Coast Guard Commandant Girds Service For Possible Budget Cuts
The service has already lived through an era of declining budgets. In the 1990s, the Coast Guard lost some 6,000 personnel as its top line funding took hits year after year.
“I understand fully what it is like to be in a declining budget situation,” he told National Defense. “I know everyone in the government has to tighten their belts. The president has asked us to do that. What I would like to do is hold on to what we have.”
The mistake made during the 1990s was the decision to sacrifice support personnel in order to keep the Coast Guard on the frontline carrying out its plethora of duties such as drug interdiction, security, search and rescue, and environmental and fishery enforcement.
“If there is any lesson to be derived from that as we go forward, it’s that I’m not going to hollow out our force,” he said.
The last 10 years have been a mixed bag for the Coast Guard. It benefited from the post-9/11 federal budgets, which saw increases for agencies involved in homeland security. It regained most of those 6,000 lost personnel. But its major ship and aircraft acquisition program, the Integrated Deepwater System, suffered cost overruns and delays.
The root of those problems came in the 1990s, when many acquisition personnel were let go.
“If you’re going to sustain operations, continue to rescue people, do drug interdiction and everything else. What do you cut? Generally you cut support,” Papp said.
By the time the money to purchase new boats, aircraft and the electronic backbone of sensors and communications gear that go with them started flowing after 9/11, the service did not have an adequate work force to oversee the complex, multi-billion dollar project.
“If we face reductions in the future, it’s going to have to come across the board in terms of cutting back on frontline operations in addition to those support activities as well. I’m hopeful that won’t happen,” he said.
To make up for the lack of contracting and management experts, the Coast Guard hired a Lockheed Martin-Northrop Grumman joint venture called Integrated Coast Guard Systems to run the project. After the cost overruns began to mount, the service fired the company, and took the reins of the program. By that time, it was becoming increasingly hard to find experienced acquisition experts, especially those who specialized in shipbuilding.
The Coast Guard has worked hard to hire and train these kinds of contract specialists, and Papp said he is “delighted” with the progress the acquisition cadre has made.
“I’m willing to stack up our acquisition work force against any other agencies in government in terms of their commitment, their talent and in terms of their getting a good return on investment,” he said.
The name “Deepwater” is no more, he added. One reform was to disaggregate the so-called “system of systems” — the myriad ships, boats, aircraft and information technology infrastructure that made up the program — and create a separate budget line and manager for each platform.
If the Coast Guard enters another era of declining budgets, the service will not be gutting any one department, he said.
This may ultimately mean fewer hours dispatching ships and aircraft to carry out missions.
“A lot of times people ask me, ‘What missions are you going to cut if you don’t get the support you need?’” Papp said.
Most Coast Guard missions are mandated, he noted. “I, as the commandant, can’t say, ‘We’re not going to do a mission.’ Or ‘We’re going to cut a mission.’”
The fact is that even on the best days, the service cannot do 100 percent of its missions 100 percent of the time. Every day, it makes tradeoffs, he said.
Regional commanders decide on a daily basis which assets will go where and perform which duties. So a drug interdiction task force that normally has four Coast Guard boats assigned to it, may in the future have only three, he said.
As for reducing the number of new ships and aircraft, Papp is optimistic that it won’t come to that.
Key for the service is the acquisition of the 418-foot national security cutters, the most technically advanced and largest of the service’s ships.
The 378-foot high-endurance Hamilton-class ships they are replacing are 40 years old “and literally falling apart,” he said. Three of the new cutters have been built and are afloat. Construction is beginning on the fourth vessel, and a contract was just awarded for number five. There is funding in the fiscal year 2012 budget to buy long-lead material for number six.
The Office of Management and Budget has signed off on a capital investment plan for the next five years that shows numbers six, seven and eight included, he said. “I’m optimistic that we will get it done. We need to get it done and I’m committed to getting those eight ships built.”
Some experts who watch the Coast Guard aren’t so sure.
James Jay Carafano, a national security analyst at the Heritage Foundation, said the cutters are at risk.
“I do think that they are fighting a rear guard action with OMB, which would love to see the national security cutter go away,” he said. The OMB’s opposition has nothing to do with the ships themselves, or the requirements to operate them, it’s just a budget target because of their high price tags, he said.
The contract for the fifth boat totaled $482 million.
“They are critical,” Carafano said. “They are the hub of the spoke that allows the Coast Guard to operate in a number of different environments.”
Joe Carnevale, senior advisor to the Shipbuilders Council of America, said the Coast Guard is also ramping up to develop and acquire the offshore patrol cutter, which Papp has said is “critical to long-term effectiveness.” Current plans call for up to 25 of the sleeker, faster boats.
“I don’t think there will be enough money in the budget to fund procurement of both those cutters at the same time,” he said.
