South Carolina
BOB FILNER, California
FRANK MASCARA, Pennsylvania
GENE TAYLOR, Mississippi
BILL PASCRELL, Jr., New Jersey
JAY W. JOHNSON, Wisconsin
JAMES P. McGOVERN, Massachusetts
TIM HOLDEN, Pennsylvania

Subcommittee on Coast Guard and Maritime Transportation
WAYNE T. GILCHREST, Maryland, Chairman
FRANK A. LoBIONDO, New Jersey, Vice-Chairman
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HOWARD COBLE, North Carolina
BUD SHUSTER, Pennsylvania
(ex officio)

BOB CLEMENT, Tennessee
JAY W. JOHNSON, Wisconsin
ROBERT A. BORSKI, Pennsylvania
(ex officio)



    Brown, Cynthia L., President, American Shipbuilding Association

    Gulling, Daniel L., President and CEO, Marinette Marine Corporation

    Kramek, Admiral Robert E., Commandant, U.S. Coast Guard

    Walker, Allen, Executive Director, National Shipyard Association

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    Gilchrest, Hon. Wayne T., of Maryland

    Shuster, Hon. Bud, of Pennsylvania


    Brown, Cynthia L

    Gulling, Daniel L

    Kramek, Admiral Robert E

    Walker, Allen


    Kramek, Admiral Robert E., Commandant, U.S. Coast Guard, responses to questions



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TUESDAY, MAY 19, 1998

U.S. House of Representatives,

Subcommittee on Coast Guard and Maritime Transportation,

Committee on Transportation and Infrastructure,

Washington, DC.

    The subcommittee met, pursuant to call, at 10 a.m., in Room 2167, Rayburn House Office Building, Hon. Wayne Gilchrest (chairman of the subcommittee) presiding.

    Mr. GILCHREST. The hearing will come to order. The hearing this morning I hope will prove invaluable, not to mention interesting, but more important invaluable for us to help in the decisionmaking process to determine to a very great extent the future of the Coast Guard's capabilities to defend the shores of the United States, continue to pursue its responsibilities of search and rescue, ensure the sustainability of our fisheries, to interdict illegal immigrants, and to interdict illicit drugs among a few of the responsibilities of the Coast Guard.

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    We are in a mode where we are trying to pay off the national debt, protect Social Security, expand Medicare and a full range of other issues, not to mention the funding of some of the other branches of the military services. But more importantly, it is a significant first step that the Coast Guard is undertaking to decide the future of its role and how it will pursue its responsibilities, whether it be fewer or larger ships, or will there be more smaller ships; what is that role, and even to a certain extent how will the Coast Guard interact and interchange its responsibilities with the other branches of the military services, such as the U.S. Air Force, the U.S. Navy.

    We are in a situation, I would guess, that is quickly changing. It is our responsibility to understand the nature of that change in deciding that we must spend our dollars for defense as wisely as possible. Military spending is going to be increasingly dependent on the new military strategy and what the new threat will be over the course of perhaps the next 100 years. A critical element in our defensive positions and all those other responsibilities that the Coast Guard has is about to take place, when, with the help of the Coast Guard, the U.S. Congress and other people, we decide how to spend billions of dollars in just the next few years. This hearing is a first step to try to understand the nature of how to do that.

    I thank the witnesses for coming this morning. We don't have our Ranking Member with us this morning, but I will recognize Mr. Johnson from Wisconsin.
    [Mr. Gilchrest's prepared statement follows:]

    [Insert here.]

    Mr. JOHNSON. Thank you, Mr. Chairman. I did run into the Ranking Member, with suitcase in hand. He is on his way here.
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    I appreciate the opportunity to make just a short statement, first of all, to express my pleasure of being here at the beginning of oversight by this subcommittee of what I think is a very important project, the Coast Guard's Deepwater Replacement Project.

    As you know, Mr. Chairman, I show up at the meetings. I am a strong supporter of the Coast Guard. I have got four posts in my district. I think the Coast Guard does a magnificent job protecting lives, protecting property, stopping the flow of illegal narcotics, protecting marine environment and a lot of other ways protecting the U.S. citizens. To do these jobs, the Coast Guard does and should get modern equipment and the right kind of equipment. I understand the Coast Guard already has some of the oldest vessels and aircraft in the world among similar agencies in other countries. That equipment will need to be replaced. The only issues are how and when.

    I am pleased that the Coast Guard is proceeding with a new and innovative effort to conduct a comprehensive study of its Deepwater needs and is involving private industry at an early stage of the procurement process. I think this is a comprehensive approach. It is far better than a piecemeal, Band-Aid-type approach. I know we will be hearing from very capable industry participants, I might brag, such as Marinette Marine from my district, later in the hearing.

    If I have a concern, it may be that we may not be moving quickly enough. I urge the Coast Guard to proceed as expeditiously as possible with the study part of its procurement needs. This project is too important to the Coast Guard and this Nation for it to bear any delay.
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    I appreciate again, Mr. Chairman, this opportunity to make a statement. I look forward to hearing all of today's testimony.

    Mr. GILCHREST. Thank you, Mr. Johnson.

    The gentleman from New Jersey, Mr. LoBiondo.

    Mr. LOBIONDO. Thank you, Mr. Chairman. Today we are reviewing a program that constitutes the future of the United States Coast Guard. While we are all proud of the excellent job that the Coast Guard has been doing, especially in the face of budget constraints, it is clear that their cutters and aircraft are showing signs of wear and tear. Soon the men and women of the Coast Guard will not be able to fulfill their mission because of outdated equipment.

    The problem will have a ripple effect in two areas. First, the ability of the Coast Guard to conduct search and rescue operations will be impaired. In my district there are fishermen, commercial fishermen, pleasure boaters, and even Air National Guard pilots who will attest to the Coast Guard's rapid response and use of technology as factors in having their lives spared from a watery death in the cold Atlantic Ocean.

    Second, the Coast Guard will not have the mission readiness to fight the war on drugs. At a time when cartels have violently stepped up their efforts to import drugs into our country, there is no margin for error. Because drugs wind up on the streets and in the reach of children, it is our duty here in Congress to ensure that the Coast Guard has all the necessary tools to fight, and we hope someday beat back this assault on our society.
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    The Integrated Deepwater System will match the Coast Guard with the aircraft, vessels and technology it needs to proceed and assist as it enters the next century. This long-term program will, when complete, improve the capability of the Coast Guard to patrol and safeguard our Nation's coastal waters. Deepwater will also allow the Coast Guard to maintain America's forward line of defense in the drug war.

    Mr. Chairman, the choice is easy. Either we undertake the job of modernizing the Coast Guard and improve its ability to carry out its range of missions, or we can do nothing and let the gap between readiness and resources widen. Thank you very much.

    Mr. GILCHREST. Thank you, Mr. LoBiondo.

    [The prepared statement of Mr. Shuster follows:]

    [Insert here.]

    Mr. GILCHREST. Admiral, we welcome you here this morning. We know you are coming to the beginning of an exciting new adventure in your life. We on the committee, including this staff, wish you well. You have served your country for many decades. You have done it admirably. You have left a legacy of positive, hardworking, courageous acts that we all will try to emulate. We wish you well with your new career, whatever it might be, and with your family. We hope your children get good grades in college. We look forward to your testimony this morning, Admiral, on this most intriguing enterprise.

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    Admiral KRAMEK. Thank you, Mr. Chairman. I am pleased to appear before this distinguished committee and ask that my written testimony be placed into the record, and I will make a short oral statement.

    Mr. GILCHREST. Without objection.

    Admiral KRAMEK. The Members have very articulately expressed the needs of the Coast Guard, both Mr. Johnson and Mr. LoBiondo, and I certainly agree with them. They know, because they have Coast Guard units in their districts, that throughout history we have been doing more than guarding the coasts, we have been a unique instrument of national security, very, very unique because we are a member of the Armed Forces and also a law enforcement agency. Our mandate to patrol the high seas and littoral regions of the United States continues as it has for over 200 years.

