[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



             DEPARTMENT OF DEFENSE APPROPRIATIONS FOR 1998

_______________________________________________________________________

                                HEARINGS

                                BEFORE A

                           SUBCOMMITTEE OF THE

                       COMMITTEE ON APPROPRIATIONS

                         HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS
                              FIRST SESSION
                                ________
                    SUBCOMMITTEE ON NATIONAL SECURITY
                   C. W. BILL YOUNG, Florida, Chairman
 JOSEPH M. McDADE, Pennsylvania      JOHN P. MURTHA, Pennsylvania
 BOB LIVINGSTON, Louisiana           NORMAN D. DICKS, Washington
 JERRY LEWIS, California             W. G. (BILL) HEFNER, North Carolina
 JOE SKEEN, New Mexico               MARTIN OLAV SABO, Minnesota
 DAVID L. HOBSON, Ohio               JULIAN C. DIXON, California
 HENRY BONILLA, Texas                PETER J. VISCLOSKY, Indiana        
 GEORGE R. NETHERCUTT, Jr., 
Washington
 ERNEST J. ISTOOK, Jr., Oklahoma
 RANDY ``DUKE'' CUNNINGHAM, 
California                          
          
 NOTE: Under Committee Rules, Mr. Livingston, as Chairman of the Full 
Committee, and Mr. Obey, as Ranking Minority Member of the Full 
Committee, are authorized to sit as Members of all Subcommittees.
 Kevin M. Roper, John G. Plashal, David F. Kilian, Alicia Jones, Juliet 
  Pacquing,P Gregory J. Walters, Patricia Ryan, Doug Gregory, Paul W. 
       Juola, Tina Jonas, andP Steven D. Nixon, Staff Assistants
       Stacy A. Trimble and Jennifer Mummert, Administrative Aides
                                ________
                                 PART 4
                                                                   Page
 Army Acquisition Programs........................................    1
 Navy and Marine Corps Acquisition Programs.......................  131
 Air Force Acquisition Programs...................................  297
 Research, Development, Test and Evaluation, Defense-Wide: 
Ballistic Missile Defense Organization............................  425
 Future Bombers...................................................  525
                                ________

         Printed for the use of the Committee on Appropriations

                                ________
                     U.S. GOVERNMENT PRINTING OFFICE
 77-432                     WASHINGTON : 2002





                     COMMITTEE ON APPROPRIATIONS

                   BOB LIVINGSTON, Louisiana, Chairman

 JOSEPH M. McDADE, Pennsylvania      DAVID R. OBEY, Wisconsin
 C. W. BILL YOUNG, Florida           SIDNEY R. YATES, Illinois
 RALPH REGULA, Ohio                  LOUIS STOKES, Ohio
 JERRY LEWIS, California             JOHN P. MURTHA, Pennsylvania
 JOHN EDWARD PORTER, Illinois        NORMAN D. DICKS, Washington
 HAROLD ROGERS, Kentucky             MARTIN OLAV SABO, Minnesota
 JOE SKEEN, New Mexico               JULIAN C. DIXON, California
 FRANK R. WOLF, Virginia             VIC FAZIO, California
 TOM DeLAY, Texas                    W. G. (BILL) HEFNER, North Carolina
 JIM KOLBE, Arizona                  STENY H. HOYER, Maryland
 RON PACKARD, California             ALAN B. MOLLOHAN, West Virginia
 SONNY CALLAHAN, Alabama             MARCY KAPTUR, Ohio
 JAMES T. WALSH, New York            DAVID E. SKAGGS, Colorado
 CHARLES H. TAYLOR, North Carolina   NANCY PELOSI, California
 DAVID L. HOBSON, Ohio               PETER J. VISCLOSKY, Indiana
 ERNEST J. ISTOOK, Jr., Oklahoma     THOMAS M. FOGLIETTA, Pennsylvania
 HENRY BONILLA, Texas                ESTEBAN EDWARD TORRES, California
 JOE KNOLLENBERG, Michigan           NITA M. LOWEY, New York
 DAN MILLER, Florida                 JOSE E. SERRANO, New York
 JAY DICKEY, Arkansas                ROSA L. DeLAURO, Connecticut
 JACK KINGSTON, Georgia              JAMES P. MORAN, Virginia
 MIKE PARKER, Mississippi            JOHN W. OLVER, Massachusetts
 RODNEY P. FRELINGHUYSEN, New Jersey ED PASTOR, Arizona
 ROGER F. WICKER, Mississippi        CARRIE P. MEEK, Florida
 MICHAEL P. FORBES, New York         DAVID E. PRICE, North Carolina
 GEORGE R. NETHERCUTT, Jr.,          CHET EDWARDS, Texas                
Washington
 MARK W. NEUMANN, Wisconsin
 RANDY ``DUKE'' CUNNINGHAM, 
California
 TODD TIAHRT, Kansas
 ZACH WAMP, Tennessee
 TOM LATHAM, Iowa
 ANNE M. NORTHUP, Kentucky
 ROBERT B. ADERHOLT, Alabama        
          
                 James W. Dyer, Clerk and Staff Director

                                  (ii)

 
             DEPARTMENT OF DEFENSE APPROPRIATIONS FOR 1998

                              ----------                              

                                          Thursday, March 13, 1997.

                       ARMY ACQUISITION PROGRAMS

                               WITNESSES

GILBERT F. DECKER, ASSISTANT SECRETARY OF THE ARMY, RESEARCH, 
    DEVELOPMENT & ACQUISITION
LIEUTENANT GENERAL RONALD V. HITE, UNITED STATES ARMY, MILITARY DEPUTY 
    TO THE ASSISTANT SECRETARY OF THE ARMY, RESEARCH, DEVELOPMENT & 
    ACQUISITION
LIEUTENANT GENERAL OTTO J. GUENTHER, UNITED STATES ARMY, DIRECTOR FOR 
    INFORMATION SYSTEMS FOR COMMAND, CONTROL, COMMUNICATIONS, AND 
    COMPUTERS

                              Introduction

    Mr. Young. The Committee will come to order.
    This morning we had an excellent hearing with Secretary 
West and General Reimer, and this afternoon we will be 
conducting a hearing specifically on acquisition.
    We are very happy to welcome back Mr. Decker and Lieutenant 
General Hite and General Guenther. We are pleased to have all 
three of you at the table.
    I made a lengthy opening statement this morning. I am not 
going to repeat it. I am concerned that the budget is not 
adequate to maintain the tremendous amount of OPTEMPO that we 
are seeing, and so I will not repeat that for you.
    This afternoon's questioning will probably go to that same 
issue. Are we doing everything that we need to do to take care 
of our Army and make sure that we have adequate training, 
readiness capabilities and are we planning enough modernization 
so that ten years from now, twenty years from now, the Army is 
still what we want it to be?
    We are happy to welcome you here. We will hear your 
statements in just a minute.
    Let me ask Mr. Murtha if he has any opening comments.
    Mr. Murtha. No.
    Mr. Young. Okay.
    Mr. Decker, we will place all of your statements in their 
entirety in our record, and you feel free to summarize in any 
way you like, and when you have completed at your leisure, we 
will have some questions.
    [Chairman Young's prepared statement follows:]

                           Opening Statement

    This afternoon, the Committee will conduct a hearing on Army 
acquisition programs.
    We are pleased to welcome Mr. Gil Decker, the Assistant Secretary 
of the Army for Research, Development, and Acquisition. He is 
accompanied by Lieutenant General Ronald Hite, the Military Deputy to 
the Assistant Secretary of the Army for Research, Development and 
Acquisition.
    The Army's overall budget has been declining steadily over the last 
ten years and most of the reductions have been levied against 
modernization programs. The fiscal year 1998 budget continues this 
trend. The Army's fiscal year 1998 budget request for modernization 
programs is $2.9 billion less than last year; or a 15% cut. Most of the 
Army's aircraft, missile, vehicle, and ammunition accounts are below 
last year's level and rarely at levels that make economic or 
operational sense. Based on the fiscal year 1998 budget, for the 
immediate future our soldiers will be flying 40 year old cargo 
helicopters, driving 30 year old trucks, and using war reserve 
ammunition for training.
    We are concerned that this budget will not supply our soldiers with 
the right types and quantities of equipment. For example, the fiscal 
year 1998 budget proposes no funds for heavy tactical vehicles, even 
though the Army is short of its requirements by hundreds of vehicles 
and we are relying on trucks which have exceeded their original design 
life.
    Under this budget, the Army is procuring items at such low 
quantities and stretching out development for so long that it actually 
increases the cost, making it even more difficult to buy the equipment 
necessary to support Army missions. For example, the fiscal year 1998 
budget proposes procuring only 12 Improved Recovery Vehicles although 
the annual economic rate of production is 24 vehicles.
    Finally, by failing to put new equipment in the field, we are only 
increasing the long term costs of maintaining and operating old weapon 
systems. We see this in your helicopter programs, where the fiscal year 
1998 budget proposes terminating Black Hawk production after 1999, 
forcing the Army to maintain almost 600 old, Vietnam-era UH-1 
helicopters in the fleet.
    At the same time we see all these problems in Army procurement, we 
have noticed that the Army's 1998 request for research and development 
activities is higher than last year's request. We have to ask whether 
those R&D activities should come at the expense of producing equipment 
which is essential to meet your warfighting requirements today.
    During the past two years we have worked hard with the Army to 
provide funding increases that you asked us to provide, but it is clear 
from your fiscal year 1998 budget that many of these needs are, once 
again, being deferred. We want to work with you to identify and remedy 
the most pressing shortfalls, and to eliminate budget growth where it 
is not needed.
    Finally, we understand that this will be the last time Mr. Decker 
will testify before our Committee. Mr. Secretary, we will miss your 
candor and appreciate all of your efforts to ensure that our nation's 
soldiers are equipped with the best equipment available.

                    Summary Statement of Mr. Decker

    Mr. Decker. Thank you very much, Mr. Chairman.
    I promise you faithfully this will be brief. I am sure the 
questions and answers are where we will all learn from each 
other in the interchange.
    Toward the end, I do have a short 5-minute video of some of 
the clips of some of the recent successes in our systems that 
we field, and I would like to show you that. We will get to 
that at the end.
    I thank you very much for this opportunity and I thank you 
for your kind remarks.
    As I begin, I would like to express our very sincere 
appreciation for this committee's help and guidance and 
thoughts through the last few years in these tough times and 
for your very generous support of Army modernization in the 
last two years.
    We are trying our best to be careful stewards of the 
resources provided, but the successes and stability that we are 
having would not have been possible without that support.
    In addition to Generals Guenther and Hite, I also have here 
today Assistant Deputy Chief of Staff for Operations and Plans, 
Major General Ron Adams from Force Development, who is our 
partner in harmonizing requirements.
    I also have Brigadier General Bill Arbuckle, who is our 
Army Ammunition Officer, and if you have any specific questions 
in those arenas that come up, I would like to defer to them.
    I also have Dr. Fenner Milton, who is my Deputy Assistant 
Secretary in Science and Technology.
    As you pointed out, we have a detailed written statement, 
and I thank you for reading it into the record.
    America's Army is today, in my honest opinion, the world's 
premier land combat force. We are only the eighth largest Army 
in the world, but today, 13 March 1997, I think we are clearly 
the best.
    And the challenges are great. In terms of mission spectrum 
as opposed to mission mass, we are engaged in far more missions 
and deployments in more places than ever before and in more 
diverse kinds of operations. And if you look over the last 
several years, since the world became not bipolar but became 
far more diverse, the majority of these deployments have one 
thing in common: The bulk of the military participation are men 
and women soldiers on the ground. So it is clear that in 
today's world, America's Army is the force of choice. And as I 
pointed out, the statistics seem to bear this out.

                    FISCAL YEAR 1998 BUDGET REQUEST

    This year, meaning coming into the fiscal year 1998 budget 
year, we were faced with some very tough budget choices again 
in trying to balance readiness, end strength, quality-of-life 
programs and modernization. We have the lowest percentage, a 
little less than 15 percent, of the total Department of Defense 
Research and Development Acquisition Budget.
    In these times of declining resources and squeeze on 
resources, modernization in the Army has essentially become a 
``design to price'' endeavor. Within this constraint, I would 
like to believe that we are getting the biggest bang for the 
buck, but it is leaving some unfilled holes for the future.
    The fiscal year 1998 budget request funds our highest 
priority programs based on our best assessments between 
ourselves on the acquisition side and the other Army leadership 
on the war-fighting side, and we have attempted to make the 
most of these limited resources.
    We are continuing to fund at the same level as projected 
development of only two new--operating word is new--high payoff 
weapons systems and that is Comanche and Crusader. We are 
introducing in this budget a new, well-thought-out requirement 
for a future Scout and Cavalry vehicle. We have some systems 
already in procurement. I won't list them all.
    ATACMS-BAT, that is the Army Tactical Missile System with 
its brilliant anti-armor submunition package; JAVELIN, the 
light infantry antitank weapon, which is absolutely a wonderful 
weapon, and we are continuing to maintain procurement of 
tactical trucks.
    But our main strategy continues to be to extend the lives 
and to improve the performance of existing systems by 
technology insertion and upgrades. Examples of that are the 
ABRAMS M-1A2 tank upgrade; the Bradley M-3 fighting vehicle 
upgrade, the Apache D-Model helicopter upgrade; and a series of 
power projection Command/Control Communications Infrastructure 
programs at our Army installations, to be able to handle the 
critical exchange of data as forces deploy overseas to those 
locations.
    We have had to accept risks in our modernization program in 
the near-term to protect readiness and quality of life, which 
have been the avowed priorities during this period of drawdowns 
and reductions. And so, in fact, modernization in this sparse 
environment has been the bill payer.
    In this environment, in addition to the specific systems I 
have given examples of, and our modernization strategy, our 
overall focus is on information dominance. Supporting 
information dominance, such as the Army Enterprise Architecture 
and the Warfighter Information Network or WINS is critical. We 
evolved an Army technical architecture which enables us to be 
truly operable in the battlefield and without which we would 
not be able to do a digitized Army and create situational 
awareness.
    Investments in this architecture and in the warfighting 
information network will significantly enable the capacity and 
velocity of information distribution throughout the battlefield 
and throughout our forces.
    We have an Information Security program that recognizes 
that protecting this information is an important element of 
protecting our soldiers.

                     FORCE XXI AND ARMY-AFTER-NEXT

    So where are we headed? The Army set in motion a series of 
initiatives to arrive at the 21st Century with the requisite 
capabilities, including this information dominance, and we call 
this program Army XXI. And that will be the initial product of 
our current initiatives.
    Army XXI can be viewed as what is happening between now and 
the 2010/2015 time frame. It will use the digital technology to 
optimize the flow of information and create situational 
awareness at all levels on the battlefield.
    Beyond Army XXI, the intellectual energy of the Army and 
its planning is focused on what we call Army-after-next. As you 
can expect, when you are looking out 15 years in the future, 
you are looking through a cloudy crystal ball.
    But I believe the efforts of the Army and the intellectual 
energy and looking at scenarios and looking at requirements in 
the future is sufficient enough to really help us factor our 
science and technology investments so that the outcomes of 
those will be ready when we go the next round of modernization.
    We are looking for ways to be more efficient. We have 
reduced our infrastructure and we are continuing to make major 
reforms in the acquisition process.
    As I said, America's Army today is the eighth largest Army, 
and thank God it is the first best. It needs to remain that 
way.
    There are four elements that make the first-best Army: 
Quality people, quality training, quality leader development 
and quality technology and modernization. And if we fall short 
in the long-term in any one of those, we will slip from first 
place.
    You will recall last year, we demonstrated capabilities of 
tomorrow's soldiers. The individual soldier is once again 
assuming a dominant role in the warfighting capabilities with 
the diverse missions we have, and we are working hard on our 
Land Warrior program. We have to place great importance on 
enhancing the battlefield capabilities of the individual 
soldier. It is a top Army priority, and I am proud to say that 
the Soldier Modernization program is moving well.
    With that, sir, if I may, I would like to direct your 
attention to the video. I think you will find it interesting 
and informative, and then I will close my statement.
    The Committee proceeded to view the video.

                         MODERNIZATION PROGRAMS

    Mr. Decker. These are FMTV modern trucks, being procured 
and fielded as we speak. That is our heavy trucks, or heavy 
transport. These systems are being extremely well received by 
our soldiers.
    That is the High Mobility Multipurpose Wheeled Vehicle, 
HMMWV, in its many multifarious mission configurations; another 
version of the HMMWV. That is the up armored HMMWV, which we 
delivered several thousand to Bosnia. Our palletized load 
system. One person can load and unload that truck on the 
battlefield. Our Forward Air Defense Ground-Based system, which 
couples into the Avenger and the Bradley Linebacker, Air 
Defense Network; our Patriot system, including the Enhanced 
missile.
    I mentioned our soldier system. It is moving along very 
nicely. Our tactical Unmanned Aerial Vehicle, UAV program. That 
system is the Hunter you see flying, doing very, very well at 
the National Training Center.
    Our Theater High Altitude Area Defense, THAAD system, which 
we will talk about later. That is Comanche. I was down 
yesterday with Dr. Kaminski and watched it go for a series of 
its engineering test flights. It is on schedule and performing 
remarkably well at this stage of development. The Enhanced 
Position Locating Reporting system, which is also a part of our 
digital network on the battlefield.
    We finally have a Maneuver Control system, Mobile 
Subscriber Equipment, our Single Channel Ground and Airborne 
System SINCGARS radios. We have the ground station module for 
Joint Survelliance Target A Hack Radio System, JSTARS. And that 
is the TAMS, Tactical Missile System with the standard cluster 
munitions.
    This is the Brilliant Antitank Armor Submunition; the Sense 
and Destroy Armor 105 centimeter precision-guided munition; the 
ABRAMS M1A2 tank, which we sincerely believe is still the 
finest battle tank in the world.
    Our Apache Longbow, which the marketplace has proven it is 
the best heavy-attack helicopter in the world, and the Bradley 
fighting vehicle in its infantry configuration.
    Our new Command and Control vehicle that is being used by 
the Digitized Brigade at the National Training Center as we 
speak; Crusader, our new Advanced Field Artillery system. This 
is a schematic of that. It is under early development as we 
speak.
    Grizzly is a Breacher and a mine-plowing system to clear 
land mines. And that is the Javelin, a terrific antitank light 
infantry missile.
    Mr. Chairman, I know that is a little bit of PR, but it is 
illustrative that we have done a lot with what you have given 
us.
    I think these are wonderful weapons systems. And with that, 
I once again want to thank you for having us and that concludes 
my opening statement.
    [The statement of Mr. Decker follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Young. Mr. Secretary, how about General Hite, do you 
have any opening comments, or General Guenther?
    General Hite. No, sir.
    General Guenther. No, sir.
    Mr. Young. Thank you very much. We don't mind the PR, 
because we are very proud of this Army as well.
    Mr. Decker. Great.

                          Landwarrior Program

    Mr. Young. A lot of those systems that you showed us this 
committee had a lot to do with pressing ahead, and there are 
some others that you didn't put up there that fall into that 
category.
    Mr. Murtha.
    Mr. Murtha. Well, I noticed the music in the background and 
I just wonder, are you going to pipe this music into this new 
system you have got for this ground control guy?
    I mean, I can imagine, I know you guys are big on this, but 
a guy is out in the mud and somebody is sitting back in his 
tent, a one Star, and he is watching this guy on a television 
set and you have a little music because he doesn't want to get 
bored out there, and things are starting to go wrong, and he is 
telling him what to do, he has no senses because something is 
in his ear and he is watching something over a television set.
    Now, are we still spending money on that? I mean, are we 
taking away--when I came back from Vietnam, I could feel 
people, I could feel people for 6 months, and you know what I 
am talking about. You get out in the jungle, you feel them. We 
put this stuff on somebody, we are not going to feel it and 
somebody back there is going to give them orders that are not 
going to work.
    I just can't comprehend that we are not wasting a lot of 
money on something that is going to not work.
    Mr. Decker. That is a very interesting question, sir.
    Let me maybe give you a thought on that and then maybe get, 
in a simple way, a little bit technical.
    When a soldier unit, a real soldier unit, be it a light 
infantry unit or somebody with soldiers on the ground, or out 
on that kind of a mission and they will be bored more in 
today's world, it is a pretty messy environment, whether it is 
jungle, whether it is a lone patrol in the desert, whether it 
is bad weather, whatever. And you do develop a sixth sense, I 
would accept that, but the thing is, when you are in that 
obscuration-type environment, you need to see what is around 
you and so does your next higher echelon if they are not going 
to do something stupid, and one of the things we have 
discovered with the Army warfighting experiments down at Fort 
Polk, that is the National Training Center for light infantry-
type things as opposed to the desert, which is the heavy stuff.
    Mr. Murtha. Mr. Secretary, rather than have a long 
explanation, I have to come down and see this because I cannot 
conceive that this is going to be an advantage to the person 
that is out there in the field. So rather than have you go 
through a long explanation here, if you will invite me down, I 
will go down and take a look at it.
    Mr. Decker. You are invited. We will take that for the 
record, and let me just make a quick closure then.
    Mr. Murtha. Okay.
    Mr. Decker. When you go, ask the soldiers about owning the 
night--they now own the night--and ask them how they feel about 
this kind of equipment, that will be a lot better testimony 
than I can give.

                  Reserve Component Automation System

    Mr. Murtha. Now, RCAS is something that we started about 
ten years ago, which is the call-up system for Reserve and the 
Guard. We took it away from the Army because they did such a 
bad job and we gave it to the National Guard. Where is that 
program?
    Mr. Decker. I will give a very quick, less than one-minute 
summary, and I would like for General Guenther to comment. 
Today, that is one of the best-managed programs in the National 
Guard due to our excellent partnering with the Guard. So we 
have turned that program around.
    Mr. Murtha. So we can now call up people using that system?
    Mr. Decker. We can do that. Now, we have to get it 
proliferated to each of the States. One of our first major 
demos of that system was in Iowa, and it is beautiful and I 
invite you to go see it. So it is a matter of fielding schedule 
now, not a system that isn't working.
    Mr. Murtha. One other thing that we worry about is the 
ability to disrupt our logistics or administrative 
capabilities, such as a call-up. Do we have safeguards in that 
RCAS system so that they couldn't break into the computer and 
disrupt it, a country couldn't do that? So this is a safe, 
secure system?
    General Guenther. Yes, sir. If we have to send classified, 
we go off-line for that, and we use an encryption device. We 
assessed the RCAS as to how much classifed traffic you would 
pass, which is about two percent. In the RCAS system itself, we 
have security built in also to keep hackers out and all the 
antiviral protecton stuff already built into the system.
    If I might comment on the system itself and where we are, 
we are ahead of schedule on what we had projected to you. We 
have fielded 35 out of 49 Program Objective Memorandum, POM 
sites this year already. We expect to be on schedule all the 
way through fielding or even ahead of it.
    As you know, this system gets fully fielded out through 
'02, and if we keep going the way we are, we will complete the 
program ahead of schedule.
    Mr. Murtha. I believe that is the latest schedule, that is 
what you are ahead of.
    General Guenther. Sure. Sir, I would just say that the 
reason we are making such progress is because we have team work 
between the National Guard and the Reserves, and the Active 
component right now.
    Mr. Dicks. Well, Mr. Chairman, I want to compliment General 
Guenther on this, because a few years ago, maybe it wasn't that 
long ago but it seems like it, RCAS was in disastrous shape and 
the staff of the committee did a lot of good work on this 
issue, we sat down with General Guenther and he promised that 
the Army wouldn't take advantage of the National Guard. There 
was some concern about that.
    And I think that they did work together very cooperatively. 
And the contractor also, the present CEO of the company pledged 
that they would straighten out the problems, which were largely 
part of the company's fault. I think that is saying it 
accurately. But I think because Mr. Shrontz did commit to get 
this straightened out----
    General Guenther. Yes, sir.
    Mr. Dicks. That Boeing did finally get this thing rolling. 
As I understand it, it is moving in the right direction.

               High Mobility Multipurpose Wheeled Vehicle

    Mr. Murtha. I have got to ask one last question. My HMMWV 
seat, now when I went to Bosnia with the President, he was 
going to ride off in a HMMWV in my seat. I said, no Mr. 
President, I am riding off in that HMMWV seat, and I rode off 
and Senator Leahy took a picture of me riding off in the HMMWV. 
It is the only one I have ever seen. I mean, is there a HMMWV 
seat we can improve so the guy is comfortable in that right-
hand seat in a HMMWV?
    Mr. Decker. I have been assured that that newly designed 
seat is in procurement, at a reasonable rate, and it is 
getting--I don't know what the priorities of them are.
    Mr. Murtha. I will tell you if you are riding in the right-
hand seat, the priorities are pretty high. You have got every 
kind of seat I have ever seen out there.
    Mr. Decker. Okay. But I am told that that program is in 
good shape.
    General Hite. Sir, you ask me this question every year.
    Mr. Murtha. Right.
    General Hite. One of these years I am going to get it 
right.
    Mr. Young. And he is going to keep on asking, too.
    General Hite. Yes, sir. We started in 1991, all the HMMWVs 
coming off the line after that year have the new seats. We have 
also put the upgrade seat into the supply system so commanders 
of units can order that seat.
    Mr. Murtha. When you say ``improved,'' is this the bucket 
seat or is this the one that you showed me a couple of years 
ago? Which one is it?
    General Hite. It is the--we have had two versions of the 
improved one. One came in in 1991, was the first version, of 
course. The bucket seat is the one that is in the supply system 
now. You can order that.
    Mr. Murtha. Okay.
    Mr. Dicks. What was wrong with the old seat?
    Mr. Murtha. Well, I tell you, it was over a battery. It was 
like sitting on this. It just squashed down. It was bad enough 
before it got squashed down, but I mean it was absolutely 
uncomfortable, and this guy had to sit in this all the time 
going over not the smoothest roads in the world.
    General Hite. I think Mr. Murtha described it very good 
last year in terms of what you had to carry with you after you 
had ridden on that seat for a while.
    Mr. Murtha. Thank you.

                      Command and Control Vehicle

    Mr. Young. Mr. Secretary, you mentioned the Bradley 
Fighting Vehicle, and you had a couple of shots of it on the 
video, as well as the Command and Control Vehicle. And I 
recently had a chance to observe a Bradley exercise in the 
field demonstrating the system, but while I was there, in that 
command and control system, this sergeant was showing me this 
communications equipment and really bragging about how good it 
was and how he could really keep in command of the whole 
situation.
    He said the only problem was that in order to connect all 
of the communications gear together, it took harnesses about 
this long that you plugged in one to the other, and he said 
there was such a shortage of those harnesses that much of the 
time they couldn't use their communications gear.
    I wonder if you are aware of the fact that kind of a 
shortage exists?
    Now, that may only be at the training level, but if it is 
at the training level, there is a problem even if you have 
plenty at the combat level. What is the situation there, 
General?
    General Guenther. Yes, sir, I will take that one.
    As we have been building up for the National Training 
Center, NTC rotation--let me take that first and then take the 
question in general. As we have been building up for the NTC 
rotation, we did find that we were losing a lot of cables. So 
we set up what we call the Consolidated Technical Support 
Facility, CTSC, which is a capability to support units as they 
were training, a capability to bring extra cables in and 
support them totally.
    A lot of our cables in the force for those type of coaxial 
cables or other connectors that we have for the radios inside 
the Tactical Operations Center, we buy through the prison 
system. It is very well done by them, and we provide those.
    There is a basic load that they take, assessed by the 
command in an operating unit, and, sir, I am not aware of any 
cable problems right now, and they have been out at the NTC now 
for about three weeks. But we have a capability to support them 
that we built for the NTC also.

                     Individual Solidier Equipment

    Mr. Young. They also said they were really short on 
binoculars and compasses. Those seem like they are fairly 
important items for soldiers out fighting a battle. Is this 
something that is on your scope?
    General Guenther. Sir, was this at Fort Hood?
    Mr. Young. No, sir. This was at Fort Carson.
    Mr. Decker. We need to look into that, sir. I really--
wasn't aware of this at all. This is new input. I am surprised.
    Mr. Young. Well, I added it to my list of things that go on 
my big scroll, so we will discuss them with you more in detail 
when we get ready to go to markup. But, you know, these kind of 
shortages could cause problems in the conduct of the 
battlefield.
    Mr. Decker. You bet. Those bread-and-butter items are 
terribly important. We shouldn't let them get off the screen.

                            Crusader Program

    Mr. Young. Tell me something about where we are with the 
Crusader. I think it was either last year or the year before we 
tried to get you to accelerate the Crusader program a little. 
Is that something that has happened?
    Mr. Decker. I have a general view of that, but General Hite 
follows those two programs in some detail, so let me turn that 
one over to him.
    General Hite. The Crusader program is on track now in terms 
of cost and performance. We are a little bit behind schedule in 
that particular program, but otherwise it is doing very good. 
We took a decrement last year of $25 million. Ten of it was in 
the propellant line; fifteen was in the regular Crusader line. 
That is not the entire cost of the schedule slip. A lot of that 
can be blamed primarily on decision-making apparatus when we 
switched from liquid propellant to solid propellant, and I was 
part of that process.
    Mr. Young. Mr. Dicks.
    Mr. Dicks. Does ``decrement'' mean cut?
    General Hite. Yes.
    Mr. Dicks. I thought we were trying to increase that 
program.
    Mr. Young. I thought our purpose was to try to accelerate 
the Crusader program.
    Mr. Dicks. It says here in the questions that this cut is 
causing a 6-month delay.
    Mr. Young. Well, the general just indicated that.
    General Hite. Any time you take $25 million out of a 
program, it is going to have an impact.
    Mr. Young. We didn't take that $25 million out, did we?
    General Hite. Yes, sir, you did.
    Mr. Young. Let me find out why.
    That obviously was a casualty of the conference. We did not 
take the $25 million out in our Committee, but in conference.
    General Hite. When I say by ``you,'' in Congress.
    Mr. Decker. Not you specifically, sir.
    General Hite. So it served as a combination of the cut plus 
the fact that it took us some time to make a decision, a final 
decision, to switch from Liquid Propellant, LP to solid. When 
the program manager came to me, I was uneasy with making that 
decision without giving a lot more study. We probably studied 
it just a little too long, and it got us off schedule a little 
bit. But we are okay on the program now. The program is funded 
in 1998 where it should be, and we are moving forward with it.
    Mr. Young. Good.
    Mr. Dicks.

                      Comanche Helicopter Program

    Mr. Dicks. Could you tell me where we are on the Comanche 
program?
    Mr. Decker. Yes, sir. We are well into the flight test 
program of the first vehicle. As you recall, there will be two 
vehicles built in this phase. The second one is under 
construction as we speak.
    We have had about 34 flight hours on the first system. At 
the test facility in West Palm Beach, Florida--it is performing 
well. The program is using a very rigid scheduling and variance 
measuring--and cost variance measuring techniques. It is less 
than 1 percent variance from the baseline program. So relative 
to the planned program, it is right on target, and that is an 
absolutely accurate statement.
    Mr. Dicks. Well, last year we added $49 million. Was that 
necessary to keep it on track?
    Mr. Decker. It certainly keeps the future events on 
schedule. There are several things that needed to be put into 
the system that would have had to have been delayed until later 
in the program relative to making sure we have the low 
observable capability that is in the system that it needs.
    We did need to increase the flight testing a bit, and we 
needed to accelerate the mission equipment package, which is 
the reason for existence, that is the sophisticated electronic 
reconnaissance gear, in order to keep the second bird on 
schedule.
    And so those were on schedule, but the schedule was risky, 
and your addition last year significantly reduced the risk of 
keeping those on schedule.
    Mr. Dicks. Now, is the budget this year adequate, or do you 
need additional funds this year as well?
    Mr. Decker. The budget this year is adequate in relation to 
the program plan and schedule that we have laid out for the 
dollars that are available. But there will be a period of down 
time where we don't have enough funds to test but one vehicle, 
and we would like to fill that up with testing time because it 
will further reduce risk later in the schedule of the program 
when we start building the first six vehicles, and so we could 
use some extra money this year to fill that gap.
    Mr. Dicks. How much would that require?
    Mr. Decker. That is about $40 million.

               Theater High Altitude Area Defense System

    Mr. Dicks. Okay. Let me ask you, this committee has been 
very interested in Theater Missile Defense, and as I understand 
it now, we have had our--is it our fourth failure in a row on 
the THAAD program?
    Mr. Decker. No, sir. It is the third. The first flights of 
THAAD was to check out the efficacy and operation of the 
missile, and they weren't--it wasn't aimed at a target. So 
since we started firing for targets, we have had three failures 
in a row.
    Mr. Dicks. Well, what is the current status of the program?
    Mr. Decker. The status of the program is that we are on 
schedule in the sense of--well, actually we are about 4 months 
behind schedule in the sense of meeting the test--goals of 
test, and we have had these problems that have----
    Mr. Dicks. You mean you are meeting the goal of having the 
test, not that the tests are successful?
    Mr. Decker. Right. Let me explain the rest of that. So in 
terms of schedule, had we had successes, we would be in 
outstanding shape.
    Mr. Dicks. Didn't Dr. Kaminski say that this now is the 
program that is under some risk of going forward because of 
these failures?
    Mr. Decker. Well, I think until we fully understand the 
ensemble of the failures, which we have an outside team, 
outside of our program management, that is being chaired by 
General Lyles, Director, Ballistic Missile Defense 
Organization, personally, and we support this fully, going 
through a complete overview of the program in total to try to 
get at not only the specific technical cause of the failed 
hit--there were a lot of successful things that worked about 
the missile and the radar on this last one. So this is not a 
colossal disaster by any means, but we are scrubbing that down. 
But we are concerned there may be somewhere in the system of 
management some quality control issues that we haven't 
uncovered that we have got to find and screen out, and that 
would not be necessarily a technical design flaw, but something 
we have got to fix so we don't--all three of the failures we 
have had were due to different causes, and that is a problem.
    So we would expect in 2 or 3 months to have the--maybe 
sooner, to have the results of this scrub team and to give an 
assessment of the program.
    Mr. Dicks. Can you give us any idea of what kind of 
problems these are?
    Mr. Decker. Yes, sir. All of the problems relate to the end 
game. That is the last couple kilometers as you are closing in 
on the target. The tracking of the radar and the feeding of the 
control of the missile to get it into the bucket have gone 
superbly. There is a seeker, and the seeker images the target, 
and you can tell from the ground when it has imaged it, and it 
takes over control of the missile and its warhead. The seeker 
can determine where the missile is heading in relation to the 
target and generate a digital signal through a computer that 
fires small little motors that are called divert motors, and 
they are part of the attitude divert system, and that steers 
the missile in to hit. It is in that end system.
    The seekers are a very tricky technology. I will assure you 
in any, any missile, defender missile, the whole game is the 
seeker and the divert system at the end, and that is where we 
are having the trouble. We are getting close, but we haven't 
hit it yet.
    Mr. Dicks. Who builds the seeker?
    Mr. Decker. This--now, this gets a little more complicated. 
The seeker design for this missile is the platinum silicide 
PtSi. We used the best available technology at the time. Along 
the way, we are changing to a new technology; indium antimonide 
(InSb) seeker. We have continued to test the missile with the 
PtSi seeker until we get the new seeker in, the InSb, ready to 
use with confidence in future tests beginning with the next 
flight test number 8.
    Who is the builder of the double seeker we have now?
    General Hite. I forget the name.
    Mr. Decker. I am sorry. I will have to take that for the 
record. The new seeker will be made down in Corpus. They won 
that in a competitive contract.
    [The information follows:]

    The maker of the old and new seekers is Lockheed Martin 
Infra-Red Imaging Systems (LMIRIS), formerly Loral, located in 
Lexington, Massachusetts.

    Mr. Dicks. Now, we are talking about a later defense here; 
isn't that correct?
    Mr. Decker. Lockheed Martin Infra-Red Imaging Systems 
Corporation is doing the current seeker and the planned seeker 
which represents an advancement in technology. The InSb Focal 
Plane Array for the seeker is commercially available; and it 
has greater performance, costs less, and is easier to produce.
    [Clerk's note.--The witness did not discuss the performance 
characteristics of the InSb seeker in his original answer.]
    Mr. Dicks. Was the change made because of your concerns 
about this seeker working, or was it competitive or what?
    Mr. Decker. No. The change was made because the basic 
imaging material in the seeker we have now, which is platinum 
silicide, is not as sensitive and not as responsive to the 
signals, it is a thing that forms the image, as the new 
material known as indium antimonide. It is a better technology. 
It is more stable, more precise and more sensitive. So we made 
the decision for that reason, and it will be a better seeker.
    Also, the design, the platinum silicide, the seeker is 
really two halves, and I am not sure how it ended up that way. 
That was before my time. It may have had to do with the kind of 
materials. And it is really two seekers in one, and they image 
together, and they get coupled through the computer into the 
resultant image. And trying to keep that in synchronism--and 
one of the failures, one-half of the seeker entirely failed, 
and the software wasn't ready to accommodate that. So there 
were those kind of deficiencies in the present seeker, 
partially due to technology and design, that some time ago we 
decided to go to a new design and went out on competition and 
awarded that to Raytheon. And our plan----
    Mr. Dicks. So when is the first test with the new seeker?
    Mr. Decker. Well, I tell you when it was scheduled. We 
might delay until next year to make sure we don't have other 
problems in the missile review.
    When was the next flight schedule?
    General Hite. Flight number 8 is scheduled to have the next 
seeker in it, sir. We will probably shoot that seeker in that 
flight.
    Mr. Dicks. When is that going to be?
    General Hite. Depending on the results of this failure 
investigation we are doing, we are looking at the end of July 
or the first--the end of June or the first week of July for 
shot number 8, sir.
    Mr. Decker. That was the schedule that existed before we 
had the failure the other day. We will have to wait.
    Mr. Dicks. Well you all are very experienced individuals. 
Do you think the new seeker is going to solve the problem, or 
do you think there are other problems.
    Mr. Decker. I am concerned there are some other problems 
somewhere in that total front end assembly beyond just the 
seeker, and we have got to find that out. This is the first the 
absence----
    Mr. Dicks. This is starting to sound a lot like TSSAM.
    Mr. Decker. I don't know what TSSAM is.
    Mr. Dicks. Well, that was the missile we were going to fire 
off all of our airplanes.
    General Hite. The TSSAM, yes, sir.
    Mr. Decker. No, sir. If we can't get to the root of this to 
really understand it, we probably ought to stop.
    Mr. Dicks. All right. If you don't have it, though, what 
are you going to do? Theater Missile Defense is one of the 
great vulnerabilities we faced in the Gulf War. Any time you 
deploy forces, if the other side has got cruise missiles or 
Scud launchers, you have got to be able to defend these troops. 
How are you going to do it if you don't have this?
    Mr. Decker. Well, that is a good question, but in my 
opinion, if you step back and you look at the base of 
technology, engineering, management and experienced talent in 
the nation on these highly complicated technologies that make 
up these missiles, virtually every program we have, and there 
are four of them in major form, the Navy Lower Tier, the Navy 
Upper Tier, the PAC-3 upgrade and the THAAD, we have the entire 
talent base of the country tied up. So, I mean, I am not sure 
where to go if we can't get at the root of this. If I knew 
somebody else that was better, we would have them on board.
    Mr. Dicks. Well, I didn't necessarily mean that. What you 
are saying is there really isn't an alternative. You have got 
to get this right.
    Mr. Decker. You have got to get this damn thing fixed, but 
we don't want to do it and tell you that it is fixed until it 
is.
    Mr. Dicks. That is what we don't want you to do. But 
sometimes, you know, people over in the Defense Department 
cancel things prematurely and then----
    Mr. Decker. I wasn't hinting at that.
    Mr. Dicks. No, I know. But I am not saying that. I am just 
saying that my concern is we had to fix the Abrams tank. We had 
to fix the Apache helicopter. We had to fix the Bradley. We had 
to fix the F-17 airplane. Every one of these things go through 
problems.
    Mr. Decker. Yes, sir.
    Mr. Dicks. And sometimes because the press is bad and 
criticism from Capitol Hill, people say, well, we will just 
have to cancel the program. Well, if you have got to have it, 
you better make the extra effort to try and make it work. And I 
don't think we are at the point where you can really say that 
this thing can't be redeemed. I hope you guys can figure out 
the answer, because I think we desperately need it
    Mr. Decker. We do.
    Mr. Dicks. We need this capability. And if you don't have 
it, which is what I was asking you, what else would you do? If 
THAAD was cancelled, what would you do? Would you start a new 
program or what?
    Mr. Decker. I am not sure starting a new program--I mean, 
if there was another base of talent someplace in a company that 
wasn't in the ballgame, you might want to try a new team. We 
don't have that.
    Mr. Dicks. Yes.
    Mr. Decker. So we have got to get it fixed.

                      Patriot Advanced Capability

    Mr. Dicks. How are the other programs doing? How is PAC-3 
doing?
    Mr. Decker. Well, PAC-3 is moving well. I think it is in 
good shape.
    Mr. Dicks. But that is just the lower part.
    General Hite. Yes, sir.
    Mr. Decker. Yes. But it has yet to kill a missile. The Navy 
Lower Tier----
    Mr. Dicks. Has it been able to intercept a missile? I have 
seen one video of it we had here a couple of years ago.
    Mr. Decker. Yes, sir, it has. The new PAC-3, an upgrade 
missile, when is it first firing?
    General Hite. September.
    Mr. Decker. September is its first firing. It is on track.
    Mr. Dicks. And they can't expand that and go higher? If you 
could explain it to me, I don't know this as well. Mr. Wilson 
was our expert on this. He has left us.
    General Hite. Yes, sir.
    Sir, there is a possibility that you can do that, if you 
take that missile and do some things to it, that is within the 
realm of possibility.
    Mr. Dicks. It works?
    General Hite. It is something that we are looking at, but 
it would be a redesign of the missile because it is a much more 
stressing environment the higher it goes.
    Let me pick up on your point do we stop the program. What I 
would say is that this is--this program is in the 
demonstration/validation phase, and the purpose of that phase 
is to demonstrate and validate technology, find out what your 
problems are, and correct your problems before you go in to 
full-scale engineering.
    Mr. Dicks. Right.
    General Hite. When you have problems, you sort them out, 
and we are having some problems. The issue now is not the 
seeker. We are pretty comfortable with the new seeker that is 
coming on. We are pretty comfortable with that. All we were 
waiting on was the technology to get to the point where we felt 
confident to move that new seeker technology in the missile. We 
waited, and we are ready to do that.
    Our concern is, of the failures we have had, as Mr. Decker 
said, they are all different. That points us to a reliability 
or a quality assurance problem. Now, if you are having that 
kind of problem, you tighten up the management, find out what 
your processes are, are they the right processes, are they 
being conducted properly? Or you go and look for someone else 
to build a missile. If you look at each one of those firings, 
take away the fact that we didn't have an actual intercept, but 
look at the tremendous amount of things that have to happen to 
get that missile up in the air into the intercept box, all that 
equipment worked great; the radar, the BM/C2, the battle 
management devices. I mean, that is a big part of the program, 
the boosters. The problem is--might be in the reliability or 
quality assurance area, and that is what we are looking at. So 
which----
    Mr. Dicks. It sounds a lot like TSSAM. This was the same 
kind of problem we had with that.
    General Hite. Would you kill the program for that? I 
wouldn't kill the program for that. I would probably--if I 
can't get those problems fixed or those quality and reliability 
problems, if that is, in fact, what it is, I might look to a 
second source for this second missile portion.
    Mr. Dicks. Or you bring in a new program manager or try to 
get the manager's position.
    Is this Texas Instruments? Who is running this one?
    General Hite. Lockheed Martin.
    Mr. Decker. Lockheed Martin.
    Mr. Dicks. I have heard of them.
    Mr. Decker. Say again?
    Mr. Dicks. I have heard of them.
    Are they giving you management attention on this thing?
    Mr. Decker. Yes, sir.
    Mr. Dicks. Do they understand that they have got to get 
this thing fixed?
    General Hite. Yes, sir, they are now giving us management 
attention.
    Mr. Dicks. You say now?
    General Hite. My spin on it is I don't think we gave it the 
proper management attention early in the program.
    Mr. Dicks. Is the Army doing its part in terms of looking 
at its own program manager?
    General Hite. Yes, sir. We changed our program manager 
about 6 months ago. We have an extremely capable and bright 
individual running that program, one of the best we have.
    Mr. Dicks. How are the two Navy programs? Do you follow 
those as well?
    Mr. Decker. Well, certainly not in the detail of our two, 
but at the micro-level, the Lower Tier, which is the Navy 
analogy to Patriot, seems to be coming along quite well. Their 
Upper Tier, which is the echelon Spirit, is earlier in the 
entire stage in terms of even immaturity than THAAD. It just 
got out of sync. It started there. So it is too early to tell 
if they are going to have similar problems.
    Mr. Dicks. But we are talking about a layered defense; 
right?
    Mr. Decker. Yes, sir.
    Mr. Dicks. Is that what we are trying to do?
    Mr. Decker. Yes, sir.
    Mr. Dicks. It is area protection plus point protection?
    Mr. Decker. It is small area versus large area protection. 
Obviously, the Patriot is geared to defending a small area, 
with----
    Mr. Dicks. An airfield?
    Mr. Decker. Envelope and airfield or a small town or a 
corps headquarters, whatever, logistics installations, it is 
defending that area, but its range of the defense envelope, 
where the missiles can intrude and be in there, is fairly big. 
But if you go in to the--the physics, if you will, the shorter-
range ballistic missiles, the 3-to-500 kilometer have a 
different ballistic reentry coefficient and different speeds 
and you can defend them with the Patriot. When you get up to 
the 1,000-kilometer range missiles, you have got to get up 
higher and get them earlier, and that is why we went to the 
layered.
    Now, the good news is, for good, better or indifference, 
the best intelligence data we have is that the proliferation of 
the missiles today and over the next few years are the shorter-
range SCUD class. They are cheaper and they are easy to get. It 
will be awhile----
    Mr. Dicks. So PAC-3?
    Mr. Decker. PAC-3 will provide that initial okay at the 
lower tier, but when you get out to 7, 8, 9 years from now you 
will begin to see the advent of the 1,000-kilometer missiles.
    Mr. Dicks. I have stretched my time here, and I have to 
leave, but let me ask one thing.
    Are we getting any of these systems into the inventory? Are 
we getting any of the new PAC-3s?
    Mr. Decker. PAC-3s, the Patriot, with--the enhanced Patriot 
II missile is fielded, as we speak.
    Mr. Dicks. Right.
    Mr. Decker. It has got a limited capability against other 
missiles.
    Mr. Dicks. Right.
    Mr. Decker. And it is better than nothing. The new missile 
is scheduled to be fielded beginning in late 1999.
    Mr. Dicks. So we have got a year, a couple of years to go?
    Mr. Decker. A couple of years to go to get that missile 
out.
    Mr. Dicks. That is the PAC-3.
    Mr. Decker. That is the PAC-3, to get you up to the little 
larger envelope.
    Mr. Dicks. Thank you, Mr. Chairman.
    Mr. Decker. Thank you, Mr. Dicks.
    I would like to say one thing, I read a little philosophy a 
long time ago I saw in a fortune cookie. It said: ``The world 
is full of people who gave up just before they would have 
succeeded.'' We don't want to do that.
    Mr. Dicks. And I think that is a very important point. I 
mean, we were reviewing this morning with General Reimer, all 
these systems that were criticized in the press. They said they 
were terrible and then when we got to DESERT STORM/DESERT 
SHIELD and they worked and worked dramatically well. So by 
staying with it and fixing up the problems, we got the country 
systems with value.
    What I worry about is you will cancel this thing and then 
it is going to take you years to come back, and we have a big 
void here of not having protection for our soldiers.
    Mr. Decker. Thank you, sir.
    Mr. Dicks. Thank you.
    Mr. McDade. The gentleman from Ohio is recognized.

               Family of Heavy Tactical Wheeled Vehicles

    Mr. Hobson. Thank you, Mr. Chairman.
    I have three areas of questions I would like to ask, if I 
may.
    I have some problems with the way you all buy stuff, 
especially in the area of trucks, although I noticed you added 
funding for trucks. I didn't get to see the movie, but I want 
to add some things about heavy tactical vehicles. You know, you 
talk about the importance of them, Mr. Decker, but for the 
second year in a row, as I understand it, your budget proposed 
no funds to procure heavy tactical vehicles. I assume from that 
you have got enough of them, you don't need any more?
    And yet in 1999--let's see. In 1998 or 1999, I guess you 
are going to come back. I don't know how you are going to do 
that. Are you going to start all over again with somebody new?
    Mr. Decker. That is a tough one.
    Mr. Hobson. I don't like to ask easy ones.
    Mr. Decker. No, I know you don't and that is fair. You 
shouldn't ask easy ones. You should keep us on our toes.
    I think the best answer I can give you on that is we ended 
up late in the year with what looked like was going to be an 
enormous hit on top of our budget plan to that date. And in 
looking at the Army's piece of what that cut was going to be, 
the decision of the Army leaders was to say if that cut happens 
at that magnitude, we have got to stick with our readiness 
budget we submitted and stick with our quality-of-life related 
budgets, of which pay is certainly a big piece, and so the cut 
was all going to come out of the modernization program.
    Well, it turned out the cut wasn't quite as big as we 
thought, but we still had to do some things at the end. And 
when we got down to what the final bottom-line number was going 
to be for the Code Alarm and Research and Development 
Acquisition Account, we had to take a program out someplace. I 
mean, there was no way to salami-slice it, and I don't believe 
in salami-slicing.
    Mr. Hobson. Is that going to be cost-effective----
    Mr. Decker. No, sir.
    Mr. Hobson. To go cold-turkey and then come back?
    Mr. Decker. No, no. But it would have been less cost-
effective to kill some other program. And so we didn't fight 
the warfighter priorities too hard. We do that a lot on the 
basis of efficiencies, because from a warfighter priority view, 
we are in better shape with our units that we deploy first with 
the heavy trucks than we are with the others. And so we just 
said we will take a break for one year so we don't have to 
wreck these other programs.
    Now, I don't really know if we thought about the 
competitive strategy but, in reality, we always compete, but 
the maker that is currently making our heavy trucks is an 
excellent contractor. They deliver and stand behind their 
product. They have other business, and we didn't put them in 
jeopardy as a company and so they can restart. It will be 
efficient for a restart. So we put all of those thoughts 
together and said that is the program we will take out to fit 
this budget bogey.
    Mr. Hobson. You don't think they are going to be in 
jeopardy?
    Mr. Decker. I don't know the company is going to be in 
jeopardy. It is a good company and they have another base of 
business. If you put the company in jeopardy, I would be 
concerned, but I don't believe we have done that.
    Mr. Hobson. Let me go on and ask about some other vehicles.
    Mr. Decker. But it is an inefficient decision, you are 
absolutely right.

                   Family of Medium Tactical Vehicles

    Mr. Hobson. How many Medium Tactical Vehicles are sitting 
down in Texas rusting, that you haven't accepted or you won't 
accept?
    General Hite. Sir, I don't have the exact number that are 
sitting down there rusting. We have resolved that problem with 
the contractor and he has shipped those out several months ago. 
We are fielding now those trucks to both Fort Campbell and Fort 
Bragg.
    Mr. Hobson. The rusty ones?
    General Hite. Yes, sir. The ones that have been corrected. 
We put them in. We made--we asked the contractor to come up 
with a solution to that. The contractor did come up with a 
solution to that, gave us a 10-year warranty on the cab that 
was rusting and fixed those problems.
    The number that was down there, when we testified last 
year, was very high. It was like 1,700 or 1,800. That problem 
has been resolved now and we are shipping trucks every day we 
can out of Texas.

              High Mobility Multipurpose Wheeled Vehicles

    Mr. Hobson. Let me ask you another question. I want to 
switch subjects for a second. The HMMWV, is it a good vehicle? 
Does it work?
    General Hite. Which one, sir?
    Mr. Hobson. HMMWVs.
    Mr. Decker. Other than a qualitative answer, but yes, as 
far as I know, absolutely, it has got many variances and it has 
done yeomen's work on the battlefield.
    General Hite. I would add to that, I used to be the program 
executive officer to that vehicle many, many years ago, also 
tested it for about 5 or 6 or 8 years. It is a good vehicle, 
but it is a 1970s' technology vehicle. We are at the point now 
where we are starting to overload the vehicle. We are asking 
more of the vehicle than it was originally designed to do in 
terms of weight, power requirements. Also, the environmental 
problems with the vehicle, it does not meet all those.
    Mr. Hobson. The reason I asked that, and you anticipated 
where I was going because in 1999, as I understand it, you are 
going to come back and want to do a whole new vehicle. Based 
upon our experiences with new vehicles and how they are 
developed, having had some of this experience in my district--
--
    General Hite. Yes, sir. I was with you.
    Mr. Hobson. And Mr. Wilson who is not here had been through 
it at least once or twice before that.
    General Hite. Yes, sir.
    Mr. Hobson. I think Mr. Murtha and Mr. McDade went through 
it.
    Mr. Decker. Right.
    Mr. Hobson. I do not get really excited when we start 
talking about great technology advancements we are going to get 
with some of these new vehicles because as--I have got to tell 
you, is all I see are cost-overruns, unacceptable vehicles, as 
the experience we have had on the warranty problem on the FMTV, 
when we begin to do these new things.
    Now, one of the things that just happened yesterday, in one 
of the other services, which is somewhat encouraging to me, is 
that there was a $15 billion mistake, that some people got 
together with the contractor and worked it out, which maybe 
some people are beginning to get the message after a long, long 
time.
    General Hite. Yes, sir.
    Mr. Hobson. That business can't be the same as before, and 
we have got to write these contracts in the beginning, because 
the FMTV contract was more expensive to stop than it was to 
complete. And that kind of thing just, sir, can't continue on. 
We can't afford that kind of stuff.
    General Hite. Yes, sir.
    Mr. Hobson. So I am worried about 1999. I hope I am going 
to be here in 1999, and I don't want to go through this again 
and I don't think anybody else does. The problem is, there is 
always different program managers, everybody retires and moves 
on. We still tend to live with it. So I hope you don't plan on 
going through that with some radical design that isn't going to 
work in 1999.
    General Hite. Yes, sir.
    Mr. Hobson. I hope everybody gets the message on that.
    General Hite. Yes, sir.
    Sir, I understand the message, but I hope you also 
understand that these vehicles are getting old and we bought 
about 100,000 of them and some of them are 12, 13 years old 
now. We do have to upgrade the technology. If an upgraded HMMWV 
is an answer to a requirement, that will be, you know, part of 
the competition.
    Mr. Hobson. Well, I understand. But sometimes some of 
that--I have some problems with these advanced fighters. I kind 
of like some of the old stuff that works every day. Some of 
this stuff works every day. I hate to get into some stuff that 
doesn't work, we can't fix and when the warfighters have to use 
it, it isn't there.
    General Hite. Yes, sir.
    Mr. Hobson. But I understand, and we want to work with you. 
I think we proved that in the trucks, sir.
    General Hite. Sir, you have.
    Mr. Hobson. Last year, Congress provided more money for the 
trucks than the B-2. Now, nobody wrote about that, but you did. 
And this Committee is here to help you, but you have got to 
help us, too.
    General Hite. Sir, you gave us $242 million last year and 
we really appreciated that. That saved the life of the trucks.
    Mr. Hobson. Thank you, Mr. Chairman.
    Thank you, General.
    Mr. McDade. The gentleman from North Carolina.

               THEATER HIGH ALTITUDE AREA DEFENSE SEEKER

    Mr. Hefner. Thank you, Mr. Chairman.
    I would just follow up just a bit on the trucks. A few 
years ago we had one of the hearings here and we discovered in 
some of the proposals that they had, I don't remember the exact 
number, it was like $60 or $70 million to reinvent a truck. And 
we got to looking into it, and the only benefit we were going 
to get out of this reinventing the truck was it was going to 
get a little bit more speed over the road. It wasn't going to 
get any advantage when you take it out into the field and what 
have you. So now we have an upgrade of the HMMWV, I don't know 
how they are doing with the Army, but a lot of folks are 
getting fidgety about that, I know.
    To follow up on Mr. Dicks' question, how many successes 
would you have to have before you would be comfortable with 
Theater High Altitude Area Defense system, that you would 
really be confident that it would do the job? And the new 
seeker, what does it have that the old seeker doesn't?
    Mr. Decker. Let's see. Let me take the questions in reverse 
order. And I don't want to get into a lot of stuff that even I 
don't understand that well. But the new seeker uses a different 
material in the little elements that make up the sensors, the 
imager. It is like taking a picture and instead of film, you 
have this stuff that is sensitive to infrared radiation but it 
does form an image. The material in the new seeker is a much 
better material that is been proven out. It is more sensitive 
to dimmer, dimmer images, instead of bright images and those 
things. So it will perform better and it is very much more 
mature material.
    Also, the design of the other seeker, these two halves, was 
not a good way to go. I am not sure how that design was 
selected originally. It may have been a derivative of an 
earlier design.
    So we clearly believe that the new seeker is going to be 
more reliable and operate better in that environment.
    Mr. Hefner. But let me interrupt. But you don't know it 
that was the total problem?
    Mr. Decker. No. We selected the new seeker, before we had 
the first failure, on other factors. And so we felt all along 
that this new seeker, the new seeker design--material was going 
to be the right way to go. The old seeker was performing in its 
simulations and we said we should go ahead and test with it to 
prove out all the missile, and if it worked, we would hit, 
until we got to the new seeker. Well, as you know, we have had 
the three failures that failed to hit.
    Mr. Hefner. How bad did you miss?
    Mr. Decker. Do you know how far the missile was the other 
day?
    General Hite. I do not know about the other day.
    Mr. Decker. No. The first one, where the seeker failure 
wasn't a problem--we know that miss No. 2, it was a seeker 
failure, that was diagnosed carefully and we know why that 
seeker failed.
    I think it was maybe a half a kilometer.
    General Hite. Yes.
    Mr. Decker. Because you are getting in to pretty close 
velocities, and the last--the seeker failed and it couldn't 
order the divert motors to steer it in, but at those speeds 
that is fairly close. I mean, everything else on the system 
worked because, if you can get it up to about a 10-kilometer 
bucket, and the seeker and the divert motors work, you are 
going to hit it.
    Divert just means little steering rockets that steer it in. 
The seeker is telling it where to steer and it steers. That 
entire divert rocket, the complete rocket system failed. We 
don't know the cause of that failure yet.
    Mr. Hefner. How many successes would you have to have?
    Mr. Decker. Now, to get to your first question, I could 
probably go and do the statistical modeling to deal with our 
view--the statistical confidence levels, but my judgment says, 
well, certainly more than one, so at least two, probably three, 
to where you would feel like you really were there.
    Mr. Hefner. And three without a miss?
    Mr. Decker. Yes, three hits.
    Mr. Hefner. And you would feel comfortable----
    Mr. Decker. If you had two hits and a failure, you would be 
in a dilemma.
    Mr. Hefner. If you had two we were on to something?
    Mr. Decker. I would feel we were on to something. And if 
you had two in a row and a third failure, and it was an 
equipment failure rather than a design failure, I wouldn't feel 
that badly. It is kind of a judgment call there, but don't take 
that as gospel. I am giving you just a judgment view.

                            PATRIOT MISSILE

    Mr. Hefner. I understand.
    Was the Patriot which we kept alive around here for many, 
many years, and it became the hero in the Gulf----
    Mr. Decker. Right.
    Mr. Hefner. How really effective, when you did all of your 
analysis after the Persian Gulf was over, how effective was the 
Patriot?
    Mr. Decker. In the Persian Gulf?
    Mr. Hefner. Yes.
    Mr. Decker. In all honesty, Mr. Hefner, and I am not 
copping out, I have never gone and looked at whatever hard data 
exists. It did apparently hit one of the incoming Scuds on one 
occasion. But in terms of hard data, I am going to turn it over 
to General Adams. He may not know the answer, either.
    I don't know if we ever had any hard data that might be 
collected on a test run that says we know there were these many 
missiles coming in over a period of time, and we actually hit 
this many. It is a controversial subject. It clearly hit at 
least one in those engagements.
    Mr. Hefner. Okay. I have a couple of questions.
    General Adams. There was a study, Mr. Hefner, done 
immediately after the Gulf War because, as the Secretary 
indicated, there was quite a bit of controversy, and so we have 
some numbers. I don't recall exactly, but the documentation 
that was looked at at the time, indicated we had a 70 percent 
success rate.
    [Clerk's note.--General Adams testified during the hearing 
that ``we were 80 percent confident that we had an 80 percent 
hit.'']
    Mr. Hefner. You had an 80 percent hit on that one, we know, 
right?
    General Adams. Sir, we were 70 percent successful.
    Mr. Hefner. The reason I ask, the Patriot has a very 
interesting history around here. It goes back a long, long way, 
as you gentlemen know.
    I have a couple more questions here, and you can do this 
one for the record for me.
    Mr. Decker. I will answer it.

                              ABRAMS TANK

    Mr. Hefner. The M-1 tank, there have been press reports 
suggesting that the Army intends to indefinitely defer fielding 
M1A2 tanks to the Second Division in Korea in favor of 
providing a more modern tank to the experimental digitized 
division.
    What impact would this decision have on this Second 
Division? And you can do that for the record, if you wish.
    Mr. Decker. All right, sir.
    [The information follows:]

    The Army is considering a four to five year temporary diversion of 
120 M1A2 tanks to the experimental digitized division. This temporary 
diversion, if approved, will not affect Second Infantry Division 
fielding plans. What may impact the fielding of the M1A2 to Korea is an 
ongoing Army review of M1A2 requirements and affordability.

                           Starstreak Missile

    Mr. Hefner. I have another on the Starstreak, a lot of 
these systems I don't really know--I don't understand all the 
intricacies of these. Congress provided funding last year for 
phase 2, evaluation of the Starstreak missile on the Apache 
helicopter. When will these funds be obligated and when will 
phase 2 testing be completed?
    Mr. Decker. Just a moment. They have been released to the 
Army. They were on hold from OSD. We now have the money, so let 
me ask when they will be obligated.
    Do we have instructions as to that?
    [The information follows:]

    The fiscal year 1997 (FY97) were obligated in February 1997 to 
fully fund the Phase II contract. Phase II missile firings are 
scheduled for completion in October 1998, with the final report 
expected in November 1998.
    Background: Air-to-Air Starstreak (ATASK) is a two phase effort. 
Phase I was initiated in July 1995 to assess the technical feasibility 
of the air-to-air Starstreak missile through analysis of integration 
design, system effectiveness, and separation test results. Phase I 
testing was completed in October 1996 and concluded that the Starstreak 
missile could be fired safely from an AH-64A Apache helicopter, and it 
was safe to proceed to the next phase. An integrated cost analysis will 
be completed as part of Phase I, the results of which are due in April 
1997. The Phase II contract, awarded on 20 December 1996, is directed 
at the demonstration of the ATASK integration of hardware on an Apache 
helicopter, conducting airborne missile launches against aerial 
targets, and demonstrating full technical feasibility of the Starstreak 
missile as an Air-to-Air (ATA) self defense weapon for the Apache. 
ATASK was a congressional add in FY94-FY97 as follows: FY94 (Program 
Element (PE) 0203801A, $6 million) and FY95 (PE 0603003A, $3.0 million) 
for ground-to-air (GTA) and ATA evaluation of Starstreak respectively 
(Congress also added $8 million (PE) 0203801A) FY95 funds, which were 
eventually rescinded); FY96 (PE 0603003A, $4 million); and FY97 (PE 
0603003A, $15 million). Congress directed the Army to evaluate the air-
to-air missile capability of the Starstreak missile and the FY96 budget 
Joint Authorization Conferees specified the AH-64 Apache helicopter as 
the platform. Shorts Missile Systems Ltd. is the prime contractor and 
McDonnell Douglas Helicopter Systems and Lockheed Martin are major 
subcontractors.

