1. USCG Fiscal Year 2011 Budget and Project Highlights 1 LCDR Greg Matyas Office of Budget and Programs (CG-821) April 27, 2010

2. Outline: FY 2011 Strategic Overview and Priorities FY 2011 Budget Request Project Overview Agenda 2

3. 3 FY 2011 Here to Protect, Ready to Rescue

4. 4 FY 2011 CG Strategic Overview Continued recapitalization of aging assets and infrastructure is the Coast Guard’s top priorityContinued recapitalization of aging assets and infrastructure is the Coast Guard’s top priority –Recapitalization is vital to maintaining future surface, air, and shore asset capability - an essential investment for DHS and the Nation –Redirects savings from efficiencies, consolidation initiatives, decommissionings, and capability reallocations to support highest priority acquisitions. – Supports efforts to constrain Government spending Coast Guard will continue to provide superior value and service to the American publicCoast Guard will continue to provide superior value and service to the American public –Operational Commanders will use risk management to allocate available resources to meet the Nation’s highest order maritime safety, security, and stewardship needs. Sustaining long-term Coast Guard performance ultimately depends on the pace and stability of future recapitalization – the President’s FY11 Budget supports this imperative.

5. 5 FY 2011 DHS Strategic Priorities FY 2011 Budget aligns with five main missions: Preventing Terrorism and Enhancing Security Securing and Managing the Our Borders Enforcing and Administering Our Immigration Laws Safeguarding and Securing Cyberspace Ensuring Resilience to Disasters Quadrennial Homeland Security Review (QHSR) – Released with President’s Budget – Bottom Up Review (BUR) on-going

6. 6 FY 2011 Budget Request Budget Activity ($K) FY09 Enacted FY10 Enacted FY11 President's Request FY10-11 Change % Operating Expense (OE)**6,428,7186,563,8886,650,9501.3% Reserve Training (RT)130,102133,632135,6751.5% Environmental Compliance & Restoration (EC&R)11,31713,19813,3291.0% Acquisition Construction & Improvements (AC&I)1,229,1011,536,2801,381,228-10.1% Alteration of Bridges13,9974,000--- Research, Development, Test & Evaluation (RDT&E)19,59224,74520,034-19.0% Health Care Fund Contribution (HFC)257,305266,006265,321-0.3% Total (Discretionary Funding)8,090,1328,541,7498,466,537-0.9% Requests $10.08 billion for FY 2011 – discretionary & mandatory Net reduction of 773 positions (-1,112 military & +339 civilian FTP) 6 ** Does not include funding for Overseas Contingency Operations (OCO) and Polar Icebreaking operations and maintenance. Full funding for FY11 OCO and Polar is included in USN and NSF requests, respectively.

7. FY 2011 Budget Request Operating Expenses Annualization of Prior Year Funding(+$44.2M): Continue new programs and assets started in FY 2010 Mandatory Entitlements (+$143.4M): Annualization of FY 2010 Pay Raise FY 2011 Pay Increase Military Allowances 7 Analyze current contract support & bring appropriate work in-house Must generate savings DHS Balanced Workforce Strategy (-$14.5M, +300 FTP): Overall net change: an increase of $87M and a decrease of 773 FTP

8. FY 2011 Budget Request Operating Expenses Operation & Maintenance (O&M) of New Assets (+$17.5M, +38 FTP): Shore facilities, Response Boat-Mediums, Rescue 21, Nationwide Automatic Identification System, Rescue Swimmer Training Facility Surface & Asset Follow-On (+$62.5M, +336 FTP): Operations and Maintenance for NSC #3 and logistics support for NSC Crews and Operations and Maintenance for FRCs & shore-side support Maritime Patrol Aircraft (HC-144) simulator follow-on AIRSTA Miami and ATC Mobile transition support Operations and Maintenance for HC-144 aircraft Airborne Use of Force sustainment 8