    The Coast Guard is also a leader in this government for streamlining, for adopting the Government Performance and Results Act, for implementing the National Performance Review, and for strategic planning and acquisition reform. We are going to be talking about an acquisition today, so I wanted to set the stage, that we are the leaders in government in that particular area as far as doing it responsibly and doing it right.

    This acquisition that we are going to be talking about is very innovative. It is very forward-looking. The process of this acquisition is applauded by acquisition experts; it is applauded by industry and applauded by those in government who have done this before. That is because we followed the OMB A109 process and the Department of Transportation acquisition process to the letter.
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    We also are buying something different. We are not just replacing an old fleet of ships, an old fleet of aircraft, an old command and control communications system. We are looking at the entire system that we need to operate in the Deepwater environment where our responsibilities are; that is, the ships, the planes, and the command and control, communications, computers, intelligence, surveillance and reconnaissance system which integrates all of this into the most efficient and effective system to fulfill our missions in the deep ocean waters of the world. It is essential the system be fully compatible with those of the other members of the Armed Forces, especially the C4ISR system, since we work with them in a jointness that you have described, Mr. Chairman, which is the only way we can afford to operate with reduced defense budgets and Coast Guard budgets in that environment today.

    What is the job that we have to do? It is well-known to all. It is the job we have done for 200 years. Will it increase? Certainly some analysts think it will. And all of those questions are part of this acquisition. In fact, we are providing a mission statement and a specification to industry, and they are going to work together with us in partnership for the next 18 months in this acquisition to answer a lot of these questions that analysts may want answered now, ahead of time.

    This isn't the old way of doing business where we decided we needed to replace a 210-foot cutter, did a preliminary design, figured out how many we needed, went out with a preliminary specification, and asked a contractor to bid on it. We are asking contractors in Phase 1 of this project to work together with us, to determine what system has the best capability to do what we need to do now and in the future, and then in Phase 2 of the project, more than 18 months from now, to prepare a detailed design and cost estimate for what it would take to do that.
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    In between Phase 1 and Phase 2 we will develop a determinant range of numbers defining how many ships and planes and systems we need. The iterative OMB A109 process spirals down years from now, perhaps in the year 2003 or 2004, to determine the exact number, at key decision point 4. We are only at key decision point 1 now in the A109 process. A lot of analysts analyzing this project think we should know all those answers now.

    The reason to do this project in a meaningful way is to find out those answers accurately so that we can make good decisions on how we can get the most bang for the buck for the American taxpayers in the missions they expect the Coast Guard to do.

    Why are we doing it at all? It has been mentioned that we have one of the oldest fleets in the world. Of the 41 other services like ourselves in the world, ours is the 37th oldest fleet, Mr. Chairman, an average age of 24 years of age. Our Navy has an average vessel age of 12 years. The average age of all the fleets in the world is 16 years.

    People say, ''Well, maybe you ought to just keep renovating it.'' We have already renovated it once. We have extended the service lives of all but one of the classes of ships in this system, and all of the aircraft classes except one, already. Those service life extensions were for 10 or 15 years to tune up the machinery, to take care of the rusted frames, and to make them run a little bit longer. We should have started this acquisition process 10 or 15 years ago when we had to extend the service lives of the vessels, so that we would be better prepared as they reached the end of their service lives to replace them.

    You could keep running an old fleet for a long time, but 90 percent of the cost of a fleet is determined in its initial design. Only 10 percent are modifications to it after it is built. That is all we are able to achieve from renovations. You can drive the Model T down I–95, but you can't go 75 miles an hour very long in that Model T. It might look good, it might have a good design or plate on it, but it can't do the job.
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    Our current system is personnel-intensive. Sixty-six cents of every dollar that the Coast Guard spends is for personnel costs. The new systems of today take two-thirds to one-half of the personnel to operate them as the old World War II legacy systems that we have today. If we are to stay within our budget marks, accomplish what we have to do, and maintain our service to the public within those marks, I have to reduce the cost of the people doing that job. We don't even have a chance of doing that without a new Deepwater system, Mr. Chairman. The technology is obsolete.

    I just came back from the deep Caribbean where we were coordinating a multinational and joint force from the Coast Guard Cutter Dallas. The Dallas seems new to me, Mr. Chairman, because it was built since I was a commissioned, but that was over 30 years ago. The Dallas was out at sea about 200 miles south of Haiti. It had Haitian ship riders on board. It had Dominicans on board. It had the Western Hemisphere Joint Task Force on board—a Navy commodore and his team—coordinating the operations of Army assets, Air Force assets, Navy assets, and French, Dutch, and English assets, all involved in the war on drugs, trying to stop all of those drug runners from getting into Haiti and the Dominican Republic.

    The command and control system and the ability to communicate and control all those assets is paramount to successful accomplishment of our deepwater missions in the 21st century. Not having the right C4ISR system and the right command and control platform to do that means we won't be successful. There were 200 people on board that ship doing all that. There probably only needs to be 80 in a new system that can accomplish the same task more efficiently, using their intelligence to put the assets where they need to be rather than hunting around for them. That is what the Deepwater system is all about.
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    Why have we waited so long? Mr. Chairman, we haven't waited so long. Our AC&I budget has been underfunded by 40 to 50 percent over the last 10 years. For the last 10 years, I have asked for an acquisition and construction budget of $650 to $700 million to recapitalize our $20 billion plant. I continue to get around half that, $350 to $400 million. And so our fleet, just like other fleets and other acquisitions in the Armed Forces, becomes older and older, and you end up with block obsolescence.

    It is the recapitalization of the past that has brought us to this point, but today we need to talk about the future because we have a good plan, and I think we can come up with the right mix of things we need to be at our most efficient in doing our job now and in the future.

    What do the American people want the Coast Guard to do? Very simply, as the Members just stated, when they call for help and cry, ''May Day,'' they want us to go out there and save their lives and protect their property. They want to keep the oceans safe and keep them environmentally clean. They want to protect our borders from drugs and illegal migrants. They want to preserve our marine resources.

    People seem to forget that in 1976, the Magnuson Act was passed, which extended our limit out to 200 miles, our Exclusive Economic Zone. We have the largest Exclusive Economic Zone in the world, Mr. Chairman, almost 2.5 million square miles, 200 miles out, and over 45,000 miles of coastline where we are trying to protect our fisheries and our marine resources. It turns out we have the best marine resources in the world in our Exclusive Economic Zone. Every other country in the world would want a piece of it. We have to be very careful that it isn't totally depleted.
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    We are defending our country as you mentioned. Just last night in an unusual operation, a Coast Guard C–130 embarked 800 miles offshore with an Air Force parachute paramedic team to go save the life of a dying seaman at sea. This morning, we are in the Persian Gulf enforcing the embargo against Iraq, and we have had four interdictions of vessels running the embargo trying to bring gasoline and illegal products into Iraq. The reason we are there is my agreement with the CNO to free up Aegis cruisers so they could join the carrier battle groups that had to be formed to respond to the latest threat from Iraq because the Navy has reduced its ships and air wings by 45 percent, requiring us to join together to do these types of operations. We are not looking for more work. We have more than we can do now. This is an efficient, timely, least cost way to procure what we need for the future, Mr. Chairman.

    In summary, there is no avoiding the fact that if the Nation desires the Coast Guard to continue our tradition of outstanding service, then a major acquisition of assets will be required. There is simply no one else available that I know of to assume these national maritime priorities of law enforcement in the absence of the Coast Guard. The Deepwater analysis, will provide sufficient justification to commence an acquisition which will determine the most efficient way to replace our fading capabilities. While the type, number, and mix of new assets cannot be determined without a great deal of further analysis, the need for action to replace these assets is clear, and in fact the acquisition itself determines the number and the need for these analyses. We need to get on with this acquisition. I consider it a project of urgent necessity.

