our appetite to want to go further, and our work has also whetted the Navy's appetite. They are following very closely what we are doing.

What we are planning to do this year is to modify a lighter-than-air vehicle for our missions, to train some of our own pilots and have them go out and practice some of the things we perceived could be done with it during our initial trials. We will actually put it through an operational test, do some drug surveillance with it, and so forth.

One of the places we are worried about is up and down the coast of Florida, that raceway between the Bahamas and Florida. It is a marvelous place to see what we will get out of that surveillance device. Likewise, of course, as with all of our drug activity and law enforcement activity, it translates directly into defense readiness.

Our new Maritime Defense Zone responsibilities are almost directly translatable from our drug enforcement. This will pay dividends in the defense arena as well, we are convinced. We are trying to find out for sure whether what we think is true really is.

Senator CHILES. When do you think you will know?

Admiral GRACEY. We will have some very good information based on what we learn at the end of this year. I would expect my successor, and that is not as far away as you might think, Senator-it is only a year away-early on will be making some decisions about lighter than air, just as I did when I came in.

My decision was to go ahead with it and see what we could get from it. I think it has a lot of promise.

PREPARED STATEMENT AND SUBMITTED QUESTIONS

Senator CHILES. Thank you, Admiral. I will have some additional questions for the record.

Also, Chairman Andrews, Senator Byrd, and Senator D'Amato will have additional questions. Senator Packwood wished to submit a statement, and that will be placed in the record.

[The statement and the questions, which were not asked at the hearing but were submitted for response for the record, follow:]

STATEMENT OF SENATOR BOB PACKWOOD

Mr. Chairman, this morning you will hear testimony concerning the fiscal year 1986 appropriation for the U.S. Coast Guard. My purpose is to urge you, as well as the entire committee, to provide sufficient funds to meet the basic needs of the Coast Guard. I have reviewed the administration's budget request, and found that it would require a reduction in Coast Guard personnel, at a time when the Coast Guard's respon'sibilities continue to expand. Its role in search and rescue, national defense, fisheries enforcement, and drug interdiction is greater than ever. While the administration's proposed budget for the other armed services calls for an increase of about 40,000 people, the Coast Guard will face, unless funds are restored, a reduction of 1,087 military and civilian people during fiscal years 1985 and 1986.

Last year, I authored a bill which is now public law, that mandated a military and civilian personnel floor. Specifically, it called for 39,150 military personnel, and not less than 5,484 civilian employees. Even at these levels, we anticipated that the Coast Guard would be stretched thin. But, we were told by the Coast Guard that they could get the job done.

In my experience, the Coast Guard does not overstate its needs. It is, and prefers to remain, a “lean and mean" force. But the administration request stretches it just too thin. I am not asking for an expansion of the Coast Guard, although I think that could be easily justified. Instead, I am only seeking sufficient funds to allow the Coast Guard to continue operations at its current levels. Specifically, the amount I am requesting is $32 million in addition to the administration's budget request.

I believe the Coast Guard's request, which is also my request, is supported by many Senators and Congressmen, and if granted, could easily pass Congress.

QUESTIONS SUBMITTED BY SENATOR ANDREWS

A-76 CONTRACTING OUT

SENATOR ANDREWS: Last year's budget assumed that studies would be conducted to determine where cost-savings could occur by contracting out Coast Guard activities. A reduction of $313,000 and 582 positions was originally assumed for FY 1985. What will be the actual personnel and dollar savings? This year's budget contemplates savings of $3.75 million ($1.2 of which comes from law enforcement) and an additional 333 positions. Given the time it has taken to implement A-76, aren't these assumptions overly optimistic? What specific law enforcement activities are to be contracted out?

ANSWER: We currently have 1,689 billets/positions under A-76 review and expect to achieve our FY 1985 anticipatory reductions in full time positions (FTP). Until the process is complete we will not know what FY 1985 dollar savings will be realized.

Because of the time involved in performing A-76 reviews, we will be delayed until March 1987 in meeting our FY 1986 reductions.

Law enforcement is an inherently governmental activity and as such is exempt from A-76 review. We do not intend to contract out our law enforcement responsibilities. A-76 savings identified in our budget with the Enforcements Laws and Treaties program are indirect cost allocations and relate to support personnel.

SENATOR ANDREWS: Reconcile the potential incongruity of: 1) a proposal to contract out almost $1 million of search and rescue support activities; 2) the collection of user fees for certain search and rescue operations; and 3) the increased level of spending in FY 1986 for search and rescue? Are we spending more to collect fees while at the same time related tasks are done by contractors?

ANSWER: The increased level of spending reflected for search and rescue is an estimate based on the assumption that a growth in population and improving economic conditions will lead to an increase in boating activity and the higher levels of exposure and risk that accompany such activity. The proposed user fees would cost the average boater less than $25 annually, and would not deter people from boating.

The Coast Guard does not contract out the performance of search and rescue operations, and will continue to respond to all calls for assistance. However, when the Coast Guard is able to determine that a specific case is not life-threatening and there is a qualified commercial operator who serves the area, the Coast Guard will try to refer the case to a commercial operator. If one can provide the service, the Coast Guard will turn the case over and will continue to monitor it until the case is concluded.