    General Hite. Phase 2 is working now.
    Mr. Decker. It is underway, phase 2 is under way. Once we 
got the money from OSD, we were ready to go. And I believe--
Fenner, do you know when phase 2 is scheduled?
    General Adams. It began in February of 1997 and will 
conclude in November of 1998.
    Dr. Milton. I would like to answer that for the record. The 
funding has been released and the phase 2 schedule is under 
review.
    General Hite. December 1998 is when we are supposed to have 
all the analysis done.
    Mr. Decker. We are supposed to have everything done in the 
next year. The actual testing and modeling and all that will be 
done ahead of time.
    Mr. Hefner. Okay. I have a little three-parter here.
    Mr. Decker. We will make an official answer for the record 
and give you that.
    Mr. Hefner. Okay. Given the availability of funding, is the 
Army committed to conducting phase 3 side-by-side evaluation of 
the Starstreak and the Stinger missile?
    Mr. Decker. No, we are not----
    Mr. Hefner. And is further work required to launch a 
Stinger from Apache? If so, tell us--describe the additional 
work and associated costs.
    And finally, what is the projected cost of a phase 3 side-
by-side evaluation?
    Mr. Decker. The only answer I know for sure is, no, we 
aren't committed to phase 3, and I would appreciate it if we 
could take those other costs for the record. I just don't have 
them off the top of my head.
    [The information follows:]

    The following are estimated development costs for a Phase III side 
by side evaluation:

 
             Stinger                            Starstreak
 
Modification of the Stinger       Development of Starstreak launcher for
 Universal Launcher and its        an Apache Longbow aircraft;
 integration onto an Apache        integration of the Starstreak missile
 Longbow aircraft, and             with the fire control radar: $8.0
 modification of the existing      million
 Stinger Air-to-Air launcher to
 ensure MIL-STD-1760
 compatibility with the Stinger
 Universal Launcher: $11.6
 million
Launcher qualification $7.0       Launcher qualification $5.0 million
 million
      Total prior to Side-By-         Total prior to Side-By-Side
       Side Testing: $18.6             Testing: $13.0 million\1\
       million
 
     Phase III Starstreak/Stinger Side-By-Side Testing: $5.0 million
 
                       Grand Total: $36.6 million
 
\1\Does not include $22 million of Starstreak funding for Phases I and
  II.

    This side-by-side comparison testing includes targets, use of test 
range, and final evaluation report. The assumption is that the Army 
provides the Stinger Block I missiles and the United Kingdom provides 
the Starstreak missiles.
    Apart from the development costs associated with Starstreak Phases 
I and II, and not even entertaining the costs associated with funding 
Phase III, the Army is very concerned that the Starstreak rotorcraft 
integration costs in the production phase will prove unaffordable. The 
following cost drivers make the Starstreak missile retrofit more of an 
affordability issue than originally envisioned: the kits which provide 
for the integration of the missile's laser guidance system with the 
target acquisition designation system, and missile system integration 
with the fire control radar; the cost to retrofit the Longbow Apache 
fleet with Starstreak missile launchers; and the replacement of at 
least seven secondary structural components in order to withstand the 
missile's blast/over pressure effects. On the other hand, the 
production costs associated with rotorcraft integration to retrofit the 
Longbow Apache fleet with Stinger Block I or II missiles appears to be 
minimal: the unit production costs of $100,000 per aircraft (2 
launchers), and minor modifications to the aircraft's fire control 
radar. With Stinger, no change to the Apache's target acquisition 
designation system is needed.

    Mr. Hefner. Okay. We would appreciate that.
    Mr. Decker. We will give you that. To make sure I 
understand, you want to know--well, first, we are not 
committed, but if we did a phase 3, what would be the cost of 
bringing the Stinger or doing phase 3, really, which would be 
Stinger side-by-side with Starstreak from Apache.
    And then what was the other question?
    Mr. Hefner. What is the projected cost of the phase 3?
    Mr. Decker. Okay. That is one question. We will get you 
that.
    Mr. Hefner. And is further work required to launch a 
Stinger from Apache?
    Mr. Decker. We will get you the answer to that.
    Mr. Hefner. Okay. Since you used a cliche earlier about 
giving up just before you succeed----
    Mr. Decker. Just before you succeed.
    Mr. Hefner. There was a story I heard about the guy who 
invented a soft drink, and he called it 1-Up, and when he got 
to 6, he quit.
    Mr. Decker. I am going to use that in my next speech.
    Mr. Hefner. I thank you very much.
    I thank you, Mr. Chairman.
    Mr. Decker. Thank you, sir.
    [The information follows:]

    To launch Stinger from an Apache, modification of the existing 
Stinger Air-to-Air launcher would have to be made to ensure Military 
Standard-1760 compatibility, appropriate battery cooling to the 
hellfire launcher to accommodate Stinger, and associated launcher 
qualification work would need to be conducted as part of a development 
program. Total development costs are estimated to be $18.6 million. 
After development cost investments for launcher development/
qualification, the cost to retrofit the Longbow Apache fleet would 
entail unit production costs of $100,000 per aircraft (2 launchers), 
and minor modifications to the aircraft's fire control radar.

    Mr. McDade. The gentleman from Indiana.

                               AMMUNITION

    Mr. Visclosky. Thank you, Mr. Chairman.
    Secretary, General, thank you very much for coming today.
    I would like to talk to you about ammunition, if I could. 
My understanding is that the Army's annual consumption of 
training ammunition is about $900 million. My understanding of 
your budget request for FY 1998 is that for training, and war 
reserve, you have asked for about $694 million. As a result, 
you will have to use some of your war reserve.
    Is this of concern to you, and is there something we on the 
Committee should be concerned about?
    Mr. Decker. Sir, if I may, that is why I asked General 
Arbuckle, our ammunition officer for the whole Army, to come. 
He keeps track of this in great detail. There are so many 
different types of ammunition, I can't run them around in my 
head.
    General.
    General Arbuckle. Your figures are about right, sir, and 
yes, in fact, the Army has been over about the past 3 or 4 
years consciously going into war reserves to help offset the 
training requirements.
    Now, the reason we do this is twofold. One is 
affordability, but we also have to note that there is quite a 
bit of excess in our war reserve right now as a result of the 
Cold War drawdown. So we have assumed, I think, a prudent 
strategy, and we are firing some of that excess in training 
rather than having to demilitarize it.
    Is it of concern? Yes, but it is not a pressing issue that 
we have to address right now. In fact, as we look to the 
outyears, what we are going to be doing with our training 
ammunition is ceasing to dip into the war reserve for those 
things that we truly need for a war fight, but not the excess, 
instead of going to new procurement to support training. So 
this is going to come to an end over the next few years, about 
the next 3 years.
    Mr. Murtha. Would the gentleman yield?
    Mr. Visclosky. Absolutely.
    Mr. Murtha. I am not sure I understand. You say it is a 
concern. War reserves are set aside for a specific purpose, 
obviously. How serious is it? I mean, I think we need for the 
record an answer so we know exactly where we are, because we 
put ammunition in many times when you folks don't ask for it 
because we know--you have told us there is a problem, and then 
when you start using that up, that defeats the very purpose of 
what we are trying to accomplish.
    So I would appreciate it if you would answer this for the 
record so we know exactly where we are with the sustainability 
we need with war reserves.
    General Arbuckle. Okay. There is a couple of ways I will 
come at that, sir.
    Mr. Decker. We will give a detailed answer for the record.
    Mr. Murtha. Just give it to us for the record.
    General Arbuckle. Okay. We will do that, sir.
    Mr. Murtha. We need to get it right away. We don't need to 
wait until the transcripts come out. We need to see this as we 
go through our markup.
    General Arbuckle. Absolutely.
    Mr. Decker. We will get that information for the record.
    [The information follows:]

    The Army has sufficient assets (preferred plus suitable 
substitutes) to support the National Military Strategy. The following 
list of preferred munitions notes the ammunition item and the 
approximate asset posture against the Army's stockage objective at the 
end of the fiscal year 1998 funded delivery period.

        Item                            Percentage of Stockage Objective
120mm Tank, M829A2, APFSDS-T......................................    70
120mm Tank, M830A1, MPAT..........................................    90
120mm Tank, STAFF.................................................  \1\0
120mm Mortar, M934A1, HEMO........................................    20
120mm Mortar, M929A1, Smoke.......................................   100
120mm Mortar, M930, Illuminating..................................   100
120mm Mortar, M933, HEPD..........................................   100
155mm SADARM......................................................     5
155mm, M795, High Explosive.......................................    80
Wide Area Munition................................................     5
VOLCANO...........................................................    20
Selectable Lightweight Attack Munition............................    20
40mm, M430, High Explosive-Dual Purpose...........................   100
60mm Mortar, Illum, M721/M767.....................................    90
105mm Artillery, M915/916.........................................     5
105mm Artillery, M913.............................................   100
25mm, M919, APFSDS................................................    25
25mm, M792, HEI...................................................   100
155mm, Artillery, M549, HE RAP....................................   100
155mm, Artillery, DPICM, M483A1...................................   250
155mm, Artillery, DPICM, M864.....................................\2\100

                          AMMUNITION SHORTFALL

155mm, Artillery, M731, ADAM-L....................................   100
155mm, Artillery, M692, ADAM-S....................................   100
155mm, Artillery, M718A1, RAAM-L..................................   100
155mm, Artillery, M741A1, RAAM-S..................................    35
Mine Clearing Line Charge.........................................    65
2.75'' Rocket, MPSM...............................................    90
155mm, Propelling Charge..........................................\2\100
Fuze, Inductive Set Artillery.....................................\2\100

\1\No procurement planned for 120mm, Tank, STAFF.
\2\Replacements for these three preferred munitions are in the final 
stages of research and development.

    General Arbuckle. A key point here is, and we will put it 
in the record, the majority of the war reserve drawdown we are 
doing is, in fact, excess ammunition that we would not require 
for the war fight. Again, it is there from the Cold War, a 
large stockpile.
    Mr. Murtha. Okay.
    Mr. Decker. One general comment, a detail for the record. 
Part of the issue, when you get into war reserve, is what is 
called preferred munition versus the older generation. The 
older generation is good ammunition, but it is a big debate. If 
you are a CINC in the field, you want 100 percent preferred, 
and so if you want to build up to that, we are efficient today. 
We will explain all that.
    Mr. Murtha. We need to know that. We need to know exactly 
where we are.
    Mr. Decker. Okay. We will have that answer for the record.
    Mr. Visclosky. If I could follow up on the same theme, you 
had mentioned part of the equation is affordability. I guess it 
would be pretty hard to attach a percentage to that, but is 
that a small part of the reason for the drawdown? Is the 
majority of the reason because you want to get to 100,000 tons, 
as I understand it, by, 2004?
    General Arbuckle. Let me break down the ammunition budget 
into four pieces to answer that, and I think it will come into 
perspective that way.
    First is training ammunition. We talked about that briefly. 
And because training is connected directly to near term 
readiness, obviously we give that priority. So with available 
funds, we put that first on training ammunition. We keep it 
above 90 percent. That is the way it is in this budget request, 
and so that is okay.
    The next category is ``demil,'' which you just talked 
about, demilitarization. It is either obsolete or excess 
ammunition.
    Now, we plan to do about $100 million worth of that per 
year, and that program has been well supported by Congress and 
OSD, so we are in good shape in 1998 on that also.
    The third part of the ammunition budget is modernization, 
modern munitions, and the Army has been tracking 15 items we 
have identified in the modernization category.
    In this particular budget request, we are funding--
requesting funds for 5 of those 15.
    Mr. Visclosky. Is that of concern to you?
    General Arbuckle. Yes. In fact, that is in step with the 
rest of the Army approach to funding priorities, i.e., emphasis 
on training/readiness, but we pay the bill out of 
modernization. That is what is happening with munitions.
    Mr. Visclosky. And I think again, for the record, if you 
could detail the 5 of the 16 munitions that you are interested 
in modernization and where our shortfall is occurring, I would 
appreciate that.
    General Arbuckle. Absolutely.
    And the fourth category is production base. Now, the Army 
has ammunition plants where we actually produce ammunition. 
Part of the budget goes toward the equipment there, maintaining 
it, replacing it, the facilities, infrastructure, environmental 
concerns and so forth. That is marginally funded in the budget.
    Mr. Visclosky. Marginally, meaning underfunded?
    General Arbuckle. Yes.
    Mr. Visclosky. So your primary problems are not on demil or 
training, it is on the last two categories?
    General Arbuckle. Correct. Modern munitions and production 
base.

                  CHEMICAL MUNITIONS DEMILITARIZATION

    Mr. Visclosky. Time is short. I know we have a vote.
    Mr. Secretary, General, if you could comment just generally 
on the problems you are facing as far as chemical 
demilitarization.
    Mr. Decker. Chemical demilitarization?
    Mr. Visclosky. Right.
    Mr. Decker. The problems are public fear. Some of it is 
legitimate. I think--I understand it. That is an oversimplified 
answer. And part of that public fear is a mixed bag, sometimes 
intense anti-incineration feeling in the country. There is a 
generic anti-incineration feeling in the country to dispose of 
any kind of waste, the clean air concerns. There are extremes 
in that group that won't let you burn leaves in your backyard 
if they had their own way. Others are more thoughtful, but they 
would rather not have incineration.
    The only proven mature technology that is operating and has 
been demonstrated to be safe is the reverse assembly 
incineration techniques that we use at Tooele, Utah.
    But we do not have universal acceptance of that, even 
though we have hard scientific evidence. So the problem is 
working with the public, trying to convince them this is the 
best and the fastest way to go--we have been partially 
successful at that--and getting the permits.
    The permits come from the States, not from the Federals in 
this case. The Federal law has not seen fit--this is not a 
recommendation; it is a statement of fact--to abrogate the 
States' permitting responsibilities. So we have to satisfy 
eight different States with many different standards to get a 
permit to do our facility.
    Mr. Visclosky. Let me ask you from a political standpoint, 
transportation to several facilities is probably not a 
practical solution, just from a monetary perspective?
    Mr. Decker. I guarantee you it is not an acceptable 
solution. The States that we have had good support and good 
understanding and have cooperated, so they want to get rid of 
this stuff, have made it very clear we understand you and we 
will now trust you, please get rid of this stuff, but don't you 
bring one more ounce of this stuff in here. It is just that 
simple. And so I would not advocate it.
    Mr. Visclosky. From your perspective then, maybe this is 
just a question of frustration on my part, is there something 
particular we can do? The politics I don't know how we solve. 
As far as the allocation of resources to dispose of these in as 
efficient a manner as we could, is there anything--I am just 
very frustrated.
    Mr. Decker. That is a fair and an honest question. I wish I 
could give you a pat answer, but the problem really is in 
reaching public acceptance of whatever method is chosen so we 
can get our permits.
    Most of the costs, though, the time to get permits is 
taking 5 and 6 years, we estimate, because Governors don't like 
to go in the face of a lot of resistance, so they will hold 
excess public hearings. And I don't know how to solve that, 
except to work at it hard.
    The Congress has been very supportive in resources. We have 
not been nickeled, but it is just a tough problem.
    We have made a lot of progress in the last 3 years. We now 
are permitted in Oregon. I didn't think we would ever get a 
permit in Oregon, but they finally said, you know, you are 
right. So we are starting work on that plan. So we have just 
got to slaughter our way through it.
    Mr. Visclosky. Thank you, Mr. Chairman.

                   TACTICAL HIGH ENERGY LASER SYSTEM

    Mr. McDade. Let me underline, if I may, the concerns about 
the ammunition. I know you have and you share a lot of them. I 
just want to underline my interest in the issue, and we really 
want detailed answers from you.
    I want to yield to Mr. Hobson in a second, but first let me 
ask you about the high energy laser system.
    My understanding is that there is no money in the budget to 
test the unit that is scheduled, I guess, to be delivered to 
the Israelis; is that right?
    Mr. Decker. You are talking about the Tactical High Energy 
Laser (THEL), or the laser demonstration system that we are 
working on in conjunction with the Israelis.
    There is a total contract budget, and the contract is in 
reasonably good shape in terms of funding. TRW is the prime 
contractor in conjunction with a couple of Israeli companies.
    The original thoughts--this was a program that got a bit 
politicized, and more was promised than could be delivered, and 
we had to get that boxed in. So now the system consists of 
system design and testing and integration, and it will be 
demonstrated at the San Juan Capistrano range in California. 
And if it works there, the contract is done. Then it is really 
up to whatever the Israelis----
    Mr. McDade. You say you have money in the budget to test 
it?
    Mr. Decker. Well, now, there was a glitch on funding 
shortfall.
    Mr. McDade. Yes. Mr. Skeen has a great interest, if I may 
say, too.
    Mr. Decker. I understand.
    Mr. McDade. And the information we have is that you didn't 
fund the testing.
    Mr. Decker. There was a $12 million shortfall created in 
1997, and I am not sure. Was that a decrement at OSD, or do you 
remember?
    General Hite. It was a cost growth.
    Mr. Decker. No, it is not a cost growth. We have a fixed 
price award fee program. There was some problems in funding 
flow there, and we lost----
    Mr. McDade. Well, Mr. Decker----
    Mr. Decker. We are $12 million short to stay on schedule.
    Mr. McDade. And the $12 million is for testing?
    Mr. Decker. Well, if you look at the program schedule and 
the way the funds flow to get the work done, taken on through 
to testing, it is a shortfall in near term work, and if you 
used all of the funds doing that, you will have none left to do 
the testing.
    Mr. McDade. I guess the answer is, yes.
    Mr. Decker. I think it is yes, because you have got to do 
the near term work, or you will never get to testing.
    Mr. McDade. We are glad to hear the answer. Let me get you 
on this because I----
    Mr. Decker. Well, I am only talking about the testing at 
San Juan. We never did commit--we finally got an agreement with 
the Israelis that we--they thought we were going to do 
additional testing on the side, so we are only going to test it 
at San Juan Capistrano.
    Mr. McDade. Whatever. The point is that you don't have 
money to test the system, nor do you have any money to procure 
it for you.
    Mr. Decker. We never had any intention of procuring it.
    Mr. McDade. Why not?
    Mr. Decker. The system is too limited in what it can do 
unless you spend a hell of a lot more money. It was driven by a 
desire on the Israelis to put it into a fixed station 
environment to protect the villages against Katyusha rockets.
    Mr. McDade. I saw a tape about 2 years ago of the results 
out at White Sands, where the system was knocking out Katyusha 
rockets like they were deer in Pennsylvania with you behind the 
gun.
    Mr. Decker. You saw a tape I never had any knowledge of. I 
know of one highly, highly staged demonstration with the 
miracle laser that shot one Katyusha.
    Mr. McDade. Well, you better look at some additional tapes, 
and I will send you one.
    Mr. Decker. All right.
    Mr. McDade. I will tell you what has got me really 
concerned. We had to add money for this program last year, and 
several years ago Chairman Murtha took a delegation over to 
Korea, and General Luck was there, and his biggest concern was 
something popping over the mountain and he has no defense.
    This system--and the Air Force is spending, as you know, 
about a billion dollars on an airplane-mounted system to get 
something in the boost phase, but here you guys are in the 
front lines, and you have got no defense, and this system, if 
that tape is accurate and what I have been told and Mr. Skeen 
has investigated it as well, would be perfect for the defenses 
in Korea, of the General's concern about something coming over 
that mountain and stopping his activities to reinforce or 
whatever the heck he has to do.
    It looks to us like it ought to have a very high priority, 
and I don't know why there is not more activity on it.
    Mr. Decker. Because to perfect the system and make it 
tactically hard in an environment that is probably 10 times 
more harsh than a C--I mean, a 737 airplane is probably a 
billion-dollar program.
    Mr. McDade. Well, is it worth $1 billion to get security in 
Korea?
    Mr. Decker. I am not sure that the probability of success 
is as high as our missile defense systems in any reasonable 
time frame. That is a judgment call.
    [The information follows:]

    In support of the joint United States-Israel Nautilus 
program, the United States Army Space and Strategic Defense 
Command (USASSDC) conducted tracking tests on 14 March 1997. 
Using the Mid-Infrared Advanced Chemical Laser (MIRACL) system 
located at the High Energy Laser Systems Test Facility 
(HELSTF), USASSDC conducted low power tracking tests on six 
incoming inert rockets. These tests were low power tests using 
the MIRACL system and not representative of the power levels or 
system required for a tactical configuration. However, the 
results and analysis contribute to pointer-tracker algorithm 
development in support of the United States-Israel cooperative 
Tactical High Energy Laser (THEL) Advanced Concept Technology 
Demonstration (ACTD).
    The first and second rockets were launched individually to 
verify the target impact point. The MIRACL system, using 
developmental THEL ACTD pointer-tracker algorithms, 
successfully tracked both rockets. The other four rockets were 
launched sequentially, approximately 15 seconds apart. All four 
targets were initially acquired with the HELSTF SeaLite Beam 
Director, and three out of four were successfully tracked 
during the predefined engagement window. Analysis continues in 
an effort to determine the cause of an anomaly preventing 
successful tracking of one of the four rockets.

    Mr. McDade. Well, I will tell you, we have got a big 
disconnect, and I would be very, very grateful if you would go 
back and take a look and call White Sands and find out if they 
tested the system against six incoming rockets and whether or 
not they were successful, because the information that we have 
is that they were successful.
    Mr. Decker. I will certainly do that, sir. I will get you 
some information for the record.
    Mr. McDade. Give me a call back.
    Mr. Decker. Okay.
    Mr. McDade. Because it comes down to the question, we have 
always been concerned about the vulnerability of the forces in 
Korea to that kind of an attack.
    Mr. Decker. Yes, sir.
    Mr. McDade. And the system has never been in place to try 
to stop it. It looks like it might be. That is why I want to 
raise it with you, I want to talk to you about it, and I would 
appreciate a call.
    Mr. Decker. Sure. You bet.
    Mr. McDade. I yield to the gentleman from Ohio.

                          PROCUREMENT FUNDING

    Mr. Hobson. Very quickly, and I will try not to tie you 
into this, but I am concerned about your statement that the 
Comanche, if fielded; and I would also like to know where the 
$50 million went that we put in it last year to help funding 
move forward. I am also concerned about the Black Hawks. But we 
don't have--I don't think you have time--we only have a couple 
of minutes left to vote.
    Mr. Decker. I will give you detail for the record, unless 
you want an answer now.
    Mr. McDade. For the record?
    Mr. Hobson. Yes, that is fine.
    Mr. McDade. Without objection, for the record, the Chair 
recognizes the gentleman from Pennsylvania.
    Mr. Murtha. I want to know who I am going to ask about this 
seat. I understand you are retiring this summer. Who am I going 
to ask about this HMMWV seat? You have been in that program for 
20 years.
    General Hite. Yes, sir. Sir, that is why we have the seat.
    Mr. McDade. It took 20 years.
    General Hite. It took 20 years.
    Mr. McDade. We will have some undoubtedly additional 
questions and information.
    Mr. Decker. We will be happy to answer any additional 
questions for the record. We will get the information on the 
envelope post haste. I will put a high priority on that, but we 
will get the others over expeditiously as well.
    Mr. McDade. We thank you very much for your presentation. 
It was, as usual, professional and excellent. We look forward 
to working with you.
    Mr. Decker. Thank you very much, sir. Thank you all.
    [Clerk's note.--Questions submitted by Mr. Skeen and the 
answers thereto follow:]

                   Test and Evaluation Infrastructure

    Question. Mr. Decker, would you comment for the record on the 
Army's budget request for Test and Evaluation (T&E) Programs? I am 
particularly interested in the Army's proposals, if any, to upgrade 
existing infrastructure to keep pace with military modernization 
requirements.
    Answer. The Army has continued to focus its T&E investment funding 
on modernization of the infrastructure. This focus enables the Army to 
test increasingly sophisticated weaponry, and to accomplish this 
testing more efficiently, utilizing fewer operating resources, and in a 
safe and environmentally acceptable manner.
    A prime example of the Army's investment of the T&E infrastructure 
is the ongoing Test Support Network project at White Sands Missile 
Range. This network of modern, digital fiber-optic cable communications 
will provide efficient data collection and remote operations through 
increased bandwidth and data throughout capabilities, reduced costs to 
customers, quicker turnaround time between tests, and signal security.
    The Test Support Network alone represents an Army commitment of 
approximately $100 million for T&E modernization. The network will 
support testing of some of the highest profile weapons programs in the 
Army, including the Theater Area Air Defense Program, the Multiple 
Launch Rocket System, and the Army Tactical Missile System.
    Sustainable instrumentation requirements average $90 million 
annually across the Program Objective Memorandum versus a $30 million 
annual budget. The major investment focus is the Virtual Proving 
Ground, a reengineering of the Army's test capabilities to leverage 
modeling, simulation, synthetic environments, high performance 
computers and distributed communications in support of Acquisition 
Streamlining.
    Current investments in virtual test technologies are primarily 
directed toward Command, Control, Communications, Computers and 
Intelligence and missile testing at White Sands Missile Range and 
Redstone Technical Test Center, and support for Comanche helicopter 
development and ground vehicle performance modeling. These investments 
are proceeding consistent with the limited funding provided.
    The Military Construction, Army budget for fiscal year 1998 
includes $18 million to complete the construction of a $28 million 
National Range Control Center at White Sands Missile Range, New Mexico. 
The new center replaces an obsolete facility which poses a health and 
safety health because of asbestos pollution. The new facility will 
enable the Army to manage all range activities consistent with 
environmental and safety parameters.
    The Maintenance and Repair program for fiscal year 1998 funds $60 
million of a $100 million annual requirement. An additional $10 million 
is budgeted specifically to rebuild the central stream system for the 
Edgewood Area of Aberdeen Proving Ground, Maryland. The total backlog 
of repair projects for the Test and Evaluation Command is $300 million.
    Question. Does the Army have any unfunded requirements related to 
Test and Evaluation (T&E) programs and/or infrastructure? Please 
provide for the Subcommittee a listing of such requirements.
    Answer. Congress was already provided a list of unfunded Army 
requirements on 17 March 1997 and many of the programs and/or 
infrastructure were included. The following programs represent the 
unfunded requirements in the Army's T&E infrastructure.
    The Mobile Automated Instrumented Suite is a mobile real-time 
casualty assessment data collection instrument which needs $33.2 
million in fiscal year 1998 to accelerate production into one year, 
saving $20 million dollars.
    The Fire Support Automated Test System is an automated test set for 
fire support acquisition which needs $4.2 million in fiscal year 1998 
and 1999 to upgrade along with the Advanced Field Artillery Tactical 
Data System (AFATDS) software to allow operational testing without 
significant test cost growth.
    The Army requested an increase in technical test capability for the 
U.S. Army Test and Evaluation Command (TECOM) to raise developmental 
test operations capability from 62 percent to 80 percent of executable 
workload. The request is for approximately $21.7 million and $10.2 
million for fiscal years 1998 and 1999 respectively.
    The Technical Test Sustainment Instrumentation program would fund 
66 percent of the prototype and replacement instrumentation backlog at 
the TECOM test centers. The request is for approximately $43.7 and 
$45.9 million for fiscal year 1998 and 1999 respectively.
    Test Range and Facility Modernization requires $10 million per year 
for fiscal year 1998 and 1999 to modernize TECOM test ranges and 
facilities. This will ensure TECOM's test capability, improve safety of 
test operations and comply with Occupational Safety and Health 
Administration guidelines.
    Virtual Ground Targets needs approximately $.8 million (fiscal year 
1998) and $.5 million (fiscal year 1999). This project will develop 
high fidelity virtual ground targets for modeling and simulation 
efforts to supplant developmental weapon system support, reducing the 
amount and cost of live testing.
    The Army requested $.6 million for fiscal year 1998 for the 
Universal Drone Control System. These funds will be used to complete 
development of a Universal Drone Control System which will eliminate 
the need (and high cost) for continued development of custom designed 
rotary wing target control systems.
     The Army requested $3 million and $4 million for fiscal years 1998 
and 1999 respectively to support the US Army Operational Test and 
Evaluation Command's new consolidated evaluation mission and to fund 
new requirements to evaluate Advanced Technology Demonstrations and 
Advanced Concept Technology Demonstrations.
    Finally, the Army requested approximately $6.7 million and $6.9 
million in fiscal years 1998 and 1999 respectively for Survivability 
Analysis, to include information warfare vulnerability assessment of 
Army Information and Tactical Systems.

    [Clerk's note.--End of the questions submitted by Mr. 
Skeen. Questions submitted by Mr. Hobson and the answers 
thereto follow:]

                           Comanche (RAH-66)

    Question. Last year, Congress added $49 million to the Comanche 
program to help level out the funding profile and to make a more 
efficient development program. If Congress were to make additional 
money available for the program, would it bring the number two 
prototype to flying status sooner?
    Answer. The acceleration of prototype #2 is dependent on the amount 
of additional funding that may be provided by Congress as part of the 
fiscal year 1998 (FY98) appropriation. While prototype #2 acceleration 
is important, restoring the flight test program and accelerating the 
reconnaissance mission equipment package design effort is more critical 
at this point in the program. The Comanche Program Manager has 
developed a prioritized list of areas that would be accelerated if 
additional funding is available in FY98. The acceleration of prototype 
#2 falls within the items listed if $100 million was added to the 
budget request.
    Question.Would additional money accomplish tasks that would provide 
a more capable aircraft for the demonstration of the so-called EOC 
``Early Operational Capability'' aircraft? Specific areas would be low 
observables and enhancing communications with other elements of the 
joint force.
    Answer. Additional funding in FY98 would certainly allow for an 
improved program to ensure the reconnaissance capability on the EOC 
aircraft was fully tested and would provide the user a more 
``production like'' reconnaissance capability to operate during the 
field evaluation. Two of the significant areas of added capability 
planned if additional funding is provided are enhanced communications 
and improved low observable features or characteristics. There are 
several low observable features that could be added that would provide 
enhanced signature characteristics and give us an opportunity to 
evaluate the maintainability and durability before production. 
Additional funds would also allow increased functionality with greater 
opportunity for communicating in the joint area via voice, data and 
imagery. Now that a stable flying platform has been demonstrated during 
the flight test program, the priority is on adding the reconnaissance 
capability as soon as possible to allow sufficient time to prove out 
the design prior to building the EOC aircraft.

                        Heavy Tactical Vehicles

    Question. In your statement, you assert that the Army's tactical 
wheeled vehicle program is ``essential to projecting and sustaining the 
forces.'' However, your fiscal year 1998 budget request includes no 
funds for heavy tactical vehicles. Your fiscal year 1998 request for 
light tactical vehicles is $100 million less than your fiscal year 1997 
appropriation. Although your statement addressed the need for heavy 
tactical vehicles, for the second year in a row, the Army budget 
includes no procurement funds for heavy tactical vehicles. General 
Reimer, please explain why the Army is not requesting funds for heavy 
tactical vehicles?
    Answer. Affordability is the reason. The Army prioritizes programs 
and, although heavy tactical vehicles are important, funding was 
insufficient to cover all our requirements.
    Question. Are the requirements for these vehicles fully satisfied?
    Answer. The Army's requirement for heavy tactical vehicles have not 
been met. The required/on-hand quantities are: (1) Palletized Load 
System (PLS)-3,711/2,277, (2) PLS Trailers-2,891/1,195, (3) PLS 
Flatracks-55,626/10,059, (4) Heavy Expanded Mobility Tactical Truck 
(HEMTT)-13,203/12,165 (HEMTT Wreckers-2,483/1,630 and HEMTT Tankers-
4,842/4073), and (5) Heavy Equipment Transporter System-2,412/1,358.
    Question. Does the Army intend to procure additional heavy tactical 
trucks in the future? If so, which ones?
    Answer. As stated in the fiscal year 1998 proposed President's 
Budget, in the future, the Army intends to procure heavy tactical 
vehicle systems consisting of the Palletized Load System (PLS), which 
includes trucks, trailers, flatracks, and devices, Heavy Expanded 
Mobility Tactical Truck (HEMTT), Heavy Equipment Transporter System 
(HETS), and HEMTT Extended Service Program (ESP) as follows:

                          [Dollars in millions]
------------------------------------------------------------------------
                                 FY98   FY99   FY00   FY01   FY02   FY03
------------------------------------------------------------------------
PLS...........................  \1\9.   59.6   16.6   48.7   34.8   34.8
                                    1
HEMTT.........................    0.0   38.3   30.7   48.7    1.0    0.0
HETS..........................    0.0   64.7   11.8    0.0   89.2   89.4
HEMTT ESP.....................    0.0    0.0    0.0    0.0   19.8   19.9
------------------------------------------------------------------------
\1\Flatracks and Devices Only.

    Question. Does the Army TAA03 reorganization result in the need for 
additional heavy tactical trucks for National Guard units? Provide for 
the record a list of the units and the number of trucks per unit 
involved in this reorganization.
    Answer. Yes, five additional Palletized Load System (PLS) truck 
companies and three additional Heavy Equipment Transporter System 
(HETS) truck companies will be added to the National Guard. Each PLS 
company has 48 PLS trucks and each HETS company has 96 tractor-
trailers. The companies are as follows:

------------------------------------------------------------------------
        Unit designation              Location         Activation date
------------------------------------------------------------------------
137th (PLS)....................  Olathe, Kansas....  1 Oct 97
1462nd (PLS)...................  Springfield,        1 Sep 98
                                  Michigan.
1056th (PLS)...................  Gering, Nebraska..  1 Sep 99
TBD (PLS)......................  (\1\).............  FY01
TBD (PLS)......................  (\1\).............  FY02
TBD (HETS).....................  (\1\).............  FY02
TBD (HETS).....................  (\1\).............  FY02
TBD (HETS).....................  (\1\).............  FY03
------------------------------------------------------------------------
\1\To Be Determined (TBD).

    Question. Provide for the record a list of priority unfunded heavy 
tactical truck requirements, for both the active Army and the Reserve 
Components, that could be funded in fiscal year 1998. Include a 
description and justification.
    Answer. Fiscal year 1998 funding for all tactical wheeled vehicles 
is 52 percent less than fiscal year 1997 due to affordability and 
priorities. The fiscal year 1998 Family of Heavy Tactical Vehicles 
(FHTV) is funded at only 3 percent of fiscal year 1997 budget. The 
funding for FHTV, which includes the Palletized Load System (PLS), 
Heavy Expanded Mobility Tactical Truck (HEMTT), and the Heavy Equipment 
Transporter System (HETS), could be increased by $95 million in fiscal 
year 1998 as follows: (1) $50 million for 150 PLS trucks and 50 PLS 
trailers for new units, and (2) $45 million for 96 HETS for a new unit. 
Optimally, an additional $111 million would be used as follows: (1) $33 
million for 109 HEMTT Wreckers to fill shortages throughout the Army, 
(2) $45 million for an additional 96 HETS for a second new unit, and 
(3) $33 million to procure HEMTT remanufactured vehicles earlier than 
planned. (Congress increased the fiscal year 1997 R&D budget by $2 
million to develop a HEMTT remanufacture program). All of these 
vehicles, except the HEMTT Wreckers, would be fielded to Reserve 
Components.

                     Light Tactical Vehicles (LTV)

    Question. The fiscal year 1998 budget request includes $66 million 
for High Mobility Multipurpose Wheeled Vehicle (HMMWV) production. Last 
year, Congress provided $162 million--$66 million over the budget 
request. According to your statement, the reduced funding is a result 
of fiscal restraints; however, the Committee has learned that the Army 
is planning to develop a new HMMWV in fiscal year 1999. According to 
the Army, the HMMWV is a ``world class vehicle''; however, 
supportability is becoming a problem. What supportability problems are 
you experiencing?
    Answer. The HMMWV has been the world's best light tactical off road 
vehicle. However, over the past 17 years since the HMMWV was designed, 
significant commercial component changes, statutory requirements and 
our demand for increased capability from the vehicle have significantly 
reduced the reliability of the vehicle and increased the sustainment 
cost. The demand for increased capacity has been a result of the new 
missions and constraints placed on the Army in the areas of payload, 
electrical power, configuration, and mission requirements. The 
significant increase in applique equipment and use of the light fleet 
vehicles for more roles has pushed the envelope with regard to the 
ability to package all of the new equipment in the vehicle. This has a 
major impact on the human factors of the vehicle and its ability to 
effectively execute the mission as well as increasing the safety risk. 
The HMMWV has a high scheduled maintenance time requirement with 
increasing unscheduled maintenance. This demands that we develop a 
vehicle that requires significantly less scheduled service time and 
reduced unscheduled time. Finally the changing commercial components 
are not easily packaged in the 17-year-old design and the cost to 
reconfigure the vehicle to accommodate new components is increasing 
dramatically. The Project Manager Light Tactical Vehicles is preparing 
a detailed discussion and justification for this program which will be 
forwarded to Congress next month. This document will fully explain the 
investment strategy for the light fleet.
    Question. Furthermore, the Army believes that the High Mobility 
Multipurpose Wheeled Vehicle (HMMWV) is only ``marginally meeting new 
requirements.'' What new requirements are not met by the HMMWV?
    Answer. There are standards that were objectives for the original 
HMMWV that were waived during prototype phase based on cost and 
complexity versus other critical mission requirements. An example of an 
original requirement not met is interior noise. The interior noise 
exceeds that the operation without hearing protection. The use of 
hearing protection reduces the combat effectiveness of the system. To 
meet the new mission demands for the light tactical vehicles we have 
had to make significant changes. We have: increased the payload and 
ballistic protection, redesigned the vehicle to meet new federal 
standards for emissions and safety, and reconfigured the vehicle to 
accommodate a plethora of new applique and integrated components. The 
latter effort stemmed from the increased emphasis on Command, Control, 
Communications, Computers, and Information (C4I) which are key elements 
for Force XXI. In meeting these requirements we have increased the 
maintenance burden on the Army in an environment of decreasing manpower 
and money. The vehicle also does not meet all of the federally mandated 
safety requirements and, in fact, can not be sold in the military 
configuration to the general public for operation on the highway.
    Question. Could those deficiencies be resolved by modifying the 
current vehicle? If not why?
    Answer. The Army is currently conducting a formal Analysis of 
Alternatives as a normal part of an Major Defense Acquisition Program. 
This analysis will identify the most cost-effective way to meet the 
Army's requirements. This study will be completed before the planned 
release of the solicitation later this year. Preliminary results 
indicate that adapting the current vehicle is not an economically 
viable alternative and would have greater risk. As a minimum, a new 
body, frame, engine, electrical system and transmission will be 
required to meet the user's requirements. It is probable that such 
extensive changes would result in a very expensive program.
    Question. What is the anticipated cost of the new light tactical 
vehicle acquisition program? For the record, please provide the total 
cost, per unit cost and anticipated fielding schedule.
    Answer. Based on our current program assumptions and analysis, we 
estimate that the prototype phase will cost $50 million and per unit 
average cost will be $86 thousand. Our anticipated First Unit Equipped 
(FUE) is in fiscal year 2002.
    Question. Given the Army's past experience with tactical vehicle 
programs, in terms of cost growth and schedule delays, do you think it 
makes sense to develop a new light vehicle? Why or why not?
    Answer. Yes, we and industry have learned a lot and have overcome 
the pitfalls of prior programs through general and specific acquisition 
actions. Application of Integrated Process Teams within the government 
and industry are reducing risk in both the requirement and acquisition 
arenas. We have established effective Teaming arrangements with 
contractors to identify and reconcile cost, schedule and technical 
performance issues quickly and amiably between the parties. These 
efforts are focused on resolution of conditions that have previously 
created complications in contracting for tactical vehicles.

                   Light and Heavy Tactical Vehicles

    Question. The Army continues to stress the importance of tactical 
vehicles. However, our fiscal year 1998 budget does not sustain the 
light and heavy tactical vehicle manufacturing lines. What steps are 
you taking to ensure that future Army requirements for tactical 
vehicles can be satisfied?
    Answer. Army High Mobility Multipurpose Wheeled Vehicle (HMMWV) 
production will cease in fiscal year 1998. In fiscal year 2000 we will 
begin production of the Light Tactical Vehicle which will replace the 
HMMWV. In addition, the Army will start remanufacturing HMMWVs with the 
USMC in fiscal year 1999. To ensure that platforms are available for 
other Army systems during the interim when there will be no production, 
we will store HMMWVs built in fiscal year 1996 and 1997. These HMMWVs 
will be issued as a platform as necessary. Also, 350 HMMWVs built in 
fiscal year 1997 will be armored in fiscal years 1998 and 1999. As 
stated in the fiscal year 1998 proposed President's Budget, the Army 
intends to procure HMMWVs and heavy tactical trucks including the 
Palletized Load System (PLS), Heavy Expanded Mobility Tactical Truck 
(HEMTT), Heavy Equipment Transporter System (HETS), and HEMTT Extended 
Service Program (ESP) as follows:

                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                   FY98    FY99    FY00    FY01    FY02    FY03
----------------------------------------------------------------------------------------------------------------
HMMWV...........................................................    66.2    14.1   120.5   114.5   129.0   234.5
PLS.............................................................  \1\9.1    59.6    16.6    48.7    34.8    34.8
HEMTT...........................................................     0.0    38.3    30.7    48.7     1.0     0.0
HETS............................................................     0.0    64.7    11.8     0.0    89.2    89.4
HEMTT ESP.......................................................     0.0     0.0     0.0     0.0    19.8    19.9
----------------------------------------------------------------------------------------------------------------
\1\Flatracks and devices only.

    Question. What impact does your fiscal year budget have on the 
industrial base?
    Answer. The impact on the industrial base in regards to light 
tactical vehicles is that the High Mobility Multipurpose Wheeled 
Vehicle (HMMWV) plant may close if the commercial customers, direct 
sales and Foreign Military Sales do not sustain the production line. 
The impact to the Government if the vendor is not able to sustain 
production would be the early closing of the current requirements 
contract. For heavy tactical vehicles, based on a fiscal year 1998 
program of $9.1 million, production stops on: (1) Palletized Load 
System (PLS)--April 1998, (2) PLS trailer--December 1997, (3) Heavy 
Equipment Transporter System--July 1998, and (4) Heavy Expanded 
Mobility Tactical Truck--July 1998. Based on a fiscal year 1999 program 
of $162.6 million, for those types of heavy trucks in which production 
stops, contract awards occur in December 1998 and the production 
startup is 9 months later. Reductions in the work-force at both prime 
contractors and suppliers will take place including migration of 
suppliers and vendors away from Defense business. Startup will most 
likely necessitate requalification of vendors and suppliers and result 
in approximately a 15 percent cost increase to the Army. Lastly, a 
restart may require redesign to meet Federal Motor Vehicle Safety 
Standards which are exempted if production is kept constant.
    Question. If the heavy and light tactical vehicles production lines 
are closed in fiscal year 1998, what is the anticipated cost of 
restarting the production lines at a later date?
    Answer. In regards to light tactical vehicles, the Army has no 
plans to restart the High Mobility Multi-purpose Wheeled Vehicle 
(HMMWV) production line. We will fund the facilities for the Light 
Tactical Vehicle and the HMMWV remanufacture program as necessary. The 
heavy truck prime contractor, Oskosh Truck Corporation, Oskosh, 
Wisconsin, has somewhat adapted to the fiscal reality through risk 
mitigation by combining their commercial and military production lines. 
If a particular type of military truck production is stopped, such as 
Heavy Expanded Mobility Tactical Truck, the entire line will not stop. 
Startup will most likely necessitate requalification of vendors and 
suppliers and result in approximately a 15 percent cost increase to the 
Army. In addition, a restart may require redesign to meet Federal Motor 
Vehicle Safety Standards which are exempted if production is kept 
constant.

            Heavy Tactical Vehicles Extended Service Program

    Question. Congress provided $2 million in fiscal year 1997 for a 
Heavy Expanded Mobility Tactical Truck (HEMTT) Extended Service Program 
(ESP). When does the Army intend to begin this program?
    Answer. The HEMTT ESP will develop enhancements by leveraging 
commercial technology to significantly improve vehicle reliability and 
maintainability resulting in higher fleet readiness rates. Pending 
release of these funds from withhold within the Defense Department, 
development of the HEMTT ESP will begin in April 1997. Procurement 
could begin in fiscal year 1998, earlier than the Army originally 
budgeted, if Congress provides an additional $33 million which would 
buy approximately 200 trucks.
    Question. HEMTT is a key vehicle for heavy and medium truck units. 
It is important for recovery and tactical unit fuel support. Does the 
Army have sufficient quantity of these trucks to meet these 
requirements?
    Answer. No. the requirements/on hand quantities of the HEMTT are 
13,203/12,165 (HEMTT Wreckers--2,438/1,630 and HEMTT Tankers--4,842/
4,073).

    [Clerk's note.--End of the question submitted by Mr. 
Hobson. Questions submitted by Mr. Dicks and the answers 
thereto follow:]

                          Comanche Helicopter

    Question. Last year, Congress added $49 million to the Comanche 
program to help level out the funding profile and to make a more 
efficient development program. If Congress were to make additional 
money available for the program, would it bring the number two 
prototype to flying status sooner?
    Answer. The acceleration of prototype #2 is dependent on the amount 
of additional funding that may be provided by Congress as part of the 
fiscal year 1998 (FY98) appropriation. While prototype #2 acceleration 
is important, restoring the flight test program and accelerating the 
reconnaissance mission equipment package design effort is more critical 
at this point in the program. The Comanche Program Manager has 
developed a prioritized list of areas that would be accelerated if 
additional funding is available in FY98. The acceleration of prototype 
#2 falls within the items listed if $100 million was added to the 
budget request.
    Question. Would additional money accomplish tasks that would 
provide a more capable aircraft for the demonstration of the so-called 
EOC ``Early Operational Capability'' aircraft? Specific areas would be 
low observables and enhancing communications with other elements of the 
joint force.
    Answer. Additional funding in FY98 would certainly allow for an 
improved program to ensure the reconnaissance capability on the EOC 
aircraft was fully tested and would provide the user a more 
``production like'' reconnaissance capability to operate during the 
field evaluation. Two of the significant areas of added capability 
planned if additional funding is provided are enhanced communications 
and improved low observable features or characteristics. There are 
several low observable features that could be added that would provide 
enhanced signature characteristics and give us an opportunity to 
evaluate the maintainability and durability before production. 
Additional funds would also allow increased functionality with greater 
opportunity for communicating in the joint arena via voice, data and 
imagery. Now that a stable flying platform has been demonstrated during 
the flight test program, the priority is on adding the reconnaissance 
capability as soon as possible to allow sufficient time to prove out 
the design prior to building the EOC aircraft.

                       Heavy Lift Aircraft Fleet

    Question. Last year Congress added $17 million for an important 
Army warfighter requirement, the CH-47D ICH program. However, that 
funding has yet to be released. Could you please tell us the status of 
this funding? Does the delay in obligation of these funds reflect a 
belief by the Army that this is not an important program?
    Answer. The $8.7 million of the $17.772 million ICH fiscal year 
1997 (FY97) Research, Development, Test and Evaluation Congressional 
add has been released to the Army. This $8.7 million will allow the ICH 
Program Office to fund all programmatic requirements through the end of 
FY97. The balance of the congressional add, currently on withhold in 
the Office of the Secretary of Defense (ODS) must be released to the 
Army at the beginning of FY98 to allow for the award of the ICH 
Engineering and Manufacturing Development contract in December 1997. On 
the contrary, the Army views the ICH as a critical program which will 
have a significant positive impact on our warfighting capability. The 
funding was not obligated because it was on withhold in OSD.
    Question. Would you please provide for the record your specific 
thoughts and concerns about the current and future state of the Army's 
heavy lift aircraft fleet, specifically the ability to conduct another 
operation such as Desert Storm and carry modern artillery?
    Answer. The Army believes that the CH-47D Engine Upgrade and the 
Improved Cargo helicopter (ICH) programs are absolutely necessary to 
keep its only heavy-lift cargo helicopter operationally effective well 
into the 21st century. A replacement cargo helicopter for use by all 
services--the Joint Tactical Rotorcraft (JTR)--is projected to be 
available no earlier than 2015. Specifically, the CH-47D Engine Upgrade 
program will upgrade the entire CH-47D fleet of T55-L-712 engines to 
the new, more powerful T55-GA-714A configuration. This engine will 
allow the CH-47D to lift an additional 3,900 pounds of payload. The ICH 
program, then, will extend the useful life of this aircraft an 
additional 20 years. The ICH will consist of an airframe remanufacture, 
airframe vibration reduction modifications, and an upgraded cockpit 
featuring multi-service digital compatibility and interoperability. 
These modernization efforts will result in a significant increase in 
the aircraft's operational capability and effectiveness, allowing it to 
bridge the gap to the procurement of the JTR.
    Question. On 1 December 1996, the Army submitted a report to 
Congress in response to language included in the FY97 Defense 
Authorization Act. This report lists modernization priorities for the 
Army Reserves. At the top of the list is a requirement for eight 
additional CH-47D Chinook Helicopters. Yet, the Army's budget does not 
appear to include a request for funds to procure Chinook helicopters 
for the Reserves. Recognizing the increasing rule that our reserve 
forces have played in military commitments around the world, why has 
the Army not requested funds for its top Army Reserve modernization 
requirement?
    Answer. The current total Army requirement for CH-47s is 525, with 
an inventory of 467, leaving a total shortage of 58 CH-47Ds. This 
shortage exists primarily in the operational readiness float accounts. 
Most of the warfighting requirements have been filled with certain 
exceptions. The Army Reserve has a warfighting requirement of 53 CH-
47Ds, which includes five operational readiness floats. However, they 
only have 45 aircraft on hand. The Army is currently planning to 
partially fill this shortage in FY97 or FY98. However, when CH-47Ds are 
inducted into the Improved Cargo Helicopter program beginning in FY02, 
shortages will again result in the Army Reserve fleet. Current fiscal 
constraints and competing priorities have prevented the Army from 
procuring the necessary aircraft to fill shortages within both the Army 
and the Army Reserve.
    Question. If the Congress included funds for procurement of three 
additional CH-47D helicopters, would the Army obligate the funds to 
this purpose?
    Answer. Yes. If given the approporaite level of funding, the Army 
would obligate the funds to procure three additional CH-47Ds.

                             C-17 Aircraft

    Question. I am told that the C-17 creates a wake of turbulent air 
proportionally greater than those of a C-141--making it unsafe to 
airdrop troops and sometimes ineffective when airdropping equipment. Is 
this accurate information?
    Answer. As with all large aircraft, the C-17 does create wing tip 
vortexes that create air turbulence. However, the Army has recently 
completed a successful personnel airdrop test with a mass tactical 
personnel airdrop of 612 paratroopers from a six C-17 ship formation on 
31 January 1997 at Fort Bragg. The Army and the Air Force have also 
successfully demonstrated the C-17's ability to execute its heavy 
equipment airdrop capability. There have been several (4) failures, but 
they have not been attributed to the C-17. One was attributed to the 
failure of a loadmaster to properly lock down the load and the other 
three were determined to be rigger errors.
    Question. Is the Air Force working with the Army to mitigate this 
problem? Are you confident that a fix can be implemented that will 
allow us to meet the airdrop requirements outlined in the initial C-17 
program?
    Answer. the C-17 meets the airdrop criteria as contained in the 
current C-17 Operational Requirements Document. However, the Air Force, 
Air Mobility Command, the C-17 Program Office, the Army and the Army 
Operational Test and Evaluation Command, along with the contractor, 
continuously strive to improve the C-17's effectiveness. On 31 January 
1997, the Army successfully executed a battalion size personnel 
airborne operation consisting of six C-17 aircraft with 612 
paratroopers. The separation between each three ship element was 40,000 
feet. No parachute/wing tip vortices interaction was experienced.
    Question. How is the C-17 performing in Bosnia?
    Answer. During the initial buildup of forces, the C-17 flew 26 
percent of the missions and moved 44 percent of the cargo. The C-17 
maintained a mission capable rate of 86.2 percent verses the 
requirement of 82.2 percent. The C-17 will continue to support 
Operation Joint Endeavor, when the mission requires the C-17's unique 
capabilities.
    Question. Is the C-17 able to meet the runway requirements outlined 
in the initial C-17 program?
    Answer. The C-17 has successfully demonstrated every requirement in 
the current C-17 Operational Requirements Document. The Army and the 
Air Forces have established a Joint Team to develop techniques, tactics 
and procedures to allow routine C-17 operations into small austere 
airfields.

               Theater High Altitude Area Defense (THAAD)

    Question. The THAAD Theater Missile Defense (TMD) system recently 
failed its fourth test since the initiation of the program. I am very 
concerned about this development because I believe that we lack the 
lack of adequate TMD is one of the critical issues facing our armed 
forces right now. The concern was echoed by the Commander-in-Chief's 
who testified in front of our subcommittee over the past couple of 
weeks. What is the current status of the THAAD program?
    Answer. The THAAD project is in the Program Definition and Risk 
Reduction (PDRR) phase of the development, and has completed seven of 
the eleven flights in the PDRR test flight program. The flight test 
program will validate system segment designs and integrate the full 
THAAD weapon system in a progressive step-wise fashion. The majority of 
the weapon system objectives have been accomplished during the seven 
flight tests.
    THAAD flight tests results are encouraging. In the seven flight 
tests conducted to date, the majority of weapon system objectives have 
been successfully accomplished. The Battle Management, Command, 
Control, and Communication and Intelligence (BMC\3\I) segment generated 
proper engagement solutions and implemented successful launch commands 
on all five tests in which it has been utilized. The launcher system 
has successfully issued the launch command to the missile on all seven 
flight tests. The radar has tracked the target and interceptor on four 
of the five missions in which it participated. Most notably, in the 
last flight test the radar performed as the primary sensor for the 
first time. The vast majority of missile functions have been 
successfully demonstrated in the seven flight tests. In the most recent 
test at the White Sands Missile Range on 6 March 1997, three ground 
segments of the THAAD weapon system (radar, BMC\3\I and launcher) 
responded appropriately to a representative tactical ballistic missile 
target as an integrated THAAD weapon system for the first time.
    Although the flight test program has achieved major steps in weapon 
system integration, unrelated missile anomalies on the four planned 
intercept attempts have precluded target intercept--the final step in 
achieving full system operation. The characteristics of the missile 
anomalies are typical of a PDRR phase for a sophisticated system 
development effort, and the THAAD team has taken steps to correct the 
problems discovered in the flight test program.
    THAAD near-term and far-term development schedules are being 
reviewed to maintain a baseline program with acceptable risk. 
Independent review teams chartered by the Ballistic Missile Defense 
Office (BMDO) Director are reviewing aspects of the missile design and 
flight test results as well as THAAD system requirements. They are 
scheduled to report findings to an Executive Steering Group chaired by 
the BMDO Director in mid-April. The THAAD Project Office and the prime 
contractor (Lockheed Martin) are formulating a recovery plan in 
parallel with the independent review process, and the plan is expected 
to incorporate key recommendations from the review process.
    The THAAD team is currently working to the next flight test in the 
July-August 1997 time frame. As a result of the missed intercept on 
flight seven, the decision to procure the forty missile rounds for the 
User Operational Evaluation System has been delayed. In addition, the 
Milestone II schedule extends approximately three to four months (to 
third quarter of fiscal year 1998). The program is also reviewing First 
Unit Equipped criteria to determine impacts, if any.
    Question. Is the most recent test failure going to result in a 
restructuring of the THAAD program?
    Answer. At this time, THAAD is executing to a baseline flight test 
program with the next flight test in the July-August 1997 time frame, 
and with subsequent tests every two to three months. The impact of test 
results from Flight Test #7 failure is uncertain. Initial findings 
indicate that the THAAD missile missed the target because the missile's 
Divert and Attitude Control System failed to function. A detailed 
anomaly investigation was initiated to determine the root cause. Some 
program schedule impacts may result from the flight seven failure 
investigation and on-going government independent reviews. Several more 
weeks may be required before the root cause is identified, and 
corrective actions defined.
    Based on the flight seven failure investigation and independent 
reviews, THAAD's development program will be revisited to reduce 
overall program risk, while maintaining timely delivery of THAAD to the 
user. Any recommended changes to the program, especially those 
impacting funding requirements or schedule will be made available to 
Congress at the earliest opportunity.
    Question. Is the problem with THAAD fixable in your judgment?
    Answer. The judgment of the government and prime contractor team is 
that the problems experienced to date are indeed fixable. Current 
expectations are that the THAAD system should be performing at a 
maturity level typically found in mid- to late Engineering 
Manufacturing Development phase that are about ready to be fielded.
    The information gathered in the seven flight tests on the THAAD 
system is invaluable to the successful deployment of a robust upper-
tier missile defense system that meets the warfighter's needs. The 
problems discovered on previous flight tests have been fixed and 
successfully demonstrated on subsequent flights. As a result of the 
flight seven failure investigation and independent government review of 
the missile design, additional component and system testing may be 
implemented prior to the next flight test to assure product quality and 
increase the probability of intercept success.

    [Clerk's note.--End of the questions submitted by Mr. 
Dicks. Questions submitted by Mr. Young and the answers thereto 
follow:]

                        Modernization Shortfalls

    Question. The Army is requesting $11.2 billion for Army 
modernization programs. This is $2.9 billion--about 15 percent less 
that the fiscal year 1997 appropriated amount. These funds will procure 
aircraft, ammunition, tracked and tactical vehicles, missiles and 
combat support equipment. This funding will also be used for research 
and development programs.
    Mr. Decker, your statement says, ``modernization must be given 
additional resources if the Army is to maintain its technological 
edge.'' What major modernization requirements are not funded in the 
fiscal year 1998 budget?
    Answer. The Fiscal Year 1998 budget is balanced and funds our 
programs at a level that permits the Army to develop and procure the 
equipment which enables our soldiers to remain the best in the world. 
There are however, opportunities where additional investment dollars 
would permit us to secure some savings. During his testimony, the Chief 
of Staff said that his first priority for any additional funding that 
might be made available would be applied to information systems such as 
those associated with Digitization/Force XXI activities. Programs that 
could be accelerated to place key capabilities in the hands of 
commanders and soldiers include: Additional funding for Information 
Technology integration and digitization which includes All Source 
Analysis System (ASAS), Digital Topographic Support System (DTSS), 
Forward Area Air Defense Command and Control (FAAD C2), Enhanced 
Position Location Reporting System (EPLRS), Aviation Radios, and Force 
XXI Tactical Operation Centers; Modification and improvements to Kiowa 
Warrior, Avenger, Improved Cargo Helicopter, Sentinel, Bradley, 
Multiple Launch Rocket System (MLRS), and Stinger, Firefinder, Bradley 
Fire Support Vehicle, and Bradley Linebacker; Accelerated procurement 
of Palletized Load System (PLS) Trucks, Family of Medium Tactical 
Vehicle (FMTV) and Heavy Equipment Transporter (HET); and development 
of the M1 Breacher prototype and the Comanche Flight Test.
    Question. What are your top four modernization programs? Are they 
fully funded in FY98? Are they optimally funded in the accompanying 
fiscal years of the Future Year Defense Plan (FYDP)? If not, what are 
the shortfalls?
    Answer. The top Army programs are ForceXXI/Digitization, Comanche, 
and Crusader. These programs are adequately funded to accomplish the 
Army's program objectives for fiscal year 1998. Currently, the Comanche 
program is flying one prototype aircraft to demonstrate and validate 
design criteria and capabilities. Crusader has down selected to a solid 
propellant to reduce program risk and has been successful at 
automatically firing 2 successive rounds using solid propellant. The 
resupply vehicle program is on track to field with the self propelled 
howitzer. The Army's digitization program recently completed its 
Brigade-Level Advanced Warfighting Experiment at the National Training 
Center. The results of this experiment will enable the Army to select 
the most promising technologies for the Army's first digitized 
division.
    In the FYDP, these programs have been optimally funded to achieve 
the most capability for the available funds. While increased funding of 
some programs can accelerate fielding, the cost to other programs would 
result in a less than optimal mix of capabilities on the future 
battlefield.
    Question. Mr. Decker do you believe that your fiscal year 1998 
(FY98) budget allows you to procure items at a rate that makes economic 
and operational sense? Which programs concern you the most?
    Answer. The FY98 budget funds our programs at a level that permits 
the Army to develop and procure the equipment which enables our 
soldiers to remain the best in the world. There are however, 
opportunities where additional investment dollars would permit us to 
secure some savings. For example, some items are purchased below the 
economic quantity rate and therefore, the unit cost is higher. 
Obviously, those programs with the highest per unit cost cause the 
greatest concern. Whenever we can reduce the cost per item even a 
fraction, the savings can be great over the life of the program. For 
example, in FY96, we bought 750 Hellfire 2 missiles. This was below the 
minimum sustaining rate of 1248 missiles. In FY97, the Army doubled the 
amount of funding to the program and purchased more than twice the 
number of missiles. The unit cost dropped from $68,000 to $46,000. 
Another example is the Stinger Block 1 missile. In FY96 by adding $4.8 
million to the $12.4 million in the line, we were able to drop the unit 
cost by eighteen percent. The added benefit to investments such as 
these is that it enables us to buy out the line earlier and get the 
equipment in the hands of the soldier sooner. We are constantly looking 
for ways to fund our programs to get the best quality for the least 
cost. You have been a great help to us in the past and we look forward 
to your continued support.
    Question. According to your statement, the Army's strategy for 
fiscal year 1998 (FY98) is to procure a limited number of new high pay-
off weapons and extend the lives of existing systems. What new high-
payoff systems are you procuring in fiscal year 1998? Is the funding 
adequate in fiscal year 1998?
    Answer. The Army is scheduled to begin full production on the Joint 
Surveillance Target Attack Radar System (JSTARS) Common Ground Station 
(CGS) in FY98. The module will provide long-range radar and other 
sensor surveillance battle management and targeting data to tactical 
commanders. This system is critical to achieving information dominance. 
Funding in FY98 is adequate to begin procurement of CGS.
    The Bradley Fire Support Team Vehicle will enter Low Rate Initial 
Production in FY98. This vehicle will allow fire support teams to 
decrease the response time and increase the accuracy of indirect fires 
in support of maneuver combat units. This vehicle will enhance the 
ability of the services to conduct precision engagement. Funding in 
FY98 is adequate to ramp into full production later in the Future 
Year's Defense Plan.

                           Additional Funding

    Question. Last year, you were very candid about identifying your 
top unfunded requirements to the Committee and working with us to 
provide additional funding for many of them. I hope you will continue 
that cooperation with us. General Hite, please describe your top 
unfunded weapons system acquisition priorities and why the fiscal year 
1998 budget is not sufficient in these areas.
    Answer. To achieve prominence as a superior fighting force, the 
Army has relied on and will continue to depend upon technology. As our 
force has become smaller, we must replace aging and obsolete systems 
and upgrade our capabilities, to maintain this advantage. The Fiscal 
Year 1998 budget is balanced and funds our programs at a level that 
permits the Army to develop and procure the equipment which enables our 
soldiers to remain the best in the world. There are however, 
opportunities where we can develop and buy additional required 
technologies and weapon systems beyond amounts affordable in our 
balanced, yet constrained budget. During his testimony, the Chief of 
Staff said that his first priority for any additional funding that 
might be made available would be applied to information systems such as 
those associated with Digitization/Force XXI activities. Programs that 
could be accelerated to place key capabilities in the hands of 
commanders and soldiers include: information technology integration and 
digitization systems which includes All Source Analysis System (ASAS), 
Forward Area Air Defense Command and Control (FAAD C2), Enhanced 
Position Location Reporting System (EPLRS), Aviation Radios, and Force 
XXI Tactical Operation Centers; modification and improvements to Kiowa 
Warrior, Avenger, Improved Cargo Helicopter, Sentinel, Bradley, 
Multiple Launch Rocket System (MLRS), and Stinger, Firefinder, Bradley 
Fire Support Vehicle, and Bradley Linebacker; accelerated procurement 
of Palletized Load System (PLS) Trucks, Family of Medium Tactical 
Vehicle (FMTV) and Heavy Equipment Transporter (HET); and development 
of the M1 Breacher prototype and the Comanche Flight Test.
    Question. What are the potential savings if the Congress were to 
provide additional funding in fiscal year (FY) 1998 for these items, 
either by buying them earlier than planned or by lower production unit 
costs through procurement at higher quantities? Please put the costs 
and savings in the record.
    Answer. The Army has developed an extensive list of unfinanced 
requirements, along with potential savings derived if additional funds 
were received in fiscal year 1998. These savings are not always 
monetary, but reap operational impacts/benefits as well. A 
representative sample of these savings/benefits follow: (a) Bradley 
Fire Support Team Vehicle (BFIST), receiving a plus up of $18.6 million 
in FY 98 will allow BFIST production to be completed in FY 07 instead 
of FY 08. This acceleration represents a cost avoidance of $31.6 
million in FY 07 and $8.2 million in FY 08. This plus up will result in 
a net savings to the Army of $13.0 million (b) Family of Medium 
Tactical Vehicles (FMTV), receiving $517 million more in FY 98 will 
allow the Army to realize a savings of an average $6 thousand per year 
per 2.5 ton truck replaced and $4 thousand per year per 5 ton truck 
replaced or a total of approximately $16.6 million dollars in operation 
and support class. This plus up will allow for the procurement of 3,336 
more FMTV's, alleviating truck shortages and increasing equipment 
readiness rates. (c) Sentinel, receiving $20.3 million in FY 98 will 
allow for the procurement of 14 additional Sentinel radar systems (for 
a total of 27) and decrease the fielding gap between Sentinel and FAAD 
C2. This will result in a $14.3 million savings and shorten production 
schedule by one year.
    Question. Which of these items are on any of the Commanders-in-
Chief (CINC) integrated priority lists?
    Answer. Information technologies, integration and digitization 
programs (ASAS, FAAD C2, and EPLRS) compliment the capabilities 
described on the CINC Integrated Priority Lists (IPL). CINC IPLs also 
addressed enhancements to logistics capabilities which specifically 
mentioned HETs, FMTV and aging truck fleets.
    Question. Last year, the Army submitted a list which focused on 
``smart investments.'' However, the list included: $24 million for 
unfunded digitization requirements that required an additional $470 
million in the outyears to complete; $360 million for 18 additional 
Apache Longbow helicopters to ``heavy up'' the 2nd Armored Calvary 
Regiment--a fielding decision that had not and still has not been made; 
$500 thousand to increase the Warfighter Information Network's 
capacity, which required an additional $370 million in the outyears to 
sustain; and $199 million to accelerate Comanche, which required an 
additional $1 billion in the outyears, which the Army stated it cannot 
afford to sustain. Mr. Decker, how will you ensure that the fiscal year 
1998 unfunded requirements list will focus on ``smart investments''?
    Answer. The Army has gone to great lengths in an effort to ensure 
that any of the high priority items included in our listing of unfunded 
requirements represents a ``smart investment'' with the potential to 
pay dividends in varieties of ways. Each of these requirements has been 
scrutinized for its executability, and the magnitude of its 
operational, functional, and/or economic payback has been carefully 
weighed and evaluated in terms of dollars saved, costs avoided, and/or 
capabilities enhanced. All of our high priority unfunded requirements 
represent opportunities to garner significant, quantifiable benefits by 
proven and effective techniques such as program accelerations; 
expedited fielding; procuring at the most economic production rates 
possible; through the economy-of-scale savings possible with multi-year 
procurement contracts; and through implementing the improvements and 
efficiencies we're pursuing as part of our acquisition streamlining and 
acquisition reform initiatives.
    Question. How will you ensure that the items are critical 
warfighting requirements and not just ``nice to have'' items?
    Answer. The Fiscal Year 1998 budget funds our programs at a level 
that permits the Army to develop and procure the equipment which 
enables our soldiers to remain the best in the world. Most of the 
Army's procurement decisions are based on warfighting requirements. 
These requirements are examined in great detail within the Army to 
insure the appropriate capabilities and quantities are being developed 
and procured. These requirements are validated by the Joint 
Requirements Oversight Council to insure interoperability across all of 
the Services. The Army also procures some items which are not directly 
tied to a warfighting requirement, but are critical requirements for 
the operation of the Army installation activities. Many of these items 
are purchased off-the-shelf like sedans, buses, power plant equipment 
and commercial air traffic control equipment. The Joint Services 
Intrusion Detection System, for example, is required to ensure maximum 
security of Army small arms weapons that are ordinarily secured in unit 
arms rooms. This equipment is required to ensure the proper functioning 
of day to day activities, the safeguarding of Army Equipment and the 
protection of soldiers and their families.
    With the severe funding constraints in today's budget, every 
requirement is closely examined to insure only the highest priority 
requirements were submitted in the President's Budget Request.