The Coast Guard has published some initial requirements for the offshore patrol cutters, and from what Carnevale has seen, they would make for an expensive ship, roughly half of what a national security cutter costs. An industry day was held in 2010 and the service is conducting market research to see what companies have to offer.
Some of the preliminary specifications the Coast Guard is asking for are “significantly greater” than those of the 210-foot and 270-foot cutters currently in use, he said. The proposed cutters may have to sail at higher speeds, and would deploy more small boats. That increases deck space and, therefore, the price tag.
“If the requirements get out of hand, the cost is going to go up too much,” he said.
Meanwhile, these larger ships are prime targets for those wielding a budget ax.
“The cost of the civil servants and uniformed personnel who work on these programs is in the noise level,” Carnevale said. “You’re not talking a billion dollars in personnel costs to manage these programs. I don’t think the Department of Homeland Security gets much in terms of savings by eliminating a few civil service positions.”
Papp said that all indications he is receiving during the budget drills show that the Coast Guard is “doing okay.”
“We are making sure that we are doing our absolute best that there is no fat in our budget. We are looking at administrative costs, travel, things like that, to get every dollar we can devoted to frontline operations and rebuilding our infrastructure.”
However, the service may not be able to acquire new ships, boats and aircraft as quickly as it would like, he added.
He noted that the $482 million contract the Coast Guard signed for the fifth national security cutter is only $2 million more than what it paid for number four. The negligible cost increase is an indication that the service has overcome the acquisition work force woes of the past.
“That sends signals to both the administration and members of Congress that you have a good, mature, stable program that can be invested in and not only does it provide us capability and reliable new ships, but it also provides jobs to the public, to this work force, and the economy that is suffering right now,” Papp said.
Carafano said the Coast Guard, like all federal agencies, may have to spend the next two years treading water as far as funding. After the next presidential election, the outlook may change.
As for near term cuts, simply eliminating major acquisition programs, or trying to reduce personnel numbers, doesn’t happen overnight. That takes years, he said.
That leaves easy-to-chop items such as training, maintenance and operations. Cutting back on those would erode the operational capability of the Coast Guard, he said.
Does the general public understand that budget cuts may lead to more drugs on the streets, or a service that is less capable of launching search-and-rescue missions?
“Of course, they don’t. Nope. Nobody thinks about that,” Carafano said.
Other programs have not garnered the media attention, or the dollars, that the program formerly known as Deepwater has received.
Ice breakers that operate in the Arctic and boats that conduct missions on rivers are two examples. Also, the Coast Guard’s backlog of shore infrastructure projects has reached $2 billion, Papp said.
Despite the increase in personnel over the last decade, and the large amounts of money going into Deepwater, the Coast Guard still has recapitalization needs “that would make you cry,” said Carafano.
Papp said some of the Coast Guard boats that operate on navigable rivers such as the Ohio, Missouri and Mississippi are 60 years old, and maintaining and finding spare parts for them is expensive. But when faced with tough choices to replace one of them or a ship that operates on the Bering Sea with its large swells, for example, the choice is where the crew’s safety is most at risk.
Papp’s predecessor, retired Adm. Thad Allen, also made a point of calling attention to the Coast Guard’s small fleet of icebreakers. There are three. One medium icebreaker, the Healy is about 10 years old. But the two larger ones, the Polar Star and Polar Sea, are antiquated. The Polar Sea recently sustained significant damage to its engines and is not operational. The Coast Guard has received $67 million to refurbish Polar Star, using some parts from its laid-up sister ship, and it is expected to be operational in 2013. One medium and one heavy icebreaker should be enough to operate in the Arctic for the next 10 years, Papp said.
“That is ample time for our country to make decisions on what it wants to do in terms of recapitalization,” he said.
There is increasing activity in the region as the ice cap recedes. Two oil companies will start drilling there soon, Papp said.
“In order to have an effective presence, in order to have a year-round presence, we have to have ice breakers. I’m trying to make the case that we have to sustain the ones we have and make plans for replacements,” Papp said.
As for the on-shore infrastructure, legislation was recently passed that allows the Coast Guard to sell excess property and plow the money back into new buildings.
“We have some real nice property that we don’t necessarily need anymore and if we sell them we can reinvest that in projects inside the Coast Guard,” he said.
One of the first pieces of property sold was the $2 million commandant’s home in Chevy Chase, Md. Papp found alternative housing for himself at Bolling Air Force Base, near Coast Guard headquarters in the District of Columbia. The $2 million garnered will be used to refurbish enlisted personnel housing. First Lady Michelle Obama, who has taken an interest in improving the living conditions of military service members and their families, also helped the service get a $20 million appropriation for housing programs.
But cuts are coming somewhere, Carnevale warned.
“Both the Departments of Defense and Homeland Security will have to make significant budget cuts. Where they do that remains to be seen,” he said.