    I thank you for the opportunity to testify today and answer your questions, Mr. Chairman.
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    Mr. GILCHREST. Thank you, Admiral.

    The analysis, who is a part of the analysis?

    Admiral KRAMEK. The analysis. We have already done a mission acquisition report and a mission needs statement to determine what capabilities we need in the Deepwater environment. We have looked at all of the missions we are doing. We have looked at all the statutes with which we have to comply. We have completed a strategic vision statement for the future, because to meet Joint Vision 2010 of the Chairman of the Joint Chiefs of Staff, we also had to project out into the future so as to have some sense of what we will need.

    The basis for our mission analysis is found in the intelligence reports put together by the Defense Intelligence Agency and others which form the foundation for the Department of Defense Quadrennial Review, the National Defense Panel, and other unclassified studies. We presented this mission analysis to the Department of Transportation acquisition panel. They have agreed that our fleet is old and less capable than it should be. They have agreed that we have a number of missions to continue on in our present day and to start the first step of this acquisition. So what we have done now is ask industry to help us in this analysis. What they are going to help with is—

    Mr. GILCHREST. You did a study to determine the capabilities.

    Admiral KRAMEK. Yes.

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    Mr. GILCHREST. You also mentioned Phase 1, Phase 2, and then what you are doing in between Phase 1 and Phase 2.

    Admiral KRAMEK. The acquisition that we are embarked on now, the one that is funded in the 1999 budget for $28 million, has two phases associated with it. It is a concept exploration analysis. Phase 1 of the analysis lasts 18 months. We have gone out with a request for proposals and said to industry, here are the capabilities we feel we need in the Deepwater environment, and here are the general specifications of what we are looking for. Industry, we need you to analyze what mix of new assets, renovated old assets, and changes in technology are needed to meet our missions. In other words, we are not going to give up all our old aircraft. Some of them might be very capable of still performing, even without modification. Look at everything we have today, look at what we have to do and what capabilities we need to do it, and come in with a concept proposal on what you think is the best mix of assets to accomplish these missions. That is Phase 1.

    Before we start Phase 2, we plan to give industry a revalidation of our mission analysis and give them an idea of the extent to which we will perform these missions; that is important in determining how many of the assets we need. That is part of the process. And in Phase 2, the winners of the Phase 1 competition will go on and do a detailed design and a cost estimate of what this system would look like so that in the future, a decision could be made by the Commandant, the Secretary of Transportation, and the committees of Congress as to whether or not to proceed with the procurement and for how many and for what value.

    Mr. GILCHREST. Will we be given options, Admiral?

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    Admiral KRAMEK. Yes.

    Mr. GILCHREST. I guess what I am asking, with your analysis, I am sure you are going to go for what would be ideal, what would be the best method from your perspective of how to do the mission of the Coast Guard.

    Admiral KRAMEK. I think it will also include economics and what is affordable.

    Mr. GILCHREST. What would be the difference between—I have read estimates of $7.5 billion to $15 billion. What does that range represent?

    Admiral KRAMEK. It is unfortunate that those estimates were ever made because they are not representative of this project at all. But you have to start with an estimate.

    Mr. GILCHREST. Who made those estimates?

    Admiral KRAMEK. Those estimates were made by us. In order to start a project like that, you have to determine what the replacement cost of your existing fleet is. If you were to go for a one-for-one replacement of the medium endurance cutters, high endurance cutters, all the aircraft, and all the C4I systems we have, it falls in the range of $7 to $15 billion.

    I would hope that this costs a lot less than that. I would hope that we can now develop a system, rather than the hodgepodge of ships and planes that we have, which were never designed to operate together and were designed to do all different things than they are doing now. Our goal is a system that operates very efficiently in a Deepwater environment, with a minimum number of ships and aircraft manned with minimal crews, and does so more efficiently than the system we have today, Mr. Chairman.
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    Mr. GILCHREST. I just have one more question. There has been apparently some discussion to determine in the Deepwater project how many larger ships and how many medium-size ships. There seems to be two perspectives, on fewer larger ships and some of the positives and negatives to that, and more medium-size ships and some of the positive and negative aspects of that. Is that the scenario that will determine—are those the two options that the Coast Guard is looking at? Might there be something in between that?

    Admiral KRAMEK. We are not looking at either of those options. Those who look at those options are 3 years too early. There is no way to know that now. We are looking at the best system to do the job regardless of size or how many or what numbers. That is not determined yet.

    It could be there should be a family of ships and boats and aircraft to do this, but that is what industry is going to propose in their concept in the next 18 months, including which of our legacy assets, which ships and aircraft that we have now, should be part of that new system and renovated.

    For example, we have a new helicopter fleet of Sikorsky H–60s that are pretty new. We don't want to do away with them. They should be included in this picture. There is no need to go out and buy new H–60 helicopters. But I can tell you the H–60 helicopter can't land on our 200-foot cutter. It can't deploy with our 378-foot cutter. It can only land and deploy with the 270-foot cutter. Then you have got to take off its rotor blades to put it in the hangar. So there are some things that have to be done.

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    There is no predisposed asset number or type. I would hope we would come up with the most efficient size and the most efficient numbers to get the job done to the measures of effectiveness that we have signed up for—the Government Performance and Results Act performance figures that will be coming forward with our year 2000 budget—and the expectations and performance figures on what Congress, the Administration, and the American people feel, when ''May Day'' is called: what percentage of lives we should save, what percentage of property we should save, and how effective we should be in keeping drugs out of this country and how effective we should be in keeping migrants out this country.

    Mr. GILCHREST. Thank you, Admiral.

    Mr. Johnson.

    Mr. JOHNSON. Thank you, Mr. Chairman. I, too, join with you in saluting you, Admiral. I wish you well in your new adventure.

    I have some questions about Deepwater; first of all, about the missions. A lot of the missions, as you have outlined in this testimony and previous testimony, are crucial, drug interdiction and pollution prevention, that sometimes get the headlines, and very often they don't get the attention. As the Coast Guard has to make do with the fixed or slightly increasing budget as you outlined, has there been a decrease in the demand for Coast Guard services?

    Admiral KRAMEK. No. There has been an increase in demand for services, especially over the last 15 to 20 years, including an enormous increase for services in the counternarcotics area. That mission didn't exist before 1975. We also experienced an enormous increase in demand for services when the Magnuson Act was passed in 1976 and extended our 200-mile limit through over 45,000 miles of coastline. There were no regional fisheries councils then. Now there are 37 of them with management plans, and there are 86 species of fishing stocks in American waters that are depleted. There were no mass migrations before 1979. Since that time we have had four or five mass migrations of illegal migrants trying to get into our waters. We are now the land of milk and honey. We have preserved our environment, we have preserved our fishing stocks. We have a wonderful Nation. And everybody wants to come here and bring bad things here, whether they are allowed to or not.
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    So our maritime law enforcement mission has become very prominent in the last 20 years as a result of legislation, as a result of statute, and as a result of the President's drug strategy. We now have a counternarcotics strategy, an excellent one in my opinion, put together by General McCaffrey, that the President has promulgated. We are in the third year of that strategy. In 1998, it requires me to reduce the flow of drugs coming into the United States by 50 percent over the next 10 years. A few years ago there was no such standard. I believe Congress would like to see it reduced 80 percent in the next 3 years. So all of these things cause us to be very busy.

    Mr. JOHNSON. All of that information goes into the mix that you provide to the potential folks who are going to come up with the plan?

    Admiral KRAMEK. Exactly.

    Mr. JOHNSON. It has got to be a thick book of statistics and stuff that you give them so that they can look toward the future of what you are doing now and project that out, or do you have projections for that?