           Research, Development, Test and Evaluation Funding

    Question. The Army is requesting $4.5 billion for Research, 
Development, Test and Evaluation (RDT&E) activities--this is $200 
million higher than last year's budget request. In 1997, the Army spent 
29 cents of Research and Development (R&D) for every dollar of 
procurement. In this budget the Army proposes to spend 66 cents of R&D 
for each procurement dollar. Your 1998 budget clearly shows that the 
Army conducts much research and produces very little equipment. Mr. 
Decker, what has caused this trend and why is the budget so biased 
toward research rather than production?
    Answer. In 1997, before the Congressional Marks, the Army budgeted 
$6.32 billion in procurement and $4.32 billion in RDT&E. This equates 
to approximately 68 cents of RDT&E for every dollar of procurement. 
Currently the fiscal year 1998 budget is at an approximate ratio of 67 
cents of RDT&E for every dollar of procurement ($6.75 billion of 
procurement and $4.51 billion of RDT&E). Our RDT&E investment develops 
and provides significant technical insertions in our current systems 
while at the same time investing in the development of future systems 
that will ensure the accomplishment of our nation's goals. It is 
imperative that we maintain the Army's technological advantage on the 
battlefield now and in the future. Our investments in research today 
are critical to ensuring that the technologies and capabilities will be 
available when needed to forge the Army After Next.
    Question. Mr. Decker, you talk about a crisis in procurement. Most 
of the Army's aircraft, missile, tactical vehicle and ammunition 
accounts are funded below last year's budget request. However, 
Research, Development, Testing and Evaluation (RDT&E) is funded at a 
higher level than last year's budget request. Why are you trading off 
procurement dollars for research and development activities?
    Answer. In 1997, before the Congressional Marks, the Army budgeted 
$6.32 billion in procurement. Currently, the fiscal year 1998 (FY98) 
budget requests $6.75 billion, representing an increase of 6 percent. 
The FY97 budget requested $4.32 billion for RDT&E, while the FY98 
budget asks for $4.51 billion in RDT&E, only a 4 percent increase over 
the previous year.
    The RDT&E program in FY 98 is focused on supporting affordable 
options to achieve the capabilities envisioned for Force XXI, Army 
Vision 2010, and the Army After Next with emphasis on demonstrations of 
promising technologies with warfighter applications. The Army continues 
to maintain a strong and stable RDT&E program to ensure the timely 
development and transition of technology into weapon systems and system 
upgrades, and to explore alternative concepts in future global, 
capabilities-based warfighting.

    [Clerk's note.--Although the overall procurement funding 
does increase, $349,109,000 of the increase is a result of a 
transfer from the Ballistic Missile Defense Office (BMDO) for 
Patriot Missile Procurement to the Army missile procurement 
appropriation. Funding requested for ammunition and other 
procurement are less in fiscal year 1998.]

    Question. For the record, please provide a list of all ``new 
start'' Research, Development, Testing and Evaluation (RDT&E) 
activities in fiscal year 1998. Which ones are included in the 
Commanders-in-Chief (CINC) priority list?
    Answer. Guided Multiple Launch Rocket System in Engineering and 
Manufacturing Development and High Mobility Multipurpose Wheeled 
Vehicle (HMMWV) prototype. Although these systems are not specifically 
listed in a CINC's priority list they will provide Army components of 
the Joint Force with the Precision Engagement and Dominant Maneuver 
capabilities needed to enable Joint Vision 2010 operational concepts. 
The Military Operations in Urban Terrain Advanced Concept Technology 
Demonstration (ACTD), although not on a CINC's priority list, began in 
FY97 with Department of Defense funding. FY98 is the first year of Army 
funding for this ACTD.

                        Heavy Tactical Vehicles

    Question. The Army is requesting no funds to procure heavy tactical 
vehicles in fiscal year 1998. Mr. Decker, in your statement, you stress 
the importance of tactical vehicles. However, for the second year in 
the row, your budget proposes no funds to procure heavy tactical 
vehicles. Why?
    Answer. Affordability is the reason. The Army prioritizes programs 
and, although heavy tactical vehicles are important, funding was 
insufficient to cover all our requirements. Heavy tactical vehicles 
include the Palletized Load System (PLS), the Heavy Expanded Mobility 
Tactical Truck (HEMTT), and the Heavy Equipment Transporter System 
(HETS). In the Fiscal Year 1997 President's Budget, the Army budgeted 
$77.4 million for PLS flatracks/devices and $86.9 million for HETS. The 
Congress increased the Army's heavy tactical vehicle request by $50.0 
million for PLS trucks/trailers and $30.6 million for HEMTT wreckers/
tankers. The Army is requesting $9.1 million in Fiscal Year 1998 for 
PLS flatracks/devices.
    Question. General Hite, what is the Army's requirement for heavy 
tactical vehicles? Is the requirement satisfied? If not, what is the 
shortfall?
    Answer. The Army's requirement for heavy tactical vehicles have not 
been met. The required/on-hand quantities are: (1) Palletized Load 
System (PLS)-3,711/2,277, (2) PLS Trailers-2,891/1,195, (3) PLS 
Flatracks-55,626/10,059, (4) Heavy Expanded Mobility Tactical Truck 
(HEMTT)-13,203/12,165 (HEMTT Wreckers-2,483/1,630 and HEMTT Tankers-
4,842/4,073), and (5) Heavy Equipment Transporter System-2,412/1,358.
    Question. What is the impact of the fiscal year 1998 budget on the 
industrial base--both the prime and its suppliers?
    Answer. Oshkosh Truck Corporation, Oshkosh, Wisconsin is the prime 
contractor for the Palletized Load System (PLS), Heavy Expanded 
Mobility Tactical Truck (HEMITT), and Heavy Equipment Transporter 
System (HETS) tractors and produces these vehicles on a combined 
commercial and military assembly line to keep unit costs as low as 
possible. System and Electronics Incorporation, St. Louis, Missouri 
produces the HETS trailer. Based on a fiscal year 1998 program ($9.1 
million), production stops on: (1) PLS-April 1998, (2) PLS trailer-
December 1997, (3) HETS-July 1998, and HEMTT-July 1998. The fiscal year 
1998 program (Standard Study Number DA0500) of $9.1 million buys: (1) 
968 Container Roll-in/Out Plantforms-$8.1 million, and (2) 40 Container 
Handling Units-$1.0 million. Based on a fiscal year 1999 program 
($162.6 million) for those types of trucks in which production stops, 
contract awards occur in December 1998 and the production startup is 9 
months later. Reductions in the work-force at both prime contractors 
and suppliers will take place including migration of suppliers and 
venders away from Defense business. Startup will most likely 
necessitate requalification of venders and suppliers and result in 
approximately a 15 percent cost increase to the Army. Lastly, a restart 
may require redesign to meet Federal Motor Vehicle Safety Standards 
(FMVSS) which are exempted if production is kept constant.
    Question. Based on your 1998 budget, you plan on spending $162 
million in 1999 on heavy tactical vehicles. Since you will have a 
``cold'' manufacturing line, what will be the cost of restarting the 
line?
    Answer. Oshkosh Truck Corporation, Oshkosh, Wisconsin is the prime 
contractor for the Palletized Load System (PLS), Heavy Expanded 
Mobility Tactical Truck, and Heavy Equipment Transporter System (HETS) 
tractors and estimates that if a particular type of truck production is 
stopped, even though the total line does not stop, then start-up costs 
associated with renegotiating venders and suppliers (which represent 75 
percent of the assembly process) would increase unit costs by 
approximately 15 percent. In addition, a restart may require redesign 
to meet Federal Motor Vehicle Safety Standards which are exempted if 
production is kept constant. Start-up costs from System and Electronics 
Incorporated, St. Louis, Missouri, which produces the HETS trailer, are 
currently being developed.
    Question. It is our understanding that the lead time for heavy 
tactical vehicle is approximately 9 months. Does the fiscal year 1998 
budget include funds to procure long lead items required for 1999 
production? Why?
    Answer. No, the 1998 budget does not include funding for long lead 
items due to affordability.

                        Light Tactical Vehicles

    Question. Last year, Congress appropriated $166 million for light 
tactical vehicles, the High Mobility Multipurpose Wheeled Vehicle 
(HMMWV). The Army is requesting $66 million in 1998 for HMMWV 
production. Does the fiscal year 1998 budget satisfy Army requirements 
for light vehicles? If not, what are the shortfalls?
    Answer. The requested budget does not fill the remaining 
requirement for light tactical vehicles in the Army inventory. The 
total Army requirement for HMMWV is 119,518 vehicles. This is an 
increase over prior year requirements based on the Department of the 
Army decision to ``Pure Fleet'' the light tactical fleet using only the 
HMMWV. We have on hand today 100,854 leaving a shortfall of 18,664. The 
Army has budgeted for 774 vehicles in FY98 and of these 524 represent 
new production.
    Question. Does the budget request sustain the industrial base? If 
not, what is the impact?
    Answer. The U.S. Army can not predict the commercial, foreign 
commercial/military direct and Foreign Military Sales (FMS) of the 
HMMWV by the prime contractor AM General Corporation (AMG). AMG has 
advised the Government that to sustain a production rate of 16.5 
vehicles per day, their new minimum sustaining rate, they require the 
Department of Defense to procure 10 per day (2,350 vehicles per year). 
This represents Government funded procurements exclusive of any FMS 
cases. Thus, the amount requested would not satisfy the contractor 
identified requirement for the full year.
    Question. The Army has decided to develop a new light tactical 
vehicle and terminate the production of the High Mobility Multipurpose 
Wheeled Vehicle (HMMWV) at the end of 1998. According to the Army, the 
HMMWV is a ``world class vehicle''; however, supportability is becoming 
a problem. What supportability problems are you experiencing?
    Answer. The HMMWV has been the world's best light tactical off road 
vehicle. However, over the past 17 years since the HMMWV was designed, 
significant commercial component changes, statutory requirements and 
our demand for increased capability from the vehicle have significantly 
reduced the reliability of the vehicle and increased the sustainment 
cost. The demand for increased capacity has been a result of the new 
missions and constraints placed on the Army in the areas of payload, 
electrical power, configuration, and mission requirements. The 
significant increase in applique equipment and use of the light fleet 
vehicles for more roles has pushed the envelope with regard to the 
ability to package all of the new equipment in the vehicle. This has a 
major impact on the human factors of the vehicle and its ability to 
effectively execute the mission as well as increasing the safety risk. 
The HMMWV has a high scheduled maintenance time requirement with 
increasing unscheduled maintenance. This demands that we develop a 
vehicle that requires significantly less scheduled service time and 
reduced unscheduled time. Finally the changing commercial components 
are not easily packaged in the 17-year-old design and the cost to 
reconfigure the vehicle to accommodate new components is increasing 
dramatically. The Project Manager Light Tactical Vehicles is preparing 
a detailed discussion and justification for this program which will be 
forwarded to Congress next month. This document will fully explain the 
investment strategy for the light fleet.
    Question. Furthermore, the Army believes that the High Mobility 
Multipurpose Wheeled Vehicle (HMMWV) is only ``marginally meeting new 
requirements.'' What new requirements are not met by the HMMWV?
    Answer. There are standards that were objectives for the original 
HMMWV that were waived during prototype phase based on cost and 
complexity versus other critical mission requirements. An example of an 
original requirement not met is interior noise. The interior noise 
exceeds that for operation without hearing protection. The use of 
hearing protection reduces the combat effectiveness of the system. To 
meet the new mission demands for the light tactical vehicles we have 
had to make significant changes. We have: increased the payload and 
ballistic protection, redesigned the vehicle to meet new federal 
standards for emissions and safety, and reconfigured the vehicle to 
accommodate a plethora of new applique and integrated components. The 
latter effort stemmed from the increased emphasis on Command, Control, 
Communications, Computers, and Information (C4I) which are key elements 
for Force XXI. In meeting these requirements we have increased the 
maintenance burden on the Army in an environment of decreasing manpower 
and money. The vehicle also does not meet all of the federally mandated 
safety requirements, and, in fact, can not be sold in the military 
configuration to the general public for operation on the highway.
    Question. Could those deficiencies be resolved by modifying the 
current vehicle? If not why?
    Answer. The Army is currently conducting a formal Analysis of 
Alternatives as a normal part of an Major Defense Acquisition Program. 
This analysis will identify the most cost-effective way to meet the 
Army's requirements. This study will be completed before the planned 
release of the solicitation later this year. Preliminary results 
indicate that adapting the current vehicle is not an economically 
viable alternative and would have greater risk. As a minimum, a new 
body, frame, engine, electrical system and transmission will be 
required to meet the user's requirements. It is probable that such 
extensive changes would result in a very expensive program.
    Question. What is the anticipated cost of the new light tactical 
vehicle acquisition program? For the record, please provide the total 
cost, per unit cost and anticipated fielding schedule.
    Anwser. Based on our current program assumptions and analysis, we 
estimate that the prototype phase will cost $50 million and per unit 
average cost will be $86 thousand. Our anticipated First Unit Equipped 
(FUE) is in fiscal year 2002.
    Question. Given the Army's past experience with tactical vehicle 
programs, in terms of cost growth and schedule delays, do you think it 
makes sense to develop a new light vehicle? Why or why not?
    Answer. Yes, we and industry have learned a lot and have overcome 
the pitfalls of prior programs through general and specific acquisition 
actions. Application of Integrated Process Teams within the government 
and industry are reducing risk in both the requirement and acquisition 
arenas. We have established effective Teaming arrangements with 
contractors to identify and reconcile cost, schedule and technical 
performance issues quickly and amiably between the parties. These 
efforts are focused on resolution of conditions that have previously 
created complications in contracting for tactical vehicles.

               Family of Medium Tactical Vehicles (FMTV)

    Question. The Army is currently procuring the Family of Medium 
Tactical Vehicles (FMTV), 2.5 and 5 ton trucks, to replace those that 
have been in the fleet for over 20 years. The Army is requesting $209 
million for fiscal year 1998 for FMTV. During the past year, the Army 
has developed a new acquisition plan to develop a second producer. Mr. 
Decker, please describe the Army's new FMTV acquisition plan.
    Answer. We changed the FMTV acquisition strategy to mitigate a 
break in production, to reduce Operations and Support costs, to keep 
the FMTV pipeline flowing, to ensure commonality in FMTV rebuys and to 
ensure continual competition in the program. We plan to award a sole 
source, multiyear procurement contract to Stewart and Stevenson (S&S) 
in fiscal year 1998. The following year, fiscal year 1999, we plan to 
award a competitive, multiyear contract to a second source. While the 
new contractor is facilitizing and becoming qualified, S&S will 
continue to produce vehicles. Once the second source is qualified to 
produce, they will compete with S&S for FMTV funding.
    Question. Is you new acquisition plan funded in the budget?
    Answer. No, as a minimum we need an additional $44 million in 
fiscal year 1998 to mitigate a potential two month production gap.
    Question. We understand that the economic rate of production to 
maintain two Family on Medium Tactical Vehicles (FMTV) producers would 
require an annual procurement of $600 million. In the past few years, 
the Army has been unable to budget that amount for its entire tactical 
vehicle fleet. Given all of the modernization shortfalls you need to 
``fix'' how are you going to maintain that level of funding in your 
budget?
    Answer. I believe that the $600 million figure came from the 
Tactical Wheeled Vehicle Investment Strategy that the Department sent 
to the Congress in fiscal year 1995. Initially, to maintain two 
producers the Army believes that it needs $400 million per year. As you 
know, our budget process is an internal trade off between our 
prioritized requirements as affordability. We will do our best to fund 
our highest priorities.
    Question. As you know, out year projections usually do not 
materialize. If this happens, would you still want to continue with a 
second source?
    Answer. Our planning is predicated upon certain out year funding 
streams. If, at a future date those funding streams change, we will 
adjust our plans accordingly.
    Question. Are you satisfied with the Family of Medium Tactical 
Vehicles (FMTV's) that are currently being delivered to the Army?
    Answer. The Army is extremely satisfied with the FMTV. It is a 
first class vehicle that is very easy to maintain.
    Question. The Army is not required to compete the FMTV program or 
develop a second source. If your are satisfied with the product you are 
fielding, why not save the cost of the FMTV competition and award the 
contract to the current producer?
    Answer. The Army believes that it is in its best interest to 
interject competition in its procurement awards whenever possible.

                    Black Hawk Multiyear Procurement

    Question. Although the Army has a requirement for 500 additional 
Black Hawk helicopters, the fiscal year 1998 budget proposes to procure 
only a total of 36 in FY98 and FY99. The FY98 budget proposes to 
terminate Black Hawk production in 2000. Last year, the Army requested 
funding to begin a new multiyear contract for Black Hawk helicopters. 
Furthermore, the Army identified a $243 million shortfall in FY97 for 
Black Hawk procurement. The Congress provided $225 million for Black 
Hawks--$64 million above the President's Budget and the authority to 
proceed with a multiyear contract. This year's budget does not include 
funding for a Black Hawk multiyear contract. Why does your FY98 budget 
not include funds for the multiyear contract that you requested in 
fiscal year 1997?
    Answer. The FY98 budget reflects program budget decision (PBD) 722 
which anticipates a multi-service/multiyear contract for FY97-01 at 
quantities of 36, 18, 18, 18 and 18. The FY98 request reflects 
requirements to procure 18 aircraft in FY98 and advance procurement for 
12 aircraft in FY99. This completes the Army's portion of this 
contract.
    Question. Congress appropriated $65 million advanced procurement 
funds in fiscal year 1997 for the production of 36 aircraft in 1998. 
Since you are only procuring 18, can we rescind the money?
    Answer. The $65 million FY97 advance procurement funding is 
required to protect schedule, avoid breaks in production and procure 
Economical Order Quantities for the production quantities in FY98 and 
FY99. The budget is based on receiving $65 million in FY97. Even though 
we are only procuring 18 aircraft, any reduction to this amount would 
cause an increase in FY98 and FY99.
    Question. When, if ever, will you procure the additional 
helicopters to meet your requirements?
    Answer. The Army does not anticipate having sufficient 
modernization funds in the foreseeable future to enable it to procure 
the remaining Black Hawk requirement.
    Question. What is the operational impact of not fielding Black 
Hawks after 1999?
    Answer. The Army will have filled 100 percent of its active and 
reserve Black Hawk warfight requirements by 1999. The Army has decided 
it will accept the risks associated with Black Hawk shortages in the 
sustaining accounts (training, operational floats, repair cycle floats, 
and projected attrition) and the strategic reserve.
    Question. Does the fiscal year 1998 (FY98) budget request sustain 
the industrial base? Please explain.
    Answer. Yes. The intended program from program budget decision 722 
produces a multiservice/multiyear contract in FY97-01 which will 
maintain the Sikorsky industrial base.
    Question. If the Army decides to procure Black Hawks at a later 
date, what is the cost of restarting the production line?
    Answer. The cost impact of restarting the production line due to a 
significant production break is estimated to cover over $50 million in 
shut down and start up efforts.
    Question. The unit cost for Black Hawks, based on the multiyear 
procurement of 36 aircraft per year, is $8.7 million. The exact same 
helicopter will cost you $11.6 million with a single year procurement 
contact. The 36 aircraft you are buying in 1998 and 1999 will cost over 
$104 million more than if you would have continued the multiyear. Does 
this make good business sense to you? Why?
    Answer. The Army decided to withdraw funding from fiscal year 1998-
2001 (FY98-01) due to affordability. No additional cost would have 
occurred in FY98-99. Program budget decision 722 implemented the Deputy 
Secretary of Defense decision that directed the Army to continue to buy 
Black Hawk aircraft in FY 98-99.
    Question. The Army Aviation Modernization Plan is the strategy for 
replacing helicopters currently in the fleet. According to the plan, 
all UH-1, (Huey) utility helicopters will be replaced by the Black Hawk 
for both the active and reserve forces. How many UH-1 helicopters are 
currently in the army inventory?
    Answer. There are approximately 1000 UH-1s in the current Army 
inventory. The ongoing retirement and draw down programs will reduce 
the UH-1 inventory to approximately 900 aircraft by late 1999.
    Question. Will you keep UH-1 helicopters in the fleet to meet 
utility requirements? If not, how will those requirements be satisfied?
    Answer. Yes. UH-1s will fill requirements for the light utility 
helicopter mission, strategic reserve utility requirements, and 
peacetime training and support requirements.
    Question. What is the life expectancy of the UH-1 in the fleet?
    Answer. The UH-1 life expectancy is 30 years.
    Question. When will they reach their life expectancy?
    Answer. The remaining UH-1 fleet will reach an average fleet age of 
30 years in 2002. The Army has determined that it can safely operate 
and maintain its UH-1 fleet until 2010. The key to the UH-1's 
sustainability in its historical performance data and the abundant 
world wide parts supply.
    Question.For the record, please provide the anticipated retirement 
schedule for the UF-1 based on the Black Hawk fielding schedule?
    Answer. The majority of anticipated UH-1 retirements are based on 
ongoing Army National Guard force reductions. The Army will procure 
another 64 Black Hawks for fiscal years 1997-1999 (97=34, 98=18, 
99=12). These aircraft will enable the Army to displace 12 active 
component Medical Evacuation (MEDEVAC) UH-1's, 30 reserve component 
MEDEVAC UH-1's, field 8 UH-60As for a new command aviation company in 
Germany, and provide eight additional operational ready float Black 
Hawks.
    Question. According to the Army Modernization Plan, the UH-1 HUEY 
helicopters are ``old airframes, possessing inadequate lift, speed, and 
range for operations in high/hot environments.'' The Army was planning 
to replace all UH-1s with the Black Hawk, ``a solid performer with 
excellent deployability, sustainability, and maintainability.'' Since 
it appears that the Army is going to have UH-1s in the fleet for quite 
some time, are you going to improve the UH-1 to correct those 
deficiencies?
    Answer. These deficiencies describe the UH-1s inability to perform 
assault and general support missions in a wartime environment. Since 
the Army has filled 100 percent of its UH-60 wartime requirements, 
there are no warfight deficiencies to correct in the UH-1.
    Question. What is the estimated cost of a UH-1 upgrade program?
    Answer. The Army does not have a requirement for a UH-1 upgrade 
program. There has not been a cost estimate done for a UH-1 upgrade 
program.
    Question. Would it not be cheaper to procure new Black Haws, 
instead of upgrading the UH-1? Please explain.
    Answer. Since the Army has no plan to upgrade the UH-1, there is no 
cost basis to compare upgrading the UH-1 against the cost of procuring 
new Black Hawks.
    Question. What are the operation and maintenance cost for a Black 
Hawk? For a UH-1?
    Answer. Operational and maintenance costs are based on the theater 
in which the aircraft is operated. Current cost factors per flight hour 
for aircraft in Korea are: UH-60L-$1554 per hour; UH-1-$397 per hour.
    Question. The Army claims that reducing the type of helicopters in 
the fleet will reduce support and logistics costs. For the record, what 
would be the savings if you retired all helicopters and had only Black 
Hawks in the fleet?
    Answer. The Army will provide cost data at a later date. If all UH-
1s were retired, the Army would have a large number of mission 
requirements that do not need a Black Hawk. The 120 aircraft light 
utility helicopter mission does not require a UH-60. The Army also has 
a wide variety of UH-1 peace time support missions that do not require 
a UH-60.

    [Clerk's note.--The cost data was not provided to the 
Committee.]

    Question. The Congress directed that the global positioning system 
(GPS) be integrated on all service aircraft by 2000. Since you will 
have more UH-1s in the fleet than you anticipated, will you meet the 
deadline? If not, how many UH-1 helicopters will not have GPS by 2000?
    Answer. The Army has funded the procurement of GPS to integrate 
them in all remaining UH-1s by the year 2000.
    Question. Since you have decided not to go forward with the Black 
Hawk multiyear, it appears as if the Army will have to:
--pay $104 million more than you planned on spending for 18 
helicopters;
--Pay to maintain the UH-1; and pay the higher support and logistics 
costs associated with maintaining more than one type of utility 
helicopter fleet.
Mr. Decker, do you still believe the Black Hawk multiyear contact is 
unaffordable?
    Answer. Program budget decision 722 provided sufficient funding for 
an Army/Navy multiyear contract at 18 per year from fiscal years 1998-
2001 (FY98-01).
    Question. Recently, we have heard testimony from several of the 
Commanders-in-Chief (CINCs). All of the CINCs testified that they are 
faced with critical shortfalls in areas such as equipment maintenance 
and airlift. What do you think the CINCs would say about your decision 
to terminate Black Hawk production?
    Answer. Due to fiscal constraints, the higher priority of other war 
fighting systems is more important to our soldiers.
    Question. For the record, please provide, for each CINC, the number 
of UH-1s that are in his area of operations.
    Answer. Projected to the end of FY98: U.S. Army Europe--28; Korea--
3; U.S. Army Forces Command--81; U.S. Army Pacific--8; U.S. Army 
Southern Command--0; U.S. Special Operations Command--0.

                    CH-47 Improved Cargo Helicopter

    Question. The CH-47 is the Army's cargo helicopter which was 
fielded almost 40 years ago; its useful life expires beginning in 2002. 
The replacement helicopter, the National Transport Rotorcraft (NTR) 
will be a joint service helicopter and will be fielded after 2015. The 
Army's shortfall list in fiscal year 1997 (FY97) included funds to 
accelerate the procurement of new engines for the CH-47. The Army also 
identified funds to begin the development of Improved Cargo Helicopter 
(ICH) program. The ICH will be a CH-47 which will undergo an airframe 
overhaul and cockpit upgrade program. Congress provided the additional 
funding for both unfunded requirements. What is the status of the FY97 
funds?
    Answer. The $8.7 million of the $17.72 million ICH FY97 Research, 
Development, Test and Evaluation (RDTE) Congressional add has been 
released to the Army. This $8.7 million will allow the ICH Program 
Office to fund all programmatic requirements through the end of FY 97. 
The balance of the congressional add, currently on withhold in the 
Office of the Secretary of Defense, must be released to the Army at the 
beginning of FY98 to allow for the award of the ICH Engineering and 
Manufacturing Development contract in December 1997.
    Question. The Congress provided $17 million to begin the 
development of the ICH, an airframe overhaul and cockpit upgrade 
program for the CH-47. The Army is requesting $2.6 million to continue 
the program in FY98. The Army plans on delivering the first ICH to the 
fleet in 2003. The last ICH will be delivered in 2016. What is the 
anticipated cost of the ICH program?
    Answer. The current RDTE funding requirement for this program is 
projected to be $103 million in then year dollars. The current 
Procurement funding requirement for this program is projected to be 
$3.102 billion in then year dollars.
    Question. Is the ICH program adequately funded in your 1998 budget 
request? If not, what is the shortfall?
    Answer. The ICH program is not adequately funded in FY98 due to a 
$26 million FY98 RDTE decrement in Program Budget Decision 722. While 
the program remains executable, additional RDTE funds in FY98 would 
``buy back'' the year delay in fielding caused by this decrement and 
maintain program efficiencies during the Engineering and Manufacturing 
Development phase.
    Question. What is the anticipated useful life of the ICH?
    Answer. Once fielded, the useful life of the ICH will be 20 years.
    Question. The useful life of the CH-47 expires beginning in 2002. 
The first ICH will not be delivered until 2003, the last in 2016. 
Should the ICH program be accelerated? Please explain.
    Answer. The initial fielding date of 2002 was established to 
coincide with the end of the projected useful life of the CH-47D. 
Therefore, any delays of ICH fielding beyond this date would be unwise. 
Due to budget constraints during the production years, the ICH will 
only be fielded at one half the rate at which the CH-47D was fielded. 
Additional Procurement funding during the production years would allow 
the Army to accelerate procurement and fielding, providing our war-
fighters with this critical capability early.
    Question. The ICH program will be the second ``service life 
extension program'' for the CH-47; the first took place 20 years ago. A 
replacement helicopter, the NTR, for CH-47 will not be produced until 
after 2015 almost 20 years from today. Do you believe that the ICH will 
remain safe and operational until after 2015 or will not have to do 
another life extension program?
    Answer. Yes, the ICH will remain safe and operational for 20 years. 
The first ICHs will be operational until 2023, while the last ICH 
deliveries will be operational until 2036. The safety of these aircraft 
will be maintained through continued safety and sustainment efforts, 
much like the CH-47D fleet is today.
    Question. The Marine Corps is also considering a service life 
extension program for its cargo helicopters. Since both services will 
procure the NTR, would it not make more sense, operationally and 
economically, to accelerate the NTR instead of doing two service life 
extension programs?
    Answer. The ICH is intended to bridge the gap between now and the 
fielding of what is now known as the Joint Tactical Rotocraft (JTR). 
This is why the ICH program includes only the necessary quantities--300 
of the Army's 431 CH-47Ds--to achieve this bridge. The need to sustain 
the CH-47D fleet through another service life extension program in the 
immediate future is critical and cannot be delayed. Delaying the ICH 
program would result in an anticipated reduction in aircraft 
operational availability and increased Operating and Support costs 
until a replacement is fielded. Should the replacement program be 
delayed, this program would continue to grow. While the Army cannot 
speak for the Marine Corps, the JTR program is only in the very early 
stages of Concept Exploration. Many of the anticipated technologies 
required to achieve the desired performance objectives are still being 
defined. The JTR is currently projected to be fielded no earlier than 
2015, at which time the entire fleet of CH-47Ds will be over 20 years 
old.

                       Apache Longbow Helicopter

    Question. The Apache is the Army's attack helicopter originally 
fielded in the 1980's. The Army is planning to modify 758 of the Apache 
helicopters to the Apache Longbow. With its improved radar and weapon 
systems, the Apache Longbow will have improved targeting, survivability 
and maintainability features. Last year, the Army's shortfall list 
included funds to modify the Apache Longbow with a Second Generation 
Forward Looking Infrared (2nd GEN FLIR) that is being developed for the 
Comanche. Since the outyear integration costs for the Apache 2nd GEN 
FLIR program were not budgeted and projected to be approximately $700 
million, the Committee requested that the Army provide a report with 
the fiscal year 1998 budget submit outlining the risks and costs of the 
program. What is the status of the report?
    Answer. An interim report was approved for release on 11 March 
1997. The final report cannot be prepared until results of a flight 
evaluation are assessed. I the contract can be awarded by 30 June 1997 
a flight demonstration could take place in the Third Quarter, FY98. A 
final report will be prepared at that time.
    Question. When will you provide it to Congress?
    Answer. The interim report was sent the week of 24 March 1997.
    Question. The Senate provided the funds to begin the 2nd GEN FLIR 
program and their position prevailed in conference--the Congress 
provided $5 million to begin the program. What is the status of the 
FY97 funds?
    Answer. The funding provided in FY97 is being withheld by the 
Department of Defense Comptroller. The FY97 funding would allow the 
Army to do a flight evaluation of the Comanche FLIR on Apache. The 
intent of this evaluation is to provide the detailed information 
necessary to fully respond to the Congressional reporting requirement.
    Question. Does your FY98 budget include funds to continue the 
program? If not, what is the shortfall?
    Answer. Funding to support a FY98 program is not included in the 
FY98 budget. A FY98 program start would require $13 million.
    Question. Do you plan on providing offsets to continue the program 
in FY98?
    Answer. Offset decisions for FY98 have not been made yet.
    Question. The Army told us last year it believed using the Comanche 
2nd GEN FLIR would be cost effective because it would allow development 
of a single sensor for two aircraft. However, it is our understanding 
that competing contractors have told the Army they will protest ``sole 
source'' award. They say it is unfair not to compete the contract. If 
you must compete the contract, what is the anticipated cost of 
developing a new 2nd GEN FLIR for the Apache Longbow? Are funds 
included in the FY98 budget request?
    Answer. The cost of developing and procuring a new 2nd GEN FLIR 
would be approximately $774 million, $26 million more than the 
projected cost of leveraging the work already completed on the Comanche 
FLIR. Funding to support a 1998 program is not included in the 1998 
budget request.
    Question. It appears as if your Apache Longbow 2nd GEN FLIR program 
is in trouble because you did not provide Congress with a report as 
requested; the Office of the Secretary of Defense has not released your 
FY97 funds; you did not provide funds in FY98 to continue the program; 
and you can not award the contract without a competition. So why 
shouldn't we rescind the funds?
    Answer. Funding should not be rescinded because it was provided for 
the express purpose of investigating the feasibility of using the 
Comanche FLIR on the Apache, not necessarily to begin a Apache 2nd GEN 
FLIR program. Data derived from the feasibility study and flight 
demonstration will not only provide valuable information for any future 
Apache 2nd GEN FLIR program, but also serves as a risk reduction to the 
Comanche program. A sole source contract can be awarded for this 
feasibility study because there is only one developer of the Comanche 
FLIR. However, any new effort to develop and produce an Apache 2nd GEN 
FLIR would be competed in accordance with the Competition in 
Contracting Act.
    Funding to support follow-on 2nd GEN FLIR requirements will be 
addressed in the FY99-03 Mini-Program Objectives Memorandum.
    Question. Last year, the Congress provided $27 million to procure 
one crew trainer for the Apache Longbow. The Army identified an 
unfunded requirement for two crew trainers. It is our understanding 
that funds are not included in the fiscal year 1998 budget for the 
second trainer. Why?
    Answer. The FY98 budget request contains $81.7 million for Apache 
Longbow training devices. The 1998 funding would procure the best mix 
of required training devices based upon available funding. Devices to 
be procured in 1998 are two Longbow Crew Trainers, two Longbow 
Collective Training Systems, two Multiplex Avionics, Visionics, 
Weapons, and Electrical Systems Trainers, three Airframe Engine and 
Drivetrain Systems Trainers, and 45 Tactical Engagement Simulation 
Systems. With an additional $28 million, the Army would procure one 
additional Longbow Crew Trainer; one Multiplex Avionics, Visionics, 
Weapons, and Electrical Systems Trainer; and two Airframe Engine and 
Drivetrain Systems Trainers.
    Question. The Army is pursuing a six year multiyear contract for 
the Fire Control Radar (FCR), which is a key component of the Apache 
Longbow weapon system. The FCR provides automatic target detection, 
classification, and prioritization and a firer and forget capability. 
The Apache Longbow airframe is a five year multiyear procurement. Why 
are you requesting a six year multiyear contract for the FCR?
    Answer. A six year multiyear contract is being requested because it 
would complete the procurement of the remaining 207 FCRs and offer a 
considerable cost avoidance. Army analysis projects a cost avoidance of 
approximately $80 million.

                        Kiowa Warrior Helicopter

    Question. The Kiowa Warrior is the Army's armed reconnaissance 
helicopter. Originally fielded during the Vietnam War as the OH-58, 
this helicopter will start to be replaced after 2006 by the Comanche. 
The Army is requesting no funds for Kiowa Warrior production for fiscal 
year 1998. What is the Army's requirement for Kiowa Warriors? How many 
are in the current fleet? How many are on contract?
    Answer. The Army's requirement for Kiowa Warriors is 507, and 
includes all units, both Active and Reserve, that have Kiowa as part of 
required equipment. There are currently 314 in the fleet. There are a 
total of 398 on contract.
    Question. Last year, Congress provided an additional $190 million 
for Kiowa Warrior (FY97 plus up). What is the status of those funds?
    Answer. $79 million of the $190 million has been released by the 
Office of the Secretary of Defense (OSD). The $22 million will be used 
to continue procurement of 10 additional aircraft. The $57 million will 
be used for the Safety Enhancement Program (SEP). The remaining $111 
million for procurement of aircraft above the 398 quantity is still on 
withhold by at OSD.
    Question. The Army has requested that $57.3 million of the 1997 
funds appropriated for Kiowa Warrior production be reallocated to 
correct safety problems on Kiowa Warrior helicopters in the fleet. The 
funds will be used to procure and install crashworthy seats, airbags, 
restraint systems and engine upgrades. Last year you told us the cost 
of the program was $172 million. Has the cost of the safety enhancement 
program (SEP) changed? If so, by how much and why? Is it adequately 
funded in the budget? If not what is the shortfall?
    Answer. The entire SEP cost as estimated last year is $189 million. 
This includes a program which began in fiscal year (FY96) and continues 
through FY04. In FY96, $15 million was spent on the SEP; which leaves a 
remaining requirement of $174 million. The SEP is partially funded in 
the FY 97-01 budget at $115 million (includes the $57.3 million from 
the FY97 plus up). There is a total $59 million shortfall in FY00 
through FY04.
    Question. What effect will the Bell-Textron's recent contract award 
for the Marine Cobra and Huey upgrade program mean to its overhead 
rates? Will it lower the cost of production of Kiowa Warriors?
    Answer. During the first two years of the Marine Cobra and Huey 
program there will be no effect on the overhead rates. This is because 
the majority of the effort during the first two years will be for non-
recurring engineering. After two years of the effect will be to reduce 
the overhead rates for all programs and the cost of producing the Kiowa 
Warrior.

                          Comanche Helicopter

    Question. The Comanche is the next generation armed reconnaissance 
helicopter. The Comanche will significantly expand the Army's ability 
to collect reconnaissance information in all battlefield environments 
because of its improved sensors and greater flexibility for deployment. 
The Comanche will replace the Kiowa Warrior. The Army is requesting 
$282 million in fiscal year 1998 for continued development of Comanche. 
Mr. Decker, your statement says ``Comanche, if fielded,''--Is the Army 
considering not fielding the Comanche? Please explain.
    Answer. The Army has always expected to field this critical 
warfighting asset. My statement simply recognized that we have 
acquisition decision points to evaluate the operational performance 
before fielding a new system. I am confident that as Comanche fully 
demonstrates the capabilities it is designed to provide, it will be 
procured and fielded as programmed.
    Question. Last year, the Army requested an additional $199 million 
to accelerate the development of Comanche. Accelerating the program 
would not only field Comanche sooner, but would also save $3 billion in 
acquisition costs. Congress provided an additional $50 million for 
Comanche in FY97. How did the Army spend the additional $50 million?
    Answer. The $50 million was released to the Army on February 28, 
1997. Specific uses are additional flight testing, beginning 
development of the Link 16 communication capability for Comanche, 
earlier development work on the Electro-Optical Sensor System and the 
Low Observable development programs, and wind tunnel tests.

                          Hellfire II Missile

    Question. Last year, the Army's unfunded priority list included a 
request for economic order quantity funding for a proposed four-year 
Hellfire II multiyear contract. In this year's budget, the Army 
eliminated all Hellfire II production in fiscal year 1998 and out. 
Given that stability of requirement and funding are prerequisites for 
multiyear contracts, why did the Army request a multiyear for Hellfire 
II only to eliminate production in the FY98 and out?
    Answer. The Army could not afford the continued buy of Hellfire II 
missiles at less than the annual minimum economic rate and Congress did 
not support the requested economic order quantity funds to initiate 
multiyear procurement. In the near term, Army has over 37,000 Laser 
Hellfire missiles (all tactical configurations), which fully meet all 
anticipated operational requirements. The Army expects Foreign Military 
Sales to sustain the Hellfire II production line through FY99, as a 
minimum, and the Army will address restarting the Hellfire II (or an 
improved version) production line in the FY99-03 Program Objectives 
Memorandum build.
    Question. How can we work with you to understand the priorities 
that the Army is committed to sustaining in future budgets?
    Answer. The Congress needs to continue its open dialogue with Army 
Leadership to understand our priorities. In addition, the Army needs 
the assistance from the Congress in stabilizing individual program 
funds; minimizing the decrements to the modernization programs that 
have heretofore been required to support contingency operations; and 
its continued support for the Force XXI technical initiatives.

         Extended Range Multiple Launch Rocket System (ER-MLRS)

    Question. Last year, the Army's unfunded priority list included a 
request for funds for additional ER-MLRS rockets in order to smooth 
``the ramp up'' to the fiscal year 1998 buy. However, this year's 
budget reduces the FY98 buy of this rocket to zero. Why did the Army 
request additional quantities in FY97 only to zero the program the next 
year?
    Answer. Estimated Foreign Military Sales for FY98 allowed the Army 
the flexibility to fund higher priorities. Funding for FY98 will be 
used to help the Army execute Field Artillery redesign, allowing the 
Army to modernize more of the Army National Guard with Paladin 
howitzers, while maintaining combat capability in the Active Component 
divisions. Additionally, Extended Range Guided (ER-Guided) Rocket 
technology was successfully demonstrated in 1996 and resulted in the 
Army giving the ER-Guided Rocket program a higher priority than the 
Extended Range Rocket. Thus, during the FY98 budgetary process, the 
Army adequately funded an Engineering, Manufacturing and Development 
program for the ER-Guided Rocket beginning in FY98. The FY96 and FY97 
buys of 2,826 ER-MLRS Rockets and follow-on procurements provide an 
interim capability until the ER-Guided Rocket begins production.
    Question. What is the Army inventory requirement for this weapon?
    Answer. The requirement for the ER-MLRS Rockets is 150,000 rockets. 
The Army is currently assessing the requirement for the ER-Guided 
Rocket and will use the ER-MLRS Rocket as an interim capability until 
the ER-Guided Rocket is fielded in FY2003.
    Question. Under the current plan, when will this inventory 
requirement be met?
    Answer. The current plan required procurement of the ER-Guided 
Rocket to continue thru FY2012.
    Question. Would any of the Commanders-in-Chief (CINCs) agree that 
it is prudent to eliminate United States production for the ER-Rocket 
in FY98?
    Answer. The FY96 and FY97 procurement of 2,286 ER-MLRS Rockets 
provides the CINCs an interim capability through FY98. Limited follow-
on production planned for FY99 through FY01 will further increase 
quantities of the ER-MLRS Rocket available to meet contingency 
requirements. The CINCs require an MLRS rocket that provides them 
operational and logistical flexibility. The ER-Guided Rocket is the 
objective MLRS rocket that will provide the operational and logistical 
flexibility required by the CINCs. The ER-Guided Rocket is scheduled to 
begin production in FY2002 with fielding in FY2003.
    Question. How can we work with you to understand the priorities 
that the Army is committed to sustaining in future budgets?
    Answer. Maintaining an open dialogue with the Army leadership, 
assisting in stabilizing funding for individual missile programs, and 
continued support for the Army's Force XXI modernization initiatives 
will serve to provide a better understanding of the Army's priorities 
in sustaining future budgets.

                           Starstreak Missile

    Question. Given the availability of funding, is the Army committed 
to conducting Phase III side by side evaluation of the Starstreak and 
Stinger missiles? If not, why not?
    Answer. The FY97 Joint Appropriations Conference was specific in 
their language regarding Starstreak. The language stated, ``an increase 
of $15,000,000 only for continuation of the air-to-air Starstreak 
evaluation. The conferees agree that side-by-side testing with other 
missile candidates should not occur until after completion of Phase II 
testing of Starstreak''. Phase II missile firings are scheduled for 
completion in October 1998, with the final report expected in November 
1998. It is very important to complete the Phase II testing and data 
analysis prior to development of a launcher, and integration of the 
Starstreak missile system with the fire control radar on the AH-64 D 
Apache Longbow. Until Phase II is completed, the Starstreak missile's 
ability to accurately track and engage airborne targets, and its 
associated probability of hit for which target acquisition and tracking 
are major factors, will be unknown, and will significantly increase 
risk to the launcher and system integration designs for the Apache 
Longbow. Accordingly, the Army initiated an analytical effort to 
conduct a parallel cost and performance assessment of Stinger Block I/
II and Starstreak missiles fired from Longbow Apache and Comanche 
aircraft in simulated one-on-one and few-on-few combat scenarios, which 
also coincides with the Starstreak Phase II contract completion date. 
The Starstreak Phase II test results will be used to validate the model 
and achieve a high degree of confidence in the analytical performance 
comparison between missiles. The model provides the Army and the UK a 
means to evaluate the two air-to-air missiles without having to fund a 
costly Phase III side-by-side comparison test. Use of modeling and 
simulation, therefore, is the affordable approach to provide the 
comparisons between missiles without having to fund a Phase III side-
by-side test evaluation program which is estimated to cost $36.6 
million.
    Question. Is further work required to launch a Stinger from Apache? 
If so, please describe the additional work and the associated costs.
    Answer. Modification of the existing Stinger Air-to-Air launcher to 
ensure MIL-STD-1760 compatibility, appropriate battery cooling to the 
hellfire launcher to accommodate Stinger, and associated launcher 
qualification work would need to be conducted as part of a development 
program. Total development costs are estimated to be $18.6 million. 
After development cost investments for launcher development/
qualification, the cost to retrofit the Longbow Apache fleet would 
entail unit production costs of $100,000 per unit aircraft (2 
launchers), and minor modifications to the aircraft's fire control 
radar.

                 Army Tactical Missile System (ATACMS)

    Question. The Committee understands that there may be possible 
foreign sales for the Block IA extended range variant of ATACMS. What 
is the status of these Foreign Military Sales (FMS) cases?
    Answer. The extended range ATACMS Block IA is not currently being 
considered for foreign sales. However, the export version of ATACMS 
Block I is being offered for FMS. Turkey and Greece have agreed to buy 
72 and 41 Block I missiles, respectively. In the near term, the only 
possible additional FMS case is with South Korea.
    Question. Have the benefits of the additional quantities been 
factored in the pricing in the fiscal year 1998 President's Budget? If 
not, what savings are anticipated in FY98?
    Answer. Benefits to the Army from the Turkey case are reflected in 
the FY97 ATACMS Block IA budget. The contract for the Greece buy has 
not been definitized, therefore further Army FY97 benefits are not yet 
quantified. The Army bases savings on the increase in the production 
rate from FMS. The production rate benefits are leveled across all the 
missiles being procured concurrently ensuring the Army shares in the 
savings. The exact amount of the savings realized is dependent upon the 
contract that is negotiated, the number of additional missiles per year 
procured, and the actual contractor costs incurred in the early years 
of production. The Army is unable, at this time, to determine any 
potential FY98 benefits from the possible South Korean case.

                              Abrams Tanks

    Question. The 1998 budget requests $342 million to continue the 
multiyear procurement of M1A2 tanks. Last year, the Army procured 120 
M1A2 tanks for a unit cost of $1.8 million. For fiscal year 1998, the 
Army is planning on procuring 120 tanks at $2.9 million a copy. A 
Second Generation Forward Looking Infrared Radar (II GEN FLIR) and 
electronic upgrades, which were not included in previous M1A2's, will 
be included in the 1998 production vehicles. What is the per unit cost 
to procure and integrate the II GEN FLIR on the M1A2?
    Answer. First some clarification. The Army requests $622.2 million 
in procurement funding to continue and support the Abrams multiyear--
$328.6 million in regular procurement for the 1998 quantity, $266.2 
million in advance procurement for the 1999 quantity, $13.9 million in 
initial spares and $13.4 million in system training devices. The unit 
costs shown on the P-40 form only reflect ``Regular Procurement'', the 
correct unit costs can be derived from the Program Summary on the P-40 
form and are shown on the P-5 form. The correct unit costs for FY97 and 
FY98 are $4.18 million and $4.9 million respectively. In addition, II 
GEN FLIR upgrades the ``thermal sensors'' and is not a ``radar.'' The 
budget documentation shows the System Enhancement Program (SEP), 
including II GEN FLIR, cuts into the final 10 tanks of the 1998 
quantity. As a result, the 1998 buy bears the non-recurring start-up 
costs in addition to the recurring costs. We estimate $2.66 million per 
tank is required to start-up and procure 10 sets worth of II GEN FLIRs. 
As another point of comparison, for the first 500 tanks, our estimated 
costs for II GEN FLIR are:

                        UNIT COST--1ST 500 UNITS
                         [Dollars in thousands]
------------------------------------------------------------------------
                                                        FY96
                                                       Const $    Esc $
------------------------------------------------------------------------
II GEN FLIR.........................................      $753      $856
I GEN FLIR..........................................       359       408
                                                     -------------------
Delta...............................................       394       448
------------------------------------------------------------------------
Note: Constant--Const, Esc--Escalated.

    Project Manager Abrams is assessing a potential delay in the M1A2 
SEP development effort which may slip SEP production cut-in by two 
months/10 tanks.
    Question. What electronic upgrades, which were not included on 
earlier M1A2's, will be integrated on the tanks produced beginning in 
1998?
    Answer. The following lists the improvements to be introduced in 
1998:
    a. 2nd Generation Forward Looking Infrared Sensors
    b. Core Electronics (Digitization) Upgrades
          (1) New Hull/Turret Main Processors
          (2) Mass Memory Unit
          (3) Task Force XXI Command and Control Software
          (4) Open Architecture
          (5) Upgraded Displays and Soldier Machine Interface
    c. Enhanced Position Location Reporting System (EPLRS) interface
    d. Embedded Global Positioning System
    e. Voice Synthesis
    f. Under Armor Auxiliary Power Unit (APU)
    g. Thermal Management System
    Question. What is the per unit cost to procure and integrate the 
new electronics on the M1A2?
    Answer. Our estimate for the average unit cost for the first 500 
units as compared to the original electronics is shown below:

                  ELECTRONICS UNIT COSTS--1ST 500 UNITS
                         [Dollars in thousands]
------------------------------------------------------------------------
                                                        FY96
                                                       Const $    Esc $
------------------------------------------------------------------------
Under Armor APU.....................................      $104      $118
Thermal Management System...........................        80        90
Other Electronics...................................       278       316
                                                     -------------------
    Total Average Cost..............................       462       524
                                                     ===================
1st GEN Electronics & External APU..................      $389      $443
                                                     -------------------
Delta...............................................       $73       $81
------------------------------------------------------------------------

    Question. Will you retrofit the M1A2 tanks produced in prior years 
with the II GEN FLIR and electronic upgrades?''
    Answer. Yes, our current plan is to retrofit all M1A2s to the M1A2 
SEP configuration.
    Question. What is the cost of the retrofit program?
    Answer. The estimated total cost to retrofit 617 M1A2s to the M1A2 
SEP configuration is $828 million ($1.34 million each) over the period 
from FY00 through FY06.
    Question. What is the anticipated schedule for the retrofit 
program?
    Answer. The FY98 President's Budget initiates funding in FY00 for 
an initial quantity of two. Based on the funding in the modification 
line, the program will complete in FY07 at a total quantity of 617 
M1A2s.
    Question. Are funds included in the FY98 budget for the retrofit 
program? if not, what is the shortfall?
    Answer. Funds are included in the 1998 budget documentation to 
initiate the retrofit program. Over the period from FY00 to FY03, we 
plan to procure 187 M1A2 to M1A2 SEP retrofits.
    Question. In Fiscal Year 1997, the Congress provided $8 million to 
begin the development of the next generation tank. It is our 
understanding the funds have not been released by the Office of the 
Secretary of Defense Comptroller. Have you requested the funds?
    Answer. No. the Army has not requested the funds. It has taken some 
time to define an Army position regarding the use of the funds. In 
addition, the Congressional language supporting the plus-up requires 
competitive contracting. Since the Army did not anticipate this 
funding, we're behind where we'd like to be in preparing contractual 
documentation. Current policy is to not request release of funding 
until near contract award.
    Question. If the funds are released, would you use the $8 million 
to begin the development of the next generation tank?
    Answer. If the funding was released, we would apply it to tank 
modernization in accordance with Congressional language as follows:
    a. $3.5 million for two studies to (1) define a post M1A2 SEP ($1 
million) program to provide target acquisition and accuracy 
improvements increasing the tank's lethal range and (2) conduct Future 
Combat System (FCS) concept studies ($2.5 million) to assess potential 
requirements and technologies for a future tank.
    b. $2.8 million for Abrams (M1A2 and M1A1) operating and support 
cost reduction efforts. Specifically, $1.4 million to undertake a 
project to increase track and roadwheel life and $1.4 million for a 
Nuclear, Biological, Chemical Filtration system redesign. Both projects 
can make a significant impact in reducing the ownership costs of the 
Abrams fleet.
    c. Finally, $1.5 million to assess the feasibility of M1A1 Command 
and Control digitization using modified M1A2 SEP components.
    Question. If so, are funds included in the budget request to 
continue the effort?
    Answer. The Army has included funding for an FCS in the FY98 
budget. Program Element 63645, Project DQ19 (shown below) is 
specifically designated for initiating a focused FCS development 
effort. The FY97 piece is the result of the FY97 Congressional plus-up:

----------------------------------------------------------------------------------------------------------------
                                                           FY97    FY98    FY99    FY00    FY01    FY02    FY03
----------------------------------------------------------------------------------------------------------------
PE 63645DQ19............................................     7.8       0       0     2.0    24.8    28.9    38.5
----------------------------------------------------------------------------------------------------------------

    In addition, there is a significant amount of work ongoing in the 
Tech Base which supports the FCS. In essence, we plan to use a portion 
of the 1997 plus-up to focus the Tech Base and subsequently initiate a 
new start in the 2000 timeframe.
    Question. Is the Army planning to procure additional M1A2 tanks 
upon completion of the current multiyear contract? If so, how many?
    Answer. The Army may continue M1A2 procurement after the multiyear 
procurement; however, affordability will influence the annual upgrade 
production rates and may influence the configuration of the tank. The 
challenge is to strike the right balance among operational 
requirements, affordability and industrial base considerations. 
Currently, about 2,127 M1A2s are required to equip the Core Force 
(Force Packages 1 and 2) and meet the requirements for the training 
base and test vehicles. The current approved M1A2 program is for 1,079 
vehicles--19 pilots/prototypes, 62 new production and 998 upgrades. 
This quantity provides M1A2s for Force Package 1, training base and 
test vehicle requirements. At this point in time, the Army is not 
certain ``How many M1A2s'' it will procure. Right now, we're committed 
to buying M1A2 upgrades through the end of the multiyear (786 upgrades 
or 867 M1A2s).

                          Ammunition Programs

    Question. Last year, the Congress provided $1.1 billion for the 
procurement of ammunition. This represented an increase of almost $300 
million to the fiscal year 1997 budget request. The additional funds 
were provided to adequately modernize the ammunition inventory and 
preserve the industrial base. The Army's fiscal year 1998 budget 
request for ammunition is $890 million. Does the fiscal year 1998 
budget request adequately fund the Army's requirement for ammunition 
and sustain the capabilities of the industrial base?
    Answer. Within the context of the overall Army budget, we have 
built a balanced program that is suitable. We place funding priority on 
readiness which means training ammunition. We then buy modern munitions 
based on affordability. The fiscal year 1998 request adequately funds 
our demilitarization program and marginally funds requirements for our 
organic production facilities.
    Question. The Army's annual consumption of training ammunition is 
approximately $900 million. The fiscal year 1998 budget request for 
both training and war reserve ammunition is $694 million. As a result, 
the Army must use war reserve ammunition to support training 
requirements. Does this concern you? Why?
    Answer. The Army's use of war reserve to support training draws 
down the existing war reserve for use in training. Some of these items 
became excess as a result of post Cold War requirements reductions over 
the last several years. The use of these munitions in training avoided 
storage and eventual demilitarization costs. However, some of these 
items, which are not excess, have been drawn below the total needed for 
war reserve purposes and replacing them will be prioritized within our 
fiscal constraints.
    Question. The Army is responsible for the storage and maintenance 
of all conventional ammunition. In the past, the Army has budgeted $300 
million for this activity. How much is included in the fiscal year 1998 
budget request for this activity?
    Answer. The Army's fiscal year 1998 budget request for ammunition 
management totals $369.4 million, and includes funding for both the 
toxic chemical and conventional ammunition stockpile management 
programs. The toxic chemical munitions program ($79.1 million) provides 
for the proper storage, maintenance, and surveillance of chemical items 
until demilitarization actions are complete. The conventional 
ammunition stockpile management program ($290.3 million) provides for 
supply management, inspection, maintenance, and surveillance for the 
world-wide wholesale stockpile of conventional ammunition. This is 
considered an adequate level of funding to support the Army, as well 
our conventional ammunition storage mission in support of other 
Services.
    Question. Several contractors who operate Army ammunition plants 
have made Post Retirement Benefit (PRB) claims against the Army. The 
Army believes the cost of settling one of the claims, by Uniroyal, 
Inc., is approximately $35 million. What is a PRB claim?
    Answer. A PRB claim is a request for funds to pay post retirement 
benefits for health and life insurance or other non-pension welfare 
benefits to qualified retirees.
    Question. Why is the government liable?
    Answer. The issue of government liability has not been determined. 
The Army position is that there is no legal liability under the 
contracts as a direct cost. The Uniroyal request for extraordinary 
relief did not include a determination of government liability. The 
Army Contract Adjustment Board (ACAB) decided to grant the Uniroyal 
request under Public Law 85-804, in recognition of an equitable 
obligation based on how the Army historically told the contractors to 
account for costs. The ACAB decision gives rise to a legal obligation 
to pay in accordance with the decision.
    Question. It is our understanding that the Army would like to use 
expired years dollars to pay the claim. How would this be accomplished?
    Answer. The use of expired year dollars may require Congressional 
approval because the Office of the Secretary of Defense, Comptroller 
has determined the Army must use current funds.
    Question. What steps will you take to ensure that no future claims 
are filed against the government?
    Answer. We know of no way to ensure there are no future claims 
against the government other than to encourage all contractors to 
accrue the funds necessary to finance Post Retirement Benefit costs 
against current customers.
    Question. The fiscal year 1998 budget proposed that the Army 
procure no kinetic energy tank ammunition after 1998. Will the Army's 
requirement for kinetic energy tank ammunition be satisfied with the 
fiscal year 1998 procurement?
    Answer. No.
    Question. Last year, Congress requested a report on the industrial 
base for kinetic energy tank ammunition. Briefly outline your findings 
and solutions.
    Answer. The report determined that the depleted uranium projectile 
assembly was the critical issue (sabot and penetrator). The report 
indicates a viable option to fill the void with a combination of 25 
millimeter (mm) and 120mm kinetic energy rounds until the next 
generation of 120mm kinetic energy round completes development, if the 
Army decides to pursue the next generation.
    Question. What will be the restart costs for depleted uranium 
kinetic energy tank rounds if the production line closes?
    Answer. If we implement the findings of the report, there are no 
restart costs. If we choose to completely halt kinetic energy munitions 
production, it may not be possible to reconstruct the industrial base 
as currently configured. For example, the issue with the Depleted 
Uranium penetrator is not restart costs but Nuclear Regulatory 
Commission and state licensing over which the Army has no control. 
Restart costs are cartridge and acquisition strategy dependent and will 
require further study.
    Question. It is our understanding that the Army has no plans to 
procure Depleted Uranium (DU) in fiscal years 1998 through fiscal year 
2003. There are only two DU suppliers in the United States. What impact 
does this decision have on the industrial base?
    Answer. The fiscal year 1998 budget includes funding for both the 
120 millimeter (mm) (M829A2) and 25mm (M919) kinetic energy rounds, 
both of which have DU penetrators. If there is no procurement of 
kinetic energy munitions in fiscal years 1999 through 2002, the 
commercial facilities which produce DU would have no Department of 
Defense business. The decision to close the commercial facilities would 
be a commercial decision.
    Question. In the last five years, how much has the Army spent on 
DU?
    Answer. The Army buys cartridge which contains DU. the cartridges 
are procured from systems contractors; the DU is provided to the 
systems contractors by subcontract. Congress has funded the 120mm 
(M829A2) in each of the last five years, with an average DU component 
cost of approximately $10 million per year. The 25mm (M919) was funded 
in fiscal years 1994, 1995, and 1997, with an average DU component cost 
of $4.5 million per year.
    Question. Do either of the DU suppliers have non-defense customers? 
If so, do they have enough non-defense sales to keep them viable until 
2003?
    Answer. Both suppliers have multiple business activities, most of 
which are defense related or connected. Neither of the suppliers 
appears to have sufficient non-defense sales at this time to remain 
viable through 2003.
    Question. How will you ensure that DU is available after 2003?
    Answer. As indicated in our report to Congress, the Army is 
considering a plan to procure a combination of DU munitions until the 
next generation of 120mm kinetic energy round completes development. If 
this item is type classified, we would expect to procure modest 
quantities.
    Question. The Army demilitarizes conventional ammunition at an 
annual cost of approximately $100 million. The Army believes it can 
lower the cost of the demilitarization program by selling munitions to 
industry, who will destroy the munitions and then sell the by-products. 
What are the benefits of commercial demilitarization?
    Answer. There are two major benefits of selling munitions to 
industry. The first is a cost avoidance for demilitarization which can 
range from $800 to $1,200 per short ton, depending on the complexity of 
the to be demilitarized. The second benefit is the additional 
demilitarization which could be bought by the Army with the proceeds 
from these sales.
    Question. What are the anticipated savings?
    Answer. The actual savings would depend on the number of short tons 
actually sold and the price the Army could get for these obsolete or 
excess munitions.
    Question. The demilitarization program's goal is to reduce the 
ammunition stockpile to less than 100,000 tons by 2004. Based on 
funding available, will you reach your goal using the current methods 
of demilitarization?
    Answer. The three major factors which will impact the Army's 
ability to reach this goal are the accuracy of the forecasted 
generations into the demilitarization account; annual funding levels; 
and the Army's ability to minimize or reduce future cost increases. If 
the Army is able to successfully manage these three factors but is not 
able to increase sales of obsolete or excess munitions, then we 
estimate we could have approximately 40,000 short tons in addition to 
the desired inventory level of 100,000 short tons by the end of fiscal 
year 2004.
    Question. Would you reach your goal using the proposed method?
    Answer. The Army believes that the goal can be reached or exceeded 
if we have greater flexibility to sell obsolete or excess munitions 
from the demilitarization account as requested in our legislative 
proposal. This does not mean that we would not have to continue to 
closely monitor and manage other aspects of this program, i.e., funding 
levels, generations, and costs.
    Question. Are there any obstacles that will not allow you to 
implement your plan? If so, what are they and how can they be overcome?
    Answer. The Conventional Ammunition Demilitarization Program has 
received good support from both Congress and the Office of the 
Secretary of Defense. The Army is intensively managing this program to 
assure we have a balanced program (private industry/government and 
destructive/non-destructive technologies). One of our initiatives is 
the legislation allowing greater flexibility for sales from the 
demilitarization account. The Army is committed to reducing the 
demilitarization backlog to less than 100,000 short tons by the end of 
fiscal year 2004. The legislative initiatives is one of our efforts to 
assure that this goal is met.
    Question. Last year, Congress appropriated $45 million for the 
Armament Retooling and Manufacturing Support (ARMS) program. How do you 
plan on spending the $45 million?
    Answer. Approximately $5 million would be used for loan guarantees 
and to support program costs. The additional $40 million will support 
expansion of ARMS to four additional facilities that are not currently 
participating and support additional ARMS proposals at the other eleven 
eligible facilities.
    Question. You are requesting $5 million for fiscal year 1998 to 
continue the ARMS program, but no funds are budgeted for the outyears. 
Why?
    Answer. This is the maximum amount available for the Army to 
allocate to this program within current fiscal constraints. The Army 
will continue to assess future funding of this program as it refines 
its future programs and needs.
    Question. Will you terminate the ARMS program after 1998?
    Answer. The ARMS program will continue after 1998; the goal is to 
make it a self-sustaining operation.
    Question. The fiscal year 1998 budget provides funding for only 
five of the sixteen munitions required to modernize the Army's 
ammunition inventory. When does the Army plan on buying the 11 
munitions required to modernize its inventory?
    Answer. The Army intends to procure all fifteen of the munitions to 
modernize the inventory as soon as possible within its current fiscal 
constraints. Of the ten munitions which are not being procured in 
fiscal year 1998, three have filled the requirement, three are at or 
above fifty percent of the requirement, and one is still in 
development. Of the remaining three, one is programmed for procurement 
in the future.
    Question. What is the impact of the Army's decision not to procure 
all of the munitions required to modernize its inventory?
    Answer. The Army must continue to rely on the substitute munitions 
previously procured and maintained in the stockpile. The Army has 
chosen to accept this moderate risk in order to fully support training 
and thereby support near term readiness.