9. FY 2011 Budget Request Operating Expenses 9 Asset Decommissionings: −Four High Endurance Cutters (-$28.2M, -764 FTP) JARVIS, RUSH, HAMILTON, CHASE; backfill 2 HECs in Honolulu and 1 HEC in San Diego NSC#1 fully operational, NSC#2 operational 4 th Qtr FY11; homeport in Alameda −One Medium Endurance Cutter – ACUSHNET (-$2.8M, -86 FTP) −Four HU-25 Aircraft (-7.7 M, -62 FTP) Three HU-25s will be replaced with new HC-144 at AIRSTA Miami, FL One HU-25 – removed from service at AIRSTA Cape Cod, MA HC-144s programmed for 1,200 flight hrs per year vs. HU-25 programmed at 800 flight hours per year

10. FY 2011 Budget Request Operating Expenses Program Decreases: Rotary Wing Capacity −Remove five H-65s out of service (-$5.5M, -68 FTP) −Move four H-60’s to AIRSTA Traverse City; two from OPBAT support & two from MSRT support −Close seasonal air facilities (AIRFAC Waukegan and AIRFAC Muskegon) 10

11. 173nm 196nm 95nm 151nm 214nm 208nm 32nm 104nm 11 Rotary Wing Re-alignment – Great Lakes AIRSTA Traverse City AIRFAC Muskegon AIRFAC Waukegan AIRSTA Detroit Chicago

12. FY 2011 Budget Request Operating Expenses −Decommission Five MSSTs (-$18.2M, -391 FTP) −New York, King’s Bay, New Orleans, San Francisco and Anchorage −Move towards regional concept −Reinvest in Law Enforcement Detachments (LEDETs) −(+3.6M, 50 FTP) to add 18 th LEDET and increase size from 11 to 12 on 17 others 12 Program Decreases: Deployable Force Capacity

13. 13 FY 2011 MSST Decommissioning Plan MSST Boston MSST Miami MSST New Orleans MSST Galveston MSST Honolulu MSST Anchorage MSST San Diego MSST San Francisco MSST Seattle/Tacoma MSST LA Long Beach Remaining MSST locations MSRT location MSST Decommissionings in FY-2011: MSST New York, NY MSST Kings Bay, GA MSST New Orleans, LA MSST San Francisco, CA MSST Anchorage, AK MSRT Chesapeake MSST Kings Bay MSST New York

14. FY 2011 Budget Request Minor Appropriations – Current Services 14 Environmental Compliance & Remediation: Request $13.3M (+0.1M) and 24 FTE (0) Reserve Training: Request $135.7M (+2.0M) and 536 FTE (0) Research, Development Testing & Evaluation: Request $20.0M (-$4.7M) and 101 FTE (0) Health Care Fund: Request $265.3M (-$0.7M) Boating Safety: Request $119M (-$9.9M) and 8 FTE (0) Oil Spill Recovery: Request $92M (+$1M)

15. FY 2011 FTP Reduction* (Discretionary) 01 February 2010 * Note: Does not include OCO or Polar Icebreaking funding/positions + 339 CIVILIANS (+ 4.3%) MILITARY (-1,112 FTP) Follow-on for new assets (NSC, MPA, FRC, RB-M): + 308 FTP Balanced Workforce Strategy (i.e. insourcing): +115 FTP Technical Adjustment – FY09 Mil/Civ Conversion: -103 FTP Decomm four HECs: -747 FTP Decomm five MSSTs – LEDET Reinvestment: -395 FTP Decomm ACHUSHNET: -86 FTP Rotary Wing Realignment: -68 FTP Decomm four HU-25s: -62 FTP Reduce Mission Support: -27 FTP HEC Logistics Support: -17 FTP MIFC Consolidation: -11 FTP Eliminate MCSA Follow-on: -12 FTP DECOM NSFCC: -5 FTP CGIS Realignment: -2 FTP $-75.2M (- 0.9%) Net Reduction: -773 FTP (- 1.5%) FY 2010– Enacted ($8,541.7M) Military: 42,329 FTP Civilian: 7,927 FTP Total: 50,256 FTP FY 2011– PB ($8,466.5M) Military: 41,217 FTP Civilian: 8,266 FTP Total: 49,483 FTP -1,112 MILITARY (- 2.6%) FY 2011 PB CIVILIAN (+ 339) Follow-on for new assets (NSC, MPA, FRC): + 66 FTP Balanced Workforce Strategy (i.e. insourcing): +185 FTP Technical Adjustment – FY 09 Mil/Civ Conversion: +103 FTP Decomm five MSSTs- LEDET Reinvestment: +4 FTP Reduce Mission Support: -7 FTP MIFC Consolidation: -1 FTP DECOM NSFCC: -4 FTP CGIS Realignment: -7 FTP