    Admiral KRAMEK. I give them, first of all, what we are doing now and made a very big, thick book of our level of activity the last 5 years so they can average that out and develop a baseline. In order to predict for the future, we all wish we had a great crystal ball. We have our own. We do strategic planning. But we are going to be helped in that endeavor by doing a roles and missions study.

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    The President's 1999 budget requires the Coast Guard to conduct a roles and missions study with emphasis on the Deepwater environment, so that at the end of Phase 1 of this procurement and acquisition, and before Phase 2 starts, our roles and missions can be revalidated by a special commission which will be designated by the Secretary of Transportation. I am meeting with him on Friday on the final approval of the charter which I have sent to him to do that Roles and Missions Commission. That Commission will revalidate our mission analysis report and our mission needs statement.

    As I said before, it is an iterative process, spiraling in toward a number that is approved by the Administration and the Congress, so we know exactly where we are headed. This is not an open-ended procurement or an unconstrained procurement, it is very, very well-structured.

    I would like to say one other thing about the roles and missions study. I am very concerned that this study be accomplished on time so as not to delay this acquisition. You can be sure that the charter that I have put together allows that study to be completed within 1 year of when we stand up to the committee, which I hope will be this summer. That will leave us 6 months for analysis before the commission needs to provide input to the acquisition process. I would certainly welcome this committee's oversight to make sure that we get that done on time. I think that will be essential, so that we are not delayed because of that study.

    Mr. JOHNSON. It sounds like public-private brainstorming, but it has a deadline.

    Admiral KRAMEK. It does.
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    Mr. JOHNSON. The increasing age on the equipment that you noted, you are 38th, 37th in the world in terms of other comparable navies?

    Admiral KRAMEK. That is correct.

    Mr. JOHNSON. What is the drawdown in terms of the personnel that are required for ships and equipment of this size? I know you have been downsizing as a force, but yet is there an increasing number of people just required? You mentioned 200 people on the one ship you were on just to operate it.

    Admiral KRAMEK. There were 200 people, including the task groups. Just to operate it takes 175 people. So there were 25 more people on there because we had on board an aviation detachment, a Navy task force staff, and Haitian and Dominican Navy personnel so we could operate in their respective territorial airspace and enforce their respective country's laws on the high seas. You need to do this in maritime agreements.

    But that ship, one of our high-endurance cutters, was built to do ocean station weather patrols before we had weather satellites. It was never built to do what we are doing with it, which is command and control of a major drug operation in the deep Caribbean. But it is our most capable class of vessel. There are only two on the East Coast, by the way, because I had to put the other 10 in the Pacific to do the fisheries patrols in the north Pacific and the Bering Sea since our 210s and our 270s are not capable of handling the weather there.

    These ships were designed with World War II technology. They are very people-intensive. As an example, there are 53 engineers on this ship to keep it running. The Pratt and Whitney turbines are no longer built, they were the aircraft engines for the old 707s. It is tough getting spare parts. We began renovating this class of vessel about 12 years ago to last another 15 years, so in a few more years it will be near the end of its service life.
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    New classes of ships that have the same capability as this nearly 35-year-old cutter now have less than one-half of the people this cutter has on board. And these ships that are already under construction around the world, in my estimation, one person on a ship in the life cycle cost of that ship requires 10 tons and $1 million life cycle cost. So for every Coast Guard person that I can reduce in the future crews of these ships, we can save a lot of money. We can save millions of dollars in the future and still do our job better.

    I think it is essential that we do that. I think being a good steward of the taxpayers' purse requires us to look at an acquisition which will reduce our crew sizes. I have also reduced 4,000 people in the Coast Guard since taking over this office 4 years ago. We are the smallest we have been since 1963. I almost find it alarming that our uniformed service is smaller than the New York City Police Department, and yet we are required to do all of these jobs. So in order to do them, I need to reduce the intensity of people so that I can employ them in other missions and accomplish everything else we need to do.

    Mr. JOHNSON. It sounds like you have a good plan for efficiency. I wish you well with it. We will be here to oversee it. Thank you, Mr. Chairman.

    Mr. GILCHREST. Thank you, Mr. Johnson.

    Mr. LoBiondo.

    Mr. LOBIONDO. Thank you, Mr. Chairman.

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    Admiral, the administration is proposing to conduct a roles and missions study for the Coast Guard, which you just talked about briefly a minute ago. I would like you to expand on that just a little bit and tell me about how this effort would compare with the work that is already being done in preparing for the Deepwater procurement.

    Admiral KRAMEK. It will help validate some of the work that has been done for the Deepwater procurement. The roles and missions study will be done by a commission established by the Secretary of Transportation who will prepare a report. They will review all the statutes that we have to operate by, all the Presidential decision directives, all of the missions that we have, and they will report to the President through the Secretary of Transportation and validate those roles and missions, as the President's 1999 budget says, with an emphasis and focus on the Deepwater project.

    In 1995, we put together our mission analysis report on our deepwater roles and missions at that time, some may question whether or not those are really our roles and missions today. Well, the Roles and Missions Commission will review that and revalidate that mission analysis report and say, yes, the Coast Guard is supposed to be doing that. They are agency that we want to patrol the Exclusive Economic Zone. They are the lead agency for maritime interdiction of migrants and drugs into this country. It will revalidate Presidential Decision Directive 9, Presidential Decision Directive 14, and all of the different things that have given us the tasks that we have today, with an emphasis on the Deepwater project.

    So I expect that that will be done and we will make any course corrections we have to make before we start the second phase of this acquisition, and there is specifically time for that. I think it is a good idea to do that.
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    Mr. LOBIONDO. I was going to ask you, do you think that is a good idea to do that?

    Admiral KRAMEK. I think it is a good idea, because you will know, we will know, and the taxpayer will know they will get the most bang for their buck.

    I am convinced after 40 years in this service that we have more work to do than we can do. The former Chairman of this committee, Chairman Coble, held several hearings to demonstrate that. I welcome a roles and missions study to take a look at what we have to do and revalidate that. I think they are going to find we have a lot more to do than we have the capability and ability to do.

    At the same time, though, as I said before, I am concerned that it doesn't become an instrument for paralysis by analysis; that we get this done quickly, in a timely manner so as not to hold up any of these acquisitions that we have to make. That is why I welcome your oversight to make sure that it does get done on time.

    Mr. LOBIONDO. That is one of the concerns I have, that this could, in fact, end up delaying beyond what is already a critical time period. Do you have any sense beyond suggesting to Chairman Gilchrest an oversight role for this committee of how we can make sure that paralysis does not set in by just overanalyzing this time and time again?

    Admiral KRAMEK. I am very confident now that won't happen. We have put together a very well thought out charter. I presented that to the Deputy Secretary of Transportation last week and the Assistant Secretary for Budget and Programs in the Department. Admiral Loy, my successor, and I—Admiral Loy is here at this hearing this morning with me, and has been confirmed by the Senate to be the next Commandant—he and I are meeting with the Secretary this Friday for the final approval of that. They asked for the whole thing to be done in a year. It needs to be done in less than 18 months. I think we are going to be on schedule with it. I think we need to make sure we stay on schedule with it. But right now the way we have put it together is to meet the schedule without delaying any of the projects.
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    Mr. LOBIONDO. Thank you, Mr. Chairman.

    Mr. GILCHREST. Thank you, Mr. LoBiondo.

    Just a couple of other quick questions. Could we have a list, Admiral, of the people on this roles and mission reevaluation of your evaluation group?

    Admiral KRAMEK. Yes. I have made a prospective recommendation to the Secretary. As soon as he approves it, we will send that out.

    Mr. GILCHREST. Thank you.

    [The information follows:]

    The charter for the roles and missions study is still under development within the Administration. Participants in the study will be identified once the charter has been approved, and that list will be promptly provided to the Subcommittee.

    Mr. GILCHREST. Could we also have a list of all the teams involved in the Deepwater project?