                              Digitization

    Question. The Army is creating a ``digitized battlefield'' that it 
believes will give it the ability to maintain a modern, but smaller 
force capable of decisive victory. Digitization is the application of 
information technologies--sensors, communications, computers, 
displays--to meet the needs of the battlefield commanders at all 
levels, providing a common picture in near-real time, shared data among 
battlefield systems and the synchronization of combat power.
    The Army is requesting only $57 million for ``horizontal 
battlefield digitization''. The fiscal year 1997 budget request 
forecast $110 million for fiscal year 1998 horizontal battlefield 
digitization. What is horizontal battlefield digitization?
    Answer. Horizontal battlefield digitization is the name of a 
specific program element and project in the Army's budget which funds 
the development of the Applique/Force XXI Battle Command Brigade and 
Below system and helps to support the overall digitization effort. That 
project is managed at the department level by the Army Digitization 
Office.
    Question. Why do you only need half of the funds you were planning 
on spending in FY98?
    Answer. The Army had planned to procure prototype digitization 
hardware in FY98 to outfit a heavy division for the division Advanced 
Warfighting Experiment (AWE). Due to fiscal realities, the Army decided 
to downsize the division AWE to a division command post exercise, 
reducing the requirement. However, I do need to clarify this. Recently, 
we have identified through the AWE process, other digitization related 
efforts which will require additional funding, such as some applique 
prototype improvements and testing.
    Question. What activities were you planning in fiscal year 1997 for 
fiscal year 1998 that are not funded?
    Answer. Hardware upgrades for a Limited User Test, and some 
improvements to software functionality.
    Question. What is the impact of the reduced horizontal battlefield 
digitization funding?
    Answer. The Division Advanced Warfighting Equipment (AWE) has been 
revised to make maximum use of simulation and will concentrate on those 
initiates which show promise in the Task Force (TF) XXI AWE. This 
event, as revised, will be executable. However, as the Army is still in 
a learning process, in reference to digitization, we may have to 
accommodate unforeseen requirements resulting from events such as the 
ongoing TF XXI AWE at the National Training Center.
    Question. According to the Army, schedule and cost risk of the 
digitization program is medium, however, the Army rates technical risk 
as high. Please define what you mean by ``medium'' and ``high'' risk.
    Answer. These ratings you refer to were a snapshot in time as of 
the first of December. High technical risk results when expected levels 
of performance are not realized and the fixes are not identified or 
sufficiently developed to overcome the problem. High cost risk results 
when sufficient funding is not available within the current budget to 
pay for unexpected cost increases. Medium technical risk results when 
expected levels of performance are not realized and potential fixes are 
identified and developed but not yet implemented. Medium cost risk 
results when additional costs have been identified and may cause 
reprioritization within existing program funding. The schedule risk is 
greatly influenced by the technical risk and the availability of 
funding.
    Question. Last year, we were told by General Reimer that cost risk 
was ``low'' and technical risk was ``medium''. This year you identify 
cost as ``medium'' and technical as ``high'' risk. What changed?
    Answer. Last year the risk assessment was based on our best 
estimate since we had not yet equipped the Experimental Force. In 1996 
we delivered the equipment into the hands of the soldiers in the field, 
and we have been able to assess complexity and the level of technical 
integration required. Based upon lessons learned during the platoon, 
company, and task force train-up, additional architecture, security, 
and integration work is required for the objective system, thereby 
raising the technical risk and cost risk.
    Question. Congress has provided over $350 million for the 
digitization effort. Given the resources committed to this effort, 
shouldn't the risk diminish each year? Please explain why this is not 
happening.
    Answer. The effort to ``digitize a division by the year 2000'' was 
initially judged to be high risk. This was a qualitative judgment based 
on the limited knowledge of the true complexity of digitizing the 
force. The experimental process has provided the opportunity for the 
Army to ``peel back the onion'' during successive experiments and 
simulations. Lessons learned and insights gained have formed the basis 
for updating operational requirements impacting on the technical 
performance issues and have served to provide a more complete blueprint 
of the digitization efforts required. The biggest technical and 
schedule challenge has been the integration of various diverse systems.
    Question. The Army is planning on fielding an ``interim'' digitized 
division in fiscal year 2001. The Army would like to field an 
``objective'' digitized division in FY06. What is an ``interim'' 
digitized division?
    Answer. An interim digitized division is an organization:
    a. Equipped with a mix of both legacy and immature (early design, 
but acquisition approved) systems.
    b. Able to command and control using digital methods; and able to 
maintain common relevant picture, situation awareness and Combat 
Service Support management throughout the unit.
    c. Organized in accordance with the Table of Organization and 
Equipment, but modified to compensate for lack of certain ``enabling 
technologies.''
    d. Trained primarily at the unit through both New Equipment 
Training and unit training.
    Question. What is the cost of fielding the interim digitized 
division? Is it adequately funded in the budget? What is the shortfall?
    Answer. The costs associated with fielding the first interim 
digitized division includes not only materiel, but all the other 
functional domains such as Doctrine, Training, Leadership, 
Organizations and Soldiers. The first interim digitized division will 
be fielded, for the most part, with systems that are in the pipeline 
and are scheduled to be fielded somewhere in the Army by FY00/FY01. 
Some additional funding will be required to do the architecture work, 
to develop security measures for the network, to integrate the system 
of systems, to develop training support packages, and to develop and 
integrate the system of systems Tactical Operations Centers. Ongoing 
analysis and experimentation indicate that additional FY98 and outyear 
funds may be required to perform the above stated functions. It looks 
like approximately $100 million in FY98.
    Question. What is an ``objective'' digitized division?
    Answer. An ``objective'' digitized division is an organization:
    a. Equipped with mature (objective) systems.
    b. Able to fully command and control using digital methods.
    c. Able to maintain common relevant picture, situation awareness 
and Combat Service Support status throughout the unit.
    d. Organized in accordance with the Table of Organization (TOC) and 
Equipment and with all currently planned ``enabling technologies.''
    e. Trained primarily at Training and Doctrine Command institutions 
as part of the institutionalized soldier development and training 
process.
    Question. What is the cost of fielding the objective digitized 
division? Is it adequately funded in your budget? What is the 
shortfall?
    Answer. The cost associated with the objective division is much the 
same as for the interim division. Since the objective division is not 
required and until 06, much of the equipment will be available through 
existing budgeted quantities. There may be an additional requirement 
for communications capacity, as well as the architecture, security, 
training, integration, and TOC costs indicated for the interim 
division. The architecture development may show a need for additional 
command and control workstations.
    Most of the funding to equip this division is available. However, 
the experimentation process is expected to demonstrate a need for 
additional funding for the above functions.
    We will not know the answer to this question until the results of 
the Task Force XXI Advanced Warfighting Experiment (AWE) are finalized. 
There may be a need for more items of equipment as we learn the value 
of digitization to the entire force. As we analyze the AWE we will 
identify those areas that need increased funding and welcome your help 
in addressing those.
    Question. What will be the benefit of the digitized division in:
    a. a lesser regional conflict?
    b. peacekeeping operations?
    c. an urban environment?
    Answer. The benefit of a digitized division compared to a non-
digitized division is the achievement of information dominance and the 
capability to place greater force at the decisive point in order to 
destroy the Threat. It doesn't matter what type of mission is assigned; 
the application of information in formulating decisions is what will 
allow the division to accomplish it's mission rapidly. Combined with 
his real time awareness of the disposition of his own forces, the 
commander can move essential and tailored force to influence and 
control events many times faster than can be done today. Thus, whether 
the event is a full scale enemy assault or a humanitarian assistance 
mission, the commander can stabilize the situation before it is out of 
control and he can accomplish this with minimum risk to his own force. 
Furthermore, the capability to deploy forces with higher efficiency 
reduces the total force commitment required to effect United States 
policy regardless of where it is in the spectrum of operations. The 
other advantage lies not necessarily in application of the capability 
that a digitized division brings to the battlefield, but rather that a 
potential hostile force knows that you know what he is doing and can 
bring more firepower to bear, quicker, than he can. A digitized 
division allows the United States to operate from a position of 
advantage decreasing the risk associated with these type operations.
    Question. What is the urgency of fielding the Army's interim 
digitized division by 2001? What is the perceived threat?
    Answer. An interim digitized division by 2001 should not be viewed 
as an urgency of fielding, but as capitalizing on windows of 
opportunity by optimizing programs that have been in development for 
years. For example, synchronizing their fieldings of the Army Tactical 
Command and Control System battlefield automation systems and creating 
a tactical internet by integrating existing communications systems 
through network engineering and management provides a leap ahead in 
capability to command and control. The threat today is not necessarily 
a specific country but the availability and proliferation of advanced 
offensive weapons capabilities available on the open market to 
virtually anyone with the where-with-all to purchase it. The reduced 
force structure of the Army requires the ability to rapidly respond to 
a variety of threats across the spectrum of operations.
    Question. Based on your own risk assessment of the digitization 
effort, do you believe that fielding the first digitized division by 
2001 is ambitious? Please explain.
    Answer. Yes, it is ambitious for a purpose. The Army has put an 
ambitious ``mark on the wall'' designed to continue with the rapid pace 
of modernization and development. Maintaining that ``mark'' has helped 
to maintain momentum of development.
    Question. Given the Army's tight budget, what is the benefit of 
fielding an interim digitized division? Why not save the dollars and 
accelerate the fielding of the objective division?
    Answer. The Army plans to embed, vice applique, the digitization 
capability into many of the combat vehicle systems scheduled for the 
objective division. The Research Development Test and Evaluation effort 
required to embed digitization into the combat vehicles is underway. 
Fielding of systems with embedded capability, e.g., M1A2 System 
Enhancement Package and M2A3 are scheduled for the fiscal year 2000-
2005 timeframe. In order to get the digitized capability in the field 
earlier than those dates it will have to be done with applique. 
Fielding an interim digitized division allows the Army to make use of 
technology enablers sooner, continue the learning curve for concepts 
and doctrine for the force, and continue to learn and develop tactics, 
techniques, and procedures as we move to the objective division.
    Question. How will you offset the cost of the digitized division in 
your budget? What is of lesser priority, pay, operations and 
maintenance, research and development? Or procurement dollars? Please 
explain.
    Answer. Both the interim and objective divisions will use systems 
which are either already fielded or programmed for delivery in time to 
meet Army digitization objectives. However, given the experimental 
underpinning of the digitization effort, additional operation and 
maintenance, research and development, and procurement funds may be 
required to completely link systems together and integrate them into 
the divisions. Efficiencies, such as those gained through the 
synchronization of fielding schedules, will help to mitigate the impact 
of these incremental costs. Ultimately, though, the Army may have to 
make hard choices between systems and programs to ensure that we are 
able to fully realize the enhanced capability of digitization. You can 
rest assured, however, that the Army remains committed to maintaining 
unit readiness to support the National Military Strategy.
    Question. Digitization depends on the ``Tactical Internet''. Last 
year, the Army said the Tactical Internet was the ``long pole'' in the 
digitization effort. This year, it continues to be the ``long pole''. 
It is our understanding that the Tactical Internet provides limited 
Command and Control connectivity, that voice-data contention is a 
problem, and the robustness and capacity of the network has not been 
fully determined. The Tactical Internet is an Enhanced Position 
Locating System (EPLRS) based system. Is this the tactical internet you 
will field with the ``interim'' digitized force? To the objective 
digitized force? Please explain.
    Answer. The architecture of the Tactical Internet is being matured 
to substantially improve delivery of command and control messages. 
Functionality of the EPLRS will be enhanced to provide more flexible 
and adaptable services. Selected parameters of the Single Channel 
Ground and Airborne Radio System System Improvement Program and the 
associated internet controller will be adjusted to provide significant 
improvements in combined voice-data nets. The TI provided to the 
interim digitized division will be a significant step forward from that 
used in Task Force XXI. The TI for the objective division will continue 
to evolve from this base, while introducing improved capabilities and 
functionalities as they can be matured and tested.
    Question. What is the objective tactical internet?
    Answer. The next increment of the tactical internet will increase 
capacity through the incorporation of components of the Warfighter 
Information Network such as the Future Digital Radio Block II, High 
Capacity Line-of-Sight Radio and Asynchronous Transfer Mode hubs.
    Question. When will you field the objective tactical internet?
    Answer. There really is not an ``objective'' tactical internet. We 
expect as technology moves forward the Army will adapt to those 
improvements and upgrade as required. We have adopted an open systems 
architecture to allow us to leverage from the commercial sector.
    Question. The digitized battlefield will have high data rate 
requirements. The current infrastructure can not support all of the 
communication requirements of the digitized battlefield. Which Army and 
other Department of Defense systems will satisfy the high data 
requirements for the digitized force?
    Answer. The requirements for data capacity have not yet been fully 
defined. However, currently under development are some systems designed 
to give increased data rates. Those include systems such as; Near-Term 
Data Radio (NTDR) also called Future Digital Radio Block I.; Future 
Digital Radio Block II; High Capacity Line-of-Sight Radio; Global 
Broadcast Service--Battlefield Awareness Data Dissemination System. On-
going enhancements to Enhanced Position Location Reporting System 
(EPLRS) and Single Channel Ground and Airborne Radio System (SINCGARS) 
will also provide modes data capacity improvements that will be 
available near-term.
    Question. Will those systems be available when you field your 
``interim'' digitized division? If not, what is the impact?
    Answer. The NTDR is scheduled to be available for the interim 
division. Enhancements to SINCGARS and EPLRS will also be available. We 
are looking for an interim capability and these systems should be able 
to provide sufficient data handling capacity.
    Question. The Force XXI Battle Command Brigade and Below (FBCB2) is 
the software for the digitized force. Currently in development, all 
digitized platforms, from tanks to Apaches, will receive FBCB2. What is 
the status of the FSCB2 development program?
    Answer. FBCB2 is more than just software. It also includes 
hardware, which is commonly referred to as the applique, and platform 
interfaces. Version 1 of the FBCB2 software is currently undergoing 
experimental testing with the Experimental Force at the National 
Training Center. It contains sufficient functionality for 
experimentation. Version 2, with increased functionality and robustness 
and fixes resulting from the lessons learned thus far, is currently 
under development. It should be available in mid fiscal year 1998.
    Question. Initial Operational Test and Evaluation for FBCB2 is 
scheduled for late 1999; fielding is scheduled for 2000. Do you believe 
this is an ambitious schedule? Why?
    Answer. Yes, we have always said that the schedule is aggressive. 
We are following a streamlined approach to acquisition. Although the 
schedule is aggressive, we have included successive iterative testing 
of the hardware and software and have incorporated the users during the 
development to ensure the products are useful and meets the users 
needs.
    Question. If FBCB2 encounters problems in development, will the 
date for the ``interim'' digitized division slip? Please explain.
    Answer. Not necessarily. Although we have the aggressive schedule, 
we have built into that schedule time for the iterative testing of the 
hardware and software. We also are building the software with a 
``core'' functionality with which the division should be able to 
execute its mission even if all, the desired functionality is not 
there. The problems would have to be severe and it of course would 
depend on the nature and criticality of the problem.
    Question. The digitized force will be extremely vulnerable to 
information warfare. According to the Army, information security poses 
one of the greatest challenges for the digitized battlefield. The Army 
is currently assessing the vulnerabilities of the digitized battlefield 
systems to attack. How are you testing the vulnerability of individual 
digitized systems to attack?
    Answer. We are conducting vulnerability assessments both in the 
field (Red Teaming) and in the laboratory so we can develop fixes and/
or mitigate the effects in support of the warfighter. The six Red Team 
tasks we are conducting during Task Force XXI Advanced Warfighting 
Experiment (AWE) is a good example of what we are doing to test the 
vulnerability of systems.
    Question. How will you reduce the vulnerability of the 
``digitized'' systems from attacks?
    Answer. We're building a warfighter information system that will 
provide the decision maker the information needed in a timely, 
accurate, and secure manner.
    a. A security Integrated Concept Team and Integrated Process Team 
have been stood up to address the network security issues/designs for 
the AWEs and the First Digital Division. Concerned with the total 
spectrum of Information Warfare attacks, but focusing on Electronic 
Warfare and hacker/virus attacks first.
    b. We're designing the network to be as protected as possible with 
the Command and Control (C2) Protect tools/devices that are available 
and a ``defense in depth'' approach.
    c. An external perimeter made up of Transmission Security, 
Communications Security, firewalls, security guards and physical 
isolation will protect our systems and the information on them from 
external attack. Within the tactical environment, the Army has a 
classified backbone network, which utilizes bulk encryption techniques 
thereby giving us a high level of assurance.
    Throughout the infrastructure, all classified information 
processing is protected by the best encryption technology provided by 
the National Security Agency. Security guards (Hardware/Software) and 
physical access controls then isolate the network.
    d. Internal subperimeters limit the access between user domains 
using firewalls and/or router filtering while remaining transparent to 
authorized users.
    e. Workstations include individual access controls, configuration 
audit capability, and C2 Protect procedures and tools to identify any 
security anomalies.
    f. This technologically evolving network will be overlaid with a 
network management system and workstation procedures that provide real-
time security management and intrusion detection.
    Question. Does the budget provide funding to implement information 
security tools for the ``digitized'' systems? If not, why?
    Answer. Yes, funding is available, at the system level, but not 
enough. The Army is currently addressing the requirements for the First 
Digital Division and Force XXI.
    Question. The Maneuver Control System (MCS) is an automated Command 
and Control (C2) system for the Force Level Commander. MCS will 
integrate data from other C2 systems to create a common picture of the 
battlefield. MCS has been in development since the mid-1980's. Riddled 
with developmental problems since its inception, MCS is scheduled for 
its Initial Operation Test and Evaluation in fiscal year 1998. The Army 
is using MCS in the Force XXI Army Warfighting Experiment (AWE). Are 
you satisfied with its performance? Please explain.
    Answer. Yes. The Task Force XXI AWE at the National Training Center 
indicates that the Army is on the right track for digitizing the 
battlefield, and that training and leader development are key 
imperatives in this effort. Based upon the excellent performance of MCS 
during this experiment at the National Training Center, the Army fully 
supports the fielding of common hardware II devices to the MCS training 
base. Institutional training of MCS and other Army Battle Command 
Systems is vital to the training and leader development imperatives of 
the Army's Force XXI initiative. The Army needs to equip the schools 
with MCS now to allow for the timely development of training before the 
system is fielded to operational units. The risk in procuring 
commercial hardware is low, and the payoff of averting the normal two 
year lag between the fielding to operational units and the first 
graduation of school training users is high.
    Question. The Army is using Maneuver Control System--Block III in 
the AWE; however, Block IV is currently under development and will be 
fielded to the ``interim digitized force'' in fiscal year 2001. What is 
the difference between Block III and Block IV software?
    Answer. The major difference between Block III and Block IV 
software is that Block IV uses the advanced Common Operation 
Environment (COE) software and has additional functionalities. Block 
III software contains COE 2.1 from the Defense Information Systems 
Agency (DISA). Block IV software will contain COE 3.1, 4.0, and 5.0 as 
it is developed. Approximately 50 percent new functionality will be 
built in Block IV (upon this improved foundation) over that which 
currently exists in Block III. Additional functionalities to be added 
in Block IV, for example are: Engineering, Military Police, and 
Aviation support software.
    Question. Do you believe the Block IV program schedule is high 
risk? Please explain.
    Answer. No, the schedule is not high risk. However, the schedule 
assumes the risk characteristics of the Defense Information 
Infrastructure (DII) COE upon which it is based. Whenever DII COE 
software is not delivered, Block IV will have to develop this software 
independently if DISA, or not have needed functionality.
    Question. If the problems with MCS are not resolved with the Block 
IV upgrade, will the date for digitizing the ``interim'' division slip? 
Please explain.
    Answer. Developmental problems with the Block III software were 
primarily limited to the Army's experience in 1993 with the Loral 
contract. Since 1993, MCS has been on a progressive and planned 
recovery. This recovery has exceeded expectations in III Corps and Task 
Force XXI. Digitizing the ``interim'' division could occur with the 
Block III software with its limited COE and functionality. However, 
this is not the Army's plan. The Army wants and needs an MCS based on 
COE, Army Technical Architecture, Joint Technical Architecture and the 
additional functionalities Block IV provides.
    Question. The Near-Term Digital Radio (NTDR) will replace the 
SINCGARS and EPLRS radios. A production contract will be awarded in 
1999. The Army is requesting $18.6 million to build and test the NTDR 
in 1998. What is the status of the NTDR development program?
    Answer. A contract for $10.7 million was awarded in January 1997 to 
a team led by ITT to procure and test 110 NTDRs. NTDR is planned to 
meet the Block I requirements of the Future Digital Radio (FDR) ORD as 
the backbone data radio system to augment/replace the EPLRS system for 
Force Package I units. The production contract for 1999 is contingent 
upon successful technical/operational testing planned for early fiscal 
year (FY99). The Army has $201 million in the President's Budget from 
FY99 through FY06 to produce, field, and support the procurement of 
4,579 radios and 23 Network Management Terminals. NTDR is a data only 
radio and will not replace SINCGARS which has voice capabilities. 
Contingent upon funding being made available, a competitive Research 
and Development contract in FY99 will be awarded for the development of 
the FDR Block II/III (programmable multi-band multi-mode radio) which 
is planned to eventually replace all of the legacy radios and 
potentially be a joint service program. The FDR Mission Needs Statement 
is scheduled for a Joint Requirements Oversight Council decision in 
June 1997.
    Currently, the NTDR system is undergoing integration testing to 
serve as the inter-Tactical Operations Center data hauler for the 
Division XXI Advanced Warfighting Experiment planned for November 1997.
    Question. What is the anticipated per unit cost of the NTDR?
    Answer. It is anticipated the average hardware unit cost for the 
4,579 fieldable NTDRs will be around $14 thousand each.
    Question. The Army believes to digitize its force, it can no longer 
field weapons systems one system at a time. Since systems will be 
operationally and technically interdependent they need to be fielded in 
``packages.'' The Army would like to field systems based on 
requirements for a particular division. Who has the responsibility for 
ensuring that the future Army systems will be operationally and 
technically interdependent? Will it be the program managers for each 
system or will you create a new ``oversight'' office?
    Answer. The Army is currently studying the entire process to 
determine who and how to best perform this function. Since this is a 
new way of doing business, we must ensure we have done our homework. We 
suspect that an overall system integrator will be required.

                         Force XXI Initiatives

    Question. Last year, the Army's number one unfunded requirement was 
the ``Force XXI Initiative.'' The Army identified a $100 million 
shortfall; Congress provided $50 million in fiscal year 1997. The Force 
XXI Initiative is ``an ACTD-type approach to streamlined acquisition of 
high pay off technologies.'' This year the Army is requesting $99 
million to continue the Force XXI Initiative.
    The Army believes that the Force XXI Initiative would provide 
``funding flexibility to jump start technology programs early, without 
having to wait up to two years to fund a new initiative'' during the 
budget cycle. Please give us some examples of the technologies the Army 
want to ``jump start.''
    Answer. The largest number of ``technologies'' are in the 
information dominance area and have to do with improving the way 
information is transmitted, formatted, stored, retrieved, used, and 
interpreted on the battlefield. Some of the systems designed to improve 
information use are Army Airborne Command and Control System (A2C2S), 
Aviation Tactical Operations Center (AVTOC), Maneuver Control System 
Courses of Action Tools Integrator for Situational Awareness, Network 
Encryption System (NES), Tactical Internet (TI) and Applique. Other 
technologies involve the updating of combat systems with new 
technologies or providing new systems that leverage information and 
weapons technologies needed to operate in Army XXI. Some of these 
technologies are incorporated in the Palletized Loading System-Enhanced 
(PLS-E) which provides enhancements to reception, staging and movement 
activities in addition to implementation of velocity management, 
intransit visibility and battlefield distribution. Radio Frequency 
Technology/Tagging provides total asset visibility and intransit 
tracking capability to combat service support managers. Mortar Fire 
Control System (MFCS) provides a complete, fully integrated digital on-
board fire control system for mortars and brings them in line with 
capabilities on the battlefield such as the upgraded Advanced Field 
Artillery Tactical Data System (AFATDS). Gun Laying Positioning System 
(GLPS) allows faster and more accurate fires from light artillery 
units. The Lightweight Laser Designator Rangefinder (LLDR) provides 
both artillery and dismounted infantry a lightweight and portable 
rangefinder that is more accurate than current capabilities.
    Question. The Army is also requesting $137 million to fund Advanced 
Concept Technology Demonstrations (ACTDs) which according to your 
testimony last year ``give us a great opportunity to transfer 
technology to the warfighter.''
    ACTDs and the Force XXI Initiative appear to be mechanisms for 
fielding systems outside of the acquisition and budget process. What is 
the difference between ACTDs and the Force XXI Initiative?
     Answer. Neither the ACTD process nor the Force XXI Initiative/
Warfighting Rapid Acquisition Process (WRAP) are done ``outside the 
acquisition and budget processes''. Both methods use nontraditional 
acquisition techniques such as rapid prototyping, commercial 
technologies, use of available evaluation data, etc., to shorten the 
time it takes to field new systems and new technology to the 
warfighter. The methods are not the same. Force XXI initiatives are 
potential solutions which have already undergone all or most of the 
development and evaluation necessary to reach production within one to 
two years. The Force XXI initiatives concentrate on providing 
immediately available technology that matches future goals to the 
warfighter as fast as possible and requires a funding commitment before 
being accepted as a final candidate. These initiatives cover the full 
spectrum of capabilities required. ACTDs are designed to match a 
warfighter's requirement with a concept and technology expected to 
satisfy the requirement. The nearly mature technology and concept 
evolve to a residual capability at the end of the demonstration period 
(assuming success). ACTDs take between two and four years to complete. 
There is not a requirement to acquire technologies developed as a 
result of the ACTD. Acquisition Integrated Process Teams (IPT) are 
formed for each ACTD to develop proposed acquisition strategies for 
ACTD ``systems'' if required by the user/sponsor (Commander-in-Chief) 
and successfully competed in the service's Program Objective 
Memorandum.
    Question. The technologies which you will ``jump start'' are part 
of the Army's Warfighting Experiment (AWE). During the AWE the Army 
will test other new technologies to see how they would operate under 
battle conditions. The AWE will take place at the National Training 
Center (NTC) in the California desert.
     Since the AWE is an experiment, will those technologies that you 
wish to ``jump start'' go through additional testing?
    Answer. The final evaluation from the Operational Test and 
Evaluation Command (OPTEC) of the effectiveness and capabilities of the 
system are probably the most significant part of the final choice of 
candidates. OPTEC will provide information on success or failure (and 
degree), additional testing required and effectiveness to the force 
among other issues. All of the issues considered under normal 
circumstances for operational test and evaluation will be considered 
under the WRAP process. The difference is that WRAP uses ongoing 
evaluations and other available data on usage and capability to 
evaluate the system not just what is gathered from the experiment. 
OPTEC is required to certify each system as having met the requirements 
of operational testing as prescribed by law. Because some of the 
systems must undergo additional test and evaluation at some level, any 
Force XXI Initiatives funds for those systems will be used to complete 
that evaluation and get the system into production.
    Question. The NTC is in the desert; how will you ensure that the 
technologies are operable, reliable and supportable when taken out of a 
controlled warfighting experiment for example:
    a. Will it operate in cold or wet weather;
    b. Is it rugged enough to survive the battlefield; and
    c. Is it interoperable with other Army or service systems?
    Answer. OPTEC will determine what additional test and evaluation is 
required based on the maturity of the system including any evaluations 
necessary under other weather conditions or if the system is ruggedized 
enough for the battlefield. The AWE is utilizing links to Joint STARS, 
Unmanned Aerial Vehicles (UAV) and national intelligence assets to 
receive and pass information just as would be required on a 
battlefield. In addition, information has been passed through planned 
nets to the Marine Corps operating out of Twenty Nine Palms. Close Air 
Support (CAS) aircraft have been used in the AWE to provide strikes. 
The AWE is evaluating interoperability within the evolving architecture 
required by the Joint Staff for all the services. As such, all the 
systems being used in the AWE should be interoperable with Army and 
other service battlefield systems.
    Question. The Committee understands there are 96 candidates 
currently being evaluated to receive the fiscal year 1997 Force XXI 
Initiative funding. One example of the type of technologies you are 
evaluating is the mortar fire control radar. It is our understanding it 
will cost approximately $200 million to field the mortar fire control 
radar.
    How will you ensure there is adequate funding in the outyears to 
sustain projects funded with Force XXI Initiative dollars?
    Answer. The WRAP process requires that outyear funding requirements 
(funding tails) be identified for all candidate systems. If a candidate 
is selected, then the sponsoring functional area must find the funding 
internally before turning to the rest of the Army to fund. In any case, 
no candidate will be accepted without having identified the out year 
funding necessary and the offsets to pay the bill.
    Question. When will you budget for outyear dollars required to 
develop and field Force XXI technologies?
    Answer. Army is using current input on candidates to affect the 
current mini-POM actions. In addition, for candidates that could go 
into production (possible low rate) in fiscal year 1998, we will be 
looking at how to reprioritize within functional areas in the upcoming 
budget year. For longer term funding, all programming and budgeting 
documents for years after fiscal year 98 will reflect the funding lines 
for the approved initiatives.
    Question. Will they continue to be funded in the force XXI 
Initiative account?
    Answer. WRAP policy is specific in that no more than two years of 
``jump start'' funding will be provided to complete ALL actions to get 
to procurement. This accounts for the time it usually takes for the 
system to be put into the resourcing cycle. At that time, the system 
will no longer be carried by the Force XXI Initiative account. Because 
we allow two years maximum, we also require the candidates to identify 
two years of funding if necessary.
    Question. Since you are not budgeting for the total development and 
fielding costs of Force XXI initiatives, you will be forced to 
reallocate funds in your budget. Will you provide offsets to the 
Congress? What programs in your budget do you view as potential offsets 
for Force XXI initiatives?
    Answer. The Army will identify the outyear bills and give Congress 
assurance that these will be funded in the next Future Years Defense 
Plan (FYDP). Details of offsets must achieve concurrence through the 
formal Program Object Memorandum (POM) and budget process to accomplish 
this.
    Question. What will be the average development and fielding 
schedules for Force XXI technologies? Do you plan on fielding them at a 
quicker rate than trucks or helicopters?
    Answer. WRAP policy requires putting the systems into regular 
programming and into production within two years of receipt of funding 
(less if done later in the fiscal year). Fielding schedules are based 
on the individual system and he quantity, production rate, spread 
across the force, etc. If a ``buy out'' of the total Army quantity at 
an inexpensive rate can be accomplished in one year and it is smart to 
do so, we will make that recommendation. If it takes longer to field, 
then we will look at that timeframe with reference to all the 
candidates and other Force XXI issues. Systems based on commercially 
available or immediately available military technologies that are 
usable with little or no modification may be fielded faster than 
others, the length of time to field is system dependent. The key is 
that we will not spend years in development for the systems.
    Question. Congress provided $50 million in fiscal year 1997 for the 
Force XXI Initiative. Has the Army received the fiscal year 1997 funds?
    Answer. Funds are on withhold at Office of the Secretary of Defense 
(OSD) until the Army completes the evaluation of candidate systems, 
provides recommendation to Congress as required by law and receives 
approval from Congress on the candidates recommended. Notification to 
Congress is expected to occur during the first week of May 1997.
    Question. If not, why?
    Answer. Evaluation of candidate systems will not be completed until 
the AWE is finished. There is no requirement to use these funds until 
that evaluation is finished.
    Question. When do you expect the funds to be released?
    Answer. Late May to early June 1997.
    Question. When do you expect to obligate the funds?
    Answer. Depending on the system, between late June and late August 
1997. It is a requirement of all candidates that the program office be 
able to obligate the funds by the end of August this fiscal year to 
receive the funds.
    Question. Last year, the Congress directed that none of the Force 
XXI Initiative funds may be obligated without prior notification. The 
notification is to include the requirements, maturity, affordability, 
and sustainability for each system. When will the Congress receive 
notification for the fiscal year 1997 funds?
    Answer. Notification is expected to be provided the first week of 
May 1997.
    Question. Will the notification include the funds required to 
complete the program in fiscal year 1998?
    Answer. If a candidate requires fiscal year 1998 funds from the 
Force XXI Initiative account, they will be identified. If other funds 
are required, those will also be identified. The Army is viewing these 
funds across several years not just one year at a time.
    Question. Will you provide the offsets in your fiscal year 1998 
budget request to continue the activity?
    Answer. If the activity requires funding from regular sources 
during fiscal year 1998, offsets/billpayers will be identified for 
reprioritization.
    Question. This year you are requesting $100 million for the Force 
XXI Initiative, $50 million more than last year's appropriated amount. 
Given the shortfalls in your modernization accounts, why did you 
increase the funding?
    Answer. The Army requested $100 million in fiscal year 1997 but 
only received $50 million. The funding request for fiscal year 1998 
remains the same as for fiscal year 1997--$100 million. These funds 
allow us to apply streamlined acquisition techniques to rapidly acquire 
new and available technologies at lower risk and lower cost thereby 
filling gaps in our modernization accounts that might otherwise not be 
funded. It also allows us to bridge to the Program Object Memorandum 
build for fiscal year 1997 initiatives having requirements in fiscal 
year 1998.

    [Clerk's note.--The fiscal year 1997 budget request 
included no funding for the Force XXI initiative.]

           Advanced Concept Technology Demonstrations (ACTD)

    Question. Advanced Concept Technology Demonstrations (ACTDs) are 
the Department of Defense sponsored initiatives developed to accelerate 
and facilitate the application of mature technologies to solve military 
problems and provide new operational capabilities to the field sooner 
than the normal acquisition process.
    This year the Army is requesting $137 million for ACTDs--this is 35 
percent higher than last year's appropriated amount. Mr. Decker, why is 
your fiscal year 1998 request for ACTDs 35 percent higher than last 
year?
    Answer. The amount requested by the Army for ACTDs in the FY98 
President's Budget is $154 million ($137 million + $16.5 million for 
Theater High Energy Laser (THEL) ACTD). In FY97, the amount 
appropriated last year for Army ACTDs was $157 million. The net change 
is a reduction of $3 million in FY98. THEL ACTD funding of $44.06 
million was provided by the Congress in FY97. The Army request for THEL 
in FY98 is $16.5 million.
    Question. For the record, please provide the ACTDs planned for 
FY98. Please include prior year funding, planned funding for the fiscal 
year and future funding requirements. Also include any Defense-wide or 
other Service Research, Development, Test and Evaluation funds which 
have or will be provided for each ACTD.
    Answer. Approved Army ACTD chart follows. Please note that MOUT 
ACTD, the Combat ID ACTD, and the Rapid Terrain Visualization ACTD are 
dependent on transfers from the Office of the Secretary of Defense 
(OSD) ACTD funding line FY98.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Question. What process is in place to determine which technologies 
should be fielded?
    Answer. To determine which technologies should be fielded, the ACTD 
selection process forces a technical evaluation to be made of the 
proposed advanced capability. Successful candidates must provide 
residuals (software/hardware) which are of sufficient maturity to be 
available in the timeframe of the ACTD with low risk in a configuration 
which troops can use. The selection process includes:
    a. Technology reviews by Army Chief Scientist
    b. ACTS requirements validation by Commanding General, Training and 
Doctrine Command (CG, TRADOC)
    c. Joint Requirements Oversight Council (JROC) prioritization
    d. Commander in Chief (CINC) sponsorship
    e. Under Secretary of Defense (Acquisition and Technology) approved
    f. CINC/field commander acceptance prior to fielding with soldiers
    From an acquisition reform in action--getting technology into the 
hands of soldiers quickly for evaluation, getting immediate feedback, 
while providing CINCs a new operational capability. This approach is 
supported in the Department of Defense (DoD) 5000 series regulations.
    Question. How do you ensure that the technology will be reliable 
and operable in military operations?
    Answer. Prior to putting technologies in the hands of soldiers. 
ACTDs go through developmental, operational and safety testing. Exit 
criteria is established in coordination with users to ensure the ACTD 
meets CINCs requirements. Ultimately, CINC/field commanders evaluate 
test results and ACTD performance prior to deploying ACTD technology 
with soldiers.
    Prior to transitioning ACTD, the Army, with OSD, conducts ACTD 
Transition Integrated Product Teams (TIPTs). These teams ensure that 
necessary preparations are made during the formulation, execution and 
residual support phase of an ACTD. The TIPTs recommend appropriate 
acquisition strategies for Army consideration. Upon successful 
completion of an ACTD and favorable evaluation of the leave behinds by 
the user, the acquisition and fielding of the new capability will 
compete against Army Program Objective Memorandum (POM) priorities in 
the Planning, Programming and Budgeting System (PPBS) process.
    Question. How do you ensure that the operating and logistics cost 
for successful ACTD technologies can be supported in future budgets?
    Answer. Transition Integrated Product Teams (TIPTs) also ensure 
that supportability assessments of ACTDs residuals are developed. These 
assessments include estimates for out year funding of leave behind 
systems, assuming favorable ACTD results. Operating and logistics costs 
are included in the system life cycle cost estimates which are 
considered in the Program Objective Memorandum (POM) prioritization 
process. As an example, the Rapid Force Projection Initiative (RFPT) 
ACTD TIPT is addressing four key areas related to future fielding: 
requirements; acquisition; fielding and supportability; and test, 
evaluation and analysis.
    Question. For the record please provide a list of technologies 
fielded as a result of the ACTD process. Please include testing, 
fielding, and support cost for each system.
    Answer. Since ACTDs began in 1995, and these are normally 3-5 year 
programs, the Army has completed the demonstration phase of only one 
ACTD to date, Precision/Rapid Counter-Multiple Rocket Launcher ACTD, in 
October 1996, in Korea for the Commander in Chief United Nations 
Command (CINCUNC). The following hardware and software (SW) items are 
continuing to be evaluate in the residual phase of the ACTD:

------------------------------------------------------------------------
                                                           Procurement,
                                                            testing and
                      Leave behind                         support costs
                                                               ($ in
                                                            thousands)
------------------------------------------------------------------------
Work Stations...........................................           5,500
Visualization SW........................................          \1\125
Weapon-Target Pairing SW................................           3,150
                                                         ---------------
      Total.............................................           8,775
------------------------------------------------------------------------
\1\(Government furnished equipment).

    The Army also supports other Service/Agency ACTDs. The highly 
successful Predator ACTD provided a radar mission package called 
Tactical Endurance Synthetic Aperture Radar (TESAR). TESAR is enabled 
by the Army-developed aided target recognition hardware and software.
    Question. What are your views as how the present ACTD program is 
structured? How can it be improved?
    Answer. The ACTD program is structured for evaluation of relatively 
mature technologies and concepts in an operational environment. The 
Army view is to use the ACTD process in complex system-of system 
scenarios to solve critical military needs for the warfighter. The 
success of Precision Rapid Counter Multiple Rocket Launcher ACTD in 
Korea for the Commander-in-Chief United Nations Command is an 
outstanding example of the value ACTDs provide to rapidly and 
effectively respond to warfighter urgent needs for technology 
innovation. The ACTD process could be improved by stronger commitment 
from Services/Agencies to cooperate in the joint arena and by greater 
stability in the Office of the Secretary of Defense funding lines.

                       Chemical Demilitarization

    Question. The Army has the responsibility for destroying all 
chemical warfare related material. The Army is currently constructing 
chemical demilitarization facilities at various storage locations. 
Congress mandated that the 31,493 tons of chemical munitions must be 
demilitarization by 2004. To date, 1,440 tons have been destroyed. The 
Army is requesting $620.7 million for chemical demilitarization in 
fiscal year (FY) 1998.
    The FY97 Appropriations Act included a general provision which 
prohibited the obligation of funds for the construction of a baseline 
incineration facility in Kentucky or Colorado until 180 days after the 
Secretary of Defense submitted a report on alternative destruction 
technologies. The President's FY98 budget proposes to delete the 
provision. Why?
    Answer. This prohibition could potentially delay the completion 
date for the disposal of chemical weapons from four to ten years. The 
Department's intent is not to delay the timelines to destroy the United 
States' chemical weapons. The National Research Council (NRC) of the 
National Academy of Sciences concluded that the greatest risk 
associated with the chemical weapons stockpile results from its 
continued storage. In the interest of public safety and environmental 
protection, we want to get on with the chemical weapons destruction 
process as quickly as possible and proceed with a concurrent program to 
assess alternative technologies for the assembled chemical munitions. 
This is our commitment and obligation to the citizens whose communities 
surround the stockpile storage sites. The NRC also concluded that the 
incineration baseline technology is currently the only mature process 
which can demilitarize the complete weapon--the agent, explosives, and 
decontamination of metal parts.
    Question. What impact does the general provision have on the 
chemical demilitarization schedule? On program costs?
    Answer. The schedule and cost impacts are not known at this time as 
the Program Manager for Assembled Chemical Munitions was just recently 
designated (December 1996). The prohibition could potentially delay the 
disposal completion date from four to seven years beyond the 
Congressionally mandated date of December 2004, if a technology is 
identified and demonstrated at the location where it is to be employed; 
and if the technology is demonstrated at a different location from 
where the technology will be used, delay could be as great as seven to 
ten years. Delays to the program will result in additional cost 
growth--inflation factors, storage of the stockpile, Chemical Stockpile 
Emergency Preparedness Program (CSEPP) costs, and program management 
costs. The annual cost of delay for these two sites is approximately 
$50 million.
    Question. If the provision is repealed, do you believe that 
Kentucky or Colorado will allow the Army to begin the construction of 
demilitarization facilities before the alternative technologies studies 
are completed? Please explain.
    Answer. Repealing the prohibition would not remove all obstacles 
which could jeopardize the Army meeting the operations completion date 
of December 2004. There are other site-specific and public acceptance 
issues which must be resolved and locally legislated mandates which may 
prohibit or delay the Army obtaining the necessary environmental 
permits. The Commonwealth of Kentucky has passed legislation which 
requires that the technology used be fully proven in a comparable sized 
facility, for a sufficient period of time, at a 99.9999 percent removal 
efficiency for all substances proposed for destruction or treatment 
under all operating conditions, including occurrence of malfunctions, 
upsets, or unplanned shutdowns. Colorado requires a Certificate of 
Designation, issued by the local county for the location, construction, 
operation, and closure of a hazardous waste incinerator. This is a 
lengthy process which is initiated after the Resource Conservation and 
Recovery Act permit is issued.
    Question. With the exception of the Colorado and Kentucky 
facilities, do you believe that the chemical demilitarization program 
will remain on track?
    Answer. Yes, the other sites are on track for completion by 31 
December 2004. The greatest risk to schedule is in environmental 
permitting activities. Changing community perception also impacts on 
schedule attainment. Implementation of alternative technologies poses 
schedule risk. Delays are anticipated awaiting investigation, pilot 
demonstration and testing of technologies to achieve required levels to 
validate their efficiency, maturity and effectiveness.
    Question. Currently chemical munitions are demilitarized through 
incineration. Congress provided $40 million in fiscal year (FY) 1997 to 
identify and demonstrate no less than two alternative technologies to 
the baseline incineration process for demilitarization of assembled 
chemical munitions. Explain how you intend to use the $40 million 
appropriated in FY 1997? Is the $40 million sufficient to conduct the 
alternative technology demonstration program? If not, what are the 
shortfalls? When will this program be complete?
    Answer. Congress appropriated $40.0 million in FY 1997 to identify 
and demonstrate alternative technologies to the baseline incineration 
process to demilitarize assembled chemical munitions. In compliance 
with Public Law 104-208, Dr. Paul Kaminski, the Under Secretary of 
Defense (Acquisition and Technology), appointed Mr. Mike Parker as the 
Program Manager for Assembled Chemical Munitions Demilitarization 
Alternatives. Mr. Parker reports directly to Dr. Kaminski and not 
through the Army. Answers to these questions should be addressed to the 
office of the Under Secretary of Defense (Acquisition and Technology).

    [Clerk's note.--End of questions submitted by Mr. Young.]
                                           Thursday, March 6, 1997.

               NAVY AND MARINE CORPS ACQUISITION PROGRAMS

                               WITNESSES

JOHN DOUGLASS, ASSISTANT SECRETARY OF THE NAVY FOR RESEARCH, 
    DEVELOPMENT AND ACQUISITION
VICE ADMIRAL DONALD L. PILLING, UNITED STATES NAVY, DEPUTY CHIEF OF 
    NAVAL OPERATIONS, RESOURCES, WARFARE REQUIREMENTS AND ASSESSMENTS
LIEUTENANT GENERAL JEFFREY W. OSTER, UNITED STATES MARINE CORPS, DEPUTY 
    CHIEF OF STAFF, PROGRAMS AND RESOURCES

                              Introduction

    Mr. Young. The Committee will come to order.
    This afternoon the Committee will conduct a hearing on Navy 
and Marine Corps acquisition programs, and this is an open 
session. We are pleased to welcome Mr. John Douglass, Assistant 
Secretary of the Navy for Research, Development and 
Acquisition. Secretary Douglass is accompanied by Vice Admiral 
Donald L. Pilling, the Deputy Chief of Naval Operations for 
Resources, Warfare Requirements, and Assessments; and by 
Lieutenant General Jeffrey W. Oster, Deputy Chief of Staff for 
Programs and Resources.
    Admiral Pilling's biography will be placed in the record 
inasmuch as this is his first appearance before this 
Subcommittee in this capacity, and we are happy to make a 
permanent record of that, Admiral.
    The Department of Navy's fiscal year 1998 budget request 
for modernization provides for only 51 new aircraft, of which 
only 39 are combat aircraft, 512 missiles and 4 combatant 
ships. Last year we were told that four combatant ships was the 
lowest Navy ship acquisition since 1933, so we added funds for 
more ships. But this year the Administration's new budget 
returns us to the 1933 level. The problem isn't just in 
shipbuilding. The number of tactical aircraft requested is the 
lowest since 1941.
    Mr. Douglass, your statement implies that the Navy's 
acquisition budget supports the war fighting needs of the 
theater CINCs, and their forces. When we look at the details of 
the budget, we see a number of problems. For example, we 
understand that under your current program for the DDG-51 
destroyer program, the next 12 ships to be built will lack any 
cruise missile self-defense and ballistic missile defense 
capabilities.
    Your statement further claims that the Navy's budget 
continues an ``all-out effort'' to protect our sailors and 
Marines serving aboard ships against missile attack. But the 
budget zeroes out all production funds for cooperative 
engagement and ship self-defense installations.
    The budget proposes an overhaul of the USS NIMITZ aircraft 
carrier without any new ship self-defense features, including 
cooperative engagement, that were planned a year ago.
    The budget terminates or delays several other important 
ship self-defense programs.
    We talked about this this morning with the Secretary of the 
Navy and Admiral Johnson, and we were told that that is the way 
it had to be, that budgetary problems were budgetary problems. 
We are frankly concerned about that, and I would like to have 
you get into great detail with us on the importance of building 
ships without self-defense capabilities.
    We are talking about systems where the R&D has already been 
done, the IOC has been reached, and all we have to do is 
produce and install them. Where ship self-defense is concerned, 
it is particularly disturbing that programs are proposed to be 
delayed or halted after billions of dollars of R&D has been 
completed and the leadership of the Defense Department and the 
Navy have raved about their technical performance.
    So, we do have some concerns about your acquisition budget. 
We agree with those from the Defense Department who have told 
us there are a lot more things that you really need in order to 
maintain the modernization schedule that we have been led to 
believe the Administration wanted. So we would like to get into 
detail with you today about some of those items. But I am 
really concerned about tremendous amounts of money building 
ships that aren't going to have these new self-defense features 
on them.
    So I would like to hear your statement and the admiral's 
and the general's, and then we will have some interesting 
questions for you.
    Mr. Murtha, do you have an opening statement?
    Mr. Murtha. Let me just add to what the Chairman said. We 
started this self-defense thing, Mr. Kilian recommended it, I 
don't know how many years ago. We started it 5, 6, 7 years ago. 
The Navy, kicking and screaming and complaining, didn't want to 
do it. Admiral Boorda recognized the importance of it. Research 
was done, a lot of money was spent on research, and now we are 
talking about $20 million a ship, as I understand it, this 
could be implemented. I cannot believe that we are spending 
money the right way when we are allowing these ships to go out 
without sufficient protection.
    We are limited in the amount of money that we can 
distribute. You are limited by the amount of money you get. But 
it just doesn't seem wise to me that you are leaving a hole, 
which is so important to the security of our forces out there. 
I just cannot imagine that you are letting this happen.
    So I hope you will be able to explain it, and look forward 
to hearing your explanation. But I hope we can resolve this 
thing.
    Mr. Young. Mr. Secretary, we welcome your statement and 
look forward for the opportunity to discuss it in detail with 
you.
    [Clerk's note.--The Charts referred to by Mr. Douglas are 
printed at the end of this statement. See page 180.]

                   Summary Statement of Mr. Douglass

    Mr. Douglass. Thank you, Mr. Chairman. I would like to 
begin by requesting that our joint statement be entered into 
the record, sir, in its entirety. What I would like to do, if 
this is acceptable to you, is summarize it in a series of 
charts and some videos that we think will be interesting to the 
Members. We will try to get through that as quickly as we can. 
All of us will participate in this briefing with the charts and 
the videos, and then we will move quickly into any questions 
that you may have, sir.
    Mr. Young. Mr. Secretary, that is fine. I am remiss, I 
should have mentioned your statement in its entirety will be 
placed in the record.
    Mr. Douglass. Thank you, sir.
    I want to open my testimony by saying that no one is more 
mindful than me, sir, of some of the comments that you and Mr. 
Murtha have made about ship self-defense and other programs. I 
am especially mindful that the way our system works is that you 
gentleman are the representatives of the people, and these 
questions that you are asking are right on target, sir. So we 
hope that we can have a good dialogue with you and answer these 
questions to your satisfaction. Sir, for anything we can't 
answer today verbally, we are committed to working with this 
committee to get you a full and complete answer for the record, 
sir.
    Mr. Young. Thank you very much.
    Mr. Douglass. You have already beat me to the punch in 
introducing my two colleagues today, both distinguished 
warriors. It is a great pleasure for me to work with them.
    I would just remind the Members that last year was the 
first year we brought to you a fully integrated budget in which 
the Navy and the Marine Corps budgets had been integrated from 
the ground up. We followed that procedure again this year, and 
as you pointed out, this is Don's first year. Jeff was here 
last year as we went through that process. I think the process 
of integration is getting better as the time goes by, sir. 
Could I have the next chart.

                Procurement and Research and Development

    (CHART 1) This is a brief summary here of what you are 
going to see. We will go into it in a lot more detail. The 
budget, if you add up all the RDT&E and procurement and 
National Defense Sealift Fund, NDSF, is actually up 1 percent 
from where we were last year when you view the combined the 
Navy and Marine Corps budget request.
    As you can see, what we are trying to do, sir, is stabilize 
our programs. We are mindful of the direction that this 
Committee has given us regarding multiyear procurement on some 
of our aircraft programs and so on, and you will see we do plan 
to take that very seriously.
    The Department is working hard at acquisition reform. We 
will have a little bit to say about that at the end. You are 
going to see, sir, as we go through this briefing, some real 
concerns about the future industrial base for the maritime 
forces. This is becoming an increased concern.
    The systems you see on the bottom of the chart are all new 
systems in which we are investing. Major systems we are 
investing research and development dollars in that have not yet 
gone into production. We will go very briefly into those, and 
we will then be able to answer any detailed questions that the 
Committee has. The next chart, please.

                            Budget Summaries

    (CHART 2) We thought this might be helpful in placing this 
$27 billion budget request in some perspective. You can see the 
blues columns are where we were last year, and the reds columns 
are where we are this year. All the accounts except for 
shipbuilding are down slightly from last year. Shipbuilding has 
increased this year, and we will discuss that in some detail. 
But you are absolutely right in your opening statement. We are 
back to four ships again this year, not counting our ships that 
are in the Ready Reserve Fleet or going to our Prepositioned 
forces. We haven't counted them in that count. But that is how 
our dollars are being spent. I would also note on the right 
side of the chart procurement of ammunition for the Marine 
Corps and Navy is up slightly this year. The next chart, 
please.

                            Navy Trendlines

    (CHART 3) This is the dilemma. You all have been very 
helpful to us in explaining this to the American people. This 
is where we were in the 1980s, and many of us were in this 
business in the 1980s. You can see on that chart that the level 
of procurement was up there at or above $50 billion early in 
the 1980s. This was pretty much sustained with a slight decline 
during this time frame. There was also a very robust RDT&E 
funding level back at the 1980s.
    (CHART 4) The next chart is where we have been in the 
1990s. This is the problem I know this Committee has been 
deeply concerned with, and that is the nose-dive you see in the 
procurement budget includes airplanes, ships and other systems. 
There has been a gradual erosion of our research and 
development base, noted by the blue line, as we have gone 
across the 1990s and on into the beginning of the next century.
    Mr. Murtha mentioned to me just before the hearing, he is 
concerned, and we certainly share his concerns, about how are 
we going to get up that slope again. That is something that we 
have tried to pay some considerable attention to, Mr. Chairman. 
We are very open to working with this Committee as we work out 
the inevitable gives and takes on the priorities required for 
our Navy and Marine Corps to get up that slope. We are 
dedicated to trying to get there from here.

                           Shipbuilding Plan

    (CHART 5) The next chart I think will be revealing in this 
respect. This is our shipbuilding plan. We start here because 
that is probably the defining point for our Navy. As you 
correctly pointed out, there are only four ships in fiscal year 
1998, but I think it is very important to tell you that we have 
been able to fully fund all these ships in this program.
    In our previous programs, you may recall, we had received 
some policy direction from the authorization committees that 
some of these ships could be shown in the budget but did not 
have the money put in the budget. We had various qualifications 
on our submarines, and we didn't have the carrier in until this 
year. So this is the first year in recent years that we have 
brought to the Congress a shipbuilding program in which all of 
these ships are fully funded in our Future Year Defense 
Program. That has been a very substantial effort for us to be 
able to fit these ships in, and it is something we are proud 
of.
    We do have two block buys or multiyear buys, if you will. 
We are proposing on our New Attack Submarine to buy all four of 
the initial submarines on a single contract. This is new and 
something different. Of course, we have the DDG-51 multiyear 
buy for which the Congress gave us authority last year. The 
next chart, please. We will get into individual programs in 
detail.

                        CVN-77 AIRCRAFT CARRIER

    (CHART 6) Our first priority in the ship area, of course, 
is CVN-77, the last of the NIMITZ carriers. As you may recall, 
Mr. Chairman, last year we only had the advanced procurement in 
for this ship. This year it is fully funded, and that is a 
fairly significant addition to our shipbuilding program.
    We have proposed to the Congress a change in our New Attack 
Submarine construction program. Right now the law requires us 
to compete either the first two boats or the first four boats.
    We have been working with both Newport News and Electric 
Boat, the two shipbuilders that will be the builders on the New 
Attack Submarine. They have made some proposals to us on how to 
develop this submarine as a team instead of in a competitive 
way. We estimate just in the Future Year Defense Program, 
compared to last year's budget, this would save us between $450 
and $600 million, by going into this teaming arrangement. We 
think it is a good idea. We are proposing it to the Congress. 
We are hopeful that it will be well received and we will have 
permission from the Congress at the end of this legislative 
cycle to go ahead with this teaming approach, because we really 
can't afford the competitive program that was directed in the 
law the last 2 years.

                           SEAWOLF SUBMARINE

    As we talk about the SEAWOLF program, this is where the 
videos start. SEAWOLF has been doing exceptionally well in its 
sea trials so far. She is quieter and faster than we had 
predicted her to be. As a matter of fact, she surprised us so 
much with her speed that we had some flooding in the wide 
aperture array and had to put her back in the shipyard and 
batten down the array fairing. But all of the systems are 
performing actually quite a bit better than we predicted. So 
technically she is a wonderful success, and we just put her 
back in the water again to finish the sea trials.
    We have a short video. Admiral Pilling will narrate the 
video.
    [Clerk's note.--The Committee proceeded to view a series of 
short videos.]
    Admiral Pilling. The video is a 40-second clip that starts 
off with the christening back in June of 1995 and ends with 
some of the sea trials.
    Mr. Douglass. It starts with your morning witness and his 
wife breaking the champagne bottle.
    Admiral Pilling. We are getting underway for the sea 
trials. It was last fall, and Mr. Douglass already mentioned it 
was a superb set of sea trials, with one exception, a fairing 
on the aft part of the ship for the wide aperture array failed. 
That whole covering has been redesigned and repaired. The ship 
will continue the sea trials at the end of this month and will 
be commissioned in the late spring.
    Mr. Douglass. We are very proud to tell you, Mr. Chairman, 
that we remain under the $7.2 billion cost cap that the 
Congress has given us, and we are sure that we will be able to 
finish the three submarines within those provisions.

                            DDG-51 DESTROYER

    On the DDG-51 program, you may recall last year the 
Congress gave us authority to procure the next 12 ships in a 
block buy. In round numbers, this is going to result in a 
savings to the taxpayer of around $1 billion. We are in the 
process now of formulating the request for proposals that would 
go out to the two builders. Those will go out sometime in the 
weeks ahead, and we will be glad to answer any questions you 
may have on that.

                                 LPD-17

    We have also awarded the lead ship contract for the LPD-17, 
and we will be glad to answer any questions the Committee may 
have on that. That program, as you probably know, is being 
reviewed by the GAO right now. The next chart, please.

                               SMART SHIP

    (CHART 7) I don't know if you have had the opportunity to 
go to Pascagoula and see the Smart Ship Program. This is a 
program started by our late CNO, Admiral Mike Boorda. It has 
been an outstanding success. The idea is to use technology to 
take crew members off the ships. For every crew member we can 
get off the fleet, we can save $800,000 in life cycle costs. 
This project has shown us a way to get the crew size down by 90 
to 100 people.
    I have been out on the YORKTOWN, and she is doing very 
well. We have a skipper, Mr. Chairman, from the University of 
Florida. He has that Gator in his wardroom just like I have in 
my office. I can tell you this program is doing really well and 
is a great credit to our late CNO.

                              ARSENAL SHIP

    We are also in the business of working together with 
Defense Advanced Research Projects Agency (DARPA), to develop 
an Arsenal Ship. This is a completely new kind of ship. We have 
three contractor teams working on this ship now. We just down-
selected from five teams. The idea is to produce a ship with 
massive firepower but very low life cycle costs. I am very 
proud to tell you that the three proposals involved crew sizes 
of 30, 23, and zero. One of the offerers is proposing a ship 
that for all practical purposes will go into combat with no 
people aboard it.
    This is a demonstrator program, it is a one-of-a-kind. We 
have not decided whether we are going to put it into production 
or not, but we are learning enormous amounts of information, 
things we really need to know as we design our new carrier and 
our new surface combatant of the future.

                          CVX AIRCRAFT CARRIER

    CV(X) 78 is our next-generation aircraft carrier. This year 
we are getting underway on the research and development for 
this ship. It is a tremendous challenge. We lay her keel in 
2006; she goes to sea in 2013.
    I have a 1-year-old son at home, just celebrated his 
birthday. He will be 78 years old when that ship retires from 
the fleet. So you can imagine, Mr. Chairman, we are trying to 
look at where will aircraft technologies be when my little son 
is 78 years old. Where we will be with computers, with 
propulsion systems and so on. We are trying to design a ship 
that can have the long-term technical viability to absorb all 
these changes in technology that we know are coming in the 
years ahead and still be an effective weapons system for the 
Navy of the future.

                        SC-21 SURFACE COMBATANT

    Our next surface combatant is SC-21. This is an enormously 
innovative program. We are trying to take lessons from the 
Smart Ship, from the Arsenal Ship, from the work we are doing 
on our aircraft carriers, from the work we are doing on our 
submarines, channel that learning about the Navy of the future 
and how to build the ships of the future into our SC-21 
program. Don and I have most recently looked at how we could 
accelerate the schedule for this program so it fits nicely into 
the back of the current DDG-51 program.

                         COMBAT LOGISTICS SHIPS

    Finally, in our shipbuilding programs in the beginning of 
the early years of the next decade, the next century, we are 
going to have to build some future combat logistic ships. We 
will be bringing forward legislative proposals to the Congress 
about instead of buying these ships and putting them in the 
Navy's inventory, how we could acquire these ships under a 
build and charter concept that would allow us to avoid the 
capital expenditures so we could spend our scarce capital on 
other things. But it would require some legal changes on our 
ability to do long-term charters. The next chart, please.

                           AVIATION PROGRAMS

    (CHARTS 8 and 9) We will be switching to our aviation 
programs. This is a snapshot of aircraft procurement. And here 
again, Mr. Murtha, this is the bow wave we talked about. You 
can see we are in the bottom of an even steeper valley on 
airplanes than we were on ships. The bottom of that valley is 
the lowest level in my time. You mentioned 1941, Mr. Chairman. 
I was told the year was 1938. I think we are both in the 
ballpark. It has been a long time since we were down at that 
level.
    We are starting up the ramp. Fiscal year 1998 is 
substantially higher than where we were a couple of years ago 
in fiscal year 1996, as you can see. The main thing is we are 
beginning to increase the numbers of F/A-18s and V-22s that we 
are purchasing for the Department. You will see that as we go 
on into the next couple of charts.
    Please take that chart down and let's show a quick video 
first on the F/A-18E/F and then on the V-22. Don and Jeff will 
narrate the video.

                              F-18 FIGHTER

    Admiral Pilling. The F/A-18 video is about one minute long.
    As you know, the first flight of the F/A-18E was in 
November of 1995. This is a video of the sea trials we had in 
January where we actually went out on the STENNIS in a 
snowstorm. The first landing was made by a Navy Lieutenant by 
the name of Frank Morley. While we were out there, we did 64 
catapult launches and 64 arrested landings. No problems. The 
plane is on schedule. It is under weight, which is unusual for 
a plane at this stage.
    Mr. Murtha. You didn't mention cost.
    Admiral Pilling. It is still under the cost profile we 
agreed on at the beginning.
    Mr. Douglass. It is under cost.
    Admiral Pilling. You can see it was a very successful sea 
trial.
    Mr. Douglass. Under cost in both development and 
production, Mr. Murtha.
    Mr. Young. Some of our colleagues suggested we would be 
better off buying more C and Ds rather than going into the more 
expensive E and Fs, and that we would get more airplanes for 
the dollar. Can you give us an answer on that? How much more do 
we get from the E and F than we do the C and D?
    Admiral Pilling. For a complete answer, we would have to be 
in a closed session. There are some classified aspects of this 
plane. But we have growth in this airplane. There is no more 
room for growth in the C and Ds. It is under weight; it has 17 
cubic feet of volume that can be used for growth in the future. 
Some of the capabilities being built into that airplane, 
including range and increased bring-back capability to the 
carrier deck, we think are well worth the investment.
    Mr. Douglass. When you look at the size of the RDT&E 
program, I think it has been an outstanding success. It is the 
first program to win the Packard Award for Excellence from the 
Department of Defense. We are very proud of the F/A-18E/F.
    I am aware of a few questions from other committees 
regarding engine problems. You may be interested to know that 
we had a slight engine problem during the development flight 
test program. It had to do with some improvements in the engine 
that we were trying to make. We looked very quickly at the 
parts involved, changed them slightly, and completely solved 
the problem. That is the only real problem we have had in the 
flight test program so far.
    So I am very happy to report that the handling capabilities 
are excellent, its takeoff and landing capabilities are 
excellent, and this is really a success story, Mr. Chairman.
    Do you want to go on into the MV-22 here?

