Jun 13 2001

TRANSPORTATION APPROPRIATIONS SUBCOMMITTEE HEARING - COAST GUARD FUNDING

Statement of Senator Richard C. Shelby

 U.S. Senator Richard C. Shelby, Ranking Member of the Transportation Appropriations Subcommittee, today commented at the subcommittee's hearing

"Just last week, we received a supplemental request from the Administration that includes a request for some additional funding for the Coast Guard. The last two years, the Congress has provided substantial supplemental funds to the U.S. Coast Guard for operations and for capital acquisition."

"As I've said on earlier occasions, I'm increasingly concerned about this practice _ it seems to me a dangerous game to get into the habit of always providing additional funds for operations through supplemental appropriations acts. This practice leads to expectations on the part of the Coast Guard that they will always get bailed out of funding shortfalls and provides a disincentive to manage operations and personnel to the annually appropriated funding level.

"In addition, it could actually encourage the Coast Guard to neglect those programs that provide the strongest case for supplemental funding. I'm committed to funding Coast Guard operations, but I'm increasingly troubled by how that funding is cobbled together during the course of the year. It is one thing to address an unanticipated funding shortfall, but the recent addiction to supplemental funding for routine operations is not good for the Coast Guard and does not encourage sound financial management.

"I also believe it is worthwhile to spend some time talking about the Coast Guard's procurement program _ most notably the Integrated Deepwater procurement and the National Distress and Response System Modernization. Admiral Loy and Inspector General Mead _ I hope we have time to have a candid discussion on where we are on these two programs and what steps we should take now to make sure that we give the men and women of the Coast Guard the tools they need to get the job done.

"At the same time, I am not willing to break new ground just for the sake of breaking new ground. I believe that the procurement practices at the Department of Transportation should minimize the risk to the taxpayer and provide a reasonable assurance that the procurement can be completed with a minimum of cost growth, delay, or pressure to trade away capability.

"Unfortunately, both the Integrated Deepwater Systems project and the National Distress and Response System Modernization fail all three of these tests. In fact, I don't believe that these procurements could have been designed to be more at odds with those three best business practices for procurement programs.

"If I were a cynic, I would look at the cost estimates for Deepwater and the increased cost estimates for the National Distress and Response System and think that someone is creating artificial deadlines and trying to get Congress to act precipitously. Even the recently announced review of the Deepwater procurement by an outside consultant is advertised as not delaying the procurement. Given that this is a twenty-year procurement, I would think that we would take the extra time necessary to get it right and to minimize the risk to the taxpayer and the Coast Guard's and the Department's other priorities.

"Admiral, you won't be here to clean up when the bills come due on these procurements _ so, I trust you will be patient with those of us who will.

"I also intend to ask you about your interim plans for the National Distress and Response System modernization. I'm afraid that people might think, in light of the campaign that's being made on behalf of the Deepwater procurement, that you have made a conscious choice that Deepwater is more important than modernizing what I call the `911' system for recreational boaters, fishermen, and other people engaged in commercial marine activities. The deadline under the International Safety of Life at Sea has passed, but the Coast Guard won't be able to receive distress calls transmitted on digital select calling signals _ the new international standard _ any time soon.

"Fully 65 percent of the Coast Guard's five year capital budget is devoted to the Deepwater procurement. Deepwater is almost 10 times as large as what's budgeted for the National Distress and Response System modernization, the next largest procurement. Clearly, these two procurements compete with each other for resources, and I'm concerned that the Coast Guard has so much of it's organizational ego tied up in the Deepwater procurement that we're setting ourselves up for a massive cost overrun or procurement mess.

"Too much of the Deepwater procurement strategy seems to be designed to just clear the next hurdle and push the consequences off until later. This reminds me of the Big Dig project in Boston. There, the strategy was to dig the hole in the ground and the Government would have no option but to finish the job. Here the mantra is: get the R-F-P out on the street, secure the $338 million appropriation and Congress will have to finish the job no matter the cost. I'm not convinced that we should necessarily go down that path.

"Now, in light of those reservations, I know some will question my commitment to modernizing the Coast Guard's capital plant. Let me repeat what I have said in the past three committee reports again for the record today: the Coast Guard needs to modernize or replace its aircraft, communications equipment, and especially its ships.

"In addition, the Coast Guard tells me that aren't as capable of executing `systems integration' as well as commercial contractors _ and I have no reason to question that assessment. In fact, I believe we should explore expanding the role of a system integrator to make sure that all Coast Guard assets at a station or within a district are interoperable.

"I believe that we must modernize the National Distress and Response System, and that we can and should recapitalize the Coast Guard's capital plant. However, we should not panic and rush a procurement that is characterized as `high risk' by every procurement expert that looks at it.

"It almost seems as though the Coast Guard is holding it's breath waiting for some clock to run out on Congressional review and oversight of this procurement strategy. Folks, it's time to exhale and take a deep breath _ we're going to be dealing with the recapitalization of the Coast Guard for a long time. The effort didn't start with the Deepwater concept, and it will continue long after all of us focus on other issues. This is a continual process, and I, for one, resent the Big Dig strategy that seems to be employed here."