    Admiral KRAMEK. Yes. We have a whole matrix team. We will give you—in fact, we need to give you the entire acquisition plan. We have reorganized in the Coast Guard specifically with different teams that will be working on this. Some will support the roles and missions study, to make sure that this is done very thoroughly and on time.
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    Mr. GILCHREST. Thank you.

    [The information follows:]

    The actual teaming arrangements by industry in response to the Coast Guard's Deepwater request for proposals are source selection senstive. However, the following teaming arrangements have been reported in the news media: Boeing/Avondale/Raytheon, Lockheed Martin/Litton/Bell Helicopters, Marinette Marine/Bath Iron Works/Science Applications International Corporation/Sikorsky, and Bollinger Shipyards/Halter Marine/Booz Allen.

    Mr. GILCHREST. Two other very quick questions. They might not be quick answers. I have heard periodically over the last several months, and I just wanted to direct this question to you. This is not directly related to the Deepwater project, but it has some ramifications. There has been a good deal of discussion over the last year or so about the amount of money authorized and then appropriated to the Coast Guard for drug interdiction. In the same vein, there have been discussions about where that money might come from. There have been some discussions specific to that about reducing the Coast Guard's fisheries patrols in the EEZ and using that money for more drug interdiction activities. Could you comment on those kinds of statements?

    Admiral KRAMEK. I think it is exactly the wrong thing to do. Certainly,any administrator needs to balance the assets he has based on priorities. There have been times, such as the mass migration from Cuba and Haiti, where I have had to reduce our business in fisheries and even drug enforcement, but not search and rescue. In order to rescue 56,000 Cubans and Haitians in 1994, for example, it took about 3 or 4 months. Then we shifted back. That is the bang for the buck you get for us being a multimission agency and being able to do that.
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    However, long term, to take away from fisheries in the Exclusive Economic Zone, which is over a $20-billion-a-year industry in the United States that employs over 400,000 people, is absolutely the wrong thing to do. In 1991 and 1992, the Coast Guard received approximately twice as much funding for counternarcotics as we do today. In 1991 and 1992, there was almost twice as much ship time, cutter days, cutter hours, and Navy hours put in the war on drugs as there is today. And in 1991 and 1992, there was three times the amount of flight hours allocated to counternarcotics in the transit zone than there are today, 37,000 hours then, less than 12,000 hours today.

    So my answer to your question would be wherever our budgets were cut and that money went, that is where it should be taken back from, not fisheries, which are under attack by countries with huge populations that derive 40 percent of their protein from the sea, and we have a good part of that in our Exclusive Economic Zone. And so we, in keeping with the Magnuson Act and just common sense, ought to preserve that not only for the world, but for ourselves and for the economics of our domestic fishing industry here in the United States. I don't know where the funds went over the years, Mr. Chairman, but they were reduced from those projects. Perhaps they should be restored.

    I certainly don't sit in your chair or work in your part of government, but when I see our government thinking about such a huge and needed increase in transportation infrastructure and highway construction with tens of billions of more dollars being invested in that and hardly anything more put into counternarcotics, and thinking about taking money out of fisheries, I am astounded that we can think about anything that way and not protect our borders first.
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    Mr. GILCHREST. We are astounded as well, Admiral. I appreciate your statement, and your comments are taken to heart. Maybe you should run for Congress in your next adventure.

    As you leave, Admiral, once again I want to wish you well. You have served your country. I didn't serve in the Coast Guard. I served in one of those other branches. I was a proud marine. I have traveled to the Caribbean, Alaska, the Northwest, the Antarctic, New England, certainly areas around Washington, D.C., and even London with the Coast Guard over the past year or so. It is a fine branch of service. You have a good deal to be proud of.

    I will make a comment about the International Maritime Organization meeting in London, which the Coast Guard basically represents the United States. Our delegation, made up of people from the Coast Guard, was the finest delegation in that branch of the United Nations. We all can be proud of that.

    Admiral, we all wish you well.

    Admiral KRAMEK. Thank you, Mr. Chairman.

    Our next panel will be Cynthia Brown, President, American Shipbuilding Association; Allen Walker, Executive Director, National Shipyard Association, representing the Halter Bollinger Joint Venture; and our next witness will be introduced by Mr. Johnson.

    Mr. JOHNSON. Thank you, Mr. Chairman. It gives me a lot of pleasure to introduce a constituent from my district, Dan Gulling, who has been the President and CEO of Marinette Marine Corporation of Marinette, Wisconsin, since 1991. He has a master's of science degree from Carnegie Mellon University. My aide would be mad if I didn't also mention that he graduated from the University of Notre Dame. He now lives in Green Bay.
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    Under his leadership at Marinette Marine, they have two active contracts with the Coast Guard, replacing buoy tenders. I have had the pleasure of attending about a half a dozen or so launchings of the buoy tenders. My wife JoLee recently had the honor and privilege to be chosen in sponsoring one of the newest tenders launched. In fact, today as we speak, it is riding around Lake Michigan. She declined all of a sudden this morning to get up at 7 a.m., get out on the ship and take it for a ride. I don't know why. I would have been there.

    I have been told the Coast Guard is very happy with the shipbuilding that Marinette Marine has performed. I am hopeful that Marinette will be a major player in the Deepwater program.

    I welcome you, Dan, and happy to hear your testimony.

    Mr. GULLING. Thank you very much, Mr. Johnson.

    Mr. GILCHREST. Thank you, Mr. Johnson.

    We will start with Ms. Brown. Thank you for coming this morning.


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    Ms. BROWN. Thank you, Mr. Chairman, members of the committee. Thank you for the opportunity to testify today in strong support of the Coast Guard's Deepwater Capability Replacement Program.

    The American Shipbuilding Association represents the Navy's core shipbuilding industrial base and the Nation's largest shipbuilders. We employ over 90 percent of all the workers engaged in new ship construction in the United States in contract with thousands of companies throughout 46 States for equipment and services. ASA also represents 19 partner companies engaged in the design and manufacture of ships and ship systems.

    The Coast Guard's fleet of Deepwater cutters, and aircraft is old and getting older, manpower-intensive, costly to maintain, and in dire need of replacement. Beginning in 2002, the 43 Coast Guard cutters and 113 aircraft will begin to reach the end of their service lives. The block obsolescence of the Coast Guard's Deepwater capability will have far-reaching negative implications for our Nation. Without modern and efficient replacement cutters and aircraft with integrated common C4I systems, the Coast Guard will no longer be able to perform critical missions such as drug interdiction, search and rescue, support of naval operations worldwide, treaty enforcement, oversight of our Exclusive Economic Zone and environmental protection. The Coast Guard has an urgent requirement which must be met now.

    The Coast Guard's Integrated Deepwater Replacement Program is the culmination of years of study by the United States Coast Guard and the Department of Transportation. Indeed, the Department of Transportation's System Acquisition Review Council, known as TSARC, has already validated the mission requirements of the Coast Guard, and the Coast Guard has rigorously followed OMB acquisition procedures, including TSARC approval of a mission needs statement. The next step is to proceed with the design and development stage of the best integrated group of systems to meet the Coast Guard's defined mission needs.
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    Congress appropriated $5 million in fiscal year 1998 to begin the concept exploration phase whereby shipbuilders, airframe, electronic and communication designers and manufacturers will team to prepare and present to the Coast Guard an integrated modernization plan. These initial proposals, which were just submitted last week, will be studied by the Coast Guard, and three teams will then be selected for the second phase of the program.

    During the second phase of concept exploration, the industry teams will finalize schedules and specifications for the ships, aircraft and C4I systems to meet Coast Guard requirements and present their respective proposals to the Coast Guard for selection of the best proposal.