16. Key Project HighlightsFY 11Comment Response Boat – Medium$42M10 boats; 115 of 180 boats funded through FY 11 National Security Cutter$538MProduction for NSC 5; 5 of 8 NSCs through FY 11 Offshore Patrol Cutter$45MSupports pre-acquisition design and engineering Fast Response Cutter$240M4 cutters; 12 of 58 cutters funded through FY 11 MEC Sustainment$30M3 x 270’ cutters; All 210’s funded through FY 11 Note: +$3M for cutter boats. Surface: $898M 16 Fiscal Year 2011Acquisition Construction and Improvement (AC&I) Highlights

17. Air: $101M Key Project HighlightsFY 11Comment Maritime Patrol Aircraft$40M1 aircraft; 15 of 36 aircraft funded through FY 11 HH-60$32M8 aircraft sustained in conjunction with depot maintenance HC-130H / J$29M2 center wing boxes plus design for H; logistics for J Note: HH-65 to execute prior-year funding to continue sustainment projects. 17 Fiscal Year 2011Acquisition Construction and Improvement (AC&I) Highlights

18. Key Project HighlightsFY 11Comment Rescue 21$36MDeploy to LA/LB, Detroit, Buffalo, Honolulu, Guam and San Juan, PR. Shore$69MRehabilitate buoy-tender moorings Newport, RI; Phase III of Chase Hall (CGA); Phase II of Thrun Hall (ATTC) barracks; minor shore, ATON and S&D. Military Family Housing$14MBuild/acquire housing in Upper Keys & Montauk Note: No funding requested for Interagency Operations Centers (IOC) or Nationwide AIS (NAIS). Other Equipment/Shore: $119M 18 Fiscal Year 2011Acquisition Construction and Improvement (AC&I) Highlights

19. Other: $263M Key Project HighlightsFY 11Comment Government Program Management; Systems Engineering Integration $74MSupports CG assumption of systems integrator C4ISR/ Technology Obsolescence Prevention $31MDesign and engineering for NSC, FRC and MPA DW Logistics$50MFacilities & training for NSC & FRC; deploy CG-LIMS Personnel$108MAnnualize FY10 growth; 785 FTP for acquisition & tech auth 19 Fiscal Year 2011Acquisition Construction and Improvement (AC&I) Highlights

20. 20 FY 2011 Budget Request Summary Questions?

21. 21 FY 2011 Budget Request Summary Backup Slides

22. Mandatory Spending Increase 17 Nov 09 Total Discretionary Spending vs. Mandatory Spending in Inflation- Adjusted Dollars (2008)

23. Future Discretionary Decline 17 Nov 09

24. “discretionary” spending “mandatory” spending 59% of Federal Budget funds ‘mandatory bills’ DHS is only 3% of federal discretionary spending 17 Nov 09

25. DOD Topline Funding ($ in Billions) (Not adjusted for inflation)  Leveraging acquisition processes to field greater quantities of less exquisite technology  Balancing long-term, high end costly programs with low-tech lest-costly solutions implemented immediately  Continued investment to maintain the size of the workforce *Source: OMB