The $1 million of A-76 savings related to the Search and Rescue (SAR) Program result from a reduction in the indirect or overhead costs associated with personnel who support the SAR program indirectly. Except for the Great Lakes consolidation, there will be no reduction in Coast Guard SAR program operations or personnel levels.

User fees are not directly related to our budget. The purpose of user fees is to recover a portion of the costs incurred by the Coast Guard when the services performed provide special benefits to a limited number of users. Cost recovery through user fees is based on the assumption that it is more equitable for the cost of services which provide special benefits to a limited number of recipients, over and above the benefits received by the public at large, to be paid by those who benefit from them rather than to burden the general taxpayer. The costs for collecting user fees are not included in the proposed search and rescue spending levels, but are included in the user fee legislation recently introduced in the House of Representatives under H.R. 1936.

Although these activities may appear to be incongruous on the surface, they are consistent and reconcilable.

SENATOR ANDREWS: Why will it cost $367,000 for travel to administer the A-76 Program? How does this compare to other Department of Transportation (DOT) modes? Other federal agencies? ANSWER: The $367,000 requested for the A-76 program will be used as follows: $167,000 for seven procurement personnel to be located in field contracting offices, $150,000 for A-76 Task Force expenses (including travel), and $50,000 for contracting A-76 reviews. It is difficult to compare the Coast Guard A-76 program costs with other modes in the Department of Transportation (DOT), or other agencies for that matter, because we all deal with the program differently. For instance, the Coast Guard is the only DOT mode that centrally manages the A-76 program and conducts the reviews of commercial activities. Most Department of Defense (DOD) agencies also have centralized policy staffs but depend on components of their field organizations to do the actual studies. The FAA anticipates spending about $500,000 for contracted reviews in FY 1986.

PERSONNEL REDUCTIONS

SENATOR ANDREWS: What analysis has the Coast Guard performed of the potential shortage of maintenance personnel to support Coast Guard capital equipment not in the Department of Defense inventory? The budget requests 16 additional civilian personnel for new aircraft. In future years, will the Coast Guard have enough engineers and specialists to repair and maintain new, sophisticated vessels and aircraft?

ANSWER: Our request for additional personnel is based on an analysis of existing aeronautical engineering resources in the contracting, inventory management and engineering functional areas compared to Coast Guard and Department of Defense standards and tempered with three years of actual experience supporting the new HU-25A Falcon Jet. In the future, we expect to be able to recruit and train the necessary personnel to repair and maintain our vessels and aircraft.

SENATOR ANDREWS: The budget process proposes 38,259 military positions and 38,220 full time equivalents in FY 1986. The Coast Guard authorization established a full time equivalent floor of 39, 150. Is this shortfall the reasons for the requested bill language limiting funds for military compensation? What amount is necessary to fully fund the authorized personnel level? Why hasn't

the Department addressed this funding requirement in a reprogramming request, as directed for the Senate report? ANSWER: Yes, the personnel shortfall is the reason for requesting limited funding. $773,800,000 in the Operating Expenses appropriation will fund compensation for 36,543 military full-time equivalents (FTES) of our budget total 38,220 FTEs and is consistent with our overall appropriation levels. The remaining FTEs will be funded from our other appropriations or on a reimbursable basis by other agencies.

To reach the floor (39,150 plus 157 Public Health Service officers) would require 1,087 more FTE. An increase of $32,134,981 would be necessary to fund those additional FTE.

USER FEES

SENATOR ANDREWS: The budget proposes legislation to authorize a system of user fees sufficient to collect $236 million in fiscal year 1986. Yet the so-called White House House/Senate leadership budget compromise assumes only $150 million in Coast Guard user fees. What changes will be made to the Department's legislative proposal of April 2 because of this reduction?

ANSWER: If the amount to be collected is less than the amount contained in the Department's legislative proposal, the level of cost recovery would be adjusted to reflect the change. The same services would continue to be eligible for cost recovery, and the fee schedules and collection systems would still be determined through the regulatory process.

SENATOR ANDREWS: Why does the estimated number of search and rescue cases increase in fiscal year 1986 when the proposed legislation would establish charges for non-emergency operations? ANSWER: Boating activity is expected to increase at a rate of one to two percent per year during the next five years as a result of an improving economy and population growth. Accompanying this increase in activity will be an increase in the level of exposure and risk, and the need for the availability of search and rescue services.

The Coast Guard will maintain a full capability to receive and evaluate calls for assistance, and will continue to maintain a capability to respond to all calls for assistance, both life threatening and non life threatening. Even if commercial service is available, it will still be necessary for the Coast Guard to be able to respond to all calls for assistance and to ensure that comprehensive search and rescue services are available.

SENATOR ANDREWS: The categories of Coast Guard services for which user fees would be assessed include recreational and commercial vessel safety, and port and environmental safety. Is this initiative consistent with the Department's primary safety responsibility?

ANSWER: Yes, it is consistent with the Department's safety responsibilities. Users pay for most of the costs of operating and maintaining the nation's air traffic control system. It is also consistent with the provisions of Office of Management and Budget Circular No. A-25 which has been in effect since 1959.