    By allowing industry to participate early in the design process, the Coast Guard will ensure itself of getting the best state-of-the-art technology currently available. This technology will be integrated into the ships and airplanes to reduce manning requirements and to provide the most capable multipurpose and cost-effective solution to meeting the myriad of missions required by the Coast Guard.

    This relatively new acquisition approach has become the acquisition approach of choice for the U.S. Navy. This is because in today's environment, the ultimate expertise in the design and construction of major ships resides in the private sector. Thus it is much more economical for industry, with its design expertise and knowledge of current technologies, to work hand in hand with the Coast Guard in designing and producing an integrated system for Deepwater. This acquisition approach will eliminate redundancy, reduce design time, ensure that the latest system technologies are integrated into the ships and the airplanes, reduce the number of different platforms and systems required, and ensure commonality and interoperability of the Coast Guard's Deepwater fleet of the 21st century.
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    The time for government studies is past. The Coast Guard and the Department of Transportation have fully analyzed their mission requirements. It is now time for industry to propose how the Coast Guard can most efficiently and economically meet those missions. Accordingly, industry urges this committee to deny the President's budget request for a Presidential advisory council to once again study the mission needs that have already been studied and identified. Neither the Coast Guard nor the Nation has the luxury of more time or an abundance of money to fund duplicative and unnecessary studies. In fiscal year 1999, an authorization and appropriation of $28 million is needed to fund the joint Coast Guard/industry concept exploration phase of the Deepwater program. These funds will finance the concept design process of the three teams, begin the down-select process of the Coast Guard, and prepare for the detailed design for construction of the Deepwater System. The actual build contract is not anticipated until May of 2001.

    Since the oldest cutters will be retired from service beginning in 2002, there is no time for delay. This program needs to go forward. If not, the Coast Guard will have to cut back on its drug interdiction, search and rescue, and other very important missions, or large sums of money will have to be invested in old platforms to keep them operational. But spending to keep these older platforms operational is neither cost effective nor a realistic alternative.

    Newly designed and constructed ships with automated ship systems will greatly reduce the size of the crew required to safely and efficiently operate the ships. These ships will also be much less costly to maintain throughout their operational lives. Investing large sums of dollars to extend 30- to 50-year-old platforms is simply not economical nor smart.

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    Furthermore, the Coast Guard will realize tremendous savings through the force and mission multiplier of modern systems, savings that cannot be achieved with the current fleet of cutters and aircraft. The Deepwater program will save taxpayer money, and it will provide the Coast Guard with a quantum leap forward in force capability. It will also help to sustain the Nation's core defense shipbuilding industrial base during a historic, and alarming low point, in Navy shipbuilding orders. Since 1994, the Navy has been procuring the lowest number of ships since the 1930s, or the Great Depression. As a result, our industry has reduced further its capacity by 30 percent in terms of employment in just the past 7 years. At the same time, our shipyards have continued to modernize their facilities and invest in technology to remain at the forefront of the design and construction of the most technologically advanced ships in the world. The Deepwater program will provide critically needed work to support our highly skilled design engineers and production work force during this period of few Navy ship construction orders.

    In closing, I would like to reinforce, Mr. Chairman, that the government-industry partnership embodied in the concept exploration acquisition approach is the smartest, most innovative and most cost-effective means for the Coast Guard to acquire its next generation of Deepwater assets. I therefore respectfully request this committee to approve the $28 million in the fiscal year 1999 budget to fund the concept exploration phase and deny any Presidential commission to restudy the mission requirements of the Coast Guard, which have already been studied in depth. Thank you.

    Mr. GILCHREST. Thank you, Ms. Brown.

    Mr. Gulling?

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    Mr. GULLING. Thank you. Good morning, Chairman Gilchrest and Congressman Johnson and Congressman Lobiondo. I really am very pleased to be here today. And I would like to speak briefly and in very strong support of the Coast Guard integrated Deepwater program and their approach to it.

    The Coast Guard has been faced with increasing pressures, as you have heard, to reduce manning and operating costs. And I think they have responded very well with significant reductions.

    At the same time, they continue to be available to respond to emergencies like the TWA Flight 800 disaster and oil spills and things like that, in addition to their normal missions, and their capital assets are getting very old. The age of their fleet reduces potential efficiency because they can't take advantage of modern technology. It increases their costs because it is more expensive to maintain and can lead to personnel retention problems, especially when combined with morale issues, which can certainly result from the extensive downsizing that they have been through. In other words, I think the age of fleet operates in the opposite direction that they need to move in.

    Fundamentally, to do more with less, it is necessary for the Coast Guard to upgrade its aging asset base, just as it is necessary for industrial companies, and equipment just plain wears out. As to the Coast Guard's approach to this procurement, I think it is highly innovative.

    They are trying to look at procurement in a systems context and to plan over a prolonged period of time, not just to procure individual assets on a piecemeal basis. They are looking closely at support, at manning and at life-cycle costs as priority components in this procurement. They are not just buying hardware. And they are trying to get creative input from their potential suppliers, independent from their own thinking, which they can evaluate and to which they can add their judgments as to what these systems should look like.
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    Many of the other services in the Department of Defense had been seeking and experimenting with new procurement methods. Starting several years ago, the Coast Guard tried a new method, what was then a new method, for the WLB seagoing buoy tender program. Instead of defining the hardware in detail, they defined their specifications or their performance criteria in detail for the tenders. Then they used an innovative two-phased procurement. Three $1.5 million concept design contracts were awarded as that first phase, one to Marinette Marine Corporation and one each to two of our capable competitors.

    In this proposed Deepwater procurement, each of the three competitors for the WLB procurement developed a different and a creative design approach to meet the Coast Guard's specifications for the WLB. And although I can't speak for the others, the Coast Guard certainly got a bargain from Marinette Marine on this effort, because we spent a lot more than $1.5 million doing the job.

    The result has been that the Coast Guard did get an innovative new design for the WLB seagoing buoy tender which meets their requirements, and the ships have been delivered on time and within budget. And three of them are now in service with the fleet. The other two will be delivered very shortly.

    The proposed Deepwater procurement I believe takes this approach one step further. It retains the funded concept design approach—I have to add, partly funded, under the proposed program.

    It adds a more detailed design phase, and I think this is necessary because of the complexity of the systems involved and also so the Coast Guard can have some input into the process. And this is the iterative thing that I think Admiral Kramek was referring to. But this approach focuses on a system, not on individual assets; and it starts not with specifications for the asset, but with mission requirements.
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    The result should be that the Coast Guard will get some creative input from potential suppliers, including some very capable systems analysis and integration firms like Science Applications International Corporation, which we plan to work with; input which they can test against their own thinking in the Coast Guard, developed from their operational experience and which they can contrast to similar competitive input, which they should get from other teams, to come up with the best long-term solution considering both existing and phased-in new assets and considering life-cycle costs, which I think are very important to them.

    As the Admiral pointed out, that is the bulk of the cost of the Coast Guard. I believe that Admiral Kramek and the Coast Guard have made the WLB procurement a real model for those in DOD and elsewhere seeking new procurement methodologies. And I really believe that if the Coast Guard is able to go ahead as they plan with their proposed integrated Deepwater systems procurement that they will provide another very successful model for government capital procurement; and I very much hope and respectfully hope that the committee and the Congress will support it.

    Thank you very much.

    Mr. GILCHREST. Thank you, Mr. Gulling.

    Mr. Walker?

    Mr. WALKER. Thank you. Mr. Chairman and members of the subcommittee, thank you for this opportunity to comment on the Coast Guard Deepwater Capability Replacement Analysis. Let me begin by saying that the shipyards that I represent fully support the Deepwater assets acquisitions strategy being proposed by the Coast Guard.
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    My name is Allen Walker, and I am the Executive Director of the National Shipyard Association. NSA is the national association of the commercial shipyard industry. We represent 45 shipyard companies that own and operate over 45 shipyards—over 90 shipyards in 17 States. NSA member companies employ more than 25,000 workers; that is over 50 percent of the total U.S. shipyard workers primarily engaged in non-Navy shipbuilding.