                             MV-22 AIRCRAFT

    General Oster. Mr. Chairman, the film clip will show some 
full-scale development aircraft. The first part of the film 
will show the aircraft and flight operations around and aboard 
the flight decks. The V-22 is fully compatible with the LHA/LHD 
class ships. This is a wingfold test with the blade folded to 
show it, and then you will see it moved on the elevator. It is 
fully shipboard compatible.
    The next series of clips show a simulated assault landing 
in rugged terrain, taking Marines into the objective area, to 
be followed up by another full-scale development craft 
evacuating a wounded Marine.
    Next you will kind of see, you saw it real quickly, that is 
the flight mode versus the helicopter mode. We are happy to say 
we are now into an Engineering and Manufacturing Development, 
(E&MD). Aircraft number seven was delivered. The first flight 
was February 5th, with all tests successful. We have had four 
other flights since then, and the next event we are looking 
forward to is the flight ferry up to Pax River to finish the 
testing. That will finish the exit criteria for the E&MD 
models.

                          JOINT STRIKE FIGHTER

    Mr. Douglass. If you can put the chart back up, we are 
pressing on with the Joint Strike Fighter. As you probably 
know, Mr. Chairman, we had a source selection this year. The 
way we manage this program is we provide the program manager to 
my colleague Art Money in the Air Force who is the Senior 
Acquisition Executive, (SAE). Then we flip-flop the SAE when we 
rotate the program manager. So it went through its transition 
on into full-scale development under Art's leadership, and we 
down-selected under his leadership. We are now down to two 
contractors, which would carry it into the next phase. The Navy 
investment this year in this program is $449 million.

                         Marine Corps Aircraft

    The AV-8Bs are on track. We are doing really well with this 
program. The Marines love it. We are buying 11 airplanes in 
fiscal year 1998 for an investment of just under $300 million.
    We are very happy to tell you we have gotten our 4 Bladed 
November/4 Bladed Whiskey/4BN/4BW, helicopter remanufacture 
program approved by the Department of Defense and are on into 
the research to make that program a reality. It is $81 million 
of RDT&E funds this year. The next chart, please.

                  advanced amphibious assault vehicle

    (CHART 10) I will talk about that first bullet for a 
second. The AAAV, Advanced Amphibious Assault Vehicle is 
another outstanding acquisition reform success. We went through 
a source selection since my last testimony here. We co-located 
the program office with the contractor in Woodbridge, VA. 
General Electric Land Systems is the contractor. The program is 
on track and doing well. We have a short video on it that you 
might like to see, if you will run the video.
    General Oster. Throughout this program we have gone through 
a series of technology demonstrators. In the first part of the 
video you will see what we called the hydro-dynamic test rig. 
The real technological concern all along was could you get it 
up on plane. We demonstrated you could do that with the engine 
and propulsion, and we have achieved speeds in excess of 30 
knots. We have been able to demonstrate the transition from sea 
to land with the hydrodynamic test rig.
    But we also want it to be an infantry fighting vehicle, so 
we have also gone through some tests with automotive testing. 
We have involved the user from the beginning, so we have had 
the Marines in and around the mock-ups. Their suggestions have 
been built in.
    In terms of the tests up at Aberdeen, we passed all the 
tests and out-performed the M-1A1 tank on all overland 
operations, which were part of the threshold capabilities of 
the vehicle.
    We are real proud of our AAAV technology center down in 
Woodbridge. Some of your staffers have already visited. We 
would like to invite any of the Members or staffers to come 
down. We have a virtual design facility. We have the user and 
the designer and the fabricator working together to deliver 
what the Marine needs for the 21st century.

                      MARINE CORPS GROUND PROGRAMS

    Mr. Douglass. Putting our development team right in there 
with the contractor is, we think, a pretty interesting approach 
to increase communication and to hold these people accountable. 
We have got a great Marine Corps program manager down there, 
and I am very proud of that program.
    The next program is the Lightweight 155. This is an 
artillery improvement program for the Marines. We had three 
bidders on this program. We had a shoot-off. We are just about 
to announce the source selection on this within the next week 
or 10 days. The source selection authority is actually an Army 
general who reports to my colleague in the Army, Gil Decker. I 
will review that decision in the next week, and we should be 
announcing it before the month is out.
    Then, of course, we have our Medium Tactical Vehicle 
Remanufacture program. This is really a success story, where 
the Marines have gotten together with the Army and worked on 
the vehicle remanufacture program in order to get the costs 
down and be able to revitalize the Marine Corps truck fleet. We 
are looking at this technique and other kinds of Marine ground 
vehicles. The next chart, please.

                   C4I SPACE AND INFORMATION WARFARE

    (CHART 11) Here we get into programs that are of vital 
interest to this Committee. The are in the C4I Space and 
Information Warfare area. Cooperative Engagement Capability is 
one you mentioned in your opening statement, Mr. Chairman. 
Technically this program is doing very well. The issue, of 
course, is how quickly can we get this capability out into the 
fleet. We will be glad to answer any questions that you have on 
that.

                   THEATER BALLISTIC MISSILE DEFENSE

    Regarding Theater Ballistic Missile Defense, we have a 
video we would like to show you, and I would like to make a few 
comments about where we are with that program. This one has an 
audio on it, as I recall.
    This is a dramatic picture here. That was taken from the 
actual sensor in the front of the missile.
    I am happy to put credit where credit is due. We wouldn't 
be where we are in this program if it wasn't for the leadership 
in this Committee and some of the interests of some of your 
Members, Mr. Chairman. We are doing very well in the Area-Wide 
program. This was our first direct hit success. I now have the 
authority from Dr. Kaminski to buy all of the missiles that I 
need to finish the development of this program, the engineering 
development of this program, and to do what we call an initial 
user capability. We are pressing ahead to do that.
    In my judgment right now, getting this out into the fleet 
is only limited by the time it is going to take us to build 
these missiles and get them deployed. We are pretty confident 
that we are going to be able to get an initial capability 
during fiscal year 1999 on this program. We will have a full 
unit operational capability in fiscal year 2001. So the Area-
Wide system is doing well, and a lot of the credit for its 
success is due to the leadership and the support that has been 
evident on this Committee.
    Theater-wide, as you know, we are also----
    Mr. Murtha. Mr. Secretary, I misunderstand what you are 
saying. You are saying it is going to be deployed, or you are 
saying it is just research?
    Mr. Douglass. Admiral Pilling knows, it will be deployed. 
We will have our first ability to have this out in the fleet in 
fiscal year 1999, and the first full unit deployment will be in 
fiscal year 2001. We are pressing on.
    Mr. Murtha. I thought, though, you weren't putting it on 
the ship.
    Mr. Douglass. Mr. Murtha, this might be a good time to 
explain that. There are kind of two things you need to do to 
get this out into the fleet. You need to build the missiles 
themselves, which we are doing, and which we have now got the 
authority to build, and those missiles are actually under 
construction today. Then you actually have to make changes to 
the ships, certain technical changes in the ships, so that they 
can launch them. That work is also underway.
    Now, the question is how many ships do you modify to be 
able to launch these missiles, and how many missiles do you 
have?
    Ideally you would want to keep this in balance. In other 
words, you wouldn't want to spend the money to have, say, 30 
ships able to shoot the missiles if you didn't have any 
missiles to go on the 30 ships. You would want the 
modifications to the ships and the modifications to the 
missiles to be roughly in sync.
    I think one of the things that your Committee has pointed 
out in its analysis of our budget is that some of the ships 
that are going to be converted to be able to do the Theater 
Missile Defense are ships that are under construction now, and 
some of those ships are ships that are out there in the fleet 
already. Some of our budget documentation has indicated that of 
the 12 ships in the multiyear contract we are buying, we were 
not buying the capability to put the missiles in those 12 
ships.
    We are committed to relooking at that. That is not in 
concrete. We can fix that in the outyear budgets. But we will 
get ships and missiles in sync. We are committed to do that, 
sir.
    Mr. Murtha. That answers the question.
    Mr. Douglass. On Theater Wide, the issue over the long haul 
is how many resources do you put in year after year. As you 
know, we get our resources from the BMDO organization. Due to 
the plus-ups of this Committee last year, you have been able to 
put us on the road to a very robust program. The issue for us 
is how much money is going to be put into the outyears to keep 
this program sustained. Frankly, how much we are able to 
accomplish and when we can get an operational capability for 
Upper Tier depends on that allocation of resources. But 
technically that program is moving ahead.
    I have to be fair and tell you that there is a lot of 
debate, both in the Congress and in the Pentagon, about how 
much money should go into which programs. This program has 
competing programs in the Army, as you know, and sometimes we 
don't all agree. But ultimately, what we do depends on how many 
resources we can afford to put into it.
    Basically once I know how much per year I have to work 
with, I can tell you what date that I could bring this into the 
fleet.

                        COMMUNICATIONS PROGRAMS

    Regarding Global Broadcast Service, this is getting the 
small TV satellite antennas where you can get 100 channels we 
can all buy for our houses now, and getting those out into the 
fleet. The problem has been that commercially nobody beams that 
kind of traffic out to the middle of the ocean because there 
are no subscribers out there.
    For a very modest amount of money, we were able to get 
transponders put on three satellites that we had already paid 
for. We had to stick our neck out a little bit betting on the 
conference for some funding. Your Committee and the other three 
oversight committees worked on this with us, and we saved a lot 
of money for the taxpayers.
    This program is on track, and we will be moving that 
capability out to the fleet. Of course, we will not just use it 
to show TV movies. There will be an enormous amount of 
intelligence information, weather information, status 
information on weapons systems and other things that we can now 
push out to the fleet.
    Challenge Athena, which is our voice and imagery across the 
SATCOM program provides a big boost in the quality of life for 
our Sailors and Marines at sea. We started to bring you a video 
on this. Every time I see it, it brings tears to my eyes 
because it is a lot of videos of young Sailors talking to their 
moms and dads or little kids and so on. We are moving ahead 
with Challenge Athena as quickly as we can. The next chart, 
please.

                              MINE WARFARE

    (CHART 12) Mine and undersea warfare is next. This is an 
area that in the past from time to time has been neglected. We 
are doing our very best within our resources to support it now. 
The Congress has asked us for the last couple of years for a 
Mine and Undersea Warfare Plan and has asked that we certify 
that it is fully funded and meets the requirements of the 
Chairman of the JCS and in a joint service way.
    I am happy to report to this subcommittee that again this 
year, it is fully funded. Every year this is a struggle within 
the Pentagon. We have to all stretch and work hard together to 
get this fully funded, but we have kept it on track. It is 
going to give us a good organic capability in the fleet to do 
the kind of mine warfare that we need to do as we move on into 
the next century.
    As you can see, we have already completed conversion of the 
INCHON. We have the remote minehunting system, our interim 
system deployed with the KITTY HAWK last year. So that area is 
reasonably well-funded.

                         ANTI-SUBMARINE WARFARE

    Anti-Submarine Warfare is another area of great concern. We 
are pressing ahead. We have made some pretty significant 
accomplishments there. Some of them are listed on the chart, 
not the least of which is that we are going to have on the New 
Attack Submarine a dynamite C3I system that is a big leap 
forward from the one we have on SEAWOLF, which is itself a 
great improvement from what we have had in the past. There will 
be a significant amount of commercial off-the-shelf information 
and display equipment. It is just a tremendous leap forward. 
There will be no periscopes anymore.
    We are going to have displays on big video screens, some of 
which will be three dimensional portrayals of the ocean 
environment the submarine is in. We think this part of our 
Anti-Submarine Warfare program is well-funded, but it is 
something we are having to watch very carefully.
    We also, Mr. Chairman, I would draw your attention to the 
fact that we have been asked to provide both a classified and 
unclassified report to the Congress on how well we are doing 
here, and we are committed to getting that report over here in 
a few months on time and at the proper classification level so 
that you can see the whole picture.

                           ACQUISITION REFORM

    (CHART 13) I will wrap this up very quickly with one final 
chart, by telling you that we are working hard to maintain the 
steam on our Acquisition Reform Program. We had a stand down 
this past year in which all 43,000 Navy acquisition employees 
stopped for a day and asked ourselves what can we do to improve 
the way we do acquisition in the Navy and Marine Corps.
    I had some 5,000 suggestions come in to me as a result of 
the stand down. My staff is going through every single one of 
those suggestions, and hundreds and hundreds of them are being 
implemented. We are focusing on total ownership costs. That 
means as we modernize the fleet, we are trying to produce 
weapons systems that will take fewer and fewer Sailors into 
harm's way.
    By reducing the crew sizes on our ships in the outyears, we 
are going to be able to bring the operations costs down very, 
very dramatically. I mentioned the Smart Ship. We have already 
seen a way to get 100 sailors off of a cruiser. The Arsenal 
Ship is planned to have a very small crew. We think the SC21 
crew size will be below 100.
    So focusing on total life cycle costs, it is really going 
to pay some of the bill, Mr. Murtha, to get us up that hump in 
the outyears. We are also doing a lot of partnering with 
industry. This year we had our second conference with the CEO's 
of many of the companies that do business with the Navy. We are 
listening to what they say. I give them a report at the end of 
the year on how we are doing on things that the industry people 
have suggested we change in Navy acquisition. We have received 
many accolades during the year, far too many to list here 
today.
    The one I am most proud of here is the F/A-18 E/F. It won 
the Packard Award this past year. We are very proud of that. We 
have received now some 22 Hammer Awards from Vice President 
Gore on acquisition reform, which are outstanding examples of 
acquisition teams in the Department.
    These range all the way from small teams of Marine Corps 
personnel getting together to figure out how to bring down life 
cycle costs of existing equipment, to new ideas on our 
submarines and airplanes.
    That is a very quick overview, Mr. Chairman, of the 
multibillion-dollar program that we have proposed for your 
review and approval, and we will be glad to answer any 
questions you have, sir.
    [The joint statement and charts of Mr. Douglass, Vice 
Admiral Pilling and Lieutenant General Oster follow:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



                           SHIP SELF-DEFENSE

    Mr. Young. Okay. Mr. Douglass, thank you very much. We 
appreciate the extensive details in your presentation. I need 
to go back to this issue one more time now, the issue of the 
ship defense systems. You had a very good answer to the 
question, but as I thought through it, the answer left out a 
few things. That is, this morning one of the answers was we 
will probably retrofit. But when you retrofit, that gets very 
expensive, much more so than if you put the systems in as you 
go.
    Another problem that we haven't mentioned is--we did 
mention, but there was no response--on the DDG-51's, we are 
talking about a multiyear contract on 12 ships. What is that 
multiyear contract going to say about ship defense systems? Is 
it going to be included? Is there going to be a provision in 
the multiyear? If there is no answer for that now, how can you 
enter into a multiyear if you don't have the answer on what you 
are going to do with the ship defense systems?
    Mr. Douglass. One thing I could tell you, Mr. Chairman, 
there is a misconception here. The DDG's are going to have a 
significant amount of ship self-defense.
    Mr. Young. But not the state of the art.
    Mr. Douglass. The two items that have been contentious have 
been getting them ready as we produce them for ballistic 
missile defense capability, and the incorporation of CEC. As I 
said earlier, we are re-looking at our plans there.
    Some of these changes, as you point out, are much cheaper 
if you catch them while you are building the ship. Things that 
generally require mechanical changes to the ship are expensive 
to retrofit. But some of these are also, Mr. Chairman, just 
electronics changes where you pull out one black box and put in 
another one or change the software. In that category it is 
really not that much more expensive to do retrofits than it is 
doing it in production.
    I will tell you, it is my own hope and I will dedicate 
myself to try and do this, because I feel that I am in the same 
place you are, Mr. Chairman, on this issue. I would not like to 
see us emerge from this congressional cycle or from our budget 
development cycle for next year with that multiyear contract 
not having those capabilities in the ships to the maximum 
degree that we can. We are dedicated to doing that.
    There is a long story about why it is not in the plan. It 
is more along bureaucratic lines than it is along the intent of 
what Admiral Pilling and I, the CNO, and the Secretary 
intended. We are going to fix it.
    Mr. Young. I am sure with all of us working together, we 
will get it fixed. As you can tell, there is considerable 
concern.
    Admiral Pilling. There are really two issues here on CEC. 
One is the forward-fit issue on the DDG's, and then there is 
another issue on back-fits. I think I would like to just 
address both of them fairly quickly. The DDG issue is 12 ships 
in the multiyear. It was our original plan that the last four, 
the third ship in 2000 and the three ships in 2001, would have 
an upgrade to their radar systems.
    There was some risk in that. As we put the multiyear 
package together, we took the radar upgrade system out, and CEC 
was part of it. We checked retro back-fit costs and forward-fit 
costs for the CEC, because it would be mostly installing black 
boxes and racks, there would not be much of a difference. That 
is what happened with the DDG's.
    On the back-fit of the other ships, it had been our plan 
all along to have five carrier battle groups fully outfitted 
with CEC by fiscal year 2002. We already have two outfitted. 
For a variety of reasons that John alluded to in the 1998 
column, we ended up not procuring, at low rate initial 
production, any CEC units in fiscal year 1999, because the 
OPEVAL for CEC is in fiscal year 1998. So instead of getting to 
five battle groups by 2002, we are going to get to three. We 
will go to full rate production in 1999.
    Mr. Douglass. The bottom line though is we share your 
concern and we are going to do what we can.
    Mr. Young. We will work it out, right?
    Mr. Douglass. Yes, sir.

                             V-22 Aircraft

    Mr. Young. You mentioned the V-22 and you were pretty proud 
of the V-22 program as we are, because it was this Committee 
that kept the pressure on to keep the V-22 a viable program for 
years when there were those across the river who said we 
couldn't afford it.
    Last year, the Committee directed that the V-22 program 
achieve a production rate of 36 aircraft a year by the year 
2000. In your statement, you said today we were going to 
achieve a production rate of 18 aircraft per year. Tell us why 
the Congress said 36 a year, and you decided on 18 a year.
    Mr. Douglass. Sir, it is pretty simple. It is money. Last 
year you gave us the money. You gave us $70 million for 
advanced procurement for seven additional airplanes, and we do 
not have the money in our budget to buy those additional seven 
airplanes. So I am not trying to hide anything. I would love to 
see those extra airplanes in there as an acquisition person.
    We simply did not have the money to add. It is another 
$700-plus million as I recall, Jeff. If you just take that and 
push it on forward, we can't get up to the 36 aircraft when you 
told us to.
    I don't know how to say it in any other way other than I 
share your concern. As soon as we can possibly get this past 
low rate production, I want to see us have a multiyear contract 
here. What I would hope that we could do is, have a multiyear 
contract. Sometimes when we make a multiyear contract, you save 
hundreds of millions of dollars, and the money tends to go 
somewhere into other programs or some other place.
    I would hope that any savings on this program that come 
from multiyear, once we get through this low-rate production 
part in the program, we would plow back, to get those numbers 
up as high as we can as early as we can. We share all the 
concerns. I went back and read some of the previous testimony 
of this Committee about your concern about the age of our older 
helicopters. It is just a financial limitation problem.
    Mr. Young. Can you tell us what the unit cost would be at 
18 per year versus the unit cost at 36 per year?
    Mr. Douglass. I could, sir. I don't have it at the tip of 
my fingers.
    Mr. Young. If you could provide it. My question comes back 
to this: I thought we provided 12 versus 5 advanced 
procurement. I thought we already provided the money for 12.
    Mr. Douglass. You provided the advanced procurement. It was 
$70 million, and to give you the exact status of that, Mr. 
Chairman, I am going to choose my words carefully here because 
we are getting into some fighting in the building. We get every 
year undistributed reductions from the Congress.
    In other words, when you get down to the end game, you say, 
we can't figure out how to balance the books, so here is an 
undistributed reduction of so many million dollars. We get 
Bosnia bills to pay. We get bills for the Small Business 
Innovative Research Program. We get this and that.
    It turns out on this program, those bills added up to 7 or 
8 percent of the whole cost of the program. It was in the range 
of 40 or 50 millions of dollars in our RDT&E program. So I have 
asked the Department to forward over to the Congress a request 
to reprogram this $70 million back into the research and 
development program so I can keep this program as healthy as I 
possibly can, so we can get the numbers up into the future. But 
I regret, and I sincerely regret we could not follow through 
and build those extra seven airplanes for which you gave us the 
advanced procurement.
    General Oster may want to add to that.
    General Oster. Yes, sir. There is also a little bit of good 
news. As you know, we have been operating under the billion-
dollar cap before, which was kind of an arbitrary restriction. 
The best we were ever able to do in the FYDP in the last year's 
budget, we thought we could get to 21. That has been lifted, 
and in this particular FYDP we get up to 24 a year.
    Clearly not 36, but 24 a year moves the Initial Operational 
Capability (IOC) and the Full Operational Capability (FOC) up 
for us. Our goal still is to get up to 36 a year. So there is 
some good news in this, but it really comes down to, as the 
Secretary indicated, there is the affordability issue as these 
programs compete.
    Mr. Douglass. Just to give you an idea, Mr. Chairman, in 
this program even as it is, we have $530 million in research 
and development, and I am asking that we supplement that with 
the $70 million from last year that I mentioned to you. We have 
$542 million to buy those five low rate production birds. That 
is almost $1.1 billion. I am sure this Committee is acutely 
aware of the fact that Marines stretch their bucks as far as 
they can. That is a big bill for our Corps.
    We are going to continue to try to get the numbers up as 
high as we can. That is my commitment to this Committee as your 
acquisition person, but I can't invent the money. These two 
individuals more or less control the money. But I will do 
everything I can as your acquisition person to get the most 
airplanes for the dollars. I tell you, I have been out to the 
plant twice now. I have had the contractors in, to see me when 
we started getting the prices on these airplanes. They came in 
with a pretty substantial price increase. General Krulak and I 
personally called the CEO's of those two companies in and 
looked them in the eye and said, you know, you are going to 
have to show us where every penny of this price increase is. 
The result was that the price increase went away. So we are 
paying all the attention we can to the program. It has the 
support of our Commandant, it has the support of Secretary 
Dalton, and beyond that, sir, I don't know what to say to you.

                       FAST PATROL CRAFT PROGRAM

    Mr. Young. We appreciate that. We know it is not easy. The 
goals are the same, to provide the best technology and the best 
equipment at the best price. Some of my colleagues who are not 
members of this subcommittee have asked me to just ask one 
further question.
    Last year, the Committee directed that fiscal year 1996 
funds appropriated for the Fast Patrol Craft Program be 
released by the Office of the Secretary of Defense to the Navy 
and expeditiously obligated only for that purpose. That 
language was in the report.
    My understanding is that has not been done and that is not 
going to be done and several of my colleagues have asked me to 
ask you why?
    Mr. Douglass. I think the most basic reason why is that it 
hasn't been released to the Navy. The Department of Defense has 
never released it. That is my answer as the acquisition person. 
I think beyond that, the reason why the money hasn't been 
released is because, frankly, we haven't asked for it to be 
released, because I don't think the requirement side of the 
Navy sees a requirement for those boats.
    Admiral Pilling. There is no Navy requirement. We are 
trying to find out from the Special Operations Forces if they 
have a requirement for such a craft.
    Mr. Young. Okay. Thank you very much. I apologize to my 
colleagues for taking so much of the Committee's time.
    Mr. Murtha.

                      CHEMICAL/BIOLOGICAL WARFARE

    Mr. Murtha. One of the programs that I went down to visit 
last year during the Atlanta Olympics was the chemical-
biological warfare mission. We brought it up last year in the 
Committee that I feel this is one of the major threats. I think 
this is as important as anything we can do, is find a way to 
combat that threat.
    When I went down to visit, I came back and visited with the 
Chairman, and we decided what had been done, with the little 
bit of the Marine Corps money. The Marine Corps really handles 
that money well. Nobody does it better than the Marine Corps. 
They had a system, but it wasn't good enough. It wasn't near 
good enough. So we put $10 million in, and it has been improved 
substantially, and I understand during inauguration they 
brought the unit up here.
    Is this program to the point where we should have units, 
say, on both coasts?
    The reason I ask that question, one of the ways you 
overcome biological warfare is you have to react very quickly, 
and even with chemical warfare you have to act quickly. Should 
we also have a unit that could deploy on the West Coast because 
of the time element? Is this something we should consider? Are 
we to that point where the demonstration is over and we can 
adapt another unit like this? Maybe not in the Marine Corps, 
but another unit like this?
    General Oster. As you know, this is one of the things that 
came out of the commandant's planning guide. As we looked over 
the horizon of the requirements there, there wasn't an incident 
response capability out there. So we set about to do that. It 
was really an idea that went rapidly from concept to 
deployment. We deployed it first to Atlanta, even before we 
came up here.
    We have always believed that with the reach-back 
capability, the small amount of gear, and the rapid time lines 
for deployment, that we can deploy in a very rapid time in the 
United States. We considered the aspect of adding additional 
forces, additional units, but as of now, we have not decided to 
do that.
    Mr. Murtha. How about if we prepositioned equipment?
    General Oster. Certainly, if we preposition equipment in 
other locations, that would make life an awful lot simpler.
    Mr. Murtha. They tell me the biological response time is 4 
hours. If you have a contamination, you have to respond within 
4 hours. I think they are based at Camp Lejune to hustle them 
together and get them any place in the West Coast would take a 
lot longer obviously.
    General Oster. Clearly, it is a concern with regard to the 
response. We feel especially proud we have this capability out 
there right now.
    Mr. Douglass. Mr. Murtha, I might add to that. I think that 
the fact that the Marines have that capability is testimony to 
General Krulak's leadership and the support by you and others 
on this Committee. I think the issue begins to go beyond the 
Marines, though, in the sense that we probably should look at 
that more widely across the Services.
    One of the concerns that I have heard General Krulak 
express when he and I have testified together is that if he has 
to deploy that overseas, let's say we had another DESERT STORM, 
and then we had a terrorist event back here, we would be in a 
pickle. We couldn't do things like move it down to the 
Olympics.
    Mr. Murtha. I wish you would take a look at it and see if 
we couldn't come up with a plan to cover an emergency, once you 
get it up to a point where you think it is working.
    One other thing I would like to mention. The Chairman 
mentioned a couple Members wrote letters about releasing money. 
I am not sure, Mr. Secretary, and both of you realize how 
difficult it is for us to put a bill together. I mean, we don't 
take these requests lightly.
    When a Member comes to this Committee and makes a request, 
we turn down probably, what, three for every one.
    We put a bill together and there is nobody better at it 
than us. We do as good a job as anybody. But then it gets stuck 
because in your shop down there, both Republicans and Democrats 
tell me we got problems getting stuff broken loose, because 
some administrator is making a decision that this is not 
important.
    Well, let me tell you, to get the bill through is 
important, and to get the overall bill through is important. 
And I hope you will consider that as you go through this 
process. It is a matter of opinion whether some of these things 
are important or not important. And the Members are careful, 
considerate, and usually have good recommendations. If they 
aren't, we throw them out. So I would hope----
    Mr. Douglass. Mr. Murtha, I couldn't agree with you more. 
As you know, I spent 4 years working for Senator Nunn over on 
the Senate side. I know how hard we struggled and I know what a 
conference is and I know how the Members end up over here at 
9:00, 10:00, 11 o'clock at night trying to hammer out these 
deals.
    Just suffice it to say that it is not stuck in my shop. 
Where these things get stuck are in the Comptroller's shops. 
They have a job to do. We have to recognize that they have to 
worry about how we are going to pay for Bosnia, and this, that 
and the other possible contingencies.
    One of the problems we are looking at in the building today 
is that year after year, what we find is in order to pay for 
today's operational problems, we borrow from tomorrow's 
modernization dollars. Often the first place they look, let us 
all face it and be honest about it, over there in that 
building, if it was added by the Congress and it hasn't been 
thought up over there in the building that is the first place 
they look when they have to cut.
    I guess that is human nature. I don't know. So I agree with 
you.
    Mr. Murtha. That is a real mistake, Mr. Secretary, because 
so many of the programs we have added have absolutely turned 
out to be beneficial. The V-22 is a perfect example. You folks 
wanted to kill it, and it went straight from the Secretary 
right down. And this Committee right here with Bill Young in 
the forefront trying to save the V-22.
    Mr. Douglass. Mr. Murtha, I agree with you. I argued that 
to the best of my ability within the constraints of my office 
and there is no better example than some of the things that you 
have brought up. I can think of others.
    Mr. Murtha. The sealift transport ships, just on and on and 
on. CEC. We have been around a couple of years. It is not as 
though we haven't been around. And Manufacturing Technology, 
you zeroed MANTECH out. MANTECH is a program that saves us 
money, for heaven's sake. That is frustrating.
    Mr. Douglass. I think the young man sitting next to you 
rocking in his chair will tell you that I have bent my pick 
trying to get MANTECH funded. It is another one we are going to 
take a tough look at.
    Mr. Murtha. Okay, thank you.
    Mr. Young. I just wanted to comment that I am sure the 
Florida Gators want to figure out how to solve a lot of these 
problems.
    Mr. Douglass. I sometimes feel like an old alligator 
arguing some of these.
    Mr. Young. At least you have a tough hide.
    Mr. Douglass. We can always remember who has a tough hide.
    Mr. Young. Mr. Cunningham.
    Mr. Cunningham. Thank you.
    I am not concerned that the Secretary was not enlightened 
because he was appointed by the President of another party. Not 
only is he a Gator, but he is Air Force.
    Mr. Douglass. Sir, I was in the Navy before I was in the 
Air Force. My dad was a Chief Petty Officer, and I am proud of 
it.

                    GROUND PROXIMITY WARNING SYSTEM

    Mr. Cunningham. I know that. And I would say that having 
worked with Secretary Douglass, I would be proud to serve with 
him because of the work that we have done.
    And if you could, you know, make Duncan Hunter happy, you 
have done a lot. And the Secretary is accessible, and if 
everybody in the President's administration was as 
straightforward, nonpolitical, get to the question and the 
problem, as the Secretary, we would be much better off in this 
organization. I want to thank you.
    I have a program I would like to raise. The Ground 
Proximity Warning System for Cargo and Troop-Carrying 
Airplanes, we put about $2 million in that program last year. 
Do you still consider that a viable system that is going to 
save aircraft and lives, and if so, do you have any plans to 
put it on other assets for Marine Corps or Navy? If you don't, 
you can provide that for the record.
    Mr. Douglass. I would have to provide that for the record. 
I think the answer is yes, but I really don't know.
    [The information follows:]

    Ground Proximity Warning is an important capability to the 
Navy and Marine Corps. To illustrate its potential, analysis of 
CH-53E Controlled Flight Into Terrain (CFIT) mishaps over the 
last 10 years shows that a Ground Proximity Warning System 
(GPWS) would have provided a warning in 75% of these accidents. 
The CH-53E has lost an average of 0.4 aircraft and 1.4 lives 
each year due to CFIT. Implementation of the GPWS into the CH-
53E would have had the potential to save 3 aircraft and 14 
lives over the last 10 years.
    The Navy and Marine Corps will complete the development and 
integration of a GPWS in fiscal year 1997 using the $2 million 
appropriated last year. Installations into CH-53E, CH-53D, MH-
53E, CH-46E, CH-46D, UH-46D, and MH-46D will begin in fiscal 
year 1998. Additionally, the Navy is defining requirements for 
the potential installation of GPWS into the H-60 and UH-1 
platforms.

                          PRIVATE/PUBLIC YARDS

    Mr. Cunningham. The second thing, Mr. Secretary, we have 
been working on the issues of Bosnia funding, its impact on 
ship repair and the private versus public yards. This is very 
important to San Diego and the West Coast and the Nation for 
national security. The supplemental now looks like it will 
include, as I hear, Mr. Chairman, a disaster supplemental tied 
into it.
    Are there plans to take the money from the supplemental and 
give back the ships that we have lost in the private yards, or 
are they going to take the money they have already stolen from 
you, plus the supplemental, and apply it to Bosnia? Can we 
expect some of those ship repairs which were scheduled for 
private shipyards to come back our way?
    Mr. Douglass. I am not sure I fully can predict the outcome 
of that, but let me say this----
    Mr. Cunningham. Say it this way, would you fight for that?
    Mr. Douglass. Yes, sir. You know that I came over to talk 
to you, Congressman Hunter, and Congressman Filner about this 
issue. And we tried to work out an agreement, which is that we 
can get as much of this backlog that is done in those private 
yards as possible. We have made a commitment to you for a 
certain amount for the San Diego area, and I am going to fight 
like a tiger for that money.
    I would also say that I am busy trying to make sure that we 
balance the work load in our public yards so that we don't have 
to keep moving people around. I know that is an irritant for 
all of us, and I am going to do the best I can to stay on top 
of that.

                           BUDGET PROJECTIONS

    Mr. Cunningham. Mr. Secretary, knowing how professional you 
are in the job, one of the things I think we all ought to be 
concerned about is solving the problem. We look at things like 
affordability. We don't have the dollars to do it. The 
President proposes to cut $4.8 billion out of the defense 
budget, so we don't have the money to do the things we really 
need to do.
    The Bosnia money, I am not naive. I would bet my house 
against yours, and I have got a pretty nice one, that we are 
going to go through another conflict in the next 4 years and we 
will have to pay for it just like that. I believe it is 
unrealistic and the chart you put up there that showed in the 
year 2002 where our modernization takes place. Remember last 
year when General Shalikashvili and all the Joints Chiefs put 
their careers at risk by saying that $60 billion is what we 
need for procurement, and the President said no, $35 billion.
    Well, something you ought to be really concerned about, Mr. 
Secretary, is the President's balanced budget cuts 98 percent 
of its domestic spending during the last 2 years. And I don't 
think logically there is any way that those who want to put the 
money in social spending are going to allow us to make those 
increases in national security spending. I mean, it is just not 
logical.
    You know the smoke and mirrors that goes on around here, 
but it is something we ought to be taking a look at. If I would 
have had my way, I got here just as Dick Cheney cancelled the 
fighter the Chairman was talking about in the last hearing, and 
I disagreed with it.
    But my intent was to increase the dollars for the F-14, F-
14D. I went against McDonnell Douglas on this one. We got the 
F-18 after I pushed a personal check, like I did with my house, 
and said hey, it is going to cost us more than the $2 billion 
in R&D, for the F/A-18 effort and we only get 15 percent more 
in range. The radar won't see as far as the SU-27s radar, it 
won't even see as far as the AA-10 or AA-11 missile we will go 
up against. But we have to buy that airplane, and to fill our 
decks, and I support that.
    But in doing that, in looking at the out-year dollars, I 
would also support the increasing procurement of the V-22 to 
36. Here is an article that showed the value of a higher 
procurement rate. It is one of the best articles to make the 
case. It is written by Major General John Rhodes. And if you 
don't have this, I will provide you copies and submit it for 
the record.
    I didn't provide copies in the last hearing, but the 
article makes a really good case and us well written. I will 
give you copies. Talks about an operation which took something 
like 87 hours for a helicopter to go in, fly 480 miles, refuel 
twice, put them in daylight risk. While it only took 7 hours in 
the V-22. with lower risk.
    But with straight-line funding, we are faced with having to 
build three versions of the JSF, three completely different 
ones. The R&D cost for those, in the low-procurement numbers 
that are projected, are astronomical. If you want to save 
money, give us a flat-line procurement, we don't have to bring 
on and lay off workers. We have some idea of the spare parts 
needed and those sorts of things, which we never seem to do 
that.
    These are things we can really do together. But the V-22, I 
would increase the procurement rate, if it were up to me. I 
don't know if we can or not. But last year, you said we cut 
things that Congress added. But we also put in things that you 
really needed, that you were short.
    When the Secretary stood up and said everything is rosy, we 
found out the Marine Corps has AV-8Bs that are falling out of 
the sky. 50 percent of them have a interim fix because the 
Department doesn't have the money in order to truly repair 
them. So these are life-and-death questions, and I would hope 
that you would support us for the adds that we put in. And I 
know you do for the supplemental, Mr. Secretary, and the 
Admiral and General here.
    But I have some real concern because we push everything 
into the out-years. Since I have been here, when Les Aspin was 
sitting in the Chair for National Security, everything was 
going to the out-years and we were always going to do it later. 
We are not going to be able to do that, sir, realistically.
    Mr. Douglass. We understand your concerns, Mr. Cunningham, 
and we appreciate your support and we will do everything we can 
to work with you.
    One thing you said that I particularly agree with is this 
interwar period. I think people who think that there is no 
conflict going to come for the next 30, 40 years, or something 
like that, just haven't read the history books.
    We can't predict how these things develop. But if you look 
at the history of our country--and I am pretty proud of the 
fact that I read history pretty avidly and really stay on top 
of it--we all know it is a dangerous world and it is cyclic. 
One of the challenges we have, all of us, those on this 
Committee, and the people appointed by the President to take 
care of things for the Administration, is to stretch these 
dollars as far as we can.
    Mr. Cunningham. I have a couple of questions for the record 
I would like to submit, and when I do, I will submit this for 
the record.
    Mr. Young. No objection, Mr. Cunningham.
    Thank you very much.
    [The article follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Young. Mr. Visclosky.

                   NEW ATTACK SUBMARINE PROGRAM COST

    Mr. Visclosky. Thank you, Mr. Chairman.
    Mr. Chairman, I also have a number of questions for the 
record, if I could have those submitted, I would appreciate 
that very much.
    Mr. Secretary, Admiral, General, I want to associate myself 
with the remarks made earlier by the Chairman and Mr. Murtha on 
the ship self defense systems. I think that there is a great 
importance that we ought to all attach to that, and I would 
want to associate my remarks with them.
    I would like to talk to you about the submarine program, if 
I could, and now that the administration has decided to do a 
teaming arrangement between Electric Boat and Newport News, I 
am wondering if you could compare for me the total program 
costs today for that original 30-boat program compared to what 
it would have looked like with the sole source.
    Mr. Douglass. The original program which was made some 
years ago is some $60-plus billion program, Mr. Visclosky. The 
part that we of course struggle with, is the front end of the 
program, how are you going to build the first four or five 
boats? And as you know, the Navy's original plan was to select 
Electric Boat as the designer and builder. We were going to 
build submarines there and carriers down at Newport News.
    For several years now, the Congress has not only urged us, 
but written it into the law that we would have a competition 
between the two yards. That competition added, depending on 
whether you are conservative or liberal with your figures, 
between $3 and $6 billion cost to the program. We figured it 
was around $3 billion, the GAO figured it was closer to $6 
billion.
    Those costs were because instead of building one boat in 
one facility with one design, you were going to have two basic 
design teams, two learning curves, smaller quantity buys for 
the initial procurement of the materials and so forth. We were 
never able to fully come to grips with that extra cost of that 
competitive program, and last year we brought forward a 
recommendation to the Congress that committed us to try to do 
this competition, but did not have the money for all of the 
boats, those first four boats.
    In the time that has gone by since our last round of 
hearings on the Hill, the shipbuilders came into us and said 
look, it would be to everyone's advantage to allow us to team 
to build the New Attack Submarine. With regard to teaming, 
there is another example, Mr. Chairman, of something that was 
added by the Congress that we very much appreciate and turned 
out to be fortuitous for us. Congress added a new submarine 
large scale research vehicle for us, and the Congress allowed 
us to get these two shipyards to team on this research vehicle. 
It is a miniaturized submarine that we can use, to try on 
various new techniqies.
    Their teaming on that research vehicle went so well that 
they came to us and made proposals to me and my staff that they 
would be willing to team on the overall program on the first 
four boats, provided that we could: A. Obtain Congressional 
approval of their teaming concept, and B. That we could buy the 
first four boats in a block buy.
    Now, that has not been done before, and there is some risk 
associated with that. We looked at it very carefully. My staff 
has estimated that the savings in that program, not from this 
competitive program but from what we had in the budget, was 
going to be in the neighborhood of $450 to $600 million. That 
is a lot of money that I can spend on other things. So I 
recommended that proposal to the Secretary of the Navy, the 
Secretary recommended it to the Secretary of Defense, he 
recommend it to the President, and now all of us are 
recommending to the Congress that we change the law and allow 
us to move from a competitive program, which we never had the 
money to fund, to one of teaming.
    The bottom line of all of this is that we think the 
ultimate total cost for all those 30 ships under this approach 
will probably fall. But the reason why I have not given you a 
30-ship number for teaming versus a 30-ship number for 
competition, was that we never developed that 30-ship number 
for competition. We never extrapolated it all out.
    But I can tell you competition was at least $3 to $6 
billion more expensive on just the first four boats alone. 
Further, more and this is an important point, there was never a 
point where you could say, let's have a real competition, in 
the sense that we might have on an airplane. Where there are 
big quantities, and you can give so many to one company and so 
many to the other. For years and years, we were only going to 
be building one boat a year. So it meant every year one yard 
would get one, and another the other, unless you simply wanted 
to say we will just go down to one builder. First, we didn't 
think that was politically viable. Secondly, what would you do 
with the boats built by the loser who is now out of the 
submarine business? We would have what we refer to as orphan 
boats, and very expensive orphan boats. So for all of those 
reasons teaming began to look better and better for us, and 
that is what we have proposed to the Congress.
    Mr. Visclosky. Mr. Secretary, I have been on sabbatical for 
the last two years on this issue, but my recollection is one of 
the Committee's concerns two years ago, if not before that, was 
that there would be room in your budget over the years for the 
procurement on an annualized basis of a regular number of new 
attack submarines. You indicated here that the estimate for 
those 30 boats was $60 billion. And then you mentioned----
    Mr. Douglass. Approximately.
    Mr. Visclosky. Approximately.
    Mr. Douglass. Yes, sir.
    Mr. Visclosky. And then that the increased cost was $3 to 
$6 billion. That is not over the $60 billion, as I understand 
your answer, that is over the first four boats.
    Mr. Douglass. But it would have been added to the $60 
billion. We just never calculated it all the way out.
    Mr. Visclosky. Now, I don't understand your answer. Are you 
saying----
    Mr. Douglass. Let's say it was $60 billion, just for 
hypothetical purposes.
    Mr. Visclosky. For 30 boats.
    Mr. Douglass. It would have gone up to somewhere between 
$63 and $66 billion.
    Mr. Visclosky. With the single yard?
    Mr. Douglass. No, no, with the competition. There was all 
this extra cost at the beginning of the program. We saw no way 
of recapturing it back.
    Mr. Visclosky. Okay. So the $3 to $6 billion would be the 
additional costs because of the partnering, spread over the 
course of the 30-boat contract, that additional cost being 
attributed to the up-front cost of testing the theory of the 
partnering?
    Mr. Douglass. Not partnering. That was the extra cost for 
competition. Partnering allowed us to reduce the cost not back 
to what it would be as a sole-source producer, but 
substantially less than what it would be to have two yards 
competing with each other, two design teams, two different 
learning curves, et cetera.
    Mr. Visclosky. Okay. So because of the competition today, 
all of the things being equal, the costs for a 30-boat run 
would be, ballpark, $63 to $66 billion.
    Mr. Douglass. Yes, sir.
    Mr. Visclosky. You mentioned savings of $450 to $600 
million. Is that because of the partnering, and is that 
attributable only to the first four boats or over the 30 boats?
    Mr. Douglass. No, that is over just the first four boats, 
and it is attributable to teaming and it is a fairly 
conservative figure.

                               UNIT COSTS

    Mr. Visclosky. What do you anticipate the unit costs of the 
first four boats to be?
    Mr. Douglass. I don't have an average figure, but let me 
give you a figure that deals with the fifth boat, if I could. 
It is pretty close to that. Let me see if I have it here in my 
notes somewhere. Because I asked that same question of my staff 
early this morning, and I do have it somewhere.
    We had a metric that the Congress asked for in a similar 
line of questioning that you are putting forward. And they 
said: Tell us what you think the fifth boat would be under 
these various ways. And if you did it sole source, just one 
yard, original plan, back to Electric Boat, that fifth boat was 
going to cost about $1.55 billion. Doing it in a competition, 
the price of that boat went up to about $1.8 billion. By 
teaming, we can get the price back down to $1.65 billion for 
that boat.
    Mr. Visclosky. Okay.
    Mr. Douglass. Those are fairly rough, sir.

                           CONTRACT STRATEGY

    Mr. Visclosky. The next question I have, as I understand 
it, the contract for these first four is going to be a 
multiyear contract and is not for advanced procurement. These 
are actual construction dollars.
    Mr. Douglass. Yes, sir, we are asking for authority to 
build the first four boats in one contract. I would point out 
that some people sort of opened their eyes and said: Oh, this 
has never been done before. That is not true. It is done all 
the time.
    The only thing is we don't usually do it on submarines. We 
do it all the time on airplanes. On the B-2 program, we bought 
the first six B-2s, which cost almost as much as a submarine, 
one big contract, that was a team between Northrop and Boeing 
where Northrup was the prime contractor.
    I have got other statistics here in my notes about how many 
F/A-18s we bought on the first contract, how many various other 
kinds of things we normally buy. We just don't normally buy 
ships that way. So one of the things we are trying to do----
    Mr. Visclosky. Your contract would be cost plus, I 
understand?
    Mr. Douglass. Yes, sir, like any development contract.
    Mr. Visclosky. My recollection, and I don't have any notes 
in front of me from two years ago, but that the $1.65 billion 
for the fifth ship, I assume today is higher than it was two 
years ago?
    Mr. Douglass. Well, as I said, two years ago the figure we 
had was based on a sole source.
    Mr. Visclosky. And then we have the competition and then we 
have the savings because--my point on this would be that I 
appreciate knowing of any ship contract where the costs came in 
under what we thought they were at the beginning of a program.
    Mr. Douglass. I could supply that for the record. There are 
some, you might be surprised to know that, but there are some.
    Mr. Visclosky. My concern, to be honest with you here, is 
we are starting a new shipbuilding program on a very 
sophisticated piece of equipment, multi-lot contract, cost 
plus. And I am very concerned on behalf of the Committee of the 
obligation we are going to find ourselves in with the 
tremendous pressure you face on your entire shipbuilding 
program.
    [The information follows:]

    From Fiscal Year 1971 through Fiscal Year 1995, 402 ships were 
authorized at an original Navy budget request of $173.4 billion. These 
ships have been and will be delivered to the Fleet at a final budget 
cost projection of $169.5 billion (2.3 percent variance).
    The Naval ship acquisition and industrial construction process is 
one of the most challenging and successful joint government and 
industry endeavors. We have consistently delivered high quality ships 
to the fleet within our estimated costs. Competitive forces have 
influenced industry prices but in general the final cost outcome has 
been predictable. Many hardware components of a ship cost more and take 
longer to build than other weapon systems. Subsystem software, testing, 
and infrastructure support costs are higher. Long production cycles 
require long-range forecasting for productivity, industrial workload, 
overhead structure and industrial base. Long production cycles for the 
ship platform creates cost risk associated with technology changes and 
obsolescence of ship components and weapons systems.
    The cost of a ship evolves on a constant basis from the time of 
award until its delivery. The change is driven by a wide range of 
factors, including engineering changes inserted into the ship design 
after award to more effectively respond to desired changes in war 
fighting capability, or to implement changes in the desired number of 
hulls or ship construction profile, as well as other factors, such as 
changes in the inflation rate between contract award and ship 
completion. As a result, the initial estimate of ship cost at the 
``beginning of a program'' is not a very good metric. Point estimates 
of a ship's estimated cost are done two to five years in advance of the 
actual construction contract award. These estimates constantly evolve 
to account for changes in proposed ship design and market conditions. A 
more valuable metric is to examine the variability between Navy ship 
cost estimates versus actual construction costs over a long period of 
time.
    The Navy has done an exceptionally credible job of accurately 
estimating the total costs of ship programs over the past 15 years. The 
Navy has also institutionalized an aggressive policy of both 
controlling costs and improving cost estimating procedures. Based on 
these factors, we have high confidence in our ability to accurately 
estimate ship construction costs in the Five Year Defense Plan.

                        INDUSTRIAL BASE CONCERNS

    Mr. Douglass. If I might add, there is another factor here 
that I think is important for the Congress to take into 
consideration. I don't think you were here when I showed the 
ship production that our country has proposed for the next 6 
years--the lowest levels since the 1970s.
    There are six big private yards that can build ships for 
our Navy. I cannot keep all of those yards viable with four or 
five ships a year. So what we are going to see, unless I am 
able to get some legislation through the Congress that will 
open up American shipbuilding to the world commercial 
shipbuilding market to help us build more ships for our own 
domestic and commercial shipbuilding, is some form of collapse 
of our shipbuilding industry.
    Now, we have to ask ourselves do we, as the greatest 
maritime nation in the world, want to sustain this industrial 
base? The Navy came up with a sustainment plan, and it was to 
build the New Attack Submarine at one builder, and the Congress 
said no, no, you are not going to do that, you have to have two 
builders.
    All I am saying is if we are going to keep two builders in 
business, the best way is to have those builders team rather 
than through a competitive situation that is much more 
expensive than a teaming arrangement. We recognize and agree 
with you that there are significant challenges for the long-
term controlling costs on these programs, but I am pretty proud 
of our record in recent years in getting costs under control on 
all of our programs.
    We are paying off a few bills from 4 or 5 years ago on our 
Roll-on/Roll-off RO-RO sealift ships, but other than that, all 
our airplane, ships, across the board, are not overrunning. The 
Navy acquisition team working with our war-fighters has done a 
tremendous job.
    It is not my job alone. I am just the leader of the 149,600 
people in the Navy acquisition commands. But we have done a 
tremendous job of holding the line as numbers have gone out of 
the building programs, and so on, to keep these programs from 
overrunning.
    I share your concern, sir, but all I am saying to you is 
that I can save between $450 and $600 million on those first 
four boats, and also get technology into those boats much 
quicker. Because those submarine yards are not going to share 
their best technology with each other if ultimately they think 
we are going to pull the rug out from under one of them in some 
form of competition. Then we have the problem of orphan boats, 
what do we do with the loser's boats, the two or four, or 
whatever they built during the competition?
    Mr. Visclosky. Are you saying those yards collapse because 
they don't have the capacity, or don't have the business?
    Mr. Douglass. No, we don't have the business for them.
    Mr. Visclosky. Thank you, Mr. Chairman.

                         MULTIYEAR CONTRACTING

    Mr. Young. Mr. Douglass, the questions that Mr. Visclosky 
raised on the submarine, I realize that was a tough issue. We 
dealt with that last year, if you recall, trying to figure out 
how to handle that issue and keep both yards viable, and Mr. 
Visclosky asked some important questions relative to the 
submarine contract.
    I want to come back to the issue of the multiyear contract 
for the first four items off of a production line. And you said 
that has been done before. I have asked around the table here 
with the staff, and nobody remembers when that was done before.
    Mr. Douglass. Not on ships has it been done, not that I 
know of. It has been done on other complex programs like 
airplanes and other projects.
    Mr. Young. The first item?
    Mr. Douglass. Sure.
    Mr. Young. Give us some examples of that, for the record.
    Mr. Douglass. I have a list of them here. I just didn't 
want to spend too much time on the issue.
    Mr. Young. Do that for us, and then go back to the fixed 
price versus the cost plus. If the contractors are getting the 
advantage of a multiyear contract, why do we also have to give 
them a cost-plus contract?
    Mr. Douglass. Well, one of the reasons that I think it is 
important to not rush too quickly, we are eventually going to 
get to fixed-price contracts on these. But again, I am choosing 
my words carefully here because I don't want to make anybody 
mad.
    There has not been consensus in the Congress on this issue. 
We have some Members, Mr. Chairman, who really are pushing us 
hard to put more technology into those boats, and we have upped 
our budget substantially. We have in the neighborhood, in 
addition to all the money, which is, as I recall, over $300 
million a year now for research on the New Attack Submarine 
itself, we have about $100 million per year in the budget for 
submarine technology.
    Now, we want to take that technology, the results of that, 
and insert it into our boats as quickly as we can, to improve 
the boats as we go along. And indeed, to further answer the 
Congressman, maintaining the submarine base is often thought to 
be maintaining the shipyard workers who can build submarines. 
That doesn't maintain the industrial base.
    You have to keep the engineers who design the submarines 
employed, or when it comes time for the next submarine you 
don't have anyone who knows how to design a submarine. So we 
are getting into an area where we have got to do preplanned 
product improvement. So on the one hand, we are being driven 
not to go down to one contractor, we are being driven to put as 
much technology into the boats as we can and to allocate boats 
in certain ways between these two builders. So we found sort of 
the middle ground, the best compromise that we have been able 
to work out is to get these yards to work together, to share 
their good ideas. Now they are willing to open up all their 
design secrets to each other and really team.
    Now, this is a lifetime team. So people have asked, are you 
just going to team on the first boats and have a competition? 
No. This is it.
    If the Congress gives approval to do this, these two yards 
for submarines are teamed for the life of this program. That 
means they have to share all their internal production secrets. 
We are going to build all the front ends in one place, and all 
the back ends in another place for example, so the members of 
the team concentrate on their part of the program, so we don't 
need two design teams for the back. We get down to one design 
team in each place.
    In order to do that, we have to give them some reasonable 
degree of stability, and that is why I have recommended those 
four boats be bought on a block contract buy. But frankly, as a 
person who has been in this business for 35 years, I don't see 
any difference between building the first four submarines on a 
class in this kind of arrangement as in some other big program, 
like bombers. I don't remember the number on B-1s. I was around 
in those days, but I have forgotten the number.
    I think on B-2s, we built the first six on a development 
contract. In the FA-18 program, we had 8 or 9 airplanes, all 
built on the first contract. These big aircraft programs or 
armor contracts are essentially teaming programs. They are not 
all built 100 percent at one place. They get together.
    In the case of the B-2, the wings are built by Boeing, 
Grumman builds the fuselage, somebody else the tail, and so on. 
We have got to take that idea, which has been very, very 
successful in our aerospace industry and we are still the best 
aerospace country in the world. We know how to build the best 
airplanes in the world. We need to get that expertise and how 
to do those things into our shipbuilding industry.
    Unfortunately, I am sad to tell you that our shipbuilding 
industry is not the best in the world. They build the best 
warships in the world, but, you know, we are losing out on the 
commercial market. So somehow we have got to get those modern 
construction techniques and modern management techniques into 
the shipbuilding business or we are going to wake up some day 
and there will be some future Assistant Secretary of the Navy 
come before you with a radical idea of building a ship 
overseas, instead of here.
    All I am telling you is on my watch, Mr. Chairman, if there 
is anything I can do, work 24 hours a day, it isn't going to 
happen on my watch. I believe at the core of my soul that we 
need a maritime industrial base for this country. We are a 
great maritime nation. We need to build our warships, including 
our submarines, here at home. That is what I am trying to do, 
keep this industrial base viable so we can do that.
    Mr. Young. I think we can close on that thought, because I 
don't think you will find any disagreement from any Member of 
this Committee certainly, by any Member of Congress. We agree 
we have a great maritime nation and we must maintain our base, 
there is no doubt about that, our ability to build our own 
ships and submarines.
    Thank you very much for an interesting hearing. We will 
undoubtedly have additional questions, in fact, we have some, 
and ask that you respond in writing along with those that Mr. 
Cunningham and Mr. Visclosky asked for.
    The Committee will adjourn now until next Tuesday, March 
the 11th, when there will be an open hearing at 1:30 p.m., in 
2212 Rayburn, on the Fiscal Year 1998 Air Force Budget. The 
witnesses will be the Secretary of the Air Force, and the Air 
Force Chief of Staff, General Fogleman.
    Nothing further, the Committee is adjourned until then.

    [Clerk's note.--Questions submitted by Mr. Livingston and 
the answers thereto follow:]

                             LPD-17 Program

    Question. If additional funds were provided in Fiscal Year 1998 by 
Congress for the second LPD, would the Navy be able to execute the 
program or a contract in FY98 for this ship?
    Answer. The Navy would be able to execute the LPD 17 program if 
$739.3 million were provided in Fiscal Year 1998 for LPD 18. The 
current cost plus award fee contract structure provides for a lead ship 
and options for two follow ships with the phased combat system. The 
current budget structure provides for only a lead ship and one follow 
ship with the phased combat system, before beginning the fixed price 
incentive contract for the full combat system with Evolved Sea Sparrow 
Missile and Vertical Launch System. Consequently, the existing cost 
plus award fee option for the third ship, the first ship at the second 
yard, would not be exercised in the budget as now structured. 
Accelerating a follow ship into fiscal year 1998 also has a beneficial 
effect on the shipbuilding industrial base workload. The estimated cost 
of a fiscal year 1998 LPD 17 class ship reflecting option prices from 
the Full Service Contract is $739.3 million. A ship added in fiscal 
year 1998 would result in a reduction in total Shipbuilding and 
Conversion, Navy program costs of approximately $50 million.
    Question. In terms of unfunded requirements, is a second LPD ship 
of high, medium, or low military utility?
    Answer. The LPD 17 class ships have extremely high military value, 
because the national strategy of forward presence through naval 
expeditionary forces fundamentally depends on amphibious ships. The LPD 
17 class is urgently required to accomplish the critical replacement of 
the four aging and obsolescent classes in the Fleet that have been 
extensively and continually deployed in fulfilling national strategic 
objectives. Accordingly, the LPD 17 program will significantly improve 
readiness and provide warfighting capability that has extremely high 
military value in the national strategy.

                           LMSR Ship Program

    Question. The FY 1998 budget request includes $70 million for 
advance procurement of the last Large, Medium Speed, Roll-On/Roll-Off 
(LMSR) ship in 1999. If Congress were to accelerate the last LMSR from 
FY99 to FY98, what would be the total funding requirement for this 
ship?
    Answer. The Fiscal Year 1998 President's Budget requests $70 
million for Advanced Procurement in Fiscal Year 1998 and $322 million 
in fiscal year 1999 for the final ship. In Fiscal Year 1998, $265 
million would be required to accelerate the Fiscal Year 1999 ship--this 
translates to $92 million in total program savings ($35 million 
reprogrammed in Fiscal Year 1997 and $2 million in Fiscal Year 1999).
    Question. Would the Navy be able to execute a contract for this 
ship in FY1998 if additional funds were provided by Congress?
    Answer. If funds in the amount of $265 million above the 
President's Budget Request of $812.9 million were provided by Congress 
in Fiscal Year 1998, the Navy would be able to execute the contract 
option to procure the nineteenth and final Sealift ship. In April, the 
Navy ran a limited competition for the last 2 LMSRs. On May 23, 1997, 
NASSCO was awarded the third Fiscal Year 1997 ship. An option for the 
remaining Fiscal Year 1999 ship was established on the Avondale 
contract with an Advanced Procurement option for long lead time 
material in Fiscal Year 1998.
    Question. What is the Navy's current plans for the award of the 
last two LMSRs?
    Answer. In April, the Navy ran a limited competition for the last 
two LMSRs. On May 23, 1997, NASSCO was awarded the third Fiscal Year 
1997 ship. An option for the remaining Fiscal Year 1999 ship was 
established on the Avondale contract with an Advanced Procurement 
option for long lead time material in Fiscal Year 1998.
    Question. What are the Navy's plan for the construction of the 
extra LMSR funded in the Fiscal Year 1997 DOD Appropriations bill? When 
will an award be made?
    Answer. The Navy plans for the construction of the third Fiscal 
Year 1997 LMSR to be completed by NASSCO. The award was made May 23, 
1997.
    Question. If Congress provided additional funding in Fiscal Year 
1998, what is a higher priority for the Navy, accelerating the last 
LMSR or a second LPD?
    Answer. Assuming that the last LMSR remains in Fiscal Year 1999, 
the LPD 18 would be a higher priority, since the current program meets 
strategic mobility requirements for Fiscal Year 2001.

                          ADC(X) Ship Program

    Question. Last year's budget submission funded the first ship of 
the ADC(X) class in Fiscal Year 2000. This year's submission does not 
include the ADC(X) in Fiscal Year 2000 or any outyear. Is there still a 
requirement for the ADC(X) ship?
    Answer. There is still a requirement for ADC(X). While there is no 
Fiscal Year 2000 ADC(X) reflected in this year's budget submission, the 
Secretary of Defense Guidance directs the Navy to explore Charter and 
Build as a procurement alternative for ADC(X).
    Question. If so, what is the current time frame for this class of 
ships?
    Answer. If the Navy is allowed to lease these vessels through a 
Charter and Build approach, the current projections for ADC(X) are:
          --Contract awards for design & construction commencing in 
        Fiscal Year 2000.
          --Two new ships would commence construction each year through 
        Fiscal Year 2005.
          --Ship deliveries would commence in late Fiscal Year 2003.
          --Two ships would deliver each year through Fiscal Year 2008.

                                            ADC(X) Delivery Schedule
----------------------------------------------------------------------------------------------------------------
                   Fiscal year                      2000   2001   2002   2003   2004   2005   2006   2007   2008
----------------------------------------------------------------------------------------------------------------
Contact..........................................      2      2      2      2      2      2  .....  .....  .....
Deliver..........................................  .....  .....  .....      2      2      2      2      2      2
----------------------------------------------------------------------------------------------------------------

    Question. How many ships are planned for this class and what is the 
current price estimate for one of these ships?
    Answer. Ten to twelve ships are currently planned at an estimated 
average ship cost between $300 and $400 million.
    Question. Describe the current characteristics and capabilities of 
this class of ships. How will this ship be classified in terms of 
military specifications?
    Answer. The purpose of ADC(X) is to replace the current capability 
of the T-AE 26, T-AFS 1, T-AFS 8 and AOE 1 Class ships. ADC(X) will 
provide logistic lift from sources of supply such as friendly ports, or 
at sea from specially equipped Ready Reserve Force merchant ships by 
consolidation, and will transfer this cargo (ammunition; food; limited 
amounts of petroleum, oil and lubricants (POL); repair parts; and 
expendable supplies and material) at sea to station ships and other 
ships operating with naval forces. ADC(X) may be required to act in 
concert with a T-AO Class ship as an equivalent station ship. The 
ADC(X) is intended to operate independently underway, but could be 
escorted by Navy combatants when required for protection. The ADC(X) 
will be built to commercial standards and will have few, if any, 
military specifications.
    Question. Is the Navy considering a ``build and charter'' approach 
to the ADC(X)? If so, how would it work?
    Answer. Yes, the Navy is considering a ``build and charter'' 
approach. The Navy would sign agreements to charter the vessels with 
commercial entities, who would then design and construct the vessels to 
meet the Navy's requirements. The Navy would then make lease payments 
to the owners upon delivery of the vessels. The Navy's preferred 
``build and charter'' approach would be a bareboat charter where the 
Navy would lease the asset from a commercial entity and operate it as a 
public vessel. Crewing would be provided by the Military Sealift 
Command (MSC) with civilian mariners.
    Question. Would the Navy contract with an operator as opposed to a 
shipyard?
    Answer. The contract could be with either an operator or a 
shipyard. Charter arrangements are normally made through an owner. This 
owner could be an operator, a shipyard, or another type of company with 
marine interests.
    Question. Does the Navy currently have the authority to proceed 
with such a procurement approach? What changes in current law are 
required?
    Answer. OMB has established guidelines regarding leases of capital 
assets. Depending on how OMB evaluates the proposed ADC(X) ``Build and 
Charter'' program structure, legislation may be required if the program 
is to be executed without the need for upfront Budget Authority and 
Appropriations. However, in order to enter into a long-term charter 
arrangement, statutory authority would be required. Specifically, the 
Navy would need authority to charter vessels for 25 years, allowance 
for termination liability to be held in reserve in current Navy O&M 
accounts, and view the hire as a cost of the Navy Working Capital Fund.
    Question. If Congress did not approve changes in law to allow a 
``build and charter'' approach, what are the Navy's back up plans for 
acquiring these ships?
    Answer. If Congress does not approve any changes that might be 
necessary to executive the building and chartering of ADC(X) vessels, 
the Navy will have to enter into costly Service Life Extension Programs 
for AOE-1s, AEs, and AFSs. If and when Budget Authority and 
Appropriations become available, the Navy will replace these aging 
vessels with ADC(X) ships.
    Question.What is the Navy's current or past experience with ``build 
and charter'' arrangements?
    Answer. The Navy successfully executed long-term vessel leases in 
the 1980s for the MPS and T-5 tanker programs. In addition, MSC 
frequently leases vessels on a short term basis for up to five years.
    Question. Has the Navy ever compared its financial experience in 
the build and charter arrangement for the MPF ships versus the cost of 
acquiring and operating these ships by the government? If so, what does 
this comparison show?
    Answer. Such an analysis was conducted prior to the procurement of 
the MPF ships. A similar financial analysis based on OMB guidelines is 
being conducted for the ADC(X) vessels.