26. 17 Nov 09 DHS Topline Funding Profile ($ in billions)

27. 17 Nov 09 CG Topline Funding ($ in Billions) (not adjusted for inflation)  FY10 – Budgetary High Water mark?  FY11-FY15 -Average Discretionary Growth ~1.5%

28. Potential Out-year Impacts AC&I: At FY11-FY15 CIP Level -$348M -$629M -$924M -$1223M Discretionary top-line growth at guidance (FY11-FY15 RAD)= ~1.5% (~$130M/Yr) 17 Nov 09

29. 29 What we do with our money ? FY 2009 Enacted Budget OE $6.195B

30. FY09 Enacted - Operating Expenses $6.195B 30 Sounds like a lot – But…

31. Formulation (Aug – Feb) DHS (Mar - Aug) OMB (Sep – Jan) Congress (Feb – Sep) Enactment (Oct: Ideal) ApportionExecution FY10 FY11 FY12 FY13 31 The Budget Cycle: Four Budgets At Once

32. USCG FY 2010 ENACTED Recapitalizes Aging Assets Enhances Maritime Safety & Security Improves Command and Control Modernizes Business Practices * FY10 5.1% discretionary growth does not include Overseas Contingency Operations (OCO) funding. APPROP ($K) FY09 Enacted Level FY10 President's Request FY10 Appropriation Over President's Request OE6,194,9256,556,1886,563,8887,700 OCO 241,503 RT130,501133,632 0 EC&R13,00013,198 0 AC&I1,494,5761,383,9801,537,080153,100 BRIDGES16,00004,000 RDT&E18,00019,74524,7455,000 HFC257,305266,006 0 SUBTOTAL8,124,3078,372,7498,784,052411,303 RETIRED PAY1,236,7451,361,245 0 TOTAL9,361,0529,733,99410,145,297411,303 5.1% discretionary growth over FY 09 enacted* 32

33. Fiscal Year 2010 Operating Expense Highlights Increase Marine Inspector, Investigator, and Naval Engineering Capacity –Includes $8.6M for 74 marine inspectors –Increase staff for five National Centers of Expertise Enhance Biometrics at Sea System –4 permanent positions Counternarcotics Enforcement –Increased Armed Helicopter deployment capacity –Increase LEDET capacity Sustain SeaHawk Charleston - Interagency Operations Center –$1.1M for Charleston O&M Improve Financial Management –$20M and 86 new positions $10M for Depot Level Maintenance 33 $6.81B FY10 Enacted (6.0% growth over FY09 Enacted)* * FY10 6.0% OE growth does not include Overseas Contingency Operations (OCO) funding.

34. Fiscal Year 2010 AC&I Highlights $1.54B FY10 Enacted (4.2% growth over FY09 Enacted) ProjectFY 2010 ($M) Comment Response Boat - Medium121.0Funds 39 boats; 105 of 180 boats funded through FY 2010 Maritime Patrol Aircraft (HC-144A) 138.5Funds 2 aircraft, missionization, and simulator. 14 of 36 aircraft funded through FY 2010 National Security Cutter389.5Production for NSC4 and LLTM for NSC5 Offshore Patrol Cutter9.8Supports pre-acquisition analysis and documentation Fast Response Cutter243.0Funds 4 cutters; 8 of 58 cutters funded through FY 2010 Polar Icebreaker Sustainment 32.5Fully funds POLAR STAR sustainment project Phase II Rescue 21117.0Deploy R21 in CA, New England, & Great Lakes. Anticipate completing lower 48 & outer islands in FY’12 Interagency Ops Centers10.0Deploy Watchkeeper software tool to Sectors Shore27.1S&D, ATON & Congressionally directed projects. CG received $88M in supplemental funding for shore in ‘09 Various> $100MProgram Mgt, Systems Engineering and C4ISR design; 100 new Full-time positions for AC&I 34