    NSA member companies build, repair and service tugboats, towboats, barges of all kinds, vessels and rigs for the offshore oil industry, passenger ferries, small overnight cruise ships, fishing vessels, large yachts, and Coast Guard and other government craft. In fact, over the past 10 years, these shipyards have built more than 90 percent of all Coast Guard and Navy vessels in the size range of the Coast Guard's current Deepwater fleet.

    Mr. Chairman, as you know, the Coast Guard performs four vital missions for our Nation: maritime law enforcement, ensuring maritime safety, aiding in our national defense and marine environmental protection. The assets the Coast Guard uses to accomplish these missions in Deepwater are rapidly coming to the end of their useful life cycle. The age of this equipment and the technological advances mandate that Deepwater assets be replaced.

    We believe that the proposed acquisition strategy is the right one to adopt, and in the long run, will enable the Coast Guard to improve its operational effectiveness and decrease the life-cycle cost of its assets. For example, today 60 percent of the life-cycle costs for a 378-foot cutter are attributed to personnel. We believe that new equipment will significantly reduce the number of personnel that it takes to accomplish the same mission, thereby creating cost savings for the Coast Guard and the American taxpayer.
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    We also believe that changing needs in technology will make one-for-one replacement of Deepwater assets unnecessary, thus creating additional cost savings.

    In the past, the Coast Guard has purchased new technology on a need-for and availability-of basis. However, the ad hoc nature of acquisitions made it impossible to build an efficiently integrated equipment base. Today, no one knows the exact equipment that will be needed to meet future needs; that is why this approach is so important.

    In Phase 1 of this project, the Coast Guard will select three industry teams to study mission requirements and recommend appropriate equipment and costs.

    The Coast Guard will then evaluate each proposal to determine which one best meets its needs. This is exactly the same approach used in the private sector when projects of this scope are undertaken. It ensures choice and competitiveness. In the end, the government will get the best value for its dollar.

    I understand the concern of subcommittee members when they look at cost estimates in the range of $7.5 to $15 billion for this program. I would emphasize, however, that this is a 15-to-20-year project, and these estimates are based on one-for-one replacement of current assets, which we do not believe will be needed.

    Mr. Chairman, two shipyards that I represent, Bollinger Shipyards and Halter Marine Group, had submitted a joint proposal to conduct one of these studies. Those companies have extensive experience building top-quality Coast Guard and small Navy craft at prices that are competitive on the world market. They have exported similar vessels to Sri Lanka, the Philippines, Mexico, the Bahamas, Venezuela and Ecuador. America's midsize shipyard industry is able to build vessels at prices that are competitive on the world market. The international success of these shipyards proves it.
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    In addition to meeting the Coast Guard's needs, I urge the subcommittee to consider the significant economic and national security benefits that will occur as a result of Deepwater asset replacement. Replacement of the Deepwater vessel fleet alone is expected to create and maintain approximately 7,500 shipyard jobs per year, generating 170 million in annual payrolls for shipyard employees and over 42 million in annual State and Federal tax contributions. Moreover, replacement of the Deepwater fleet has national security benefits beyond the scope of the Coast Guard's mission.

    The work generated by this project will help maintain and modernize our shipyard industrial base, which is a vital component of our defense readiness capability.

    Evidence of the negative national security implications of an inadequate shipyard industrial base is clearly illustrated by the fact that U.S. shipyards have had difficulty finding qualified workers to meet recent—the recent upturn in shipbuilding demands. Much of the trained shipyard employment of the early 1980s has migrated to other industries or retired. In times of national emergency, a slow buildup to full employment will be unacceptable.

    This new building project will keep thousands of qualified welders and pipefitters employed for the next 15 to 20 years, ensuring that these skilled craftsmen will be available during times of national emergency.

    Mr. Chairman, in closing, we believe that the Coast Guard's acquisition strategy is absolutely the appropriate one to adopt. It will assure the Coast Guard's ability to meet its vital Deepwater mission in the new millennium with the best possible mix of equipment procured at competitive prices. We strongly urge you to support funding for the industry studies in the fiscal year 1999 budget.
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    Thank you, and I would be happy to answer any questions.

    Mr. GILCHREST. Thank you, Mr. Walker.

    Could each of you comment on, I guess I would say, Ms. Brown's comment on the President's Advisory Group Council commissioned to study the roles and missions of Coast Guard for a year, essentially to reevaluate the Coast Guard's evaluation of 1995?

    Mr. Gulling?

    Mr. GULLING. Well, Mr. Chairman, I think that the Coast Guard can certainly stand up to any analysis of their roles and missions. My sense of what I see in the country and what I have heard and seen since we worked with the Coast Guard certainly is that there is no lack of demand for Coast Guard services.

    I don't think the Coast Guard has to be defensive at all about that study. I think this study will probably add to their mission load, and if the study is a good one, I think it would point out to the—that there is a need for flexibility in the Coast Guard, too, because it is almost impossible to predict exactly what the mix of missions might be at any point in time.

    And I think Admiral Kramek pointed out a couple of circumstances where that has been a problem in the past. I think, though, that I would agree with Ms. Brown; I think that there is a real potential for that study to delay things and to complicate what the Coast Guard needs to do, and I hope it does not turn into that.
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    I don't think the Coast Guard has to worry about a roles and missions study. I just hope it doesn't turn into a complication for what they need to do.

    Mr. GILCHREST. Thank you. Those are buzzers for a vote, so could you—Mr. Walker and Ms. Brown—comment on that very quickly, and then we are going to go to Mr. Johnson and Mr. Lobiondo for the closing questions.

    Mr. Walker?

    Mr. WALKER. Well, Mr. Chairman, we also believe that the Coast Guard's mission will stand up to any study. Our concern is the same one expressed by Ms. Brown and Mr. Gulling, and that would be that any study would hold up the possibility of a—of the project going ahead. It is vital that the Coast Guard is allowed to move ahead in replacing the Deepwater assets.

    Mr. GILCHREST. I was just told that that is not a vote; we are actually in recess. So thank you, Mr. Walker.

    Ms. Brown?

    Ms. BROWN. Mr. Chairman, I think that I would also agree that the Coast Guard has nothing to be concerned about, as far as its multitude of roles and missions. It is clear that the Coast Guard has more jobs to do than it has assets to do them with.

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    But having said that, in this town, we are so used to studies. And we study and we study, and normally that is a way to delay or to defeat a program that has been extensively studied, the roles, the requirements, and the missions of the Coast Guard.

    No one knows their missions better than the Coast Guard. Time for study is over, it is now time to get on with the program and let the industry come forward with the recommendations for how the Coast Guard can meet those requirements.

    Mr. GILCHREST. Thank you, Ms. Brown. We will take a close look into this—into the people that will be appointed to this commission to study the roles and missions of the Coast Guard. Things are changing rapidly; they are different today than they were in 1995. We want a group of people, if they will pursue this study of the roles and missions of the Coast Guard, to do it just for that purpose and for no other purpose, especially not to delay. To delay is—I don't think it would be disastrous, but certainly isn't going to be helpful. And at this point it would probably be ludicrous.

    Mr. Gulling, your corporation, given the fact that some of these ships may be over 400 feet and probably fairly complex because of the demands, would you say that your corporation is up to constructing these ships?

    Mr. GULLING. Well, I would say so, Mr. Chairman. We finished in 1991 a contract to build minesweepers, the MCM class, for the United States Navy, which was an extremely complex ship, particularly from an electronics standpoint and weapons systems. Of course, we, like any shipyard, including the large ones, use systems integrators and weapons systems integrators as part of our effort.
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    I would say that the MCM program was considerably more complex a project than these ships are likely to be. At the same time, I would say that we can build ships inside up to about 330 feet in length right now, and if something were 400 feet, we can take one of two approaches; we can extend the length of our building, which would not be terribly expensive, or we could build it in two sections inside and then complete it outside.