                  LCAC Service Life Extension Program

    Question. The Committee understands that a ``basic'' SLEP phase to 
extend the service life of LCACs to 30 years and bring the craft up to 
a common configuration will be ready for implementation in 1998. 
However, this transition to production has not been programmed to start 
until 2000. If so this is a departure from the LCAC SLEP plan the Navy 
submitted to Congress in 1996. Why has the Navy elected not to start 
the ``basic'' SLEP effort in fiscal year 1998?
    Answer. On October 7, 1996, the Secretary of the Navy informed the 
Honorable Bob Livingston, of the House of Representatives, that funding 
limitations precluded commencement of the SLEP program in fiscal year 
1998 and fiscal year 1999, and that Navy requirements could be 
satisfied by commencing the program in fiscal year 2000.
    Question. If Congress were to provide the additional funds for this 
effort, what would be required to restore this program to the original 
schedule so that it can begin in FY 1998?
    Answer. The funding profile required would be ($M): fiscal year 
1998, $24.1; fiscal year 1999, $24.7; Total, $48.8.
    These amounts include the required integrated logistics, interim 
support of equipment, technical trainer upgrades, government furnished 
equipment in support of SLEP, and Department of the Navy engineering 
services support in areas of testing, configuration management, 
technical support and craft scheduling and transportation.

                        CVN-77 Aircraft Carrier

    Question. It has been reported that changes in the method of 
construction of the CVN 77 could reduce the cost of this ship by as 
much as $600 million. What changes have the potential to reduce 
acquisition costs of one ship by this amount?
    Answer. Newport News Shipbuilding (NNS) has proposed a ``Smart 
Buy'' approach for CVN 77 that would optimize the aircraft carrier 
industrial base and improve CVN 77 affordability. NNS proposes to 
accelerate the purchase of selected components and materials, detailed 
design work, and construction of low risk hull sections/modules on CVN 
77. These efforts would begin in Fiscal Year 1998 instead of Fiscal 
Year 2002. The ship delivery date will be remain in Fiscal Year 2008. 
NNS claims its ``Smart Buy'' proposal will generate potential savings 
to the total ship cost of $600 million.
    More specifically, the NNS ``Smart Buy'' proposal would generate 
savings from three main areas:
          1. Early Construction of Low Risk Hull Sections/Modules: NNS 
        asserts that $300 million can be saved by starting the 
        construction of selected low risk hull sections/modules in 
        Fiscal Year 1999. This would maintain critical structural 
        trades (welders and shipfitters) across the dip in the manning 
        curve at NNS and would preclude it from having to incur costs 
        associated with the layoff, and subsequent rehiring and 
        retraining of workers between CVN 76 and CVN 77.
          2. Increase Advance Procurement Funding: NNS states that $150 
        million in savings can be obtained by purchasing additional 
        long lead time material and equipment starting Fiscal Year 
        1998, to take advantage of current contracts for CVNs 75 and 
        76. This would allow critical subcontractors to maintain their 
        production lines and keep costs down. This would be in addition 
        to the advance procurement of nuclear components currently 
        programmed in Fiscal Year 2000.
          3. Escalation Savings. NNS estimates substantial escalation 
        savings (approximately $150 million) could be realized under 
        its ``Smart Buy'' proposal.
    The Department of the Navy has reviewed the NNS ``Smart Buy'' 
proposal (which includes a $17 million RDT&E plus-up and a $345 million 
SCN plus-up in Fiscal Year 1998) to determine if it is feasible and 
would generate the proposed costs savings. The Navy believes the 
proposal is feasible and has merit, however, cost estimators from Naval 
Sea Systems Command, RAND and the Office of the Secretary of Defense/
Cost Analysis Improvement Group (OSD/CAIG) have reviewed the estimates 
and the consensus is that the savings would be closer to $400 million. 
Early construction/workforce savings are expected to be $220 million, 
the advanced procurement savings $120 million, and escalation savings 
$60 million.
    Additionally, RAND has studied the cost impacts of accelerating or 
delaying the start of construction of CVN 77 and various build periods 
as part of its overall aircraft carrier industrial base study. They 
concluded that significant savings, on the order which NNS asserts, can 
be generated by starting construction of CVN 77 in Fiscal Year 2000 
while holding the delivery date of the ship in Fiscal Year 2008.

                      Shipbuilding Industrial Base

    Question. What is the Navy's assessment of the financial health of 
the shipbuilding industrial base?
    Answer. The major shipyards which build new Navy ships are healthy 
enough today to compete for and win major U.S. Navy shipbuilding 
contracts. The Navy conducts periodic reviews of the financial health 
of individual shipbuilding companies and also conducts more detailed 
reviews when a major shipbuilding contract is pending. Awards are not 
made to financially troubled shipyards, if the Navy determines that 
they lack the financial resources to complete the contract under 
consideration. An assessment of the financial health of the industry 
over future years will be part of the ongoing joint Department of 
Defense and Navy Shipbuilding Industrial Base Study.
    Question. What steps could be taken by the Navy to improve this 
health?
    Answer. All of the shipyards which conduct the bulk of their 
business with the Navy are facing downturns, or, at best, no growth in 
future Navy business prospects, as the last of the ships ordered in the 
waning days of the Cold War are completed. This has prompted the Navy 
to emphasize the potential for growth in the industry through expanded 
commercial and foreign military sales. As a result of a significant 
amount of work by the Congress and the Maritime Administration over the 
past several years, some new commercial work has begun in shipyards 
that had not recently built for the international commercial market. In 
addition, American shipyards are bidding on, and winning, international 
combatant shipbuilding contracts. While entering these new, highly 
competitive markets may place some shipyards under short term financial 
stress, the long term benefits of increased market access, increased 
diversification, and improved competitive pressures may help the long 
term financial health of the individual companies involved in these 
projects.
    In order to assess how the Department of Defense should address 
these and related issues in the industry, The Office of the Secretary 
of Defense and the Navy are conducting a joint study of the 
shipbuilding industry. This study is a follow-on to the work done 
during the Quadrennial Defense Review. One portion of this study will 
include an assessment of the financial health of the industry. A 
strength of this study is the emphasis on early information input by 
U.S. shipyards. This should increase the veracity of the results within 
the Department of Defense, with the Congress, and, most importantly, 
within the American shipbuilding industry.
    Question. What is the Navy's current position on the NDF (National 
Defense Features) program as one method of maintaining the industrial 
base?
    Answer. The Navy supports a National Defense Features (NDF) program 
to provide an active complement to the successful inactive Ready 
Reserve Force (RRF) in time of mobilization. The follow-on surge 
sealift mission is accomplished today through ships in the RRF. 
Currently, a shortfall exists and is projected to continue through 
fiscal year 2001. NDF ships could be used to augment the RRF and 
possibly replace aging RRF assets in a more cost effective manner, 
thereby transitioning some RRF capacity to an active status. Congress 
provided $50 million of fiscal year 1996 funs for the National Defense 
Features program. The Navy has requested proposals and is currently 
evaluating them in anticipation of a late September 1997 contract 
award. Depending on the lessons learned from this effort, follow-on 
solicitations may be issued, if future funding is identified.

                         Deep Ocean Relocation

    Question. Why is the Deep Ocean a viable candidate for relocation 
of contaminated harbor and coastal sediments?
    Answer. The potential benefits of deep ocean disposal has been 
under discussion for over twenty years. Marine sediments are uniquely 
qualified for ocean disposal. By law, and for scientific reasons, they 
may be the only waste stream that should merit such consideration. The 
principal contaminants in marine sediments are likely to remain bound 
to the sediments as long as they remain in the marine environment. The 
deep ocean, in particular, offers the potential for long term, reliable 
isolation of relocated sediments. The deep ocean is a relatively benign 
environment, characterized by low currents, relatively few living 
organisms, is geologically stable, and not susceptible to inadvertent 
human intervention.
    Left in place, or disposed of in shallow water, which is the 
current accepted practice in harbors such as New York, Boston, San 
Francisco and other locations, contaminated sediments are currently 
subject to resuspension by natural disturbance and can propagate 
through the environment and potentially into the food web.
    Relocation to the deep ocean can provide a long term dredged 
disposal solution, however, the environmental benefits as well as the 
economic viability must be rigorously demonstrated.
    Question. Does the Navy have a role in solving the problem and, if 
so, why?
    Answer. Contaminated sediments are both a national and 
international problem. Long term solution of the problem must answer 
scientific, engineering, and regulatory questions that affect world-
wide commercial and naval operations. Like the Navy's contribution in 
the TWA recovery process, there is no single agency with a broad enough 
scope to address the complete problem. However, we believe the Navy 
with its deep ocean technical and operational experience, can 
contribute to assembling a government/industry team capable of 
grappling with the total problem and prototyping potential solutions. 
We believe our experience in demonstrating and validating complex 
military systems can be applied to rigorously quantifying the costs, 
risk, and benefits of deep ocean relocation of marine sediments.
    Finally, we also believe that solving the international problem of 
contaminated sediments, especially as it relates to international fresh 
food and water supplies, falls within the context of preventative 
defense and creative, confidence building international diplomacy in 
terms of working with our allies to enhance our peace-strengthening 
capabilities through increased attention to our common natural 
environment in the Post Cold War World.

    [Clerk's note.--End of questions submitted by Mr. 
Livingston. Questions submitted by Mr. Lewis and the answers 
thereto follow:]

                          F/A-18 E/F Aircraft

    Question. Secretary Douglass, I can't help but notice with 
admiration that the F/A-18E/F program has been a stellar performer in 
that it has been on schedule, under cost and under weight throughout 
its development. What are your thoughts relating to the consideration 
of a multi-year procurement of the F/A-18E/F?
    Answer. I have tasked the F/A-18E/F program office and the Hornet 
Industry Team to investigate the implementation of a multi-year 
contracting approach for procurement of the F/A-18E/F as early as full 
rate production. Once this Government-Industry team is able to assess 
appropriate timing, resources required, strategy, and commensurate 
savings, Department of Defense and the Navy will consider a prudent 
application of a multi-year approach, given that the F/A-18E/F weapon 
system design is sufficiently mature and stable, and there are 
sufficient cost savings to be garnered.

    [Clerk's note.--End of questions submitted by Mr. Lewis. 
Questions submitted by Mr. Nethercutt and the answers thereto 
follow:]

                         EA-6B Prowler Aircraft

    Question. This year the EA-6B will assume its role as the primary 
radar jamming aircraft in the Department of Defense. Last year, the 
Navy named EA-6B modernization as a priority unfunded item, and 
Congress added over $100 million for this purpose. I am disappointed to 
see, then, that the Navy's request for EA-6B modifications has slipped 
back to about $87 million. What modifications are funded in the budget, 
and what additional modifications would you like to fund this year to 
ensure that the EA-6B can adequately protect our nation's aviators?
    Answer. The President's Budget reflects EA-6B modernization with 
$32 million for upgrading eight Block 89 aircraft to the Block 89A 
configuration. Over the course of the Future Years Defense Plan, all 
EA-6B aircraft will be upgraded to the Block 89A configuration. $5 
million is planned for completion of the three year long safety of 
flight upgrade by finishing installation of the Electronic Flight 
Instrumentation System (EFIS). $33 million is planned for procurement 
of 103 Universal Exciter Upgrades, and $16 million for reliability 
improvements to the jammer hard back. The remainder of the Fiscal Year 
1998 funding request is for miscellaneous improvements to support 
equipment.
    Additional modernization upgrades not funded or fully funded 
include: Polarization fix to transmitters, Universal exciter upgrade, 
USO-113 communications jammer, Center Wing Sections, Overhead 
connectivity, and J52P408A engine blade containment efforts.

    [Clerk's note.--End of questions submitted by Mr. 
Nethercutt. Questions submitted by Mr. Cunningham and the 
answers thereto follow:]

                           F/A-18 E/F Program

    Question. What will be the total RDT&E costs associated with the F/
A-18E/F program?
    Answer. The following table presented in million of dollars, 
illustrates the F/A-18E/F program's total RDT&E cost as reflected in 
the Fiscal Year 1998/1999 President's Budget request:

                                                [In fiscal years]
----------------------------------------------------------------------------------------------------------------
                    1992-1995                      1996   1997   1998   1999   2000   2001   2002   2003   Total
----------------------------------------------------------------------------------------------------------------
3,836...........................................    803    343    268    129     61     55      6      6   5,507
----------------------------------------------------------------------------------------------------------------

    The above total cost is lower than the original program's total 
RDT&E estimate.
    Question. As you know, I have always been concerned with our 
ability to give our warfighters the air assets that they need. One of 
the toughest decisions that we will have to make over the next few 
years is how to most efficiently plan and fund the F/A-18E/F program 
and the Joint Strike Fighter (JSF) program. You currently plan to buy a 
total of 1000 Super Hornets for the Navy and the Marine Corps. When 
considering this program, has the Navy discussed or investigated the 
possibility of a multi-year procurement arrangement as a cost saving/
efficiency measure?
    Answer. Yes, the Navy is investigating the application of a multi-
year procurement strategy for the F/A-18E/F as early as full rate 
production. The F/A-18 program office has teamed with the Hornet 
Industry Team to develop a proposed multiyear approach which addresses 
appropriate timing, resources required, strategy, and commensurate 
savings. Upon completion of this study this effort, the Department of 
Defense and the Navy will consider a prudent application of a multiyear 
approach, given that the F/A-18E/F weapon system design is sufficiently 
mature and stable, and there are sufficient cost savings to be 
garnered.
    (Point of clarification: Current plans do not include procurement 
of F/A-18E/F aircraft for the Marine Corps. The current inventory 
requirement for the F/A-18E/F is a total quantity of 1000 for the Navy 
only, to replace the F/A-18C/Ds, F-14, and A-6E.)
    The Navy is investigating the feasibility of a multi-year 
procurement for the F/A-18E/F aircraft, and the potential benefits in 
cost and efficiency a properly funded and administered multi-year 
procurement could yield. Based on the F/A-18E/F's demonstrated 
performance, technical maturity, success in flight test and significant 
test hours accumulated to date, as well as the program's unprecedented 
success acquisition arena, this multi-year procurement could reasonably 
be initiated as early as the first lot of full rate production in 
Fiscal Year 2000. In addition to the potential cost avoidance through 
the term of a multi-year procurement, this could also favorably impact 
the industrial base. The relative stability afforded by a multi-year 
procurement allows our prime contractors (McDonnell Douglas in St. 
Louis, MO, and General Electric in Lynn, MA) to enter into long term 
agreements with suppliers which incentivize investment in process 
improvements and workforce training, yielding long term benefit in 
terms of product quality, cost, and improved competition.
    The Navy has been working with its industry partners, as well as 
the Department of Defense, to formulate a budget which reflects 
procurement of the first five lots of full rate production (222 
aircraft) into a multi-year, fixed price incentive fee contract. This 
proposal will be forwarded to the Department of Defense for final 
review and endorsement.

                    Advanced Self-Protection Jammer

    Question. Last year the Congress added $50 million for Advanced 
Self-Protection Jammer (ASPJ) procurement to support pilots flying in 
contingency operations such as Bosnia. I am told that the responses 
coming back on this technology from the operators in the field is 
excellent. I also understand that, with the limited number of these 
systems currently in the fleet, our operators are forced into a ``hand-
to-mouth'' situation. Are you satisfied with this type of operation 
with respect to such a promising pilot survivability asset; and would 
you support additional funding to buy more ASPJ systems?
    Answer. The ``hand-to-mouth'' situation, called crossdecking, 
always provides challenges and are a typical event in on station 
reliefs (at sea or ashore); ASPJ certainly is not the only system the 
Navy currently has to crossdeck. The Navy believes that the current 
number of systems (to include Fiscal Year 1997 plus-up systems) are 
sufficient given present deployment schedules and projections in 
support of contingency operations.

    [Clerk's note.--End of questions submitted by Mr. 
Cunningham. Questions submitted by Mr. Hefner and the answers 
thereto follow:]

                        P-3C Aircraft Update III

    Question. Secretary Douglass, there has been much discussion about 
the benefits of COTS and NDI equipment. It is clear that more and more 
benefits are being derived by all the services through the use of these 
commercial systems instead of using the old mil-specs for everything.
    Just the other day I learned of one instance where two companies 
independently developed a COTS NDI acoustic system which can be used 
for the P-3 upgrade. This product known as the ``rainbow system'' is 
currently being flight tested and I understand the results have been 
very impressive. Additionally the procurement cost and support cost are 
significantly less than mil-spec equipment. Mr. Secretary, the Navy 
should be commended for taking advantage of these opportunities when 
industry provides them. Would you let me know how the Navy plans to 
take advantage of this opportunity?
    Answer. The Navy plans to provide industry the chance to compete 
for an upgrade to a portion of the P-3C Update III common 
configuration. We anticipate receiving responsive proposals using 
commercial-off-the-shelf (COTS ) or non-developmental item (NDI) 
hardware.
    The Navy has 140 P-3C in the Update III configuration. The current 
Update III procurement performs a Block Modification to 25 additional 
P-3C. The Navy intends to maintain a common configuration for the P-3C 
Update III. If a strategy other than maintaining the common 
configuration is pursued, new trainers and support infrastructure will 
be required, the Tactical Mission Software will have to be modified, 
and a separate software version will have to be supported.
    The Navy does continue to upgrade the common Update III 
configuration to account for out-of-production equipment. For these 25 
aircraft, because the AN/UYS-1 Acoustic Processor is out of production, 
the functionality of the AN/UYS-1 will be embedded within the AN/USQ-
78A acoustic Display and Control System using COTS or NDI hardware. The 
Navy's acquisition strategy is to have a competition conducted at the 
subcontractor level to embed the UYS-1 capability into the USQ-78A.
    The Navy intends to contract with Lockheed Martin Tactical Defense 
Systems (LMTDS) on a sole-source basis for the P-3C Update III upgrade 
kit. LMTDS will be responsible for delivering a fully integrated 
system. The Navy is awarding a sole-source contract to LMTDS for the P-
3C Update III upgrade kits because Lockheed Martin is the designer, 
developer, and sole manufacturer of more than 65% of the total avionics 
suite to be installed. LMTDS is the only source with the technical 
capability, specialized expertise, experience, and technical data 
necessary to perform the required effort, and maintain a common 
configuration.
    LMTDS will subcontract to Lockheed Martin Federal Systems (LMFS) 
Manassas, the designer, developer, and sole manufacturer of the AN/USQ-
78A acoustic Display and Control System, to be the acoustic systems 
integrator. LMFS will conduct a competition to incorporate the 
functionality of the AN/UYS-1 in the AN/USQ-78. No Lockheed Martin 
division will be allowed to compete for this upgrade. An Integrated 
Product Team has been designated, with Government participation, to 
oversee the competition.
    Because a validated technical data package does not yet exist for 
the AN/USQ-78A, a competition conducted by the Navy would put the 
Government at schedule and performance risk. The Navy would have to 
provide the newly competed system as Government Furnished Equipment to 
LMTDS, placing system integration responsibility on the Government 
without validated technical data. In addition, achieving a common 
configuration would be jeopardized.
    At the request of industry, the fleet Patrol Wings allowed multiple 
contractors the opportunity to prototype their engineering design 
models on P-3Cs for contractor conceptual demonstrations, to include 
Lucent Technologies' Rainbow system. Data obtained during these 
demonstrations were for the contractors' systems development purposes 
only and were not reviewed by Navy procurement and acquisition 
personnel due to the planned subcontractor competition. To preserve the 
integrity of the contractor's acoustic processor competition, the 
potentially competitive systems were not evaluated by Program Office 
personnel.
    The Navy's acquisition strategy reduces the integration risk 
associated with this P-3C Update III upgrade to the lowest level 
achievable. With this acquisition strategy, the Navy is likely to 
obtain the benefits of COTS/NDI while competing that portion of the 
effort that can be competed.

    [Clerk's note.--End of questions submitted by Mr. Hefner. 
Questions submitted by Mr. Visclosky and the answers thereto 
follow:]

                    Advanced Self Protection Jammer

    Question. Are you pleased with ASPJ performance while it was 
installed on F/A-18C/D and F-14D fleet aircraft flying in Bosnia and 
the Persian Gulf?
    Answer. Yes, While no operational data is available regarding 
aircraft ``saved'' with ASPJ installed, operational evaluation testing 
indicates that ASPJ provides a very robust response to a particular 
threat weapon system of interest. Modifications to the ASPJ rack have 
proven successful. Built In Test (BIT) problems have not been mentioned 
by forward deployed squadrons. To further research this area, the 
COMOPTEVFOR/DOT&E approved method for BIT reliability data collection 
is being utilized by ASPJ equipped squadrons in a carrier airwing 
currently on deployment.
    Question. Last year the Congress added $50 million for ASPJ 
procurement to support contingency requirements. It looks like that is 
still not enough to cover potential hostile areas. Do you have enough 
ASPJ systems to adequately protect aircraft that are currently flying 
in Bosnia, the Persian Gulf and other potential hot spots?
    Answer. The Fiscal Year 1997 plus-up money will yield an additional 
36 systems, to include spares. This will provide a sufficient number of 
assets for current deployment schedules in support of contingency 
operations (Bosnia and South West Asia). The final delivery for this 
buy is predicted to be complete in November 1999.
    Question. We understand that with the limited number of ASPJ 
systems currently in the fleet you are forced into a cross-decking 
situation on a hand-to-mouth basis. Are you satisfied with this type of 
operation?
    Answer. While not optimal, cross decking operations are a fact of 
life in a fiscally constrained environment. The number of ASPJ units 
available after this year should ensure the Navy retains a robust 
capability to both train and fight (if necessary) in all of our routine 
environs.
    Question. Would you desire for the Congress to add funding to the 
budget to buy more ASPJ systems?
    Answer. The Navy believes that the current number of systems (to 
include Fiscal Year 1997 plus-up systems) is sufficient until IDECM 
Radio Frequency Countermeasures (RFCM) sub-system reaches initial 
operational capability in 2002.
    Question. We understand that IDECM could be an alternative system 
for the F/A-18C/D but, with initial deliveries of IDECM systems 
scheduled for 2002, they won't be ready for retrofit on the F/A-18C/D 
for another 6-8 years. Are you comfortable with the current F/A-18C/D 
protection for several more years?
    Answer. As stated above, after the Fiscal Year 1997 plus-up systems 
have been fielded, a sufficient amount of ASPJ equipped aircraft would 
be realized for contingency operations for this interim period. The 
February 14, 1997 report to Congress cites possible candidates for 
radio frequency self-protection systems for the F/A-18C/D, to include:
         ASPJ
         Portion of IDECM (internal IDECM RFCM components 
        without a towed decoy)
         ALQ-126B upgrade
    The only cost and operationally suitable options are ASPJ or a 
portion of IDECM RFCM (minus towed decoy) mounted internally in the F/
A-18C/D. A decision will be made in FY99 regarding what path will be 
taken. This decision will coincide with the IDECM LRIP decision.
    Question. We understand that it may not be possible to install a 
towed decoy on the F/A-18C/D. If you wait several years for IDECM for 
the F/A-18C/D and the IDECM towed decoy is not installed, how will 
IDECM performance compare with today's ASPJ performance?
    Answer. Performance for the two systems, ASPJ or IDECM (without the 
towed decoy), is comparable. There are obvious long-term logistic 
benefits (fleet commonality) to a solution involving a portion of the 
IDECM system.

    [Clerk's note.--End of questions submitted by Mr. 
Visclosky. Questions submitted by Mr. Young and the answers 
thereto follow:]

                            CINC Priorities

    Question. Mr. Douglass, your statement says that the programs in 
your budget ``reflect the priorities established by the warfighters--
the theater Commanders-in-Chief.'' Your budget proposes a 12 ship DDG-
51 multiyear contract. However, not a single ship will be delivered to 
the fleet with anti-ship missile defense nor theater ballistic missile 
defense capabilities installed. Is this what theater CINCs want?
    Answer. ------. The option that provides the Navy the most rapid 
deployment of these capabilities is via backfit. Under the current Navy 
plan the first ships to receive Area Theater Ballistic Missile Defense 
capability, other than the User Operational Evaluation System (UOES) 
demonstration ships will be two Aegis cruisers in FY 00. Additional 
cruisers will be backfit in FY 02 and FY 03. The first DDG-51 class 
destroyer will be backfit in FY 03 with additional ships scheduled in 
FY 04 and out. By the Secretary of the Navy and Chief Naval Operations 
direction, Navy is reviewing acceleration options that could nearly 
double the number of ships provided both Area TBMD and CEC capabilities 
(from 15 to 28) by FY 03.
    Navy considerations associated with balancing Ship Construction, 
Navy funds for the entire Department and executing a fully funded DDG-
51 class ship procurement plan moved the introduction of Cooperative 
Engagement Capability (CEC), and Theater Ballistic Missile Defense 
(TBMD) capability in a forward fit configuration, out of the FY 98-FY 
01 DDG 51 Multi-Year Procurement (MYP).
    These 12 ships will be built with the combat systems and computer 
software configuration base to allow rapid introduction of these 
capabilities as funds become available for procurement and installation 
of CEC and TBMD. The 12 ships in the DDG 51 Multi-Year Procurement will 
have the greatest capability of any ships built to date, with respect 
to individual anti-ship cruise missile defense. CEC, is a synergistic 
enhancement to total Carrier Battle Group (CVBG) or Amphibious 
Readiness Group (ARG) self defense, including those ships, in company 
with Aegis ships, whose self defense systems are not as advanced. In 
this manner CEC leverages the superior defense capability of Aegis 
ships enhancing the entire battlegroup's defense, CEC, will also 
enhance TBMD for ships operating in a group as a means for advanced 
cueing.
    Question. Cooperative engagement is essential to fleet situational 
awareness and coordination, ship self-defense, and ballistic missile 
defense. Former Secretary Perry called it ``the most significant 
technological development since stealth.'' Your budget proposes to 
funds for cooperative engagement installations in 1998 although the 
system achieved IOC in 1996. Is this what the theater CINCs want?
    Answer. CEC was designed to counter the threat posed by 
increasingly capable cruise missiles and aircraft and provide greater 
C4I at the tactical level through the provision of a coherent tactical 
picture. ------. By FY 1999, there will be two CEC-equipped 
Battlegroups in the Fleet and CEC will be installed on an additional 
three Battlegroups in FY 2000. By FY03, the CEC inventory is projected 
to reach 60 units.
    Question. Your budget proposes to perform a nuclear refueling 
overhaul on the U.S.S. Nimitz aircraft carrier. Yet the ship would be 
delivered back to the fleet without: cooperative engagement, integrated 
self-defense (SSDS), the advanced combat direction system, the rolling 
airframe missile, the SPQ-9 navigation radar, a common high-band data 
link, the battlegroup passive horizon extension system, an outboard 
weapons elevator, conversion of nuclear magazines, emergency ordnance 
handling, and improved propellers. Is this what the theater CINC's 
want?
    Answer. Navy's plan supports the currently established CINC 
priorities. The following installations are currently planned for 
accomplishment during the Refueling Complex Overhaul (RCOH):
          Cooperative Engagement Capability (CEC)
          Advanced Combat Direction System (ACDS)-reduced scope
          Nuclear magazine conversions
          Emergency Ordnance Handling-increment 1
    The Outboard Weapons Elevator Engineering Change Proposal is 
currently under review for potential inclusion in the RCOH. The RCOH 
drydock work includes refurbishment and modifications to the ship's 
existing propellers.
    Following the RCOH, U.S.S. Nimitz will undergo a Post Shakedown 
Availability/Selected Restricted Availability (PSA/SRA), as is typical 
after an overhaul of such scope. The Navy is planning the following 
installations as a part of the PSA/SRA:
          Ship Self Defense System (SSDS)
          Rolling Airframe Missile (RAM)
          SPQ-9B navigational/fire control radar
          Common High Band Data Link (CHBDL)
          Battle Group Passive Horizon Extension System (BGPHES)
    Upon completion of the RCOH and the PSA/SRA, U.S.S. Nimitz will 
rejoin the Fleet as a modernized, recapitalized, fully capable asset 
prior to her first post-RCOH deployment.
    Question. Your budget proposes no funds for installation of ship 
self-defense systems in 1998 that are vital for a lone ship to defend 
itself from cruise missile attack. In the outyear plan, only 8 ships 
are now going to get the equipment rather than 15 planned just last 
year, and apparently the whole class of LHA ships to support Marine 
Corps combat operations is simply gone. Is this what the theater CINCs 
want?
    Answer. In the case of SSDS this slipped the procurement and 
installation of 1 LSD, 1 LHD and 2 shore based sets. We have 
satisfactorily rescheduled those ships for installation during follow-
on availability's. In the interim those ships will be protected by the 
baseline self defense systems now installed. LHAs are not currently 
included in the program due to affordability issues and projected 
service life. The theater CINCs fully support SSDS as a program and 
would like to have this capability in the fleet as soon as possible.
    Question. Our nation has already built missiles that are 
essentially invisible to radars. It is only a matter of time until 
other nations field advanced stealthy anti-ship missiles, and the Navy 
knows it. Once a ship's radar detection becomes limited, infrared 
detection becomes essential. The budget proposes no funds for 
development or production of infrared (heat-sensing) sensors for Navy 
ships. Is this what the theater CINCs want?
    Answer. Higher program priorities in the Fiscal Year 1998 budget 
submission necessitated a reduction in development funding for Infrared 
Search and Track (IRST) Sensor. There is sufficient funding in place to 
complete landbased prototype testing. Based on that test data, 
consideration will be given to fully fund this program within fiscal 
limits and against other program priorities. Theater CINCs recognize 
that IRST has the potential to add capability to ship self defense but 
also await test data before providing the appropriate level of support 
relative to other requirements.
    Question. The budget proposes insufficient funds for both the near-
term (Lower Tier) and far term (Upper Tier) theater ballistic missile 
defense, and the Navy is not planning to meet any Congressional 
fielding deadlines for these systems. Is this what theater CINCs want?
    Answer. The Navy is very serious about developing and delivering a 
sea-based theater ballistic missile defense capability to the Fleet as 
soon as possible. Navy has incurred difficulties in achieving 
Congressional fielding deadlines for these systems due to several 
factors: the amount of time required to initiate the programs; delays 
experienced in executing the Congressionally directed plus-ups; and, in 
the case of Navy Theater Wide, the process leading to a program 
decision from DoD. However, the Navy has made significant progress over 
the past year toward delivery of an initial capability to the theater 
CINC. On 24 January 1997 at the White Sands Missile Range, the Navy 
conducted the first ever intercept of a TBM target with a modified SM-2 
Block IV missile. Subsequently, at a Milestone II DAB on 22 February 
1997, OSD approved the Navy AREA TBMD program to proceed to 
Engineering, Manufacturing and Development. I have approved a plan to 
designate two ships (U.S.S. Lake Erie and U.S.S. Port Royal) to serve 
as focal points for TBMD system testing and evaluation, much like the 
approach used to achieve early evaluation of CEC in U.S.S. Eisenhower 
Battle Group, Designated by the codename ``LINEBACKER,'' (in lieu of 
the term User Operational Evaluation System (UOES)) these two ships 
will lead the Navy in TBMD development. They will receive the first 
TBMD equipment and software modifications in Fiscal Year 1998 and begin 
serving as the Navy's spearhead for both testing and tactics 
development. The sailors of these two ships will provide early feedback 
to the technical and tactical communities which can influence the 
system design and TBMD doctrine development. Most importantly, as we 
begin to deliver BLK IVA EMD missiles in fiscal year 1999, these ships 
will provide the theater CINC a contingency capability in the event of 
a crisis involving the threat of TBMs. We have also made some recent 
progress in the Navy Theater Wide program. Our work with BMDO and OSD 
over the past year has been structured to demonstrate the affordability 
of our evolutionary strategy and credibility of the Navy Theater Wide 
capability in order to ensure appropriate funding and priority within 
the DoD Ballistic Missile Defense family of systems architecture. This 
past December Dr. Kaminski designated NTW as a core BMDO program and, 
in support, in January 1997 Navy added over $200 million to the Navy 
Theater Wide program across the Future Years Defense Plan. Finally, to 
further ensure our resources are appropriately focused, in October 
1996, the Secretary of the Navy and I directed our staff conduct a 
comprehensive review of Navy TBMD programs and report back with a plan 
that could accelerate delivery of this capability to the Fleet. The 
review is nearing completion and we will be briefed on the results. All 
of these actions confirm Navy's commitment to deliver this capability 
to the theater CINC as early as possible.
    Question. The budget proposes no funds for production of an 
improved CIWS gun (called CIWS surface mode) that allows Navy ships to 
see and hit terrorist patrol boasts such as the Iranian boghammers. The 
Navy's budget plan leaves LHA, LHD, FFG-7, and LSD ships unprotected. 
Is this what theater CINCs want?
    Answer. These ships are not unprotected. Deployers to contested or 
high threat areas are routinely outfitted with 25mm chain guns. 
Additionally each have 50 caliber machine gun self defense emplacements 
coupled with support from other smaller caliber weapons. Additionally, 
FFG 7 class has a MK 75 76mm gun and standard missile with excellent 
anti-surface capabilities. All the above mentioned ships have the 
flexibility to carry armed helicopters equipped with either missile 
pods or automatic guns. The CIWS surface mode can provide the 
capability to detect and engage terrorist patrol boats as well as 
hostile attack Helos. The Navy will complete operational testing of the 
system later this year and receive fleet comments before we commit to 
full scale production. The fleet CINCs are very supportive of the CIWS 
surface mode for ships that do not have a major caliber gun.
    Question. The first new strategic sealift ship is underway, but it 
has no support equipment (lighterage) for the Army to unload it during 
combat operations. If no port was available, a theater CINC would have 
to take support away from the Marines and give it to the Army--which of 
course jeopardizes the Marine's mission. Is this what the theater CINCs 
want?
    Answer. The situation today is no different than it has been since 
deployment of the afloat prepositioned Army War Reserve (AWR-3) package 
in 1993. If no port is available, the Army must use the modular 
causeway sections (MCS) onboard T-ACS GOPHER STATE and the watercraft 
onboard AMERICAN CORMORANT that are part of the AWR-3 package 
prepositioned in Diego Garcia to offload the ships. The Army intends to 
augment this capability in Fiscal Year 1998 with an additional heavy 
lift prepositioning ship, the STRONG VIRGINIAN. If additional 
lighterage is required, the CINC must choose whether or not to use 
lighterage from ships of the Maritime Prepositioning Force (MPF) to 
assist in the offload of these ships.
    Question. In your budget, the V-22 has a 25 year production profile 
which the Commandant thinks will cost $8-11 billion more than an 
economic production program. Is this what the theater CINCs want?
    Answer. The new production run is 24 years (based on the 
President's Fiscal Year 1998 budget). With our revised economic 
assumptions, we estimate that it will cost approximately $1 billion 
less than the 25 year production profile.
    Two of three CINCs responding (IPL List) requested that the V-22 
procurement be increased over the Defense Acquisition Board (DAB) 
profile. The Department in the President's fiscal year 1998 budget 
increased the procurement rate over the DAB profile by 14 aircraft in 
the FYDP to 24 MV-22 inn fiscal year 2003.
    The Department would defer to the theater CINCs for further 
comments.
    Question. In your budget, funding for basic research and RDT&E 
management support are increased $87 million above last year's level. 
Is this what theater CINCs want?
    Answer. Basic Research was appropriated last year at $352 million 
(after Congressional undistributed reductions). This year's budget 
request is for $382 million or $30 million more than last year. 
However, the Department originally requested $35 million more last year 
than was appropriated. Congress cut $20 million specifically against 
Basic Research and levied another $15 million in general undistributed 
reductions. These FY 1997 reductions give the false appearance of a $30 
million ``increase'' over last year, when in fact, the Department's 
requirements for Basic Research have basically not changed.
    RDT&E Management Support was appropriated last year at $540 
million. This year's budget request is for $595 million or $40 million 
more than last year. In these programs, a major change in funding Test 
and Evaluation programs resulted in about $5 million of the increase 
(funds were transferred into a centrally managed program from other 
customers in RDT&E) and $15 million was added for development of the F-
4 aircraft into targets to support test and evaluation of major 
aircraft and weapons systems. However, part of this ``increase'' is 
actually a reduction in FY 1997 of $22 million for specific and 
undistributed Congressional reductions. Taken from this perspective, 
only $15 million of the noted ``increase'' is growth and that supports 
other major aircraft and weapon system.
    In addition to their fundamental support of the President's Budget, 
the Fleet CINCs are direct and significant players in the Navy R&D 
requirements process. They develop a set of Command Technology Issues 
(CTIs), which are submitted for inclusion in the Navy Science and 
Technology Requirements Guidance. Coupled with Fleet representation at 
every Science and Technology (S&T) Round Table and Working Group 
meeting, the Fleet has multiple direct channels to request and 
influence S&T support. The RDT&E management investment supports the 
above activities; the 6.1 Basic Research investment is designed to 
provide the scientific basis and enabling technologies to address these 
issues and other Navy needs.
    Question. In your budget, the Navy has deferred outyear funds for 
the LCAC (Landing Craft Air Cushion) service life extension, yet the 
Marines are looking for LCACs to perform more missions such as 
transportation of fuel to ground combat vehicles and mine clearing. Is 
that what the theater CINCs want?
    Answer. Navy requirements support commencing the LCAC SLEP program 
in fiscal year 2000 in consonance with fleet concerns. An affordable 
LCAC SLEP program that meets CINC requirements is under review. We are 
actively engaged with the CinCs to identify evolving roles and missions 
for LCAC, of which fuel delivery and mine clearing are two.
    Question. In your budget, funding for Advanced Technology 
Transition--``demonstration projects''--is increased $18 million. Is 
this what theater CINCs want? Name which CINC has included Advanced 
Technology Transition as a program on his integrated priority list, and 
how it ranks in terms of his priorities.
    Answer. Advanced Technology Transition was appropriated last year 
at $69 million (after Congressional undistributed reductions and plus 
up for SLICE project). This year's budget request is for $87 million or 
$18 million more than last year. However, the Department originally 
requested $37.4 million more last year than was appropriated. Congress 
cut $34.4 million specifically against Advanced Technology Transition 
program and levied another $3 million in general undistributed 
reductions. These FY 1997 reductions give the false appearance of a $18 
million ``increase'' over last year, when, in fact, the Department's 
requirements have declined.
    Yes, without question. Although the CINCs' Integrated Priority 
Lists are expressed in terms of capabilities rather than specific 
programs, the Advanced Technology Demonstration (ATD) Program responds 
directly to those needed capabilities and ranks first in terms of CINC 
S&T priorities and interests. The Fleet CINCs are an integral part of 
the annual ATD proposal and evaluation process, in which CINC 
priorities play a dominant role.
    The Advanced Technology Transition program (PE 0603792N), which in 
fiscal year 1997 includes a total of 16 active ATDs, is developed from 
proposals based on the Science and Technology Requirements Guidance 
(developed in part from CINC input). Fleet CINCs are represented on the 
Navy Science and Technology Working Group (STWG), with the opportunity 
to review the entire list (usually about 150) of ATD proposals and to 
review in depth the 25 finalists as part of the ATD selection process.
    The fiscal year 1997 President's Budget request of $104 million was 
reduced in the appropriation to $72 million as a result, a number of 
high-priority Fleet needs could not be satisfied. The $87 million 
request for fiscal year 1998 level for PE 0603792N represents a modest 
increase to satisfy the highest priority CINC requirements. Even at the 
requested level, an additional 10% growth would be necessary to return 
to the level appropriated in fiscal year 1995.
    The ATDs represent the Navy S&T program with strongest CINC 
engagement and support. The CINC-recommended list of ATD selections, 
each with high ratings for need, transition opportunity and technical 
quality always greatly exceeds the dollars available.
    Question. In your budget, $150 million is included as a downpayment 
towards development of an Arsenal Ship demonstrator project. Is this 
what the theater CINCs want? Name which CINC has included the Arsenal 
Ship program on his integrated priority list, and how it ranks in terms 
of his priorities.
    Answer. The Arsenal Ship is not specifically listed on the CINC 
integrated priority list; however it will enhance our ability to meet 
many of those requirements.
    Question. In your budget, growth is requested for ``Studies and 
Analysis Support'', the ``Center for Naval Analysis'', ``Management, 
Technical and International Support'' and ``RDT&E Science and 
Technology Management.'' Is this what theater CINCs want? Name which 
CINC has included any of these programs on his integrated priority 
list, and how it ranks in terms of his priorities.
    Answer. Studies, Analyses and Support was appropriated last year at 
$6.7 million (after Congressional undistributed reductions). This 
year's budget request is for $8.8 million or $2.1 million more than 
last year. This increase reflects a new study for the Large Land Based 
Aircraft (LLBA) as a potential replacement to the E-6, EP-3, P-3, C-130 
and C-9 aircraft.
    The Center for Naval Analyses (CNA) was appropriated last year at 
$38.6 million (after Congressional undistributed reductions). This 
year's budget request is for $43.4 million or $4.8 million more than 
last year. However, 75 percent of this ``increase'' is actually a 
reduction in FY 1997 of $3.6 million for undistributed Congressional 
reductions.
    Management, Technical and International Support was appropriated 
last year at $19.7 million (after Congressional undistributed 
reductions). This year's budget request is for $24.3 million or $4.6 
million more than last year. This increase reflects the addition of 
funds supporting Modeling and Simulation (M&S) efforts, including 
support for a central M&S office which will coordinate all Navy M&S 
initiatives to avid duplications among programs. It is anticipated 
substantial long term cost and operational savings will accrue.
    RDT&E Science and Technology Management was appropriated at $56 
million (after Congressional undistributed reductions). This year's 
budget request is for $57.6 million or $1.6 million more than last 
year. This increase reflects the transfer of the Naval Industrial 
Reserve functions to the Office of Naval Research and is a net zero 
change within the total Navy budget.
    To map CINC Integrated Priority Lists (IPLs) directly to management 
support programs is difficult, as Fleet priorities tend to be expressed 
in terms of capabilities rather than specific programs or line items. 
In addition, the IPLs address predominantly O&M issues rather than S&T. 
The studies, analyses and management programs listed above support the 
development of technical responses to the CINCs' IPL capabilities. 
Those IPL requirements which can be addressed by S&T in terms of long 
term improvements are developed through direct Fleet CINC participation 
in the S&T requirements process.

                           Ship Self-Defense

    Question. Mr. Douglass, your statement says ``Bottom line: our 
budget continues an all out effort to protect our Sailors and Marines 
serving aboard ships against missile attack.'' Under your plan, not a 
single ship from the 12 ship DDG-51 multiyear buy would be delivered to 
the fleet with either cooperative engagement capability nor theater 
ballistic missile defense capability. Is this ``an all our effort'' by 
the Navy?
    Answer. The 12 ships in the Multi-Year Procurement (MYP) will be 
built with the combat systems and computer software configuration base 
to allow rapid procurement and installation of Cooperative Engagement 
Capability (CEC) and Theater Ballistic Missile Defense (TBMD) as funds 
become available. The Navy has an integrated backfit plan for 
installing these capabilities and is reviewing acceleration options 
that deliver these much needed capabilities to the fleet as the 
technology becomes available, at the beginning of the next century.
    Significant progress has been achieved over the past year. 
Evaluation continues of the two CEC IOC ships, CG 68 and CG 71, in 
fleet exercises, along with correction and refinement of both system 
equipment configuration, software and CEC integration with the Aegis 
Weapon System on those ships. On 24 January 1997 at the White Sands 
Missile Range, the Navy conducted the first ever intercept of a TBM 
target with a modified SM-2 Block IV missile. Subsequently, at a 
Milestone II DAB on 22 February 1997, OSD approved the Navy AREA TBMD 
program to proceed to Engineering, Manufacturing and Development. In 
addition, efforts in working with BMDO and OSD to elevate the funding 
and priority of the Navy Theater Wide (NTW) program within the DoD 
Ballistic Missile Defense Architecture are beginning to pay off. This 
past December, Dr. Kaminski designated NTW as a core BMDO program and, 
in support, in January 1997, Navy added $207 million to the Navy 
Theater Wide program across the Future Years Defense Plan. Most 
importantly, in October 1996, the Secretary of the Navy and Chief of 
Naval Operations directed their staffs to conduct a comprehensive 
review of Navy TBMD programs and report back with a plan to accelerate 
delivery of this capability to the Fleet. The acceleration plan 
includes both TBMD and CEC. This plan, nearing completion, will be 
briefed to the Secretary of the Navy and Chief of Naval Operations in 
the near-future. All of these actions confirm Navy commitment to 
deliver these capabilities to the Fleet.
    Question. Under your plan, the U.S.S. Nimitz would be overhauled 
and sent back to the fleet without ship self-defense, cooperative 
engagement, and rolling airframe missiles. Is this ``an all out 
effort'' by the Navy?
    Answer. Following the Refueling Complex Overhaul (RCOH), the ship 
will undergo a Post Shakedown Availability/Selected Restricted 
Availability (PSA/SRA) as is typical following an overhaul of this 
scope. The Navy's plan is to incorporate the most critical warfighting 
improvements during either the RCOH or the follow-on PSA/SRA.
    Cooperative Engagement Capability (CEC) is in the CVN-68 RCOH work 
package. Ship Self Defense System (SSDS) and Rolling Airframe Missile 
(RAM) are both planned for installation during the PSA/SRA.
    Question. Under your plan, no funds are requested in 1998 for 
cooperative engagement capability installations although the system 
reached IOC in 1996. Is this ``an all out effort'' by the Navy?
    Answer. The Navy views CEC as a top priority and is committed to 
its implementation in both surface ships and aircraft. Given the 
restraints and budgetary decisions that had to be made, Navy is 
continuing procurement and production of CEC units. CEC systems to 
complete a second battlegroup are currently being procured and 
installed with RDT&E funds to support OPEVAL in fiscal year 1998. By 
fiscal year 2003 Navy will have installed CEC into 60 ships and 
aircraft. This will put CEC into 6 Carrier Battlegroups by fiscal year 
2003. In addition, Navy intends to integrate CEC in the E-2C Mission 
Computer Upgrade Program starting in fiscal year 1998. The airborne CEC 
system will IOC in the first E-2C squadron in fiscal year 2002.
    Question. Under your plan, no funds are requested in 1998 for ship 
self-defense system installations, which are vital to lone ship 
survivability from cruise missile attack. Is this ``an all out effort'' 
by the Navy?
    Answer. The fiscal year 1998 budget request slipped Ship Self 
Defense System (SSDS) procurement and installation of 1 LSD, 1 LHD and 
2 shore based sets. We have satisfactorily rescheduled those ships for 
installation during follow-on availability. In the interim those ships 
will be protected by the baseline self defense systems now installed. 
SSDS continues to be a high priority system that fulfilled the 
Congressionally mandated Quick Reaction Combat Capability.
    Question. Under your plan, no funds are requested in 1998 for 
infrared sensor development or production which are essential for 
detection of stealthy cruise missiles. Is this ``an all out effort'' by 
the Navy?
    Answer. Higher program priorities in the fiscal year 1998 budget 
submission necessitated a reduction in development funding for Infrared 
Search and Track (IRST) Sensor. There is sufficient funding in place to 
complete landbased prototype testing in fiscal year 1998. Based on that 
test data, consideration will be given to fully fund this program 
within fiscal limits and against other program priorities. Theater 
CINCs recognize that IRST has the potential to add capability to ship 
self defense but also await test data before providing the appropriate 
level of support relative to other requirements.
    Question. Under your plan, no funds are requested in 1998 for 
installation of surface ship CIWS guns (CIWS surface mode) which have 
been a fleet requirement for many years to see and hit terrorist patrol 
boats that may attack Navy ships. Is this ``an all out effort'' by the 
Navy?
    Answer. Post cold war maritime operational concepts have been 
developed and concentrate in coastal or ``littoral'' areas. US Navy and 
Coast Guard operations around Haiti and Cuba are well documented 
examples of this type of maritime operation. These littoral operations 
require a defense against small, high speed, very maneuverable surface 
threats and low, slow air threats that are expected. The requirement 
initially centered on an Advanced Minor Caliber Gun System (AMCGS) for 
the US Navy. The Navy conducted an extensive COEA as well as additional 
follow-on analysis, testing, and detailed review. Based on the results 
of these efforts, the AMCGS requirements was planned to be best 
operationally and financially satisfied by implementing the CIWS 
Surface Mode. We agree that CIWS surface mode can provide the 
capability to detect and engage terrorist patrol boats. To that end, we 
will complete Operational Testing of the capability this year and 
receive fleet comments before we commit to full scale production.
    Question. Isn't the bottom-line really that in its budget the Navy 
has taken care of its industrial base, its contractors, and Navy labs 
rather than taking care of the theater CINCs, Sailors, and Marines?
    Answer. Our nation's industrial base, contractors, and Navy labs 
support the Navy and Marine men and women who form the heart of the 
United States Navy, and the theater CINCs that command them.
    In attempting to strike a balance between today's needs and 
tomorrow's, the budget cannot completely meet all priorities. The final 
budget product is by necessity a compromise and I appreciate 
Congressional support and interest in fashioning the best balance 
possible.

                           Shipbuilding Rate

    Question. The Navy requests $7.4 billion for shipbuilding in fiscal 
year 1998. To support a ``346 Ship Navy'' as suggested by the Bottom Up 
Review, consisting of ships whose service life is about 30 years, 
requires average construction of about 10 ships per year. Secretary 
Douglass, what annual rate of construction does the Administration's 
new budget request and accompanying future years defense plan envision?
    Answer. The fiscal year 1998 President's Budget request and 
accompanying future years defense program support a construction rate 
of 5 to 6 ships per year. A summary of the Navy's fiscal year 1998 
shipbuilding and conversion plan is attached.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Question. Admiral Pilling, given this low rate, how can you 
maintain a 346 ship Navy?
    Answer. Procurement rates must increase. I share the Chief of Naval 
Operations' view that the greatest concern right now is focused after 
the end of the current Future Years Defense Plan (1998-03) when the 
lead SC-21 ship is procured in fiscal year 2003. With the SC-21, Navy 
surface combatant production has to increase to help bring total SCN 
new procurement quantities up to the 9-10 ship/year level necessary to 
support long-term recapitalization.
    The NSSN procurement rate will also have to increase following the 
initial 4 ship teaming arrangement requested in the fiscal year 1998 
FYDP program. The budget also supports ships refueling and service life 
extensions that help maintain ship force levels in the near-term.
    The ship acquisition is also a large topic with in the Quadrennial 
Defense Review. Options to increase SCN funding to support higher 
procurement levels are being addressed there.
    Question. What is the magnitude of the Navy's ship modernization 
shortfall from now until 2002?
    Answer. I share the view of Secretary of the Navy and the Chief of 
Naval Operations expressed earlier today. I am satisfied with the ship 
procurement plan today. However, certainly the DoN needs to eventually 
increase its ship building rate to about 10 ships per year once the 
ships procured back in the 1980s reach the end of their service lives.
    The current 5 ship per year budget is 4-5 ships per year below the 
goal. The ``procurement holiday'' enjoyed in recent years must end. I 
do not underestimate the immense challenges ahead to recapitalize and 
invest in the Navy of tomorrow.
    Question. The Navy's shipbuilding plan envisions multiyear 
contracts for 12 DDG 51 destroyers and the first 4 new attack 
submarines. Isn't this risky strategy, given that ``outyear budgets'' 
never seem to materialize at the level originally forecast by DoD?
    Answer. The Navy intends to comply with the fiscal year 1997 
Authorization and Appropriations Acts and execute a multiyear contract 
for the 12 fiscal year 1998 through fiscal year 2001 DDG 51 Class ships 
at a rate of three per year. The three ships planned in fiscal year 
1998 are fully funded in the fiscal year 1998 President's Budget 
request and the funding for the remaining nine ships are programmed in 
the accompanying Future Years Defense Program. The DDG 51 Class 
multiyear procurement is currently estimated to yield a total savings 
of $1.2 billion dollars over four years. Final savings will not be 
known until contracts are awarded in the fall of 1997.
    The Navy has proposed a new acquisition strategy for the New Attack 
Submarine which constructs four ships over five years under a single 
contract with an Electric Boat Corporation/Newport News Shipbuilding 
team. Teaming and a single contract is expected to save $450 million to 
$650 million over a similar construction profile without teaming. The 
single contract is an important element of this acquisition strategy 
because it provides the business incentive to the two shipbuilders to 
team. The first New Attack submarine is fully funded in the fiscal year 
1998 President's Budget request and funding for the remaining three 
ships is programmed in the accompanying Future Years Defense Program.
    The benefit of using an explicitly stated single contract is that 
it stabilizes the program, thus providing the opportunity for savings 
for economic order quantities of material procurement and reduction of 
workforce fluctuation costs. Although explicitly stated termination 
liability costs for the single contract make subsequent reductions in 
procurement quantity much more expensive than would normally be the 
case with annual contracting, the savings opportunities override this 
risk. A single contract is literally a ``win-win'' strategy for 
industry and Government, so long as the Government can avoid under 
funding the procurement in the outyears. We believe that the 
procurement levels we are estimating for both programs over the Future 
Years Defense Program are the minimum, and consequently the termination 
risk is low.
    Question. We have seen much industry consolidation in the aircraft 
production industry (e.g. Boeing and McDonnell Douglas proposed 
merger). What are your views on the need for similar consolidation in 
the nation's shipbuilding industry, and how will the Navy foster it?
    Answer. The reduction in defense spending has resulted in a 
significant number of mergers in other industrial sectors--primarily in 
those industries with shorter build times and lower backlog compared to 
the shipbuilding industry. These other sectors have been forced to 
rationalize their business base arrangements and many did so by 
downsizing or merging.
    The shipbuilding industry has also begun a similar rationalization 
process with General Dynamics' purchase of Bath Iron Works, the teaming 
arrangements for the LPD 17 amphibious assault ships, and most recently 
the proposed teaming for New Attack Submarines. Both OSD and the Navy 
view the current state of the industry with concern, and are working to 
determine the best possible plan for the long term health of this 
critical national industry. With the downsizing of the defense budget, 
industry must continue to consolidate, reengineer itself to be 
sustainable at proposed funding levels, or expand into new markets. 
These new markets include both commercial shipbuilding and foreign 
combatant sales. We anticipate further changes in the shipbuilding 
industry and will work closely with OSD to monitor the effects of any 
proposed business decisions. We will take the necessary actions to 
ensure sufficient viability of the overall shipbuilding industrial base 
to meet our national defense requirements.

                           Shipbuilding Plan

    Question. During the past year, the Navy has placed great emphasis 
on developing an integrated shipbuilding plan that fully funds the next 
aircraft carrier, revises the New Attack Submarine Program, and buys 
destroyers in a multiyear program. Secretary Douglass, please describe 
the Navy's new shipbuilding plan.
    Answer. The Navy's shipbuilding plans for fiscal year 1998 include 
a continued, stabilized procurement of DDG 51 Aegis destroyers through 
use of a 12 ship multi-year procurement to meet Congressional direction 
contained in the Fiscal Year 1997 Authorization and Appropriations 
Acts. In addition to requesting three DDG 51s, we are requesting 
research and development funds for three new classes of surface 
combatants, SC 21, the new advanced development Arsenal Ship and CV(X), 
the next generation aircraft carrier. These efforts demonstrate the 
Navy's intention to invest in future technologies and ship designs to 
position our surface fleet for the challenges of the next century.
    Submarines are very much a key element of our overall shipbuilding 
plan. Our budget includes funding for the lead New Attack Submarine and 
for the final incremental procurement funding for SSN 23 in fiscal year 
1998. The Navy is ready to proceed with lead ship construction and has 
requested $2.6 billion in fiscal year 1998 for the design and 
construction of the first New Attack Submarine. The Navy has proposed 
an innovative teaming arrangement for procurement of four New Attack 
Submarines over the next five years from Electric Boat Corporation and 
Newport News Shipbuilding. Use of a single contract for the four 
submarines is a key element of the Navy plan because it provides the 
business incentive for the two submarine shipbuilders to team. 
Together, the contracting and teaming approaches generate substantial 
cost savings over the current plan. This acquisition strategy is 
affordable, executable and supports our national security requirements.
    The Navy executed the contract award for the first ship in the LPD 
17 Class in December 1996. No LPD 17s are planned in fiscal year 1998. 
We plan on resuming procurement in fiscal year 1999, procuring an 
additional nine ships between fiscal year 1999 and fiscal year 2003.
    No new construction aircraft carriers are planned in fiscal year 
1998; however, we still need to maintain a fleet of 12 aircraft 
carriers (11 deployable and 1 reserve/training carrier). To meet this 
need, the Navy is requesting funding in fiscal year 1998 for the 
refueling of U.S.S. Nimitz (CVN 68) which is scheduled to begin complex 
refueling overhaul in fiscal year 1998, and advance procurement funding 
for the refueling of U.S.S. Eisenhower (CVN 69) which is scheduled to 
begin a complex refueling overhaul in fiscal year 2000. The cornerstone 
of our shipbuilding plan for the Future Years Defense Program in fiscal 
year 1998 through fiscal year 2003 is full funding of the final Nimitz 
class aircraft carrier, the CVN 77.
    On average, we are planning to build approximately five new 
construction ships per year throughout this period. Key factors used in 
developing our plans for the future are the number of active ships now 
in the fleet (approximately 350 ships and submarines today) and their 
average age. As we right-size the Navy, we have decommissioned a large 
number of older surface combatants, amphibious ships, and aircraft 
carriers which has resulted in not only a smaller fleet, but a younger, 
more capable one.
    Question. We understand that significant changes to any 
shipbuilding program within the plan, such as accelerating the funding 
for the aircraft carrier into fiscal year 1998, may cause negative 
impact on other programs such as DDG-51 or LPD-17 construction. Please 
explain this to us.
    Answer. The fiscal year 1998 ship building plan requests 1 new 
attack submarine, 3 DDG-51 Arleigh Burke class destroyers, the U.S.S. 
Nimitz refueling complex overhaul, and 2 sealift ships. CVN-77 is 
needed in fiscal year 2008 to replace the U.S.S. Kitty Hawk (CV-63), so 
fiscal year 2002 is the right time to build CVN-77. It is not needed 
earlier. Accelerating SCN funding into fiscal year 1998 could 
unnecessarily ``crowd out'' other shipbuilding funding dollars required 
for submarines, surface combatants, the U.S.S. Nimitz refueling, and 
sealift ships.
    However, an addition of $17 million in RDT&E funds could be of 
great use to the CVN-77 program in fiscal year 1998. This would allow 
accelerating efforts that will make CVN-77 a true ``smart transition'' 
carrier which will introduce technology improvements to reduce life 
cycle and construction costs. The Navy is currently evaluating 
contracting RDT&E proposals that claim to save up to $600 million 
against the final cost of CVN-77.
    Question. DoD outyear budget projections usually do not materialize 
as originally planned. If this happens again, what priority would the 
Navy assign to its shipbuilding plan?
    Answer. The shipbilding plan would receive the highest priority 
possible within the constraints of reduced funding. As with all budget 
submissions, a balanced plan is forged to meet Navy's requirements. 
Aviation procurement and shipbuilding would be near the top of that 
plan.
    Question. Secretary of Defense Cohen recently announced the 
formation of a Program Management Advisory Group that will conduct a 
comprehensive review of the shipyards that build surface ships. Please 
explain why this is necessary, why now, and what will be done. Why was 
this review not conducted prior to the LPD 17 contract award?
    Answer. Dr. Kaminski (USD(A&T)) and Mr. Douglas (ASNRDA)) formed 
the joint Program Management Advisory Group to conduct an independent 
assessment of the viability of Bath Iron Works and Ingalls Shipbuilding 
as producers of surface combatants and to make recommendations for a 
long term integrated approach to the surface combatant industrial base. 
This was done in response to Ingalls Shipbuilding's concerns about its 
long term viability. The Navy did a formal analysis of the DDG 51 
industrial base in 1994 and 1995, which included several variations on 
possible LPD-17 award outcomes.
                        modernization shortfall
    Question. The Navy's fiscal year 1998 budget requests $25.7 billion 
for Navy and Marine Corps procurement, shipbuilding, and R&D. This is 
$.5 billion--about 2 percent--lower than the fiscal year 1997 
appropriated amount. The funding provides for only 51 new aircraft (of 
which only 39 are combat aircraft), 512 missiles, and 4 combatant 
ships. Admiral Pilling, is the Navy's fiscal year 1998 modernization 
budget adequate?
    Answer. Yes. However, if additional modernization was made 
available by Congress, they could be used to accelerate development and 
procurement of systems in our long-range program.
    Question. What is the risk to the future of readiness of the Navy 
and the Marine Corps of such low procurement rates of Navy Weapons?
    Navy Answer. The Navy funding contained within the fiscal year 1998 
budget and that in the Future Years Defense Program (FYDP) contains 
what we believe to be the right choices to modernize our forces while 
ensuring readiness is maintained within existing resources.
    It should be noted that in comparing the fiscal year 1998 budget to 
fiscal year 1997, the advanced procurement funding in the fiscal year 
1998 Navy aircraft procurement account was reduced by approximately 
$500 million to reflect the minimum essential funding for government 
and contractor furnished equipment. Navy has budgeted for advance 
procurement only when it is cost-effective.
    In addition to funds for 4 combatants, Navy Shipbuilding Account 
includes $1.7 billion for a Refueling Complex Overhaul (RCOH) that will 
enable CVN-68 to provide 25 years of additional service.
    Marine Corps Answer. No, our fiscal year 1998 modernization budget 
is not adequate. Maintaining current readiness levels and sustaining 
the momentum of quality of life initiatives are our top priorities. 
Funding these priorities within our reduced fiscal year 1998 topline--a 
topline which is 4.5% less in real terms than the fiscal year 1997 
level, required a shift from investment accounts, both in terms of 
modernizing equipment for our ground forces (PMC and ammo) and 
maintaining our bases and stations (MRP, Base Ops, and MilCon). 
Although Marine Corps modernization funding begins to improve in fiscal 
year 1999, the fiscal year 1998 level is at a historical low--the 
lowest level since 1972. In order to reduce the risk to future 
readiness, we have selectively funded our top priority ground combat 
programs such as C4I equipment and Javelin. The budget request for 
fiscal year 1999 and the current estimate for the outyears reflect 
significant increases in funding for modernization--funding for PMC and 
ammo doubles in fiscal year 1999, allowing us to capitalize on recent 
investments in R&D.
    Question. What major requirements are not funded in the fiscal year 
1998 budget?
    Navy Answer. All immediate Navy major readiness and modernization 
requirements are funded in the fiscal year 1998 budget. However, the 
pace with which we are outfitting our ships with integrated ship self-
defense and cooperative engagement systems is not as fast as many would 
like. As pointed out in Admiral Johnson's testimony, this has been 
purely an affordability budget decision, and by no way demeans Navy 
commitment to ship self-defense. The Navy is dealing with finite 
resources and procurement requirements compete with near-term 
readiness, quality of life must be supported, and a balance must be 
struck. Not all requirements can be funded.
    Marine Corps Answer. The fiscal year 1998 budget is an austere, 
fiscally-constrained program emphasizing Defense Planning Guidance 
priorities on readiness and quality-of-life programs. With a fiscal 
year 1998 topline 4.5% less than the fiscal year 1997 level, we were 
forced to make difficult choices in order to fund our top priorities--
readiness and quality of life. As in past years, financing these 
priorities has forced the diversion of funds from investment accounts 
and precluded budgeting for investment at desired levels. My concerns 
include the continued reliance on aging systems and failure to more 
rapidly field readily available improved technology. Following is a 
list of systems which could be accelerated if additional funds were 
available:
                                                (In Millions of Dollars)
Base Telecommunications Infrastructure............................ $42.6
Javelin...........................................................  17.0
Lightweight Tactical Vehicle Replacement..........................  65.1
ITEMS LESS THAN $10 MILLION.......................................  18.2
    Combat Vehicle Appended Trainer............................... (9.2)
    ISO Beds...................................................... (6.2)
    Improved Direct Air Support Center (IDASC) PIP................ (0.4)
    Combat Rubber Reconnaissance Craft............................ (1.6)
    LAV RAM.......................................................  (.8)
Chemical Biological Incident Response Force.......................  15.1
Power Generation Equipment, Assorted..............................  22.1
MX11620 Generation III 25mm Image Intensification Tubes...........  11.1
ITEMS LESS THAN $10 MILLION.......................................  24.3
    Close Quarters Battle Weapon..................................  (.4)
    M2 Flatrack................................................... (3.2)
    Logistics Information Systems................................. (3.5)
    Defense Message System........................................ (2.4)
    Underwater Breathing Apparatus................................ (1.2)
    Marine Enhancement Program.................................... (1.7)
    Special Effects Small Arms Marking System..................... (1.5)
    Military Motorcycle Replacement............................... (3.3)
    Advanced Demolition Kit....................................... (3.0)
    TERPES........................................................ (4.1)
Shop Equipment Contact Maintenance................................  12.2
                                                                  ______
        Total..................................................... 227.7
                        =================================================================
                        ________________________________________________
                                                (In Millions of Dollars)
RDT&E, N Account:
Commandant's Warfighting Lab......................................  19.8
Marine Enhancement Program........................................   0.6
Advanced Amphibious Assault Vehicle...............................  10.1
Light Weight 155MM Howitzer.......................................   3.6
Tactical Remote Sensor Systems....................................   1.5
Marine Common Hardware Suite (MCHS) Development & Management......   0.7
TERPES............................................................   1.0
                                                                  ______
        Total.....................................................  37.3
                        =================================================================
                        ________________________________________________

    Question. What are your top 4 modernization programs? Are they 
fully funded in fiscal year 1998? Are they optimally funded in the 
accompanying fiscal years of the Future Years Defense Plan?
    Navy Answer. New procurement, and capability upgrades to current 
systems and platforms, continue to be the top modernization priorities 
for the Navy in the fiscal year 1998 budget. Procurement of the U.S.S. 
Arleigh Burke-class destroyer, the Osprey (MV-22) tilt rotor aircraft, 
the Super Hornet fighter/attack aircraft (F/A-18 E/F), and the New 
Attack Submarine (NSSN) are critical components of Navy future 
readiness and need continued Congressional support. These four programs 
are fully funded in fiscal year 1998. CVN-77 is also a top 
modernization program, a critical warfighting requirements. However, 
advanced procurement funding for this national asset is not required 
until fiscal year 2000.
    These programs are optimally funded in the 1999-2003 fiscal years 
of the Future Years Defense Program given the resources available for 
modernization.
    Marine Corps Answer. The Marine Corps' top four modernization 
programs are AV-8B, V-22, general acceleration of ground equipment, and 
the AAAV. I remain concerned about the pace of modernization for these 
and other aviation and ground equipment programs.
    If additional funds were available, I would like to accelerate 
these important modernization programs:
    I would like to maintain the fiscal year 1997 pace of 
remanufacturing our AV-8Bs. The budget provides funding for 
remanufacturing of 12 aircraft in fiscal year 1997 and 11 in fiscal 
year 1998. The remanufacturing program, among other things, provides 
for a more capable, reliable engine. Also, the current budget does not 
allow for remanufacturing of our training assets--the TAV-8B. I would 
like to procure improved engines for the TAV-8Bs, thus adding needed 
safety and reliability improvements to an important warfighting asset.
    I would accelerate procurement of the V-22. At the current level, 
we will attain our procurement objective in fiscal year 2020. 
Acceleration would allow us to field this needed capability to the 
fleet earlier, and would provide for a more efficient rate of 
production.
    In the area of support to our ground forces, I would like to 
accelerate the acquisition of modernized equipment to include improved 
C4I equipment for our MAGTFs, the Javelin--replacement for the aging 
Dragon medium antitank system, Light Tactical Vehicle Replacement 
Program, combat rubber reconnaissance craft, rebuilding our light 
tactical vehicles, and improving telecommunications support.
    I would also accelerate the development of the AAAV. Fabrication 
and testing of an additional Demonstration and Validation prototype 
would allow testing activities to be safely conducted in parallel, 
mitigating the impact of equipment failures.

