BOOZ-ALLEN HAMILTON STUDY OF LORAN

Question: We understand that Booz-Allen Hamilton recently collected substantial data and completed a cost/benefit analysis in conjunction with the plan for future funding of LORAN. Tell us generally what data the Coast Guard provided to Booz-Allen for their study and will you provide that data for the record?

Answer: The following represents the documentation provided by the Coast Guard to Booz-Allen & Hamilton for their cost analysis of LORAN-C. As contracted for, the report does not contain a true cost/benefit analysis and is based on use analysis rather than a federal requirement for a safety baseline. Most of the major items on this list are publicly available through the National Technical Information Service (NTIS) or other sources. However, copies can be provided if desired.

In addition, in January 1998 the Coast Guard provided the Booz-Allen & Hamilton (BAH) firm with revalidated LORAN-C cost estimates which are shown below and summarized in the attached graph. The cost figures provided were broken down into three areas with the first being the annual Operating and Maintenance (O&M) expenses. The second section addresses LORAN-C termination costs, and the third section presents recapitalization requirements and timeline if LORAN-C is to be continued beyond the year 2000.

USCG LORAN-C Operating Expenses,
Termination, and Recapitalization Costs

1. FY98 Operating Expenses (operations, maintenance, and personnel) recurring costs for LORAN-C.

a) Personnel Costs: Operational & Support Personnel costs are approximately $17.5M per year.

Personnel Cost Breakdown

$11.9M Operations personnel costs
$ 5.6M Support personnel costs

b) Operation and Maintenance Costs: Operating costs at the transmitting sites, inclusive of utilities are approximately $5.7M.

c) Electronics and Facilities: The LORAN-C infrastructure is also supported from Coast Guard base funding for electronics support and facility maintenance. FY98 electronics support is $0.5M per year. Facility maintenance is $3.5M.

e) Post FY00 Operating Expenses will be affected by anticipated savings from completion of recapitalization efforts which will result in more efficient operations and reduced personnel requirements. These personnel savings are likely to be partially offset by increased facility maintenance costs particularly in the isolated regions of Alaska.

General and Administrative (G&A) costs ($8.9M), which are calculated at 30% of the recurring cost, would also apply if the operating agency were reimbursed by external users.

2. Termination Costs: Termination costs are estimated at between $60-100M. It is estimated that approximately $23.7M in Acquisition, Construction and Improvement (AC&I) funding will be required to close the stations, remove all equipment, and harden the sites pending disposal. If we are required to return sites to a pristine condition (i.e. remove buildings, etc), it is estimated that, based on previous closure actions, an additional $30-70M would be required. Currently identified Environmental Compliance and Restoration (EC&R) funding requirements are estimated at $5.0M.

Year 2000 Termination Cost Breakdown

$22.7M Equipment removal ($945K x 24 sites) (AC&I)
$ 1.0M Loan Support Unit equipment removal (AC&I)

$ 5.0M Identified site remediation (EC&R)

$31.3M-71.3M Estimated additional costs to return sites to pristine condition

3. Recapitalization (AC&I) Costs:

a) Operation of LORAN-C past 2000 and until 2008 ($108.7M): The following recapitalization is required to extend LORAN-C operation until 2008. Year 2008 is the next likely termination date as it corresponds with the projected elimination of GPS Selective Availability in 2006 with a two year transition to a singularly GPS based radionavigation system. If LORAN-C operations are extended past the year

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2000, a 4-5 year recapitalization must be undertaken beginning FY2000. Failure to recapitalize, beginning in FY2000 would constitute an irreversible decision and termination in FY00 is the only other viable option. These recapitalization requirements are as follows:

1) $4M - The Local Site Operating Set (LSOS), which allows remote operation and monitoring of LORAN-C through the LCCS, is at the end of it's projected service life and must be replaced within 3-4 years. The LSOS replacement effort is estimated to cost approximately $4M, will take 3 years to complete, and must begin immediately.

2) $14M - Three LORAN-C towers (Port Clarence, Carolina Beach and Dana) will require replacement before the year 2005. Funding will be required in FY03.

3) $48M - The vacuum tube transmitters will require replacement. This 1950's

technology is becoming unsupportable. Lack of availability and projected
high costs for parts will require replacement with solid state equipment
beginning in FY00. Failure to replace the tube transmitters with solid
state transmitters will place LORAN-C operations at high risk.

4) $18.2M - The 1970's low scale integration timing and control equipment will also require replacement beginning in FY00.

5) $22M - Building/structure modifications will be required to support the installation of solid state transmitters.

6) $2.5M - Two Alaskan runways and several buildings will require rehabilitation.

Note: By international agreement, the U.S. currently owns and provides depot level support for LORAN-C equipment located at several Canadian LORAN stations. A LORAN station upgrade similar to that planned in the U.S. (including upgrade of the last Canadian tube transmitting station, as well as the timing equipment at the remaining Canadian LORAN-C stations) is estimated to cost an additional $4.5M plus $2M for building modifications. Canadian versus U.S. obligation for this funding is currently under review.

b) Operation of LORAN-C past the year 2008 ($106.2M). In addition to the
$108.7M identified for operation through 2008, operation beyond 2008 will
require replacement of eight additional LORAN-C towers as well as runway and
station rehabilitations for the remaining Alaskan stations. Three LORAN-C
towers (Seneca, Baudette and Nantucket) will require replacement by 2008 (FY06
funding) at an estimated cost of $9M. The remaining Alaskan runways and
buildings will require rehabilitation beginning in 2006 at an estimated cost of
$30.2M. This work must begin in FY06. The remaining five Alaskan LORAN-C

towers (Shoal Cove, Attu, Kodiak, Tok and St Paul) will require replacement by the year 2015 at an estimated cost of $67M. This work must begin by FY13. Operation of LORAN-C past the year 2008 will not be possible unless these towers are replaced.

USE OF EUROFIX WITH LORAN FOR DGPS CORRECTIONS

Question: There have been numerous press reports about international utilization of LORAN to transmit differential Global Positioning System (GPS) corrections by implementing "Eurofix”. How much would it cost to modify LORAN transmitters to permit Eurofix? Will you provide the Committee with details about this concept?

Answer: The Coast Guard is currently evaluating the "Eurofix" concept of transmitting Differential GPS (DGPS) corrections and other types of information using the LORAN-C signal. Because the system is still under development, the Coast Guard has not yet solicited any cost proposals or estimates regarding modifications to the LORAN-C transmitters, and therefore cannot provide estimates.

As part of the evaluation of the "Eurofix" concept, the Coast Guard will be running tests to determine if this system meets the current requirements for a precise radionavigation system suitable to meet the needs of mariners and requirements for safe navigation. Concerns exist, principally, with the system's ability to handle the required throughput of data to ensure safe navigation. This requirement, as well as other technical requirements, are currently being evaluated.

The Northwest European LORAN-C System (NELS) Steering Committee has prepared a paper on the proposed implementation of Eurofix in Europe. A copy of the paper can be provided if desired.