    Most of our competitors, including our large competitors, build completely outside. So the size issue would be a nonissue for us, sir.

    Mr. GILCHREST. Thank you.

    Mr. Walker, this team approach to procurement, could you tell us what, if any, new challenges that has posed for you?

    Mr. WALKER. Well, Mr. Chairman, I don't work directly for the two shipyards that I am speaking for. I can't really answer specifically what problems the team approach may have created. It seems to me, though, it would offer more possibilities than problems. You get two separate entities, both giving you—both melding the best ideas that they have, and you also have someone to tell you that one of your ideas might not have been as good as you thought it was inside as well.

    So I see it as a positive—as a positive thing, rather than a problem.

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    Mr. GILCHREST. Ms. Brown, would you like to comment?

    Ms. BROWN. Can I comment, please?

    Mr. Chairman, the member shipbuilders of the American Shipbuilding Association have a great deal of experience in teaming, because any time you get into the design and the construction of a very complex system—ship, weapons, electronics, communications, all of that together—we have, over the years, worked very closely with other companies.

    We have worked—we have teamed on all of the major shipbuilding programs in one form or another, either through a subcontract basis or an alliance basis, and we are doing it more and more every day as we go forward. So it is something that my members are very comfortable with.

    And it truly is a way to bring the expertise of the industry to the table early in the process, to work with the Coast Guard, to say, this is the way that you can most cost effectively meet your mission requirement; this is the design that will work best or this design will have multiple purposes.

    This is why the Navy is pursuing this acquisition approach today and tomorrow, because of the cost savings, the time savings that are there, and because the industry is where the expertise lies.

    Mr. GILCHREST. Thank you very much. I do think this offers some intriguing, new, powerful possibilities, what you are describing here this morning; and we look forward to aggressively pursuing it.
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    Mr. Johnson?

    Mr. JOHNSON. Thank you, Mr. Chairman.

    And I guess I wanted to follow up on that a little bit in terms of the procurement process, and then—Mr. Gulling talked about that a little bit and maybe he will tell us a little bit more, because I guess that is the essential concept of the Deepwater project is: Here is what we have to do, here is the whole mission, you guys tell us the best way of ships and planes and put something together.

    And I wonder what kind of information, Dan, that Marinette Marine got in doing—its buoy tender program that you described was essentially, here is what we need to do, you give us something that is going to fit that mission.

    And I don't know if Mr. Walker and Ms. Brown may have some comments about shipyards that they are familiar with that have done similar procurement processes.

    Mr. GULLING. Well, that is a very interesting question.

    For the buoy tenders, they are described in great detail, what the ship had to do, but not how to do it. So, for instance—and I can't remember the exact numbers—but the buoy tender had to maintain position in seas up to significant wave height of 8 feet and winds of 20 miles an hour coming at a certain angle to the ship. And it had to be able to conduct, automatically, buoy operations while that was happening.
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    Now, it didn't tell you how to accomplish that. It just said, we think for us to do our job well, we need to do this. And there were actually three different solutions which relate primarily to the use of positioning information from the positioning system fed back automatically through the propulsion system for the ship.

    And there were three different approaches from the three different competing contractors proposed for that. We happen to have felt, and I guess because we won, maybe the Coast Guard did, too, that ours was the most cost-effective approach, and the ship does do that. And we have an approach which is different from what the other two competitors proposed, and I think perhaps different than the Coast Guard might have come up with themselves.

    I don't know that, of course, because they didn't study it as well. But I think the beauty of this approach is that if you can just define what you have to do and let some creativity come out amongst different competing teams, you may get a different way of looking at something that, for instance, if they take any alternative approach and just designed it within the Coast Guard, they would have come up with an approach, and I am sure it would have worked, the Coast Guard is very capable, but they might not have had the different viewpoints, the light shined on the problem from different angles, and maybe they wouldn't have arrived at the same approach.

    Mr. JOHNSON. Ms. Brown and Mr. Walker, are other shipyards using this similar approach, either for Coast Guard projects or the private projects, essentially saying, here is what we need to do; you come up with a plan?

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    Ms. BROWN. Yes, Congressman. I mean, we have, ASA Shipbuilders have responded—in the Navy terminology, we normally call it a circular of requirements, to where the Navy will put out a requirement and say, industry, you go and design and build for me the best ship that will meet that requirement. We have responded to corps, as we call them, for example, and the large, medium-speed roll-on roll-off ship was a result of a circular of requirements where all of the industry, the shipyards that competed designed ships to meet that requirement, we have done—we do that today on just about all programs, there are certain guidelines that the Navy will give, and certain specifications that the Navy gives. But that is exactly what industry has been working on from the standpoint of the LPD17, the new amphibious assault ship; that is what we are doing on the DD21, the new destroyer of the 21st century. I could go on and on about programs that ASA member companies have responded to in that fashion.

    Mr. JOHNSON. I am just curious, if they give you a requirement saying, look, we have a ship right now that takes 40 people to operate, we would like to cut that in half or cut that by one-third; is that one of the types of requirements?

    Ms. BROWN. Yes, and, in fact, very much so. One of the—I guess one of the programs that is most known recently is our smart ship initiative, where companies have come together to reduce the manning on Navy ships, and it is through automation of your hull and electrical and machinery equipment. That technology is the type of technology that will be put and will be used in the Deepwater program, maybe not the same actual companies or contractors, but the technology to automate our ship systems so that the Coast Guard can reduce its crew requirements, absolutely.

    Mr. GULLING. If I may, Congressman Johnson, the arsenal ship program, which unfortunately didn't go forward into procurement, but one of our teaming members, Bath Ironworks, and another, SAIC, participated in that, and the manning requirement—or the idea to reduce the manning to the minimum possible and still meet the missions was part of that statement. And I think that everybody felt that the designs that came forth were very creative, and in fact, would have done the job.
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    Mr. JOHNSON. In fact, I think the buoy tenders you were talking about have been on there. I mean, it is a tiny amount of people that are required compared to what it replaced.

    Mr. GULLING. With the buoy tender programs—and we have the both the large one and the small one, the total fleet I believe; and again my numbers are a little shaky, but I think the total fleet gets reduced from 40 to 30 ships, and the total manning is somewhere around half to 60 percent of what it is today. And I think they have equal or greater effectiveness.

    Mr. JOHNSON. That is the efficiency that the Admiral was talking about?

    Ms. BROWN. Yes.

    Mr. GULLING. Yes.

    Mr. JOHNSON. Thank you, Mr. Chairman.

    Mr. GILCHREST. Thank you, Mr. Johnson.

    Mr. Lobiondo.

    Mr. LOBIONDO. Mr. Chairman, I don't have any questions, but just to comment on the roles and missions. And I listened carefully to what the Admiral had to say and listened with interest to your observations about wanting to make sure that we are moving forward without delay.
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    I do have concerns about unnecessary delays. We very much want to work with you to ensure that we can move forward, because I think that this timing becomes more and more critical. Washington has a propensity to slow things to less than a snail's crawl here.

    And with what the Coast Guard is facing, I think we have got ample evidence that the program has been designed, it has been analyzed, it has been thought out pretty carefully. So I am very much wanting to work with you to move this process forward.

    Mr. GILCHREST. Thank you, Mr. Lobiondo.

    Ms. Brown, Mr. Gulling, Mr. Walker, we appreciate your expertise here this morning, and it has been very helpful. We will continue to review your testimony and we hope that we may call upon you at any point for further information.

    Thank you all very much.

    Ms. BROWN. Thank you.

    Mr. GULLING. Thank you very much.

    Mr. WALKER. Thank you.

    [Whereupon, at 11:35 a.m., the subcommittee was adjourned.]

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