                           Additional Funding

    Question. Last year were very candid about identifying your top 
unfunded requirements to the Committee and working with us to provide 
additional funds for many of them. I hope you will continue that 
cooperation with us.
    Admiral Pilling and General Oster, please describe your top 
unfunded priorities and why the fiscal year 1998 budget is not 
sufficient in these areas?
    Navy Answer. In addition to the integrated ship defense and 
cooperative engagement capability concerns discussed previously, 
several other programs could benefit from increased fiscal year 1998 
funding, if additional resources were made available by Congress. 
Priorities here are accelerating procurement of systems in our long-
range program. Navy priorities would be to accelerate procurement of 
aircraft (F/A-18 E/F and E-2C), ship (DDG-51 and LPD-17), and weapons 
(Navy Area Theater Ballistic Missile Defense, Tomahawk, and Joint 
Standoff Weapon) systems. Navy Theater Wide TBMD, surface fire support, 
CVN-77, and other high priority RDT&E investment efforts could also be 
accelerated in a more cost effective manner. The attached table 
summarizes these priorities.
    Faster development and procurement was not possible in the fiscal 
year 1998 budget request due to competing requirements to maintain 
near-term readiness and to support the quality of life of all Navy 
personnel.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Marine Corps Answer. The Marine Corps' fiscal year 1998 topline is 
down by 4.5% from the fiscal year 1997 level in terms of real spending 
power. In order to fund our top priorities, near-term readiness and 
quality of life for our Marines and their families, we were forced to 
shift funds from our investment accounts, both in terms of 
modernization of equipment for our ground forces, and maintaining our 
bases and stations.
    The Marine Corps' fiscal year 1998 account for procurement of 
equipment to support our ground forces is at a historical low--the 
lowest since fiscal year 1972. Within this level of funding, we have 
selectively funded our top priorities ground combat programs, however, 
I am concerned about the pace of ground equipment modernization as well 
as aviation platforms.
    If additional funds were available, I would like to accelerate 
procurement of several important aviation and ground weapon systems.
    My first priority is safety issues. I would like to maintain the 
fiscal year 1997 pace of remanufacturing our AV-8Bs. The budget 
provides funding for remanufacture of 12 aircraft in fiscal year 1997 
and 11 in fiscal year 1998. The remanufacturing program, among other 
things, provides for a more capable, reliable engine. Also, the current 
budget does not allow for remanufacturing of our training assets--the 
TAV-8B. I would like to procure improved engines for the TAV-8Bs, thus 
adding needed safety and reliability improvements to an important 
warfighting asset.
    I would accelerate procurement of the V-22. At the current level, 
we will attain our procurement objective in fiscal year 2020. 
Acceleration would allow us to field this needed capability to the 
fleet earlier, and would provide for a more efficient rate of 
production.
    I would procure additional F/A-18Ds. The current inventory of F/A-
18Ds is inadequate to meet future training or Fleet squadron Primary 
Aircraft Authorized requirements until replacement by the Joint Strike 
Fighter (JSF). First deliveries of JSF are currently scheduled for 
fiscal year 2007.
    In the area of weapon systems to support our ground forces, I would 
like to accelerate the acquisition of modernized equipment to include 
improved C4I equipment for our MAGTFs, the Javelin--replacement for the 
aging Dragon medium antitank system, Light Tactical Vehicle Replacement 
Program, combat rubber reconnaissance craft, rebuilding our light 
tactical vehicles, and improving telecommunications support.
    I would also like to accelerate the development of several programs 
which are critical to ensure we remain a viable force into the next 
century. These include the Commandant's Warfighting Lab, the Advanced 
Amphibious Assault Vehicle, and the Light Weight 155MM Howitzer.
    Question. What are the potential savings if the Congress were to 
provide additional funding in fiscal year 1998 for these items, either 
by buying them earlier than now planned or by lower production unit 
costs through procurement of higher quantities? Please put the costs 
and savings in the record.
    Navy Answer. Potential savings that may be achieved as a result of 
any additional funding provided by the Congress in fiscal year 1998 
will be addressed as part of the fiscal year 1999 budget process.
    Marine Corps Answer. It is reasonable to assume that savings will 
be generated as a result of increased production quantities in addition 
to cost avoidance realized from escalation and inflation by buying 
ground and aviation systems earlier than currently planned. In addition 
to the savings and cost avoidance to be realized by accelerated 
procurement of these systems, earlier fielding will significantly 
enhance our warfighting capability.
    One ground program worthy of note is the International Standards 
Organization (ISO) Bed Modification program. Funding this program in 
fiscal year 1998, at the current contract option prices will save 
approximately $2 million over projected contract option prices in 
fiscal year 1999 by investing an additional $6.2 million in fiscal year 
1998.
    A $7.85 million future development cost avoidance could be achieved 
with an additional $3.6 million in Marine Corps ground combat RDT&E, N 
funds for the Lightweight 155 Howitzer program. These funds would allow 
for rapid evaluation of engineering change proposals by computer 
modeling vice live fire testing; earlier integration of lessons learned 
in the Commandant's Warfighting Lab experiments; as well as 
acceleration of improved optical fire control systems.
    There are a number of programs which will accelerate combat 
capability rather than generate cost savings or avoidance. For 
instance, an additional $17 million to fund acceleration of the Javelin 
program would allow for attainment of 100% of the Acquisition Objective 
during the FYDP and satisfy an out-year funding deficiency. The Marine 
Enhancement Program (MEP) buys only a few items as budgeted, thus 
minimal cost avoidance from inflation or a slightly lower unit price 
would be gained from buying additional MEP items; the same is true of 
Power Equipment items. Additional fiscal year 1998, funding to support 
these programs would for earlier fielding, thereby enhancing our 
warfighting capability.
    My top aviation acquisition priority is accelerating procurement of 
the V-22 aircraft. The most cost-efficient rate of procurement of the 
MV-22 is 36 per year. As the Undersecretary of Defense (Acquisition and 
Technology) stated in his letter of 30 May 1996 to the House Committee 
on Appropriations, as we increase production to 36 V-22's per year, we 
will realize additional real savings of $2.7 million per aircraft 
(constant fiscal year 1994 constant dollars). A production rate of 36 
per year thus saves $1.2 billion in constant fiscal year 1994 dollars 
over the total program, and up to $4.8 billion of inflation savings for 
a combined savings of up to $6.0 billion. Multi-year procurement is 
estimated to save even more since we can order materials more 
economically. Increasing V-22 production rates, even without multi-year 
procurement, is the most cost-effective way to modernize our aging 
fleet.
    Also, procurement of one additional remanufactured AV-8B in fiscal 
year 1998, would result in cost savings to the total program of 
approximately $1.7 million.
    Question. Which of these items are on any of the CINC integrated 
priority lists?
    Answer. The latest set of Unified CINC Integrated Priorities Lists 
(IPLs) were submitted to OSD between November 1996 and January 1997 to 
support the fiscal year 1999-2003 Program Review. The Unified CINCs' 
IPLs continue to stress near-term readiness, recapitalization, upgrades 
of existing systems, personnel quality of life, and have added 
counterterrorism and force protection.
    The unfunded Navy procurement, research and development, operation 
and maintenance, and manpower items identified in the answers above are 
all mentioned as priority items in separate READINESS, MODERNIZATION, 
RECAPITALIZATION, COMBAT FORCE STRUCTURE, THEATER MISSILE DEFENSE, 
STRATEGIC LIFT, AIR COMBAT, SEA COMBAT, COMBAT IDENTIFICATION, THEATER 
C41, MUNITIONS STOCKPILE, and FOLLOW-ON TACTICAL AIRCRAFT category 
sections of various CINC IPLs.

                                Examples
------------------------------------------------------------------------
              CINC                   IPL priority        Navy program
------------------------------------------------------------------------
USACOM..........................  Near-Term           Depot Maintenance
                                   Readiness and Qol   DDG-51, F/A-18  E/
                                   Recapitalization    F E-2C, Acoustic
                                   Modernization.      COTS
CENTCOM.........................  Theater Missile     Area and Theater
                                   Defense Sea         Wide LPD-17, ADS
                                   Combat Combat ID.   CEC
PACOM...........................  Theater-wide C4ISR  Info-Tech 21, DAMA
                                   Munitions           TLAM, JSOW LPD-17
                                   Stockpile           F/A-18 E/F Real
                                   Amphibious Lift     Property Maint.,
                                   Follow-On           Piers
                                   Tactical A/C Base
                                   Infrastructure.
------------------------------------------------------------------------


    Marine Corps Answer. The following items are listed on CINC 
integrated priority lists:
                                                         ($ in millions)
PMC...........................................................    $159.1
    Base Telecommunications Infrastructure....................      42.6
    Javelin Medium Antitank Weapon System.....................      17.0
    Light Tactical Vehicle Replacement (LVTR) Prgm............      65.1
    Combat Rubber Reconnaissance Craft (CRRC).................       1.6
    Light Armored Vehicle-Reliability and Maintainability (LAV 
      RAM)....................................................       0.8
    Chemical/Biological Incident Response Force (CBIRF) 
      Equipment...............................................      15.1
    MX11620 Gen III 25mm Image Intens Tubes...................      11.1
    Marine Enhancement Program (MEP)..........................       1.7
    Tactical Electronic Reconnaissance Processing and 
      Evaluation System (TERPES)..............................       4.1
O&MMC.........................................................     355.9
    Operating Forces O&M and Training Support.................      38.8
    Base Operations...........................................      40.7
    Initial Issue.............................................      20.7
    Chem/Bio Incident Response Force (CBIRF) Training and 
      Support.................................................       4.5
    Personnel Support Equipment...............................      25.4
    Joint Recruiting Information Support System (JRISS) 
      Infrastructure..........................................       4.8
    Rigid Raider Craft (RRC) Rehab Program....................       1.9
    Maintenance of Real Property (MRP)........................     194.1
    Depot Maintenance.........................................      25.0
O&MMCR........................................................       0.4
    Maintenance of Real Property..............................       0.4
APN...........................................................   1,424.3
    AV-8B (1 A/C, 22 T-AV8B Engines, Simulators...............     236.5
    V-22 (11 A/C, Spares and AP for Additional 9).............   1,094.0
    F/A-18D (2 A/C and Spares)................................      93.8
RDT&E (AVN)...................................................       3.9
    AV-8B Safety, Reliability and Operational Enhancement.....       3.9
RDT&E (GRND)..................................................      15.3
    Marine Enhancement Program (MEP)..........................       0.6
    Advanced Amphibious Assault Vehicle (AAAV)................      10.1
    Light Weight 155MM Howitzer (LW155).......................       3.6
    Tactical Electronic Reconnaissance Processing and 
      Evaluation System (TERPES)..............................       1.0
SCN...........................................................     746.0
    LPD-17....................................................     746.0
                    --------------------------------------------------------------
                    ____________________________________________________

Total.........................................................  $1,280.6
                    ==============================================================
                    ____________________________________________________
                  

                           DDG-51 Destroyers

    Question. The fiscal year 1998 budget requests $2.8 billion for 
construction of 3 DDG 51 destroyers. In last year's law, the Committee 
provided both additional funding and legislative authority for the Navy 
to pursue a 12 ship multiyear buy over 4 years. Secretary Douglass, 
please explain the Navy's acquisition plan for DDG 51 destroyers.
    Answer. The Navy intends to comply with the Fiscal Year 1997 
Defense Authorization and Appropriations Acts and execute a multiyear 
contract for the 12 fiscal year 1998 through fiscal year 2001 DDG 51 
Class ships at a rate of three per year. We plan to issue a multiyear 
Request For Proposals from Bath Iron Works and Ingalls Shipbuilding 
this spring, and award a contract before October 1997.
    Question. Last year, when the Navy formally requested (because it 
was not a proposal in the President's budget) additional funds to 
pursue a DDG 51 destroyer multiyear procurement contract, we were told 
that the tradition of evenly allocating ships between the 2 shipyards 
(Bath and Ingalls) would be maintained. Is that still your plan? If 
not, on what basis would you allocate work to the destroyer shipyards? 
Is it your intent to penalize the Bath yard in the DDG 51 program 
solely because it won the competition for a different (LPD 17) class of 
ships?
          Why is the Navy willing to compensate the Ingalls yard with 
        more work (taken from Bath) when Bath was not compensated in 
        the DDG 51 program years ago in an identical situation (when 
        Ingalls received contracts to build 7 LHD ships)?
    Answer. The Navy plan has been to evenly allocate ships between the 
two yards unless both shipbuilders concur with some alternative 
arrangement. The LPD-17 award has caused some concerns, and these 
concerns are under evaluation. The Navy will be involved in discussions 
with both shipbuilders on this issue, and the exact distribution of 
ships will be decided before the multiyear Request For Proposals is 
issued. The Navy does not intend to penalize any shipbuilder that loses 
a competitive contract. The Navy, however, must always reserve the 
authority to take appropriate action to preserve the defense industrial 
base when required. The Navy closely monitors the overall viability of 
the shipbuilding industrial base to ensure adequate sources of supply 
and capabilities are maintained to support the future needs of the 
Navy, and total program affordability.
    Question. Admiral Pilling, please explain why it is acceptable to 
the CNO, the fleet CINCs, and you that in the Navy's budget not a 
single ship under the multiyear plan (1998-2001) will be delivered to 
the fleet with anti-ship cruise missile defense nor ballistic defense 
capabilities?
    Answer. The Navy, in considerations associated with balancing Ship 
Construction, Navy (SCN) funds for the entire Department and executing 
a fully funded DDG-51 class ship procurement plan moved the 
introduction of Cooperative Engagement Capability (CEC), and Theater 
Ballistic Missile Defense (TBMD) capability in a forward fit 
configuration, out of the fiscal year 1998-fiscal year 2001 DDG-51 
Multi-Year Procurement (MYP). The 12 ships in the Multi-Year 
Procurement (MYP) will be built with the combat systems and computer 
software configuration base to allow rapid procurement and installation 
of Cooperative Engagement Capability (CEC) and Theater Ballistic 
Missile Defense (TBMD) as funds become available. The Navy has an 
integrated backfit plan for installing these capabilities and is 
reviewing acceleration options that deliver these much needed 
capabilities to the fleet as the technology becomes available, at the 
beginning of the next century.
    Question. Under your current plan, when is the first year that a 
DDG-51 would be delivered to a CINC's fleet with these capabilities 
installed?
    Answer. The option that provides the Navy the most rapid deployment 
of these capabilities is via backfit. Under the current Navy plan the 
first DDG-51 class destroyer will be backfit in fiscal year 2003 with 
additional ships scheduled in fiscal year 2004 and out. Under the 
current plan, ships appropriated in fiscal year 2002 will receive the 
first forward fit configuration, in production/construction. By 
Secretary of the Navy and Chief of Naval Operations direction, Navy is 
reviewing acceleration options that could nearly double the number of 
ships provided this capability (from 15 to 28) by fiscal year 2003.
    Question. Is there any technical reason why ship self-defense and 
ballistic missile defense capabilities cannot be installed on DDG 51 
destroyers prior to 2002 funded ships.
    Answer. It is technically feasible to introduce both Cooperative 
Engagement Capability (CEC) and Theater Ballistic Missile Defense 
(TBMD) as part of the multiyear procurement. The Navy is developing a 
plan which details the schedule and funding requirements necessary to 
ensure that both computer programs and equipment will support in-line 
introduction of TBMD and post-shakedown availabilities of CEC for the 
multiyear ships.
    Question. Mr. Douglass, we have never formally discussed the DDG 51 
multiyear proposal in a hearing. What are the costs, and what are the 
savings, from a multiyear strategy for 12 DDG 51 ships?
    Answer. The DDG multiyear procurement will save $1.2 billion 
dollars between fiscal year 1998 and fiscal year 2001. Savings that can 
be attributed to procurement savings, material savings and other 
factors equate to $788 million and are directly tied to the 
unprecedented long term stability offered by the multiyear process. The 
remaining $420 million is from increasing the number of ships purchased 
from 11 to 12 and by guaranteeing long term orders to the shipbuilders 
which reduce the unit cost of each ship by $35 million. In order to 
reap these impressive savings, we will spend $525 million in fiscal 
year 1997 and fiscal year 1998 for large economic order quantity buys 
of selected shipboard equipment. These funds were appropriated in 
fiscal year 1996 and fiscal year 1997 for this purpose or are included 
in the fiscal year 1998 budget request.
    The multiyear plan is a ``win-win'' strategy for the Congress, Navy 
and industry. Industry gets the long term stability in ship acquisition 
that they need to successfully plan for the future, the Navy gets an 
extra ship, and Congress sees significant cost reductions for the DDG 
program.
    Question. For the record, show the costs by fiscal year and ship 
hull number for capabilities that were dropped from DDG 51 ships 
between the time the multiyear approach was presented to Congressional 
committees last year and the current FYDP. Show each capability (e.g., 
CEC, TBMD, others) separately.
    Answer. The Navy had planned to introduce Baseline 7 Phase II in 
the Fiscal Year 2000 ships starting with DDG 97. This baseline includes 
CEC, TBMD, Advanced Processing, ID Upgrade Phase 2, SM-2 Blk 3B full 
integration, LAMPS Mk3 Block II, AIEWS Phase II, IRST/Precision ESM, 
NSFS, and several other software and hardware upgrades. Due to fiscal 
and technical concerns assessed in July and August 1996, we elected to 
defer the implementation of this baseline by four ships to fiscal year 
2002 (DDG 101), the first year after the multiyear. Since last July, we 
have been able to resolve many of the technical issues we faced, but 
the fiscal constraints remain. Deferring Baseline 7 Phase II from DDG 
97, 98, 99, and 100 saved a total of $117 million across fiscal year 
2000 and fiscal year 2001.
                              Arsenal Ship
    Question. The 1998 budget requests $150 million for development of 
the Arsenal Ship, which is basically a ship loaded with long range 
attack missiles. While cost estimates are very sketchy at this early 
stage in the program, the six ship program would cost at least $3 
billion. Admiral Pilling, please explain the Arsenal Ship concept.
    Answer. Arsenal Ship represents an affordable and much needed 
enhancement to our existing force of carriers and land attack capable 
combatants and submarines. It is not a replacement for these or for 
land-base air. Instead, it is a part of the whole--just as the 
Battleship was a part of the whole for nearly a century. Operating 
under the control and umbrella of regularly deployed Aegis combatants, 
Arsenal Ship will supply substantial firepower, early: giving unified 
Commanders-in-Chief (CINCs) the capability to halt or deter invasion 
and, if necessary, enable the build-up of coalition land-based air and 
ground forces to achieve favorable conflict resolution. With a force 
totaling about six, Arsenal Ships will be stationed continuously 
forward, always available for rapid movement upon receipt of even 
ambiguous or limited strategic warning. Much like our maritime pre-
positioning force, they will remain on station in support of a Unified 
CINC for indefinite periods without dependence on host nation support 
or permission.
    Question. Why do we need an Arsenal Ship, and why is it urgent to 
build it now?
    Answer. We need the Arsenal Ship as an affordable way to station 
massive firepower continuously forward, as an enhancement to our 
existing forces. The urgency to build it now falls into two areas: 
operational and programmatic. Operationally, we have a need to position 
massive firepower in forward areas and we need to do it affordably. We 
can and do currently accomplish that; Arsenal Ship allows us to do it 
cheaper. The sooner we build that capability, the sooner we can take 
advantage of those economies. Programmatically, there are many 
technologies that are now maturing to the point that they can be 
incorporated into this ship and the timing allows the Arsenal Ship to 
provide a technological bridge to the Navy's next surface combatant, 
the SC-21. Also programmatically, the Arsenal Ship is the Navy's most 
radical example of acquisition reform. Conducting this research and 
development project under DARPA's Section 845 authority now will allow 
us to learn from this effort and to incorporate the most successful 
aspects of acquisition reform into subsequent acquisitions.
    Question. Is the Arsenal Ship on any of the CINC integrated 
priority lists of requirements?
    Answer. The Arsenal Ship is not specifically listed on the CINC 
IPL, however it will enhance our ability to meet many of those 
requirements.
    Question. Who will ``own'' the Arsenal Ship?
    Answer. Arsenal Ship will operate in both peace and war as an 
integral fleet unit within the chain of command under Joint Combatant 
Command (COCOM). Peacetime Operational Control (OPCON) will normally be 
exercised by numbered fleet commanders. Within a Joint Task Force 
structure, OPCON will normally be exercised by the Joint Force Maritime 
Commander. Tactical Command (TACON) will normally be assigned to a 
naval commander.
    Question. How will the Arsenal Ship be employed, and what will be 
its mission?
    Answer. With about 500 missiles and space for future extended range 
gun systems, Arsenal Ships will be capable of launching many current 
and planned Department of Defense weapons across the warfare spectrum. 
Arsenal Ship can be positioned to destroy the enemy's critical 
infrastructure at or near inception of hostilities. Using precision 
guided missiles equipped with advanced penetrating warheads and sub-
munitions, this ship will serve as an additional maneuver element in 
the landing force or ground force commander's plan by isolating, 
immobilizing, or destroying enemy armored fighting vehicles, as well as 
providing fire in direct tactical support of ground forces.
    Employing the Cooperative Engagement Capability (CEC) ``remote 
magazine'' launch concept, the Arsenal Ship will provide additional 
magazine capacity for Theater Ballistic Missile Defense (TMBD) and air 
supremacy missiles. This concept allows for remote missile selection, 
on-board missile initialization and remote launch orders, and provides 
remote ``missile away'' messages to the control platform.
    Question. How will the Arsenal Ship contribute to the CINC's 
warfighting capability?
    Answer. Arsenal Ship is a firepower multiplier that, in conjunction 
with other naval forces, increases decisively the options available to 
the theater CINC. Arsenal Ship will be assigned to theater CINC to 
provide:
          Conventional Deterrence against regional aggression inimical 
        to U.S. interests,
          Flexible response for demonstration of power independent of 
        diplomatic limitations,
          Credible forward firepower support to joint and coalition 
        land forces early in a regional contingency if deterrence 
        fails.
    The Arsenal Ship weapon loadout will be robust, flexible and 
tailorable to CINC requirements in order to expand CINC options for use 
of assigned joint forces.
    Arsenal Ships will be fully integrated into the joint warfighting 
force structure. The ships will be capable of firing a variety of 
weapons in support of a land campaign, including Long Range Strike, 
Invasion topping, Fire Support to Joint Ground Forces, Tactical 
Ballistic Missile Defense and Air Superiority.
          Arsenal Ships will be stationed, operated and supported in 
        forward theaters for conventional deterrence and to provide 
        immediate responsiveness upon onset of hostilities.
    Question. Won't the Arsenal Ship be more vulnerable than other 
warships in theater?
    Answer. Though the Arsenal Ship will operate in any threat 
environment under the protective umbrella of the joint battle force, it 
must be survivable against 21st century anti-ship missiles, torpedoes, 
and mines. Passive defense will capitalize on the benefits of mass 
(tonnage), innovative applications of multiple hull integrity, and 
signature reduction. Active self-defense, if required, will be roughly 
equivalent to that of a combat logistics force ship.
    Question. What size crew will man the Arsenal Ship?
    Answer. Offboard integration of all but the most rudimentary C4I 
and survivability achieved primarily through passive design techniques 
will allow the Arsenal Ship to have a very small crew. Crew size will 
not exceed 50 personnel and the design objective is to minimize crew 
size to the maximum extent which is technically feasible. Reduced crew 
size is a principle driver in reducing the cost of ownership i.e., life 
cycle costs.
    Question. What is the total estimated development cost of the 
Arsenal Ship, and how was this number derived?
    Answer. Total Current Estimated Then-Year Dollar Development Cost 
for Arsenal Ship (in thousands of dollars)

----------------------------------------------------------------------------------------------------------------
                                        FY96       FY97       FY98       FY99       FY00       FY01      Total
----------------------------------------------------------------------------------------------------------------
DARPA..............................      1,000     18,577     47,200     50,000     36,000     22,000    174,777
NAVY...............................      3,999     17,976    102,994    139,499     79,680     11,287    355,435
                                    ----------------------------------------------------------------------------
Total..............................      4,999     36,553    150,194    189,499    115,680     33,287    530,212
----------------------------------------------------------------------------------------------------------------


    During the formulation of the Arsenal Ship Program in early 1996, 
rough order of magnitude (ROM) estimates were prepared for the various 
elements of the program. These included concept formulation, functional 
design, detailed design, the integration of various technologies, 
construction and testing of the prototype ship. The Navy/DARPA funding 
split was based on these ROM estimates and technology focus areas for 
the Navy and DARPA was codified in the May 26, 1996 Memorandum of 
Understanding between ASN(RD&A), CNO, and DARPA.
    Question. What are the estimated production costs for each of the 
six Arsenal Ships planned by the Navy, and upon what methodology are 
these amounts derived? Explain ``learning curve'' assumptions in 
detail.
    Answer. To allow the industry teams the maximum flexibility in 
meeting the aggressive Unit Sailaway Price (USP) goal of $450 million 
per ship, they have been asked to provide their production profiles for 
the construction of five Arsenal Ships and the conversion of the 
Demonstrator to an Arsenal Ship. The proposed production schedule of 
the one industry team selected to do detailed design of the Arsenal 
Ship and construction of the Demonstrator will be known in January 
1998. The Navy will use this input in developing its production profile 
and supporting SCN funding stream. The cost estimate for a production 
ship is unknown at this time as it is contingent on the successful 
industry team's irrevocable fixed price USP based on construction of 
the five ships. The USP will be strongly influenced by the production 
rate and build schedule proposed by the successful Phase III industry 
team. The three industry teams presently performing functional design 
work under DARPA Section 845 agreements are in an aggressive 
competition. Based on this competition, it is anticipated they are 
closely analyzing cost as an independent variable to ensure their 
concept designs can meet the government's USP goal of $450 million 
($550 maximum) in fiscal year 1998 dollars.
    Question. The Navy originally down-selected from five to two 
contractor teams for Arsenal ship development. Please explain your 
recent action, apparently in response to pressures from the Senate 
related to the Ingalls LPD 17 contract award protest, to reinsert the 
Ingalls team into the Arsenal ship competition after it had lost.
    Answer. The Arsenal Ship Phase II Source Selection, conducted by 
the joint Navy/DARPA team, determined that three, vice the previously 
anticipated two, industry designs were of such maturity and offered 
best value to the Government so as to be worthy of continued effort.

                     LPD-17 Amphibious Assault Ship

    Question. The LPD 17 class of 12 ships is a competitive program 
which will allow the Navy to retire 41 current ships and reduce 
manpower by 7,800. Congress appropriated funds for the first ship in 
fiscal year 1996, and the second ship was planned for fiscal year 1998. 
However, in the new budget, no funds are requested for the second ship. 
Secretary Douglass, would you please explain the Navy's acquisition 
strategy and rationale for your recent selection of the winning 
contractor team.
    Answer. The Request for Proposals (RFP) informed industry of the 
specific evaluation criteria to be used and their relative importance. 
The four categories used to evaluate proposals were:
    1. Detail Design, Total Ship Systems Integration, Testing, 
Logistics and Life Cycle Support Planning. This was a pass/fail 
category encompassing the traditional evaluation areas of management 
approach, program build strategy, technical approach to detail design, 
total ship engineering and integration, production approach, past 
performance and configuration management. In this category, the 
Offerors were also required to address the acquisition reform 
initiative known as Integrated Product and Process Development (IPPD), 
a management approach required to be used for performance of the 
contract consisting of co-located Government/Contractor personnel.
    2. Integrated Product Data Environment (IPDE). Another acquisition 
reform initiative implemented by the LPD 17 RFP, IPDE was defined as an 
information system capability which would be implemented in phases and 
which would support all phases of ship design, construction and life 
cycle support. Its core is to be a central product model database which 
is to serve as the single source of configuration data over the live 
cycle of the ship class. Traditional support data products, such as 
drawings and technical manuals, and program execution information, such 
as plans, schedules and procedures are also to be integrated within the 
IPDE. The RFP required that all of these previously paper-bound 
products be developed, updated, and available for reuse in an 
electronic form in a digital data environment.
    3. Ownership Cost Reduction Approach--Offerors were required to 
describe changes to existing processes and ways of doing business while 
designing and constructing LPD 17 that would lead to life cycle cost 
reductions during the in-service phase of all 12 ships in the class. 
Additionally, Offerors were required to describe an approach to 
developing tools and techniques to create a realistic baseline of life 
cycle costs against which savings could be measured and validated and a 
plan for integrating these tools and techniques into the IPDE.
    4. Price to Government--the price evaluation consisted of 
determining a realistic total evaluated estimated cost for each 
Offeror's proposed technical approach, taking into consideration audit 
findings with regard to each Offeror's projected labor and overhead 
rates for the period of performance.
    Section M of the RFP indicated that the basis for award would be 
overall best value to the Government and the best value would be 
determined as follows: non-price categories were significantly more 
important than price, and provided an Offeror received an acceptable 
score in Category 1, Category 3 was more important than Category 2. 
Section M also stated that the Government was willing to pay a premium, 
within budget constraints, and accept reasonable risk for the technical 
approach that demonstrated the potential for greater life cycle cost 
reductions.
    The Navy awarded the contract to the Avondale Alliance, a team 
consisting of Avondale Industries, Inc., as the prime contractor, Bath 
Iron Works as a shipbuilder teammate and major subcontractor, Hughes 
Aircraft Corporation as the total ship systems integrator, and 
Intergraph Corporation as the IPDE integrator. Using the criteria 
discussed above, a decision was made that the Avondale Alliance 
proposal represented the ``best value'' to the Government.
    Question. What, in your opinion, are the merits of the losing 
contractor team's recent protest to the General Accounting Office?
    Answer. By decision dated April 7, 1997, the General Accounting 
Office upheld the Navy's decision to award Avondale Industries, Inc., 
the contract for detail design, integration, and construction of U.S.S. 
San Antonio (LPD 17), with options for construction of LPD 18 and LPD 
19. The General Accounting Office's decision reflects a thorough 
examination of the facts related to the Navy's contract award. This 
decision validates the Navy award to Avondale Industries as proper and 
representing the best value to the Government and the American 
taxpayer.
    Question. The Navy's new shipbuilding plan proposes multiyear 
contracting for both DDG 51 destroyers and new attack submarines for 
many years. What is the risk to the LPD 17 program if Congress agrees 
to ``lock in'' funding for these ship programs, and then outyear 
budgets fail to materialize as currently projected by DoD--which by the 
way is what historically always happens?
    Answer. If outyear budgets fail to materialize, the production 
profile of LPD 17 could be reduced if production profiles of 
shipbuilding programs in multiyear contracts are held constant. 
However, the outyear shipbuilding budget profile for all programs is a 
balanced plan and we fully expect to fund the programs we have 
reflected in this plan.
    Question. How much would be required, and how much would be saved, 
if Congress appropriated funds for the second LPD 17 in fiscal year 
1998 rather then waiting until next year as envisioned by the 
Administration's plan?
    Answer. Accelerating a fellow ship into fiscal year 1998 has a 
beneficial effect on the shipbuilding industrial base workload. The 
estimated cost of a fiscal year 1998 LPD 17 class ship reflecting 
option prices from the Full Service Contractor is $746 million. A ship 
added in fiscal year 1998 would result in a reduction in total 
Shipbuilding and Conversion, Navy program costs of approximately $50 
million. Also, the current cost plus award fee contract structure 
provides for a lead ship and options for two follow ships with the 
phased combat system. The current budget structure provides for only a 
lead ship and one follow ship with the phased combat system, before 
beginning the fixed price incentive contract for the full combat system 
with Evolved Sea Sparrow Missile and Vertical Launch System. 
Consequently, the existing cost plus award fee option for the third 
ship, the first ship at the second yard, would not be exercised in the 
budget as now structured.
    If a ship is added in fiscal year 1998, the following table 
illustrates the delivery dates of the first, sixth and twelfth ship of 
the LPD 17 class:

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
FY 1998 Plan.........................  Sept 2002..............  Dec 2005...............  Dec 2008
FY 1998 Add..........................  Sept 2002..............  Jun 2005...............  Jun 2008
----------------------------------------------------------------------------------------------------------------


    Question. Will the winner of the competition be awarded all 12 
ships of the class?
    Answer. The approved acquisition strategy provides for establishing 
a long term relationship with the selected Full Service Contractor. 
Negotiated procurements with the Full Service Contractor are planned 
for the remaining nine ships assuming continued successful performance 
of each contract.
    Question. Compare estimated delivery dates of the first, sixth, and 
twelfth ships under the new budget plan compared to last year's plan. 
Is the program on track or slipping?
    Answer. The estimated delivery dates for the last ship of the LPD 
17 class is estimated to be six months later in the fiscal year 1998 
plan compared to the fiscal year 1997 plan. The following table 
illustrates the delivery dates of the first, sixth, and twelfth ships 
of the LPD 17 class:

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
FY 1997 Plan.........................  April 2002.............  June 2005..............  June 2008
FY 1998 Plan.........................  Sept 2002..............  Dec 2005...............  Dec 2008
----------------------------------------------------------------------------------------------------------------

                          New Attack Submarine

    Question. The Administration's plan for new submarine construction 
has been contentious in Congress during the past 2 years. The budget 
proposes a new plan, and Secretary Douglass is the architect. Mr. 
Douglass, please explain the Navy's new strategy for a teaming 
arrangement between Electric Boat and Newport News to jointly build the 
first 4 New Attack Submarines under a multiyear procurement contract.
    Answer. The Navy originally planned to sustain nuclear ship design 
and construction capabilities at Electric Boat with New Attack 
Submarines and at Newport News Shipbuilding with CVN construction and 
overhauls. The Fiscal Year 1996 and Fiscal Year 1997 National Defense 
Authorization Acts rejected this plan and split the first four New 
Attack Submarines between the two shipbuilders and directed a price 
competition for the fifth and later ships. The Navy could not fund the 
Congressional plan within its budget constraints.
    The Secretary of Defense Report on Nuclear Attack Submarine 
Procurement and Submarine Technology submitted to Congress on March 26, 
1996, stated that the Department would face major near term 
affordability issues in pursuing the plan directed by the Congress. The 
Secretary of Defense and the Secretary of the Navy, however, certified 
that the Navy would compete future New Attack Submarines on the basis 
of price in response to requirements in the National Defense 
Authorization Acts for Fiscal Years 1996 and 1997. In making this 
certification, the Navy made it clear that the Navy budget did not 
contain sufficient funds to execute the competition as directed by 
Congress.
    In addition to the funding issues mentioned above, the wording of 
the competition legislation presented other problems. The legislation 
directed that competition take place after allocation of two or four 
submarines. If competition were conducted after allocation of two 
submarines, neither submarine would be anywhere new completion at the 
time of the competition. If the competition were to occur after four 
submarines had been allocated, none of the four would be complete at 
the time of the competition.
    The legislation also called for a competition based on ``price''. 
This strongly implied that the winner should be chosen on the basis of 
price alone, regardless of the performance of the contractor in 
constructing the allocated submarines or the quality of the 
contractor's proposal. This section of the legislation also implied 
that the competition would be a ``winner-take-all'' competition. After 
such a competition, the Navy would be back in a sole source position 
and the losing contractor would still be building one or two 
submarines, leaving the future of these ships and their costs open to 
question.
    Finally, the fiscal year 1996 legislation contained a gap in 
production in fiscal year 2002 that would have created serious problems 
at one of the construction yards.
    A winner-take-all competition also risks shutting down one of the 
two remaining nuclear capable shipbuilders. In response to questions 
from Congress in 1995, the Navy estimated that it would cost $650 
million to $1.1 billion to transfer New Attack Submarine to Newport 
News Shipbuilding and shut down Electric Boat Corporation (worst case 
scenario). The Navy would also be faced with completing construction of 
expensive orphan submarines allocated by Congress to the losing 
shipbuilder and large cost impacts to the Seawolf program, should the 
Seawolf contractor lose the competition.
    Construction teaming will involve both shipbuilders, as Congress 
directed, but at a price the Navy can afford. Predicted cost avoidance 
from construction teaming ($450 million-$650 million over like 
profiles) makes the four-ship plan affordable. Specifically, teaming 
will:
          Enable near single learning curve economies;
          Avoid certain one-time costs from being incurred at both 
        yards (e.g., duplicate data bases, jigs, fixtures, etc.);
          Take advantage of each builder's strengths;
          Avoid the costly inefficiencies inherent in the restricted 
        communications which occur between two competing shipyards as a 
        result of proprietary concerns; and
          Provide stability to vendors, which yields savings in 
        material procurement.
    Competition in construction will not benefit the Government given 
the anticipated low build rate for submarines because:
          For effective price competition, at least two suppliers are 
        needed.
          To sustain two suppliers, there must be a sufficient, steady 
        level of business. The Navy outyear budget projections do not 
        contain sufficient submarine production to sustain an annual 
        competition until well into the next century.
          Loss of a builder with ongoing construction would be 
        extremely costly and result in a sole source submarine 
        supplier.
          Therefore, neither the Congressional mandate to have two 
        builders engaged in submarine construction nor the Department 
        of Defense policy to sustain two nuclear capable shipbuilders 
        would be achieved.
    The New Attack Submarine is a critical piece of a long range 
shipbuilding program that satisfies two overarching objectives. First, 
it meets the submarine force level requirements in the near term, as 
needed to maintain readiness by providing our Sailors with the best 
equipment at the most affordable price. Second, it seeks to protect to 
the extent possible without limited resources, the nation's critical 
maritime industrial base--shipyards, equipment suppliers, and 
engineering support base--that provides us with the most modern and 
war-ready Navy in the world.
    To be successful in these two objectives, we had to develop an 
affordable shipbuilding program that brings together all of the major 
constituent interests including Congress, the Department of Defense, 
the Navy research, development and acquisition communities, the 
warfighters, and the shipbuilding industry. To make this program more 
affordable, we had to be innovative and commit to establishing and 
maintaining a consistent shipbuilding program while investing in long-
term affordability initiatives as a key objective in the face of 
limited budget levels. The New Attack Submarine construction teaming 
and a single contract for four ships over five years is an affordable 
plan that is fully funded, executable and supports our national 
security requirements.
    Question. Has a Defense weapon system ever used a multiyear 
contract for the first four items off a production line? What are the 
risks? What are the benefits?
    Answer. Multiyear contracts for the first four items off a 
production have not been used by the Department of Defense. In the case 
of the New Attack Submarine the program was budgeted using a teaming 
approach and a single contract for production of the first four 
submarines. The use of a single contract for four ships provides the 
stable fiscal environment and business incentive for the two 
shipbuilders to team. Additionally, use of a single contract provides 
the least cost approach for maintaining both nuclear shipbuilders in 
the submarine construction business.
    Multiyear contracts have not been used for initial production 
contracts due to the statutory requirement for a stable design, which 
is usually proven out by Engineering and Manufacturing Development 
(EMD) units. In the case of aircraft programs, multiple units have been 
procured under a single, research and development contract for first 
item testing:
          The B-2 bomber program procured 6 EMD aircraft from Northrop 
        with Boeing as a major subcontractor. A production run of 20 
        aircraft were ultimately procured.
          The F/A-18 E/F program is procuring 7 EMD aircraft. 
        McDonnell-Douglas is the prime contractor and has a major 
        subcontractor relationship with Northrop-Grumman. The prime 
        holds the production contract with the government and has 
        associate contracts with all subcontractors.
    In the case of ships and submarines, the high unit costs make it 
impractical to have unique test platforms--so every effort must be made 
to reduce both risk and cost in the design, testing and production of 
the initial ship. Contracts for the first unit of any new design 
inherently involve a higher degree of cost uncertainty than follow-on 
contracts which can be priced using return cost data. However, the New 
Attack Submarine contract should present far less risk of cost growth 
than prior lead ship contracts due to actions taken by the program to 
mitigate risk and keep a focus on cost control.
    New Attack Submarine is the first submarine application of the 
design/build process, which eliminates the government as a middleman by 
making the shipbuilder responsible for ensuring that communications 
between designer and builder are fast, effective, and efficient. 
Historically, the government has acted as a middleman between the 
design agent and construction yard. A significant number of contract 
disputes over the past 25 years attributed major cost overruns to 
defective or late design information from separate Government design 
contracts. This problem should be avoided with New Attack Submarine's 
design/build approach.
    Based on the demonstrated success of the design/build process, 
confirmed by an OSD Design Maturity review completed in January 1997, 
the New Attack Submarine design will be far more mature than other 
submarine designs at the beginning of construction. For example, 
Seawolf had 4.5% of ship drawings available prior to construction 
contract award. New Attack Submarine plans and is on track to have 36% 
of ship drawings available prior to construction contract award and 60% 
available at construction start. Consequently, New Attack Submarine 
drawings will be available on average 1.5-2 years prior to construction 
requirements, as compared to less than a year for Seawolf. The early 
availability of drawings greatly reduce the risk of design changes 
during ship construction--traditionally, a major cause of cost 
increases.
    New Attack Submarine cost estimates are the most detailed ever 
developed for a new design submarine, and are based on an order of 
magnitude more cost estimating relationships than available on any 
other submarine. Consequently, the contract cost negotiated should be 
the most realistic ever.
    The use of a single contract for the first four New Attack 
Submarines will benefit the government by:
          Provides the opportunity for economic order quantities of 
        material,
          Allows for managing gaps in the production by providing a 
        mechanism for level loading of the manpower and workload,
          Gives near term stability for the shipbuilders and their 
        component suppliers to commit assets to the most cost effective 
        capitalization plans in support of this critical program.
    Question. The Committee understands that the contracts for the 
first 4 ships will be ``cost-plus'' versus ``fixed price.'' Is there a 
precedent in DOD for cost plus multiyear contracting?
    Answer. There is no precedence in shipbuilding for using a cost-
plus multiyear contract. Recent Department of Defense Guidance requires 
that a cost reimbursable contract be used for the lead ship of a class. 
In order to effectively manage ship construction costs under a cost 
reimbursable contract, the Navy will include incentive provisions 
similar to those used in fixed price contracts where the contractor can 
earn additional fee through reduction of costs.
    Question. Explain the Navy's plan to seek ``advance construction'' 
funding rather than the traditional ``advance procurement'' funding. 
Isn't this really just a euphemism for ``incremental funding''?
    Answer. The Future Years Defense Program accompanying the Fiscal 
Year 1998 President's Budget request identifies $767 million in fiscal 
year 2000 for the New Attack Submarine Program. These funds will be 
used as follows:
          $295 million will be used for advanced construction of the 
        fiscal year 2001 submarine. These advanced construction funds 
        will sustain critical waterfront tradesmen during the break in 
        New Attack Submarine production in fiscal year 2000. During 
        fiscal year 2000, these trades will begin work on the fiscal 
        year 2001 submarines. The funds are similar to the $450 million 
        industrial base funds provided by Congress for SSN 23 in fiscal 
        year 1992.
          $472 million will be used for advanced procurement of reactor 
        plant components for the fiscal year 2002 New Attack Submarine.
    Question. What is the Navy's acquisition strategy for the remaining 
boats, after the first 4 are built?
    Answer. The Navy intends to team for construction of the 30 ship 
New Attack Submarine class. The proposed construction teaming 
arrangement for the first four ships, however, neither requires, nor 
precludes, competition for subsequent submarine classes. The Navy 
reserves the option to adjust its submarine acquisition strategy based 
upon actual teaming experience and projected workloads in the future.
    Question. Why didn't the Administration simply propose a teaming 
arrangement years ago in the first place?
    Answer. The teaming proposal evolved as an affordable compromise 
between the Navy and Congressional New Attack Submarine construction 
plans. The Navy originally planned to sustain nuclear ship design and 
construction capabilities at Electric Boat with New Attack Submarines 
and at Newport News Shipbuilding with carrier construction and 
overhauls. This plan is affordable and retains two nuclear capable 
shipbuilders, as recommended in the 1993 Bottom Up Review. The Navy's 
proposal for single source New Attack Submarine construction was 
rejected by Congress. The Fiscal Year 1996 and Fiscal Year 1997 
National Defense Authorization Act required the Navy to allocate the 
first four New Attack Submarines to two shipbuilders then compete 
following ships on the basis of price.
    To reduce the cost of involving both shipbuilders, Electric Boat 
Corporation and Newport News Shipbuilding proposed a construction 
teaming arrangement under which the work for the first four ships will 
be shared by the shipbuilders. Construction teaming will allow both 
shipbuilders to be involved in New Attack Submarine construction, as 
Congress directed, but at a price the Navy can afford.

                           Strategic Sealift

    Question. The program to procure 19 Large Medium Speed Roll-on/
Roll-off (LMSR) ships is well underway at a cost of $6 billion. The 
1998 budget requests $813 million for LMSRs, to include $611 million 
for procurement of 2 ships, $132 million for overruns on the first five 
conversion ships, and $70 million for advanced procurement of the last 
ship in 1999. Mr. Douglass, what is the status of the LMSR program?
    Answer. The total requirement is for 19 ships of which five were 
conversions of commercial ships and the remaining 14 will be new 
construction. The five conversion ship contracts were awarded in July 
1993. Three ships have been delivered and the remaining two will 
deliver in May and November of this year. Of the 14 new construction 
ships we have 10 under contract; five each at Avondale (New Orleans) 
and NASSCO (San Diego). The first three new construction ships are 
scheduled to deliver in fiscal year 1998. Included in the 10 ships are 
two contract options for ships appropriated in fiscal year 1997 that we 
exercised in December 1996. Congress appropriated funds for a third 
ship in fiscal year 1997 which is not currently under contract.
    Question. What is your acquisition strategy for the additional ship 
added by Congress in 1997, and for the last ship remaining in fiscal 
year 1999?
    Answer. Our plan is to issue a two ship Request For Proposals in 
April 1997, combining the third fiscal year 1997 and the fiscal year 
1999 ships as a limited competition between the existing builders, 
Avondale and NASSCO. Contract award is planned for this summer.
    Question. How much would be required and how much would be saved, 
if Congress appropriated funds for the last LMSR in fiscal year 1998, 
rather that waiting until next year as envisioned by the 
Administration's plan?
    Answer. The fiscal year 1998 President's Budget requests $70 
million for advanced procurement in fiscal year 1998 and $322 million 
in fiscal year 1999 for the final ship. In fiscal year 1998, $306 
million would be required to accelerate the fiscal year 1999 ship--this 
translates to $51 million in total program savings. There would be no 
schedule recovery as each shipbuilder will be near maximum capacity in 
fiscal year 1998.
    Question. Explain the need for $131 million to cover overruns on 
the first 5 LMSRs, which were conversions of existing commercial ships. 
Is this the entire cost growth?
    Answer. The $131 million covers the portion of the cost growth for 
which the government is responsible. This is the entire cost growth of 
this program and remains unchanged from a year ago.
    The government was responsible for an initial schedule delay of 
approximately seven months for two primary causes. First, the U.S. 
Coast Guard revised and significantly increased the fire fighting 
system requirements to account for the hazardous cargo load. Second, 
the government furnished class standard equipment detail design 
information was delivered later than required by the shipbuilders. This 
was caused by accelerating the ship contract awards to support Army and 
JCS required delivery dates as well as strong interest in getting work 
into the industrial base. There is an additional 8-15 months of 
contractor responsible delay due to underestimating the complexity of 
the project, inefficient production, and slow start up by both 
contractors. These delays are reflected by the increased cost on the 
contract sharelines which the government shares with the contractor up 
to the ceiling amount.
    Question. What is the cost and schedule performance of the new 
construction LMSRs so far?
    Answer. Based on the December 1996 Selected Acquisition Report 
(SAR) and current returns on cost and schedule, all signs indicate each 
contractor will deliver their ships at or slightly above target price 
but within the Program Managers Estimate to which the Program is 
budgeted. The ships should also deliver within the revised schedule, 
which includes one or two months delivery date slippage related to 
recent strikes.
    Question. The Navy Comptroller revised all aircraft program advance 
procurement funding to conform to a new policy starting in 1998. Is the 
LMSR advance procurement following the same policy?
    Answer. No, LSMR advance procurement is not following the same 
policy as the aircraft program. The new policy for aircraft programs is 
to reflect minimum essential funding for advance procurement and 
contractor furnished equipment and budget for advance procurement only 
when it is cost effective and not to protect production schedules. The 
aircraft program advance procurement analysis now includes a present 
value analysis comparison of the procurement profile with and without 
advance procurement funding, showing cost effectiveness. In addition, 
the amount of termination liability coverage provided with advance 
procurement has been kept to a minimal level, covering only until the 
regular funding becomes available in October of the next fiscal year. 
In the past, some programs had adequate termination liability funding 
to cover the first quarter.
    The LMSR advance procurement reflects $70 million in fiscal year 
1997 to procure Contractor Furnished Equipment (CEE) equipment such as 
reduction gear, main control console, ship control console and main 
diesel engine. These long lead items, have a fifteen to eighteen month 
delivery schedule. In order to meet the Army load out date of fiscal 
year 2001, it was necessary to accelerate the build process of the 
fiscal year 1999 LMSR ship.
    Question. Explain why advance procurement is needed at all for the 
last ship.
    Answer. Advanced procurement is required only for the fiscal year 
1999 ship to support the DoD requirement to have all LMSRs delivered by 
the end of Fiscal Year 2001.
    Question. Was advance procurement used for the first 18 ships?
    Answer. There was no advanced procurement used for the first 18 
ships because there was sufficient time to build the ship after 
appropriations and still meet the required delivery dates as 
established in the Mobility Requirements Study.
    Question. What is the cost penalty if Congress denies this request 
in 1998?
    Answer. Should Congress deny this request, the penalty would be an 
increase in escalation and the inability of the Navy to meet the DoD 
requirement to deliver all LMSRs by the end of fiscal year 2001.

            Strategic Sealift Support Equipment (Lighterage)

    Question. The strategic sealift (LMSR) ships being built by the 
Navy are to support operations of the Army during war. Therefore, it is 
the Army's responsibility to buy support equipment for the new ships 
once they are delivered. Admiral Pilling, is it true that the first 
LMSR is now in operation but it has no lighterage aboard it?
    Answer. Yes, but Army modular causeway sections (MCS) are aboard T-
ACS GOPHER STATE and AMERICAN COMORANT also has Army watercraft assets 
aboard as part of the current Army War Reserve-3 package.
    Question. Are we buying $6 billion of LMSR sealift ships, yet have 
no equipment to unload them during combat?
    Answer. The Army is responsible for equipping and offloading the 
LMSRs. I defer to the Army to answer the offloading issue.
    Question. If the Army fails to buy lighterage, then a theater CINC 
would have to take lighterage from the Marines (MPS ships) and give it 
to the Army (LMSR ships). General Oster, would this be acceptable 
generally to the Marines during wartime?
    Answer. Generally, this option is acceptable upon the completion of 
the Maritime Prepositioning Force (MPF) mission. The CINC has fully 
capable, self-sustaining MPF assets and any use of the MPS lighterage 
to offload the Army LMSRs, prior to completion of the MPF mission, will 
degrade this mission capability.
    Question. Admiral Pilling, explain the CINC's requirement for ``Sea 
State 3'' lighterage.
    Answer. The CINCs require a sea state 3, service-interoperable 
LOTS/JLOTS capability to support expeditionary and theater sustainment 
logistics when ports are degraded or unavailable. In some critical 
areas of operation, sea state 3 conditions exist greater than 50% of 
the time. Failure to operate in sea state 3 in these situations may be 
a war stopper for these CINCs, if he cannot meet his throughput 
requirement to sustain the warfighting effort. A sea state 3 capable 
causeway lighter is one of the key systems required to successfully 
execute LOTS in a sea state 3 environment.
    Question. Mr. Douglass, please explain the Navy's plan and 
acquisition strategy to pursue Sea State 3 lighterage development and 
procurement.
    Answer. The Navy and the Army signed a Memorandum of Agreement in 
August 1996 to jointly develop a sea state 3 lighterage system. We are 
currently developing the Operational Requirements Document. The Navy 
plans to develop this as an Advanced Concept Technology Demonstration 
and has submitted a proposal for a two year $43.4 million development 
to OSD. The OSD approval will not be known until June 1997.
    Question. Does the Navy have all the funds it needs in the fiscal 
year 1998 budget for a robust development program to meet the CINC's 
requirements for sea state 3 lighterage? If not, how much is needed?
    Answer. No, we do not. The Navy has $4.8 million in the NDSF 
sealift R&D account for this development. The Navy has requested $15.9 
million from the OSD ACTD program to complete the fiscal year 1998 
funding requirements. An additional $22.7 million will be required in 
fiscal year 1999 to be shared by Army, Navy, and the ACTD program. As 
part of the ACTD, the following funding profile was proposed:

                                                 ($ in millions)
----------------------------------------------------------------------------------------------------------------
                                                               FY 98              FY 99              Total
----------------------------------------------------------------------------------------------------------------
ACTD (OSD).............................................              $15.9               $9.3              $25.2
Navy...................................................                4.8                4.3                9.1
Army...................................................                0.0                9.1                9.1
                                                        --------------------------------------------------------
    Total Funding......................................              $20.7              $22.7              $43.4
----------------------------------------------------------------------------------------------------------------

    Question. What would be the benefits, in terms of mating lighterage 
equipment to LMSR ship deliveries, of beginning the Sea State 3 
lighterage program in 1998?
    Answer. The proposed fiscal year 1998 ACTD would allow procurement 
of sea state 3 lighterage systems to begin in fiscal year 2000. The new 
systems could be loaded on the propositioned LMSRs as they return to 
the United States as part of their scheduled maintenance cycle.
    Question. What are the advantages during combat operations of 
having Sea State 3 lighterage versus today's Sea State 2 equipment?
    Answer. Advantages:
    1. With existing lighterage systems, offload of sealift ships stops 
as conditions approach the upper end of sea state 2. In some areas of 
operation, sea state condition 3 exists greater than 50% of the time. 
Having sea state 3 lighterage provides a critical element in achieving 
a sea state 3 capability that will enable the CINC to continue 
operations during higher sea states.
    2. Reduced life cycle costs through:
          O&M savings in operations and training through use of 
        identical systems by both services.
          O&M savings by using composite materials in lighterage 
        construction to decrease maintenance costs resulting from 
        storage and operations in a salt water environment.
          Economies of scale in acquisition and parts support.
                      LCAC Service Life Extension
    Question. The Navy's ``From the Sea'' strategy needs V-22s in the 
air and LCAC (Landing Craft Air Cushion) boats in the water to allow 
Marine combat forces to strike at great distances. Unfortunately, the 
LCAC fleet is not in good shape and the Navy has been slow to address 
the problem. Admiral Pilling, in what condition is the LCAC fleet 
today?
    Answer. The average craft in today's LCAC fleet is in very good 
condition. Today's LCACs have continued to perform well in a variety of 
challenging roles and have demonstrated a high degree of reliability. 
Every LCAC in the fleet currently meets or exceeds the Mission 
Reliability goal of 0.94 set by the LCAC Top Level Requirements (TLR). 
Although today's news is good, our concern is focused on the future 
condition of the LCAC fleet. The goal of our LCAC Life Cycle 
Maintenance Plan is to ensure that the current high levels of 
performance and reliability will be sustained well into the future.
    Question. How long can it remain viable if no Service Life 
Extension is performed?
    Answer. The cumulative detrimental effects of corrosion on the LCAC 
hull and its components pose a threat to the attainment of a full 20 
year design life. Without a major Depot Level effort to correct 
corrosion damage, the service life of some craft may be reduced to 
between 12 and 15 years. If a SLEP is not performed, the LCAC of the 
future will be less capable, less reliable, and significantly less 
affordable.
    Question. Does the FYDP (Future Years Defense Plan) accompanying 
the President's fiscal year 1998 budget contain an LCAC service life 
extension program. Is it fully funded?
    Answer. The FYDP accompanying the President's fiscal year 1998 
budget does contain an LCAC SLEP program. Navy requirements support 
this program commencing in fiscal year 2000. The LCAC's planned for 
induction into the SLEP program are fully funded.
    Question. The Committee understands that when the Navy retires its 
LST ships, the Marines will have to use LCACs to deliver fuel to shore. 
Do you have a sufficient number of LCACs to perform this mission?
    Answer. A number of concepts are currently being explored regarding 
future methods for the delivery of fuel, some of which involve the use 
of LCAC. These studies have not yet been completed, therefore, it has 
not been conclusively determined that fuel delivery will be a future 
LCAC mission.
    Fuel delivery is a follow-on assault echelon effort that could be 
supported by LCACs made available as the required lane breaching and 
critical landing of troops, amphibious vehicles, and HMMWVs are being 
completed. Bulk fuel delivery will be performed after hostile fire has 
been suppressed or eliminated around the craft landing zones. 
Reconfiguration for fuel delivery should not be a problem, since LCAC 
breaching and troop transporting configurations are designed for rapid 
installations and removals. Existing fuel container and pump systems 
can be accommodated by the LCAC. However, the exact number of LCAC 
required to carry out this mission has not yet been determined.
    Question. The Committee understands that a main mine-clearing 
approach involves LCAC launched anti-mine explosive charges. Do you 
have a sufficient number of LCACs to perform this mission?
    Answer. The Navy is currently developing mine clearing systems 
known as the Shallow Water Assault Breaching System (SABRE) and 
Distributed Explosive Technology (DET). Both are expected to reach a 
Milestone III decision in fiscal year 1998. A contingency capability is 
also being developed which will utilize the currently available MK-58 
Linear Demotion charge until the SABRE line charge is available in the 
fleet. At present, the LCAC is envisioned as the delivery platform for 
both of these systems. The number of LCAC required to perform the Lane 
Breaching mission has not yet been definitized. The quantity varies 
depending on a number of factors such as the tactics to be utilized, 
the number of lanes to be cleared, the egress route to be followed, and 
hydrography. War games and simulations are planned for the future to 
help quantify the number of craft required. It will then be necessary 
to determine whether or not the Lane Breaching mission requires 
dedicated craft in addition to those required for the basic mission of 
amphibious assault.
    Question. So without fuel and the ability to clear mines, how can 
the Marines perform their mission?
    Answer. Current doctrine capitalizes on the speed, range, and 
maneuverability of the LCAC to assault enemy beaches at locations of 
our own choosing, where the mine threat is minimal or non-existent. If 
this option is not available, traditional methods of mine clearance 
would be utilized. Delivery of fuel would likewise be accomplished 
utilizing traditional methods, whereby displacement craft and 
helicopters would transport fuel to the beach until such time as an 
offshore pipeline system could be put in place as part of the follow-on 
Maritime Prepositioning Force (MPF) or the Joint Logistics over-the-
Shore (JLOTS) Systems.
    Question. The LCAC fleet of today consists of 91 vehicles. Is that 
enough?
    Answer. The currently planned inventory level of 91 craft is 
sufficient to provide the 60 craft required to perform the mission of 
Amphibious Assault assuming a lift requirement of 2.5 Marine 
Expeditionary Brigade (MEB) plus 12 craft for training. Craft in excess 
of these requirements can be used to fulfill other missions or to cover 
for those craft in extended maintenance cycles.
    Question. Explain how the $37 million appropriated by Congress two 
years ago for LCAC SLEP was used.
    Answer. The $37 million is being used for LCAC SLEP development. 
This effort includes developing engineering packages for a new skirt, 
improved engine, improved corrosion control and updated electronics. 
Installation of these items on LCAC 91 will be accomplished in new 
construction. This is the last craft on the assembly line, scheduled 
for delivery in fiscal year 1999, and it will be the test platform for 
the new improvements.
    Question. Explain how the $37 million appropriated by Congress two 
years ago for LCAC SLEP was used.
    Answer. The $37 million is being used for LCAC SLEP development. 
This effort includes developing engineering packages for a new skirt, 
improved engine, improved corrosion control and updated electronics. 
Installation of these items on LCAC 91 will be accomplished in new 
construction. This is the last craft on the assembly line, scheduled 
for delivery in fiscal year 1999, and it will be the test platform for 
the new improvements.

                            Trident Backfit

    Question. The 1998 budget contains $154 million in the Other 
Procurement appropriation to start in earnest the TRIDENT submarine 
backfit with the D-5 missile. Secretary Douglass, is the TRIDENT 
backfit on track?
    Answer. Yes. The Fiscal Year 1998 President's Budget request funds 
the backfit of four of the original TRIDENT I (C-4) SSBNs stationed at 
Bangor, Washington, to TRIDENT II (D-5) capability under a ``split 
backfit'' approach. This approach was adopted, following the Nuclear 
Posture Review (NPR), as a strategy in the Navy's Fiscal Year 1996 
Budget to minimize then-current FYDP costs. The second set of backfits 
are funded entirely outside the FYDP. USS ALASKA (SSBN 732) and USS 
NEVADA (SSBN 733) will be backfit during the non-refueling engineered 
overhauls starting in fiscal year 2000 and fiscal year 2001, 
respectively. USS HENRY M. JACKSON (SSBN 730) and USS ALABAMA (SSBN 
731) will be backfit during refueling overhauls beginning in fiscal 
year 2004 and fiscal year 2005, respectively. Since each of the 
refueling overhauls is scheduled for a nominal two years, the four-ship 
backfit program will complete by the beginning of fiscal year 2007. The 
remaining four TRIDENT I (C-4) SSBNs are scheduled to be removed from 
strategic service in accordance with the NPR--two in fiscal year 2002 
and two in fiscal year 2003. All procurement actions leading to a 
planned May 2000 backfit start are proceeding on schedule.
    Question. In what years is the Trident Backfit program funded, and 
when will it be completed?
    Answer. The TRIDENT backfit schedule, as directed by the Nuclear 
Posture Review (NPR), is fully funded. Four of the original C4 TRIDENTs 
are planned to be backfit to D5 capability in a split schedule, the 
first two in fiscal year 2001 and 2002 and the second two in fiscal 
year 2004 and 2005. Other Procurement, Navy (OPN) funding for the 
shipboard portion (separate from Missile Flight Hardware and Motor Set 
expenditures) of the backfit program commences in fiscal year 1997 with 
procurement of long-lead (three year) hardware equipment. Funding 
continues through planned program completion in fiscal year 2007.
    Question. The budget proposes to slip $50 million for training 
equipment at the Bangor base from 1998 to fiscal year 1999. Why was 
this done and what is the impact? If the backfit program itself is not 
slipping compared to last year's schedule, then why would the training 
equipment be slipping?
    Answer. As an affordability measure within the Navy during Program 
Objective Memorandum (POM) 1998, $50 million in funds to procure 
equipment required to establish D-5 Strategic Weapons System training 
at Bangor were moved from fiscal year 1998 to fiscal year 1999. The 
funding delay of one year will have minimal, if any, impact on the 
ready for training (RFT) date in Bangor, since the strict lead-away-
from-need contract date was late fourth quarter of fiscal year 1998. 
The program manager (Director Strategic Systems Program) is attempting 
to prevent any delay in the RFT date by offsetting a one to two month 
procurement delay with a corresponding reduction in installation, test 
and checkout lead time. It should be noted that the original RFT date 
was set to coincide with the Pacific D5 initial operational capability 
(IOC) (May of 2002), and included provisions to fly the crews of the 
first two backfit units to Kings Bay for their conversion training. If 
a delay in training RFT date were to occur, there would exist a need to 
fly additional crews to Kings Bay for their refresher training, but no 
impact on the backfit schedule would be imposed.
    Question. When (and if) the START II Treaty is ratified, what are 
the Navy plans for use of the 4 Trident submarines that would be 
retired in 2003 not because of their service life but because of treaty 
constraints? Describe the expected conditions of these boats. What 
alternative uses are being considered?
    Answer. The Nuclear Posture Review determined that only 14 TRIDENT 
SSBNs are required for strategic service under START II, making 4 
available for other uses. Once START II ratification occurs or if a 
relaxation of the law prohibiting removal of these units from strategic 
service prior to START II ratification were provided, the possibility 
exists to convert them to a tactical role. The TRIDENT platform's 
inherent stealth, mobility and endurance, and potential for offensive 
armament could be put to good use in what the Navy is currently 
examining as the TRIDENT SSGN concept (combined Strike/Special 
Operations Forces (SOF)).
    Under the concept, the TRIDENT SSGN would carry up to 132 vertical 
launch missiles (Tomahawk or Navy Tactical Missile (NTACM)) and be 
fitted to employ both the dual dry-deck shelter (DDS) or Advanced Seal 
Delivery System (ASDS) and over 100 fully equipped SOF troops. The 
extensive planned maintenance program for the TRIDENT submarines has 
kept them in outstanding condition.

                          Aircraft Carrier R&D

    Question. The budget requests $90 million for aircraft carrier 
research and development for the carrier after the next one. The next 
one, CVN-77, is planned for construction starting in 2002 while the 
future carrier, CVX, is planned to begin construction in 2006. Total 
R&D investment for CVX will be at least $650 million through 2002. 
Admiral Pilling, please discuss the Navy's vision for the next 2 
aircraft carriers, CVN-77 and CVX.
    Answer. The total R&D investment for CVX will be at least $812 
million through 2002. The Navy is fully committed to a dual track 
carrier acquisition strategy that maintains the current force 
structure. This strategy procures the tenth and final Nimitz class 
carrier, CVN 77, in fiscal year 2002 to replace a KITTY HAWK class 
carrier after completion of 47 years of active service in fiscal year 
2008. The second element of the Navy's strategy is to transition to the 
future with a new carrier design, CVX, to begin in fiscal year 2006 to 
replace USS Enterprise (CVN 65) at the end of her service life at 52 
years in fiscal year 2013.
    CVN 77 will be a ``Smart Transition'' aircraft carrier that will 
incorporate new technologies to improve affordability and reduce total 
ownership costs for CVN 77. In addition, these technologies could be 
backfit into the existing Nimitz class carriers to reduce life cycle 
costs. It would also mitigate risk for selected new technologies to be 
fully implemented in CVX.
    The Navy's vision for CVX is to design a new class of aircraft 
carrier for operations in the 21st century that will maintain the core 
capabilities of naval aviation (high-volume firepower, survivability, 
sustainability and mobility), to significantly reduce total ownership 
costs, and to incorporate an architecture for change within the design 
of the ship. Achieving this vision will require significant design 
changes for a new platform. The Navy is pursuing significant 
improvements in the future design, such as a new aircraft launch and 
recovery system, increased sortie generation capability to match 
projected fast turnaround capabilities of next-generation aircraft, 
improvements in ship survivability, improvements in C4I capability, 
reducing topside design congestion, and reducing manpower requirements. 
Such ambitious goals require a new ship design to incorporate the 
advances that are being made in technology and to incorporate 
affordability initiatives.
    Question. How would CVX be different from the current class of 
aircraft carriers, and why is so much R&D required?
    Answer. CVX will be the first new carrier designed in over 30 
years. In March 1996, the Defense Acquisition Board (DAB) approved the 
Navy's long term aircraft carrier acquisition strategy which provided 
the Navy an opportunity to fundamentally review design options from a 
clean sheet of paper for the future carrier, CVX. The design review now 
being conducted includes analysis of all aspects of the carriers 
concept of operations, airwing types and sizes, aircraft carrier launch 
and recovery development, ship type and size, and numerous other ship 
systems development. CVX will be similar to our current aircraft 
carriers in that it will maintain the core capabilities of naval 
aviation (high-volume firepower, survivability, sustainability, 
mobility, and responsiveness). CVX will be different in that it will 
introduce new technologies, systems, designs, and processes that will 
significantly reduce total ownership costs as compared to a Nimitz 
class ship, and incorporate flexibility for change within the design of 
the ship.
    In the fiscal year 1998 President's Budget, there is $125.1 million 
funded to start the development of key technologies for CVX and to 
continue concept studies and analyses of CVX design alternatives. Some 
of the efforts planned to commence in fiscal year 1998 are development 
of an Advanced Technology Launcher (ATL), assessment of ski-jump 
options for integration with catapults, dynamic armor and other passive 
protection systems, Zonal Electric Distribution Systems, assessments of 
technologies to reduce manpower requirements, and assessment of 
technologies to develop an adjunct multi-function radar system to 
perform control and landing guidance functions.
    Question. What would be the impact of delaying the CVX R&D program 
for one year?
    Answer. A delay in the CVX R&D program for one year would adversely 
impact development of time-critical technologies for CVX. In the Fiscal 
Year 1998 President's Budget request, the time-critical technology 
initiatives planned to start are propulsion systems, alternative 
aircraft launchers, advanced armor systems, manning reduction, topside 
design, advanced computing, aviation weapons handling, and alternative 
flight deck design. All of these initiatives are intended to reduce 
onboard manning, reduce required maintenance over the life of the 
carrier and maintain warfighting capability into the future. Any delay 
in the funding of these R&D technologies for the future carrier design 
would seriously jeopardize the Navy's ability to deliver in time the 
new technologies needed to improve CVX performance while at the same 
time reducing life cycle costs.
    Question. What would be the impact of providing only half of what 
you requested in 1998 for CVX?
    Answer. A reduction in the funding of these R&D technologies for 
the future carrier design would seriously jeopardize the Navy's ability 
to deliver in time the new technologies needed to improve CVX 
performance while at the same time reducing life cycle costs. A 
reduction in the CVX R&D program by one half would adversely impact 
development of time-critical technologies for CVX and result in a one 
year delay in the program. In the Fiscal Year 1998 President's Budget 
request, the time-critical technology initiatives planned to start are 
propulsion systems, alternative aircraft launchers, advanced armor 
systems, manning reduction, topside design, advanced computing, 
aviation weapons handling, and alternative flight deck design. All of 
these initiatives are intended to reduce onboard manning, reduce 
required maintenance over the life of the carrier and maintain 
warfighting capability into the future.
    Question. The Navy has already demonstrated its inability to fully 
fund its carriers by dropping $120 million of critical features from 
the Nimitz overhaul in 1998. What critical features have already been 
dropped from CVN-77?
    Answer. The Navy plan for USS Nimitz includes incorporation of all 
critical warfighting improvements, including ship self defense 
capability. Following the Refueling Complex Overhaul (RCOH), Nimitz 
will undergo a Post Shakedown Availability/Selected Restricted 
Availability (PSA/SRA), as is typical after an overhaul of such scope. 
Critical modernization items not included in the RCOH budget are 
planned for execution during the PSA/SRA. Upon completion of the RCOH 
and the PSA/SRA, USS Nimitz will rejoin the Fleet as a modernized, 
recapitalized, fully capable asset prior to her first post-RCOH 
deployment.
    CVN 77, the last Nimitz Class carrier, will replace an aging Kitty 
Hawk Class carrier after 47 years of service life in fiscal year 2008, 
and it will be a ``Smart Transition'' carrier that will introduce new 
technologies to improve affordability and reduce life cycle costs for 
CVN 77. In addition, these technologies could be backfit into the 
existing Nimitz class carriers to reduce life cycle costs. It would 
also mitigate risks for selected new technologies to be fully 
implemented in CVX. Initial funding for CVN 77 R&D is scheduled to 
begin in fiscal year 1998. The range of options on critical features 
for CVN 77 remains to be evaluated.

                        Submarine Technology R&D

    Question. In the late 1980s, the Congress insisted that the Navy 
spend more on submarine technology R&D and the Navy fought it. 
Eventually, the Navy saw the wisdom of this approach, but unfortunately 
was so slow to act that little of the $500 million investment actually 
resulted in equipment for the Seawolf or New Attack Submarine. The Navy 
now claims that we should start investing in submarine technology 
again. Admiral Pilling, why does the Navy now think an increased 
investment in submarine technology R&D is worth making?
    Answer. Historically, submarine technology development, maturation, 
and transition have been performed on a cyclical base in conjunction 
with building the ``next'' class of submarine. This cyclic approach was 
generally successful when there was overlapping development of multiple 
submarine classes and block upgrades. The current situation of low 
production rate of submarines coupled with high rate of technology 
turnover, dictate a more steady funding profile for technology 
development, maturation and transition. Therefore, the Navy intends to 
pursue a funding approach to submarine R&D to ensure technologies 
continue to transition to NSSN. As NSSN moves to production phase, the 
development dollars in the NSSN program are declining. The Navy has 
programmed increased money into its two primary program elements for 
submarine R&D-PE 0603504N (Advanced Submarine Combat Systems 
Development) and PE 0603561N (Advanced Submarine Systems Development). 
The increased funding in these program elements will maintain a funded 
R&D program at an appropriate level to support exploration of promising 
technologies and development to maturity.
    Question. How much more is in the Navy's outyear budget plan for 
submarine technology R&D compared to last year?
    Answer. Following the lead of the $60 million congressional plus-up 
in fiscal year 1997, the President's Budget for fiscal year 1998 
sustains the $60 million level of increased funding through fiscal year 
2000, for a total of $180 million. Funding for fiscal year 2001 and 
later will be addressed in the Navy's upcoming budget review cycle.
    Question. In what areas does the Navy now plan to invest, and why 
are they deemed important?
    Answer. The Navy's near term and long term submarine technology 
investment plans are outlined in the first annual update to the 
Secretary of Defense report on Nuclear Attack Submarine Procurement and 
Submarine Technology. This report was forwarded to the Congress on 
March 14, 1997. An excerpt from this report describing the Navy's 
technology investment plans is attached.
2.1 Background
    Historically, several nuclear submarine development programs 
proceeded in parallel. Each new submarine program drew extensively from 
the previous program, and general research and development (R&D) 
programs. Technology funding was increased in the early years of a 
submarine program, and reduced to a subsistence level during serial 
production. This cyclic approach worked in the past because there was 
an overlap of multiple submarine design, production, and modernization 
programs. This approach was successful for the New Attack Submarine 
(NSSN) design, which incorporates advanced technology to meet all 
projected military requirements, and has the flexibility to accept 
emerging technologies that will reduce life cycle costs or enhance 
capabilities.
2.2 Current Submarine Technology Development
    Today, extremely low submarine production rates, coupled with the 
rapid pace of technological advancement, dictate a more steady funding 
profile for technology development, maturation, and transition. This 
approach requires a change in technology management. Accordingly, the 
Department of Defense (DoD) established the Submarine Technology 
Oversight Council (SUBTOC) to advise submarine technology integrated 
product teams (IPTs). This increases the opportunity to identify and 
select innovative technology for insertion in the NSSN to maintain its 
margin of warfighting superiority. A description of this approach can 
be found in the Under Secretary of Defense (Acquisition and Technology) 
Report on Advanced Submarine Technology issued in October 1996. 
Subsequently, a new flag officer position, the Office of the Director, 
Submarine Technology (ODST), has been created in the Naval Sea Systems 
Command to be the single point of contact for submarine R&D.
2.3 Submarine Technology Management
    To help improve submarine technology management and coordination, 
the Navy recently established the ODST. Accountable to Assistant 
Secretary of the Navy (Research, Development, and Acquisition) 
(ASN(RDA)) and the Chief of Naval Operations, ODST is the single point 
of contact for all submarine R&D programs in the Department of the 
Navy, and is key to coordinating submarine technology efforts between 
the NSSN Program Manager and the submarine R&D community. Specifically, 
ODST's mission is to:
          coordinate and integrate all submarine R&D activities among 
        the DoD, Navy, and industry;
          identify new technologies to meet changes in warfare 
        requirements;
          ensure that Navy technology plans support and are in 
        accordance with DoD and national strategies for science, 
        technology, and national security objectives;
          articulate Navy warfare requirements to industry technology 
        providers;
          develop technology transition plans for incorporating 
        improved technology into submarine hulls;
          ensure submarine shipbuilders participate fully in the Navy's 
        submarine technology development program; and
          co-chair the Flag Chaired IPT responsible for integrating 
        major technology providers within the Navy.
    As co-chairman of the Flag Chaired IPT, the Director, Submarine 
Technology oversees the activities of the working level teams in 
support of the SUBTOC. The SUBTOC ensures that the efforts to advance 
submarine technology from initial concept to production are coordinate 
within the DoD. The SUBTOC is co-chaired by the Under Secretary of 
Defense (Acquisition and Technology) and ASN(RDA). It has regularly met 
to provide top-level guidance to submarine technology managers. The 
major issues it has addressed include strategic areas for submarine 
technology investment, Defense Advanced Research Projects Agency 
(DARPA) participation in submarine technology development, insertion of 
technology in NSSNs, and the development of effective dialog between 
shipbuilders and the Navy on technology issues.
    The Flag Chaired IPT integrates and prioritizes inputs provided by 
the System Oriented IPTs (SOIPTs), and provides recommendations to 
resource sponsors. The Flag Chaired IPT, in conjunction with the 
SOIPTs, completed a seven-month process in February 1997 that 
established the integrated submarine technology strategic goals and 
plans described in Sections 2.5 and 2.6. The SOIPTs developed consensus 
on technology goals, evaluated on-going projects, and developed 
investment recommendations for the Flag Chaired IPT. Objectives of the 
Flag Chaired IPT include improving the definition of requirements and 
objectives for the technology development community, and balancing 
performance, schedule, and cost for potential technology improvements.
2.4 Submarine Technology Investment Strategy
    The NSSN is designed to provide a capable, technologically robust 
warship that meets all military requirements at an affordable price. It 
is important to recognize that incorporation of future technologies 
into the NSSN platform will be made feasible, in large measure, due to 
the innovative ``design and build'' process. The extensive use of 
computer-aided design and engineering tools permitted the Navy to 
incorporate state-of-the-art technologies into the baseline design, 
while providing sufficient flexibility into the ship necessary to 
permit the insertion of technologies that may be developed in the 
future. Figure 2.1 identifies the advanced technologies that have been 
incorporated into the base design of the NSSN.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    The fiscal year 1998 (FY98) budget contains funds to support 
insertion of advanced technologies to further enhance the stealth, 
affordability, and capability reflected in the NSSN. The Congress 
strongly supported this approach by providing an additional $60 million 
to accelerate the insertion of selected technologies. Table 2.1 
provides the spending plan for the additional $60 million of R&D funds 
provided by Congress.

Table 2.1

Technology Development and Maturation Plan

                                              FY97 Funds ($ in millions)
Insertion Opportunities:
    Fiber Optic Sensors (LWWA)....................................  $8.8
    Advanced Hybrid Propulsor.....................................   3.2
    Elastomeric Ejection System...................................   1.5
    Advanced Acoustic Sensors.....................................   1.1
    Advanced Acoustic Sensor Processing...........................  10.0
Core:
    Rim Driven Motors.............................................   4.4
    Structural Acoustics..........................................  13.0
    Hydrodynamics.................................................   5.0
    Propulsion....................................................   7.0
    Design Improvement Evaluations................................   5.0
Congressional Direction:
    Doppler Sonar Velocity Log....................................   1.0
                                                                  ______
        Total....................................................\1\60.0

\1\Of the above, each shipbuilder received $9.4 million

    In addition, the Congress redirected $50 million of FY96 funds from 
the National Defense Sealift Fund to pursue design and construction of 
a second Large Scale Vehicle (LSV-II). Newport News Shipbuilding (NNS) 
and Electric Boat Corporation (EB) have agreed to collaborate on the 
development of the LSV-II. The Navy plans to have the LSV-II under 
contract in the summer of 1997. LSV-II will provide a key capability 
for future technology development.
    The President's Budget for FY98 sustains the $60 million level of 
increased funding in submarine R&D through FY00 in order to provide 
mature technologies that will be available for insertion into early 
NSSNs. Additional funding to enable the insertion of these technologies 
during the construction of NSSNs will be addressed as maturing 
technologies are evaluated through the design improvement process 
described in the accompanying report. This additional funding will be 
prioritized within the DoD's program and budget review process. The $60 
million provided by Congress for FY97, along with the additional 
funding the Navy has committed to submarine technology, will help 
enable the DoD to advance the development and maturation of submarine 
technologies, and invigorate the technology pipeline.
    Based on the available funding and the efforts of the management 
team, technology focus areas have been established and the technology 
insertion plan has been refined. These focus areas have enabled the DoD 
to establish a balanced investment strategy employing a steady funding 
stream to achieve substantial gains in submarine military performance 
and affordability.
2.5 Submarine Technology Focus Areas
    Advanced submarine technology R&D programs will focus on achieving 
large step improvements in connectivity, payload (which includes power 
projection), stealth, and sensors and processors. Incremental insertion 
of these maturing technologies into the NSSN, as was done with the LOS 
ANGLELES class, will ensure the US maintains submarine superiority.
    Connectivity: Technologies that provide secure command and control 
connectivity between the National Command Authorities and the on-scene 
commander. Effective real-time two-way communication with the National 
Command Authorities, combined with a total area situational awareness 
capability is vital to submarines in support of joint warfighting 
missions. As international crises change rapidly, a submarine must 
provide and receive updates on tactical situations in its assigned area 
to achieve maximum advantage.
    Investments in rapidly developing fields of connectivity span the 
entire range of information warfare and battlefield dominance 
technologies. The ability to receive, transmit, and comprehend ever-
increasing volumes of data while remaining stealthy are a vital part of 
this investment. Advanced displays will be developed using the best 
commercial, open system architecture offered by industry, as will off-
board vehicles that will greatly expand the submarine sensor's reach.
    Payloads: Technologies that enhance maritime support of land 
forces, in-theater fire support, and reconnaissance capabilities. As 
with the NSSN, flexibility of mission assignment is a vital attribute 
for future submarines. Payloads possess the warfighting capabilities 
for submarines, and a varied selection of payloads will provide maximum 
flexibility to national and theater commanders, whether the mission is 
reconnaissance, interdiction at sea, or strike in support of land 
forces.
    Advanced strike weapons such as Navy Tactical Missile System 
(NTACMS) expand the range of stealthy strike options for the battle 
force commander. Submarine launched and controlled Unmanned Undersea 
Vehicles (UUVs) will expand the battle force horizons.
    Stealth: Technologies that improve covertness and minimize 
vulnerability. Since its invention, the principle military value of the 
submarine has been its inherent stealth; i.e., its ability to control 
an area without being detected by the enemy. The submarine has the 
capability to operate in an assigned area with impunity, and conduct 
intelligence and surveillance missions in advance of a battle group, 
launch special operations forces, or support deployed forces ashore. 
Hence, stealth is the one essential element that distinguishes 
submarines from all other warfighting platforms. During the Falklands 
war, for example, the threat posed by British submarines in the area 
after the Belgrano was torpedoed and sunk forced the Argentinean navy 
to sit in port. This had a strategic impact on the course of the 
conflict since Argentinean ground forces in the Falklands were 
prevented from being re-supplied.
    Continued technology investment in stealth is vitally important to 
the sustained advancement of submarine warfare. Stealth investments 
represent efforts to become undetectable to acoustic, infra-red, 
optical, radar, and electromagnetic sensors. Both SEAWOLF and NSSN 
represent major advances in stealth. Past stealth investments such as 
quiet nuclear reactor coolant pumps and propulsors originated from 
long-term efforts, and are just now entering the fleet aboard the 
SEAWOLF class submarines. In the future, electric drive propulsion and 
hydrodynamic advances will be necessary to provide substantial 
improvement in submarine acoustic quieting, which will be needed to 
maintain our margin of superiority. These long-term efforts must be 
coupled with a steady investment.
    Sensors and Processors: Technologies that enhance battlefield 
preparation and interdiction. Coupled with our strategy for enhancing 
the military value of submarines in connectivity, payloads, and 
stealth, the extraordinary flexibility of NSSN open architecture allows 
for the rapid and affordable integration of industry-driven leaps in 
advanced sensors and processors. These advances will be vital to 
sustaining battlefield awareness and tactical control, and to meet 
targeting requirements for advanced weapons.
    Technologies to be pursued include high-frequency sonar imaging, 
wake detection, advanced electronic countermeasures, advanced sonar 
synthetic aperture processing, and the application of fiber optic 
technology to sonar sensors. In particular, the advanced hull sonar 
program, if successful, has the potential for substantially altering 
the design of the submarine's hull by eliminating the need for a 
conventional sonar sphere in the bow section.
    Inherent to all focus areas is the commitment to affordability by 
pursuing technologies that will reduce submarine design, construction, 
and life cycle costs.
2.6 Technology Investment Plan
    Near-Term Technology Insertion Opportunities: The near-term 
emphasis to develop those technologies that will enhance joint force 
interoperability and real-time communications, and ensure sustained 
dominance of littoral (coastal) engagements. While achieving this goal 
will require technologies from each of the areas discussed above, the 
focus will be connectivity and payload. Near-term technologies in 
connectivity that have potential for insertion include situational 
awareness, data fusion, acoustic communications, and NTACMs. Near-term 
technology opportunities are also driven by industry advances, 
especially in the area of sensors and processing. The DoD will continue 
to use methods such as rapid insertion of commercial-off-the-shelf 
(COTS) equipment into NSSN open architecture systems to capture 
industry advances.
    Appendix A provides a list of technologies that have the potential 
to enhance affordability to capability of early NSSNs. Many of these 
technologies were previously reported as Category I and II 
technologies.
    Core Technology Development: The long-term emphasis is to assure 
our continued dominance in stealth, which is the single most important 
attribute for submarines operating in either the open ocean or littoral 
waters. Stealth allows submarines to operate in any ocean in the world 
with virtual impunity. Existing propulsion and hydrodynamic 
technologies have limited potential for growth.
    Many new technologies and novel approaches must be pursued. Though 
many of the new concepts for achieving the necessary technological 
breakthrough exist, their development will entail a moderate level of 
technical risk, and an unprecedented degree of integration over a broad 
range of disciplines.
    Foremost among these efforts is the commitment to electric drive as 
a replacement for steam turbine propulsion. Electric drive, with its 
accompanying flexibility in electric plant architecture and component 
design, is expected to provide the necessary acoustic growth potential 
for the propulsion plant. Equally important are fundamental and 
synergistic changes to submarine hydroacoustic and hydrodynamic 
architectures. This includes significant changes to the sail, 
propulsor, hull shape, sonar, appendages, and other items pertinent to 
maneuvering and acoustics.
    The wide range of core technologies being developed or evaluated 
are listed in Appendix B. This reporting category includes technologies 
previously reported as Core and Category III technologies.
    Question. Can you assure us that this time ``we won't get burned 
again,'' and that the results of this R&D will actually go into a 
future Navy submarine?
    Answer: Many of the technologies developed from the R&D infusion of 
the 1980s (Advanced Vibration Reducer, Non-Penetrating Periscope, EM 
Silencing Equipment, etc.), have transitioned to submarines at sea 
today or are in use as vital development tools (Hydroacoustic/
hydrodynamic Technology Center, Intermediate Scale Measurement System).
    The Secretary of Defense Report on Nuclear Attack Submarine 
Procurement and Submarine Technology dated March 1997, identifies 
several promising technologies for development. For those technologies 
identified in the 1997 update as having the greatest potential for 
insertion, the Navy has budgeted the necessary R&D funds to mature them 
to the point of transition to a submarine design. At this point, 
potential design improvements will be evaluated based on a variety of 
criteria, including military requirements, technical feasibility, total 
ship impact, risk elements, impact on the mission effectiveness, cost 
impact and relative maturity of the technology. The Secretary of the 
Navy Report on Shipbuilder Design Improvements for the New Attack 
Submarine dated March 1997 provides a detailed description of the 
formal process the Navy will use to ensure continued improvement of 
submarines through insertion of technological innovations.
    Question. How did the Navy use the $60 million additional funds 
that Congress appropriated in 1997 for advanced submarine technology?
    Answer. The Navy plans to spend the $60 million provided by 
Congress in fiscal year 1997 as follows:
Insertion Opportunities:                                  ($ in million)
    Fiber Optic Sensors (LWWAA)...................................  $8.8
    Advanced Hybrid Propulsor.....................................   3.2
    Elastomeric Ejection System...................................   1.5
    Advanced Acoustic Sensors.....................................   1.1
    Advanced Acoustic Sensor Processing...........................  10.0
Core:
    Rim Driven Motors.............................................   4.4
    Structural Acoustics..........................................  13.0
    Hydrodynamics.................................................   5.0
    Propulsion....................................................   7.0
    Design Improvement Evaluations................................   5.0
Congressional Direction:
    Doppler Sonar Velocity Log....................................  $1.0

        Total..................................................... $60.0

\1\Of the above, each shipbuilder received $9.4 million

    In addition, the Congress redirected $50 million of fiscal year 
1996 funds from the National Defense Sealift Fund to pursue design and 
construction of a second Large Scale Vehicle (LSV-II). Newport News 
Shipbuilding and Electric Boat Corporation have agreed to collaborate 
on the development of the LSV-II. The Navy plans to have the LSV-II 
under contract in the summer of 1997. LSV-II will provide a key 
capability for future technology development.
    Question. Has the entire $60 million, other than pro-rata fair-
share of undistributed reductions, been made available for obligation 
for advanced submarine technology? If not, why would you need any 
additional funds in 1998?
    Answer. Yes.
    Question. DARPA had a world-class operation in submarine technology 
development, which apparently has been dismantled by the current DARPA 
director as being a ``low priority.'' Do you agree with that approach?
    Answer. Both the Navy and DARPA believe that DARPA should be 
involved in high impact, revolutionary technology programs. DARPA's 
role in submarine technology development is under review by the 
Submarine Technology Oversight Council (SUBTOC). This Council is co-
chaired by the Under Secretary of Defense (Acquisition and Technology) 
and the Assistant Secretary of the Navy (Research, Development and 
Acquisition) and its membership includes submarine technology 
stakeholders in the Department of Defense, including the Director of 
DARPA, and both submarine builders. The SUBTOC has produced encouraging 
results, including the possible pursuit of a joint Navy/DARPA small, 
minimally manned submersible project.

                      AEGIS Ship Follow-On (SC-21)

    Question. The 1998 budget and accompanying outyear budget plan 
envision spending at least $750 million to develop a follow-on ship to 
the DDG-51 destroyer. Admiral Pilling, what is the Navy's requirement 
for a follow on to the DDG-51?
    Answer. DDG-51 is the most capable destroyer in the world. There 
will be no requirement for a follow-on to the DDG-51 class until they 
retire at the end of their service life. A follow-on is required to 
replace the retiring FFG-7s and soon the DD-963s and DDG-993s. The 
Mission Need Statement (MNS) for a 21st Century Surface Combatant, 
signed in September 1994, provides the requirement for a follow-on for 
those classes of ships. SC-21 is not a follow-on to DDG-51, but an 
entirely new class being designed to perform land attack warfare, to 
accommodate new capabilities through advanced technology, and to 
incorporate cost reduction measures that can not be integrated on a 
mature platform such as DDG-51.
    Question. Why is this urgent now?
    Answer. Beginning in 2008, surface combatant force levels are 
projected to begin a long period of decline as the last DDG-51 is 
delivered and the aging FFG-7, DD-963 and DDG-993 class ships retire. A 
new class must begin delivering at that time in order to maintain 
adequate force levels. Due to the long lead time required to design and 
construct a major new surface combatant class, maintaining the current 
development schedule is urgent.
    Question. The Navy can't afford to put cooperative engagement, 
infrared sensors, theater ballistic missile defense, or advanced guns 
on the destroyers it is building today and for the foreseeable future. 
Why is it that the Navy can't adequately equip its current ships, yet 
it hungers for a new ship?
    Answer. The option that provides the Navy the most rapid deployment 
of Cooperative Engagement Capability (CEC) and Theater Ballistic 
Missile capability is via backfit. Under the current Navy plan the 
first ships to receive Area Theater Ballistic Missile Defense 
capability in conjunction with CEC, will be two Aegis cruisers in 
fiscal year 2000. Additional cruisers will be backfit in fiscal year 
2002 and fiscal year 2003. The first DDG-51 class destroyer will be 
backfit in fiscal year 2003 with additional ships scheduled in fiscal 
year 2004 and out. Under the current plan, ships appropriated in FY 
2002 will receive the first forward fit configuration, in production/
construction.
    Additionally, the Navy has planned to introduce DDG-81 and follow 
with the MK 62 gun in conjunction with the Extended Range Gun Munitions 
(ERGM) rounds. All ships in the DDG-51 class Multi-Year Procurement 
(MYP) for fiscal years 1998 through 2001 will have this gun.
    What the Navy can't afford is to not attempt to capture the latest 
technology and acquisition initiatives, increase warfighting 
capability, increase automation, and reduce manning to thus to reduce 
the cost of procuring and maintaining Surface Combatant force structure 
as exemplified most recently by Operation Desert Strike. The Navy can 
not afford to maintain force structure levels without building new 
ships.
    Question. What are the deficiencies of the DDG-51 that require the 
development of a follow-on ship? Describe each in detail for the 
record.
    Answer. Procurement Cost: It is anticipated that the Navy and the 
Nation will be little able to afford to continue procuring Surface 
Combatants at a cost of $800 million to $900 million a piece, well into 
the future, and at a sufficient rate to maintain Surface Combatant 
force structure for the future.
    Cost of Manpower: At an annual cost of between $30,000 to $75,000 
per crew member, the Navy is compelled to reduce manning, while at the 
same time increase levels of warfighting capability and complexity in 
addressing the future threat facing its Surface Combatants. New 
missions, including TBMD, CEC, and enhanced Naval Surface Fire Support 
(NSFS) in conjunction with an evolving threat, are drivers for change 
in ship and combat systems design.
    Cost of Maintenance: The Navy is compelled, via Congressional 
direction, and to technically keep pace, to go to procurement of 
Commercial Off the Shelf (COTS) based computing systems. We must 
``break with the past'' in the costly procurement of MILSPEC equipment, 
and the costs associated with upgrade and maintenance.
    Question. If the Congress were to deny funds for a new ship 
development, why couldn't you keep producing DDG-51s?
    Answer. If the Congress were to deny funds for a new ship 
development, the Navy could continue to procure DDG-51's, but given 
cost, and a fiscally constrained environment, procurement would be 
reduced to such an extent that Surface Combatant force structure could 
not be maintained. Additionally, the Navy would miss the opportunity to 
take advantage of advanced technology initiatives, and acquisition 
reform, to help reduce cost of procurement, manning and maintenance.
    Question. In what year does the Navy project that a potential 
adversary country would field a ship as capable as today's DDG-51?
    Answer. The Navy can not currently predict when any potential 
adversary could possibly field a ship with the same capabilities as 
today's DDG-51. But in examining recent events, the Navy can look with 
some concern to the arranged sale by the Russians to the Chinese of 2 
Sovremenny class DDGs with their accompanying SS-N-22 missiles ------. 
While this development is of concern, it was not unanticipated. A 
series of improvements to ships and weapon systems including AN/SPY-
1D(V) on ships in the Multi-Year Procurement, CEC and SM-2 Block IV, 
will go a long way in keeping our Surface Forces ``pacing ahead of the 
threat.''
    The Navy will strive in continued improvements to DDH-15s and in 
development of future Surface Combatants to maintain this goal.

           Intercooled Recuperative (ICR) Gas Turbine Engine

    Question. Two years ago, the Committee recommended that the 
Intercooled Recuperative gas turbine engine program be terminated, but 
did not prevail in conference. The fiscal year 1998 budget requests $32 
million for continued development. How much have we spent on ICR 
development so far?
    Answer. To date we have spent or obligated $273 million in U.S. 
funds plus $31 million provided by France and the United Kingdom. The 
United Kingdom has also provide another $22 million in testing 
services. This totals $326 million.
    Question. Does it work?
    Answer. The testing shows that the ICR concept does work. We have 
demonstrated 21% fuel efficiency improvement and predict at least 28% 
improvement for the final fully developed configuration. The 
demonstrated performance is based on a variety of different tests which 
total 680 hours of engine operation, including 374 hours of operation 
with the redesigned recuperator (known as the Limited Operational 
Unit). Two 500 hour tests and a 3000 hour endurance test remain to be 
conducted. These tests will help determine the reliability and 
maintainability of the ICR engine.
    Question. How much more is contained in the outyear budget plan for 
additional development of the engine?
    Answer. $93.8 million for fiscal year 1998 through fiscal year 
2001.
    Question. How much more is required above the amount in your 
outyear plan in order to achieve development of an engine that could 
actually be installed in a ship?
    Answer. The Navy estimate is that there is an additional $124 
million required to complete full qualification testing, at-sea testing 
and logistics support.
    Question. Explain the Navy's plan to ask Britain to foot more of 
the bill for this program, which is based on a British Rolls-Royce 
turbine engine. What has been your success so far?
    Answer. The ICR engine is a U.S. Navy program. Under a 1994 
Memorandum of Understanding (MOU), the UK and France have provided some 
funding, testing support and services. To date, they have provided $53 
million in funds or testing services, which is 16% of the obligations 
thus far. The British Navy has been very interested in the development 
of the ICR engine and would like it accelerated to be available as a 
propulsion alternative for the Horizon Frigate, a joint project 
involving the UK, France and Italy. We are discussing the possibility 
of the UK providing additional funding (or in-kind services) to help 
offset the estimated $124 million required to complete the full 
qualification and at-sea testing. In addition, we have proposed that 
they also make suitable arrangements for sharing any future cost 
overruns. These discussions have just recently begun. While not 
accepting these terms, the UK has indicated a willingness to pursue 
further agreements, after receipt of our formal proposal. The UK 
recently provided $7 million toward the $124 shortfall via an amendment 
to the MOU. The French have also expressed interest in continuing the 
program, and similar discussions are underway with them.
    Question. Explain why, after spending $.3 billion on this program 
so far, the Navy recently decided to drop the engine as a candidate for 
installation on the DDG-51 destroyers?
    Answer. It is not cost effective to amortize the class unique non-
recurring costs given the few remaining candidate ships in the DDG-51 
class.
    Question. If we agree to your plan, which will eventually costs $.5 
billion, will ICR be the ``engine of choice'' for installation on new 
Navy ships such as the Arsenal ship or the DDG-51 follow on ship (SC-
21)?
          Are you testifying that it will be installed if it works?
          Or are you testifying that it just must be one of the 
        candidate engines?
    Answer. The ICR engine will be one of the candidate engines.
    Question. Under what conditions would the Navy terminate this 
program?
    Answer. The Navy would recommend termination if the U.K. and French 
MOU partners don't:
          a. pay at least 50% of the shortfall for full engine 
        qualification (in cash or in kind-services)
          b. make suitable arrangements for sharing future cost growth.
    Question. Admiral Pilling, would you say the technology merits a 
$.5 billion R&D investment in this program? Do fleet CINCs agree with 
you?
    Answer. This technology and others that save fuel costs are 
important to the Navy. Although the ICR testing is currently on track, 
earlier problems with the recuperator severely impacted the cost and 
schedule of the program. As a result, key efforts to fully qualify the 
engine for fleet transition (for example, shock testing, logistics 
development) are no longer funded. The Navy can not affort to pay for 
all these transition items, so we have entered into discussions with 
the U.K. and France to see if they can share the costs.
    The fleet CINCs support technologies that save fuel and support our 
approach of getting the U.K. and France to share more of the costs. 
Given the severe fiscal constraints that we are operating under, the 
CINCs are concerned about the cost effectiveness/payback of the ICR 
technology.
    Question. When all costs, including $.3 billion in sunk cost are 
considered, how many years will it take to reach a payback of the 
taxpayer investment in this program?
    Answer. The OSD Cost Analysis Improvement Group (CAIG) recently 
prepared an analysis of the payback. Based on the current estimate to 
complete the program, the CAIG predicted the earliest payback period 
for the remaining investment (not counting sunk costs) to be on the 
order of 30 years. All analyses are based on assumptions about fuel 
inflation rates and the number of candidate ships. Over a range of 
assumptions, the payback periods average 30 to 40 years.

                             New Model F-18

    Question. The 1998 budget includes $2.5 billion for the F/A-18 E/F 
aircraft, of which $268 million is for R&D and $2.2 billion is for 
production of 20 aircraft. Mr. Douglass, your statement says that the 
F/A-18 E/F Super Hornet program is on track, within cost, below weight, 
and meeting all performance criteria. F/A-18 E/F aircraft cost $79 
million each for a total program cost of $79.5 billion. What is the 
status of the F/A-18 E/F development program?
    Answer. The F/A-18E/F entered E&MD (Engineering and Manufacturing 
Development) in June 1992. To date, the airframe E&MD contract with 
McDonnell Douglas (St. Louis, MO) is 88.9% complete, and the engine 
contract with General Electric (Lynn, MA) is 94% complete. The Super 
Hornet completed Initial Sea Trials aboard the USS JOHN C. STENNIS 
(CVN-74) in January 1997, successfully conducting 64 catapult launches 
and arrested landings, as well as demonstrating its flight stability 
during carrier approach. All seven flight test aircraft are currently 
flying in support of the flight test effort, and have flown in excess 
of 441 flights and nearly 713 hours to date. The first year of flight 
test has cleared nearly all of the aircraft's clean (without weapons) 
flight envelope. Stores separation work was initiated in February 1997. 
By February 1998, a significant portion of the loads envelope will have 
been flown and the test team will know a great deal about the precise 
characteristics weapons exhibit as they are launched from the aircraft. 
The F/A-18E/F flight test program will continue through November 1998.
    Question. Please explain what difficulties have been experienced in 
the test program with the F414 engine.
    Answer. The F414 engine experienced failure of a compressor 
component which had been recently redesigned to increase engine 
efficiency and enhance already existing performance margin. The problem 
was addressed by returning to the previous, proven configuration. With 
only two ground tests remaining--Engine Gyroscopic Test and Fan 
Containment Test, the F414 team anticipates completion of Limited 
Production Qualification within the established program schedule. 
Although overall impact to the flight test program was a two month 
slip, all flight test assets have been reconfigured, and the team is 
working to recover margin by closely managing test assets and 
capitalizing on test efficiencies.
    Question. Please explain what difficulties have been experienced in 
the test program with the landing gear.
    Answer. Generally there have been no issues with the landing gear 
in flight test. The only incident noted so far was an indicator switch 
miss rig that caused a planing link warning light to illuminate on one 
flight. However, there were no problems with the gear itself.
    Question. What problems have been discovered with the structure and 
flying qualities of the aircraft?
    Answer. Extensive ground test on the Static Test article and 
aircraft E-3, the loads aircraft, has been conducted with test results 
generally matching analysis, With regards to flying qualities, the 
flight control software has remained the same since first flight and 
has been praised by test pilots, especially in the powered approach 
flight regime around the carrier.
    Question. Aircraft weight affects range, speed, payload, and 
carrier recovery payload. Although the aircraft remains below its 
weight goal--which is good--aircraft weight has been steadily 
increasing. Is there a weight problem when all known potential weight 
increases and structural redesigns are considered?
    Answer. No. Even with all potential weight increases accounted for, 
aircraft weight still remains well below the specification weight 
requirement. However, with three years remaining in the test program, 
additional design changes will likely be identified which will require 
use of some of that weight margin.
    Question. What effect will McDonnell Douglas' recent loss on the 
Joint Strike Fighter competition mean to its overhead, and indirectly 
to the F/A-18E/F cost?
    Answer. Short-Term Impact--McDonnell Douglass submits proposals 
excluding potential contracts that they may be competing for, so the 
effect of the loss will have little or no effect on our contracts. In 
addition, the JSF work would have been extensively engineering with 
little relation to our manufacturing dominated contracts.
    Long-Term Impact--McDonnell Douglass will have fewer programs to 
spread its overhead rates across; however, overhead cost should 
stabilize/slightly increase if McDonnell Douglass optimizes its 
infrastructure to meet the needs of its programs.

                          Joint Strike Fighter

    Question. The 1998 budget requests $931 million for concept 
development of the Joint Strike Fighter which could become the largest 
acquisition in the history of the Department of Defense in terms of 
total costs. Mr. Douglass, what is the status of the Joint Strike 
Fighter development program?
    Answer. The Joint Strike Fighter Program (JSF) plans to develop and 
deploy a family of aircraft that affordably meets the next-generation 
strike needs of the Air Force, Navy, Marine Corps and allies. JSF 
Program activities are centered around three distinct objectives that 
provide a sound foundation for start of Engineering and Manufacturing 
Development (E&MD) in 2001:
          (1) facilitating the Services' development of fully 
        validated, affordable operational requirements;
          (2) lowering risk by investing in and demonstrating key 
        leveraging technologies that lower the cost of development, 
        production and ownership; and
          (3) demonstrating operational concepts.
    A multiyear $2.2 billion JSF Concept Demonstration effort commenced 
in November 1996 with competitive contract awards to Boeing and 
Lockheed Martin for Concept Demonstration programs. These competing 
contractors will build and fly concept demonstrator aircraft, conduct 
concept unique ground demonstrators, and continue refinement of their 
ultimate delivered weapon system concepts. Specifically, Boeing and 
Lockheed Martin will demonstrate commonality and modularity, STOVL 
hover and transition, and low speed handling qualities of their 
respective weapon system concepts. Pratt and Whitney is providing 
propulsion hardware and engineering support for both Boeing's and 
Lockheed Martin's on-going JSF Concept Demonstration efforts. The JSF 
Alternate Engine Program, with General Electric, continues technical 
efforts related to development of an alternate engine for production in 
order to reap the financial and operational benefits of competition.
    Early warfighter and technologist interaction continues as an 
essential aspect of the JSF requirements definition process, and is key 
to achieving JSF affordability goals. To an unprecedented degree, the 
JSF Program is using cost-performance trades early as an integral part 
of the weapon system development process. The Service's completion of 
the Joint Operational Requirements Document is planned in Fiscal Year 
2000 to support the Milestone II decision in Fiscal Year 2001 for start 
of E&MD.
    A sizable technology effort is underway to reduce risk and life 
cycle cost (LCC) through technology maturation and demonstration. The 
primary emphasis is on technologies which have been identified as high 
payoff contributors to affordability, supportability, survivability and 
lethality. Numerous demonstrations have been accomplished and others 
are in process to validate performance and LCC impact to component, 
subsystem, and the total system.
    Question. Last year, concern was expressed by the House National 
Security Committee over the viability of the ASTOVL variant of the 
aircraft for the Marines (to replace AV-8B Harriers). Please discuss 
the issue and how it was resolved, and please verify for us that the 
Defense Department is committed to developing an ASTOVL variant of the 
aircraft.
    Answer. Last year the House Authorization bill stated that no JSF 
funds could be spent for ASTOVL development. Neither the House 
Appropriations bills contained that language. In fact the House 
Appropriations bill contained language stating that the JSF STOVL 
variant must be developed ahead of or concurrently with the other 
variants. Neither of the final Fiscal Year 1997 Defense Authorization 
and Appropriations bills contained STOVL prohibitions. We hope that 
support for ASTOVL development continues to be strong both on the 
committee, and in the House.
    The Defense Department is fully committed to development of a STOVL 
JSF variant for the Marines. The JSF program is fully funded within the 
FYDP and STOVL is an integral part of it.
    As you know, we are in the Program Definition and Risk Reduction 
phase (PD&RR) of JSF now. The Concept Demonstration portion of PD&RR 
requires each industry team to build two flying demonstrators, one 
conventional and one STOVL. Demonstration of STOVL hover and transition 
is a key aspect of this phase and is required by the Single Acquisition 
Management Plan. The Concept Demonstration program provides two 
different STOVL approaches and aerodynamic configurations, and 
maintains a competitive environment between contractors prior to E&MD. 
Additionally propulsion development continues during this phase with a 
byproduct of STOVL development being significant improvements in single 
engine durability and reliability for all variants. In short, we feel 
that we have a strong STOVL development program within JSF and we are 
committed to maintaining it.
    Question. Most of us remember the Air Force's ``Great Engine War,'' 
where a billion dollars were spent to bring a second contractor into 
the fighter engine business and which resulted in better engines at 
significantly lower cost. The Navy recently signed a $97 million 
``alternate engine'' contract for the Joint Strike Fighter. Please 
explain your strategy and your plans to use $10 million provided by 
Congress for risk reduction to facilitate this effort.
    Answer. During the JSF Concept Development Phase, all three 
competing weapon system contractors chose the Pratt and Whitney F-119 
or derivative as the primary propulsion system for the Concept 
Demonstration Phase. Recognizing the financial and operational benefits 
of competition, the JSF Program is pursuing the development of a 
competitive engine for production.
    Phase I of this effort began in fiscal year 1996 with a General 
Electric study effort to determine the comparative Life Cycle Cost and 
performance of the GE F110 and YF120 derivative engines in each of the 
preferred weapon system concepts. Based on the study results, the 
government selected the YF120 engine derivative for continued 
development. Phase I initiated preliminary design risk reduction 
studies, systems design/integration, cycle refinement, and component 
design and associated technology maturation for the YF 120 derivative 
engine. Phase II, which commenced in fiscal year 1997, will continue 
detailed design and begin hardware testing of the YF120 engine, 
culminating in core testing beginning in fiscal year 1999.
    Conress appropriated an additional $10 million for fiscal year 1997 
competitive engine efforts. This funding will be used for a variety of 
risk reduction efforts including: turbine rig test and analysis, core 
integration, core supportability, material characteristics, weapon 
system concept integration, and diagnostics.
    Question. Please discuss your plans for cooperation with other 
nations in this program, and what they bring to the table in terms of 
capabilities and financial contributions.
    Answer. The JSF Program Office has established a framework to 
accommodate international participation during the concept 
demonstration phase of the program. Currently, the United Kingdom is on 
board as a full collaborative partner, with emphasis on the JSF STOVL 
variant. The UK is contributing $200 million to the program for this 
phase. The Netherlands, Norway and Denmark will soon join the program 
as associate partners, with primary interest in the JSF CTOL variant. 
The total planned financial contribution for this effort is $32 million 
with signature of the multilateral agreement planned in April 1997. The 
Canadians have formally requested to join the program and negotiations 
are expected to commence in April 1997. Numerous other countries have 
received briefs on the program and are interested as well.
    Benefits to be derived from international participation in the 
program include a harmonization of the requirement with our allies 
which will lead to improved interoperability, strengthened 
international ties and lower overall program cost as a result of future 
anticipated international buys of the JSF (i.e., lower unit cost).
    Firm financial contributions and associated efforts are 
incorporated in JSF Program plans and funding and are reflected in the 
fiscal year 1998 President's Budget request.
                              V-22 Aircraft
    Question. The 1998 budget requests $530 million in R&D and $542 
million in procurement for production of 5 V-22 aircraft. Mr. Douglass, 
your statement says that MV-22 is the highest priority for Marine Corps 
aviation and that the current acquisition profile for the MV-22 will 
complete the projected aircraft procurement in 25 years. At this rate, 
V-22 cost $87 million each for a total program of $45.5 billion Last 
year, the Committee directed that the V-22 program achieve a production 
rate of 36 aircraft per year by the year 2000. Why did the Navy ignore 
us?
    Answer. We have increased the procurement of V-22s by 16 aircraft 
over the request from last year, increasing to 24 aircraft per year by 
the end of the FYDP. We fully recognize the need to get the rate up and 
to replace the current fleet of medium lift helicopters. In the final 
analysis, we had to take a hard look at balancing all of the 
Department's requirements with the available resources.
    Question. Last year, all 4 Committees in the Defense budget process 
provided advance procurement funds for 12 aircraft in 1998. Yet, only 5 
aircraft are now budgeted. Why did you not take advantage of this 
opportunity?
    Answer. We share the Committees' commitment to increasing the 
production rate of the V-22, and we have made significant progress with 
the current request. In reviewing the additional funds required to 
procure the additional 7 aircraft, we simply were not in a position to 
pursue it this year. Since the Conference Report made provisions for us 
to request reprogramming of the $70 million, we have made that request 
and ask for your prompt approval.
    Question. Is a 25 year production profile acceptable to the 
Commandant or the theater CINCS?
    Answer. I cannot speak for the CINCS, but for the Commandant, based 
on the Fiscal Year 1998 President's Budget, a 22 year procurement 
profile is not desirable. The last MV-22 aircraft would be received in 
fiscal year 2000. Given the current MV-22 procurement profile, our CH-
46s will be approaching 50 years of age at retirement. I would much 
prefer a higher production ramp to 36 MV-22's per year that would 
replace our aging CH-46E fleet aircraft 5 years earlier while providing 
a significant savings of up to $6 billion.
    Question. So, how do we get out of this dilemma?
    Navy Answer. In this declining DoD budget era, equipment must be 
procured at less than optimum rates in order to achieve a balance that 
supports total Department of the Navy warfighting requirements. The 
only way to modernize more quickly is to obtain additional fiscal 
resources, either from another program or from a Congressional 
Enhancement.
    Marine Corps Answer. In this declining DoD budget era, equipment 
must be procured at less than optimum rates in order to achieve a 
balance that supports total Department of the Navy warfighting 
requirements. The only way to modernize more quickly is to obtain 
additional fiscal resources, either from another high priority program 
or from a Congressional Enhancement.
    Question. Mr. Douglass, please explain the new plan to pursue a 
Special Operations Forces variant of the V-22 aircraft. What are the 
costs and what are the benefits?
    Answer. A major contract modification was awarded in December 1996 
to develop the SOF variant. The plan includes the modification of E&MD 
aircraft #8 to integrate the terrain following/terrain avoidance radar 
and avionics equipment and the remanufacture of E&MD aircraft #9 to a 
full CV-22 configuration. The RDT&E costs are approximately $560 
million and procurement costs are about $4.3 billion. The benefits will 
be a unique aircraft that will accomplish the long range SOF mission 
with the minimum of assets. The 50 CF-22 aircraft to be procured will 
replace approximately 100 H-53, H-60 and C-130 aircraft currently being 
used by USSOCOM.

                            Navy Helicopters

    Question. The Navy's helicopter master plan consolidates missions 
and reduces the types of helicopters used by the Navy. The Navy will 
reduce the types of helicopters from seven to two. The plan, which will 
be complete by 2012 is aimed at reducing manpower and logistics support 
costs. Based on the plan, the Navy will procure a Blackhawk derivative, 
the CH-60, to replace current logistics and combat helicopters; 
remanufacture SH-60B/SH-60F/HH-60H helicopters to a multi-mission 
helicopter, the SH-60R; and outscore military sealift requirements to a 
private contractor.
    The Navy plans to retire its logistics and cargo helicopters and 
replace them with a Blackhawk derivative, the CH-60. In fiscal year 
1997, Congress provided an additional $7.5 million to begin the CH-60 
program. This year the Navy is requesting $31 million for the CH-60. 
The Navy will begin procuring the CH-60 in fiscal year 1999.
    During the fiscal year 1998 budget build, DoD accelerated the 
schedule and increased the procurement quantities of the CH-60. What 
was the rationale for accelerating the CH-60 program? Do you believe 
that this is an ambitious schedule? Why or why not?
    Answer. The schedule was accelerated for two reasons. First, to 
replace the combat logistics aircraft as rapidly as possible to 
minimize the investment in components required to keep these aircraft 
safely flying. Second, to minimize the potential increased costs 
associated with allowing the production line of Sikorsky aircraft to 
``go cold'' prior to the initiation of the previously planned CH-60 
production. The program acceleration is currently executable, without 
incurring unnecessary risks.
    Question. What is the program cost and schedule?
    Answer. The CH-60 program is currently scheduled to enter full-rate 
production in fiscal year 2000, with a production rate of a minimum of 
18 aircraft per year through completion of minimum of 134 aircraft in 
fiscal year 2006 to support the combat logistics and combat SAR 
requirements. The Navy is reviewing potential revisions to the rotary 
wing infrastructure which may adjust the total number of required 
aircraft upwards. The total procurement cost of the program, as 
currently planned, is $2.6 billion in instant fiscal year 1997 dollars.
    Question. It is our understanding that the fiscal year 1998 budget 
request does not include advance procurement funds. Are advance 
procurement funds required in fiscal year 1998 in order to begin 
production in fiscal year 1999? If so, how can you begin production in 
1999?
    Answer. Advance procurement (AP) for the CH-60 program was removed 
from the fiscal year 1998 budget by the Navy, in response to the 
interpretation of OSD direction to remove AP when not required or 
economically justified. The CH-60 had planned to benefit by the pricing 
provided by the contractor in the current Army H-60 contract. The lack 
of Navy H-60 production or advance procurement funding in fiscal year 
1998 will result in a production break of approximately nine months at 
the contractor's facility, with a resulting increase in ``production 
start-up costs'' and a requirement to enter into a new and distinct 
contract. The program office has recognized and briefed that without 
advance procurement the production schedule will increase from the 
currently planned 12 to 18 months, to between 21 and 27 months. There 
will be no change in production start (manufacturing of components), 
but there will be a 9-month delay in production completion of fully 
assembled aircraft.
    Question. Last year, the Army requested funds and the authorization 
for a Blackhawk multi-year contract for fiscal years 1997 through 2001. 
In the fiscal year 1998 budget request, the Army has reduced the 
funding and production schedule of Blackhawks. What is the impact on 
the Navy CH-60 program, in terms of per unit and total program cost, by 
the Army's decision not to go forward with the multi-year contract?
    Answer. The current program pricing is based upon commitment by 
Sikorsky aircraft to maintain the previously provided pricing for a 
sustained rate of 36 per year as long as the Navy maintains a minimum 
production rate of 18 aircraft per year. As a result, the Navy does not 
expect a change in per unit or total program cost.
    Question. It is our understanding that DoD has released the fiscal 
year 1997 funds for the CH-60 program; however, the Army has not 
provided the Blackhawk helicopter for CH-60 development and testing. 
Could you explain what the problem is? When will it be resolved?
    Answer. The requisite Memorandum of Agreement (MOA) between the 
Army and Navy for transfer of a UH-60L to the Navy for demonstration of 
the CH-60 capabilities in fiscal year 1997 has been signed. The MOA was 
delayed as both Components' counsel ensured it to be in accordance with 
Congressional direction and law. (Congressional support (i.e., waiver 
of statute) is believed to be required to allow the Navy to replace the 
UH-60L ``in-kind'' from the production line in fiscal year 1999). The 
UH-60L is at Sikorsky, and the CH-60 modification effort has begun.
    Question. To reduce costs and infrastructure associated with its 
anti-submarine and surface warfare platforms, the Navy will 
remanufacture Seahawk (SH-60B/SH-60F/HH-60H) helicopters to a multi-
mission helicopter, the SH-60R. For fiscal year 1998, the Navy is 
requesting $71 million for the SH-60R development program. What is the 
acquisition strategy for the SH-60R? What is the cost of the 
acquisition program?
    Answer. The Navy is using cost-type contracts to conduct 
Engineering and Manufacturing Development (EMD). Fixed price contracts 
will be used for production phases of the SH-60R program. Total 
procurement is expected to be $4.7 billion (FY93$).
    Question. According to the Navy, flight hours for Seahawk 
helicopters are exceeding planned operational usage--H-60s are wearing 
out faster than anticipated. Given the increased optempo of the 
Seahawk, are you satisfied with the delivery schedule of the SH-60R? 
Why or why not?
    Answer. The current SH-60R schedule will satisfy the Navy's 
requirement. The increasing operational demands on the HSL community 
caused by the introduction of additional LAMPS MK III capable surface 
combatants makes the number of available HSL aircraft in the fiscal 
year 2001 through fiscal year 2004 critical. Bureau number by bureau 
number management of aircraft undergoing re-manufacture as well as 
those undergoing standard depot level maintenance will be used to 
mitigate impacts to the operational forces.
    Question. Although it is called a ``remanufacture'' program, the 
SH-60R is really an integration of improved sensor and system 
improvements to ensure the viability of the helicopter for the next 20 
years. Last year, the Navy was considering a service life extension 
program that would increase the life of the platform from 10,000 to 
20,000 hours. Are you still planning to do a service life extension 
program? If so, is the program funded in your budget--what is the cost 
and schedule? If not, why?
    Answer. A SLEP, extending the useful aircraft service lives from 
10,000 flight hours to 20,000 flight hours, remains part of the 
remanufacture program. The Service Life Assessment Program (SLAP, which 
identifies the SLEP requirements) has not been completed. However, 
preliminary assessment indicates an approximate labor and material cost 
of $5 million per aircraft. This amount is included in the existing 
funding request.
    Question. The Navy believes it will reduce logistics and 
infrastructure costs by developing identical avionics and cockpits for 
the SH-60R and the CH-60. The CH-60, which is primarily a transport 
helicopter, will receive the same sophisticated avionics required by 
the multi-mission SH-60R helicopter. The SH-60R will perform anti-
submarine and -surface warfare. The unit cost for the CH-60 could 
increase as a result of commonality; however, the Navy believes that 
the life cycle cost savings will outweigh production costs. Which 
components will have an increased unit cost as a result of commonality? 
What is the estimated increase?
    Answer. The Navy Helo Master Plan resolves the Navy's entire 
current and anticipated rotary-wing needs in a well formulated and 
thought-out plan, with consideration for minimizing the future 
procurement, support and infrastructure costs. Within this plan, the 
CH-60 directly addresses the near-critical availability, age, and cost 
of ownership of the CH-46 Combat Logistics Support aircraft, and the 
requirements for air-station, amphibious, and Combat Search and Rescue 
(SAR) aircraft. Additionally, because the CH-60 replaces HH-60H that 
will be remanufactured into SH-60R, the CH-60 helps address the 
identified shortfall of available Light Anti-Submarine Warfare 
Helicopter (HSL) assets to support existing and future surface 
combatants, and the need to update the reserve HSL components with 
capability equivalent to the active forces.
    The CH-60 and SH-60R are intended to include nearly-identical 
cockpit and flight avionics, but not sensors and mission avionics, to 
reduce supply requirements, maintenance costs, and operator training 
costs. The common cockpit for these platforms is still in design. 
However, the two prime contractors have been given guidance that the 
entire cockpit and flight avionics suite is not to exceed $1 million 
per aircraft. The flight avionics for the last lot of HH-60H aircraft 
cost approximately $635 thousand; the maximum expected procurement cost 
increase to support commonality approximates $250 thousand per 
aircraft. Components that may increase in procurement costs to support 
the benefits of commonality are: programmable keysets vs. Control/
Display Navigation Units (CDNUs), 6 x 8 inch flat panel flight displays 
vs. 4\1/4\ x 4\1/4\ inch situational displays, and inertial navigation 
vs. doppler based navigation. Each of these changes would still be 
required as ``kits'' for those CH-60 performing the Combat SAR mission 
if not already provided in the baseline aircraft.
    Question. What is the estimated life cycle cost savings as a result 
of commonality? When will the Navy realize those savings?
    Answer. While the total anticipated life cycle cost reduction to 
the Navy is the ``cornerstone'' of the Navy Helo Master Plan, any 
numbers presented now would be incomplete. We continue to identify and 
refine projected cost reductions using the model developed by US 
AIRWAYS to support their decision to reduce type/model/series aircraft 
across their organization in order to increase their profits. Although 
final organizational performance measures are different for the Navy 
(e.g. readiness vs. profits), the areas for reducing expenses are 
strongly similar. The Navy will realize the anticipated cost reductions 
as type/model/series helicopters are removed from the active Naval 
inventory.
    Question. Many of the avionics components for the SH-60R are 
currently in development. Integrating these new components may result 
in a schedule slip and increased cost for the CH-60 program. Which 
components are currently under development? When will those components 
be available for integration on the CH-60? Which components are most 
likely to cause a schedule slip?
    Answer. The design of SH-60R flight avionics is under revision, due 
to the potential reduction in cost of ownership through use of 
available commercial technology. All major components for revised 
flight avionics are existing commercial or ``ruggedized'' commercial 
components. While the potential always exists for a schedule slip, the 
plan to reduce dependence on technology development by using hardware 
and software available in the open market leads the program office to 
believe there will be no schedule slip for either aircraft. The costs 
of flight avionics designs have been predominantly allocated to the SH-
60R program, so the integration costs to the CH-60 revolve around 
wiring modification, drawings, and generation of installation technical 
directives; the estimated cost to the CH-60 program is approximately 
$6.5 million. No further cost growth is anticipated. Both the SH-60R 
and the CH-60 programs will need the designs completed, and hardware 
flight qualified and available by first quarter fiscal year 1998; this 
is achievable, with low to moderate risk. The components or activities 
most likely to cause a schedule slip would be the integration of cards, 
``cardsets'', backplane and the operating system that would make up the 
scaleable mission computer.
    Question. The Navy is conducting a demonstration for outsourcing 
military sealift requirements. The Navy believes it may be more 
operationally and economically effective to allow commercial helicopter 
operators to transport equipment from shore to ship. When will this 
demonstration be completed?
    Answer. The demonstration of outsourcing of MSC requirements is 
expected to be completed in mid September 1997.
    Question. When will the Navy make a decision on outsourcing?
    Answer. The Navy will make a decision after demonstration 
completion, and submission of the associated report to the Smith 
Appropriations Committee (about third quarter Fiscal Year 1998).
    Question. If the Navy decides that outsourcing is not operationally 
and economically feasible, how will you satisfy your helicopter 
military sealift requirements? Will this require an increased 
procurement of helicopters? If so, how many helicopters will be needed 
and what is the estimated cost of such a procurement?
    Answer. If the Navy decides that outsourcing is not operationally 
and economically feasible, the helicopter MSC requirements will be 
reviewed. Additional procurement of helicopters may be required.

                        Marine Corps Helicopters

    Question. The helicopters in the Marine Corps fleet were fielded in 
the mid 1980's. The Marine Corps developed a ``Rotary Wing 
Modernization Plan'' as the guideline to modernize its current 
helicopter fleet. According to the plan, the Marine Corps will replace 
heavy and medium assault support helicopters with the MV-22 and upgrade 
Huey utility and Cobra attack helicopters. In fiscal year 1998, the 
Marine Corps is requesting $529 million to procure MV-22's and $80 
million to begin a Huey/Cobra helicopter upgrade program. Is the Marine 
Corps ``Rotary Wing Modernization Strategy'' adequately funded in the 
budget? If not, what are the shortfalls?
    Answer. The Marine Corps is adequately funded within the 
constraints of the Department of the Navy's budget. Additional funding 
would allow an accelerated replacement of our aging aircraft with 
modern, technologically advanced, and Joint Strategy Review/National 
Military Strategy aircraft.
    The helicopters in the Marine Corps fleet were fielded in the mid 
1980's. The Marine Corps developed a ``Rotary Wing Modernization Plan'' 
as the guideline to modernize its current helicopter fleet. Accordingly 
to the plan, the Marine Corps will replace heavy and medium assault 
support helicopters with the MV-22 and upgrade Huey utility and Cobra 
attack helicopters. In fiscal year 1998, the Marine Corps is requesting 
$529 million to procure MV-22's and $80 million to begin a UH-1N Heuy/
AH-1W Cobra helicopter upgrade program (4BN/4BW).
    Question. The Marine Corps ``Rotary Wing Modernization Strategy'' 
outlines a plan for replacing helicopters currently in the fleet. Some 
of the aircraft will be over 40 years old when they are retired. Is the 
``Rotary Wing Modernization Stragey'' based on fiscal restraints or 
operational requirements? Are you comfortable with the helicopter 
replacement schedule--should it be accelerated? Why or why not?
    Answer. Our modernization program is based on our long standing 
neckdown strategy of: the V-22, the 4BN/4BW and the CH-53E. We are 
concerned with the paced of this modernization effort; however, fiscal 
constraints prevent the Marine Corps from modernizing at a faster rate.
    Question. The MV-22 will replace the CH-46E and CH-53A/D 
helicopters. The CH-46E provides medium assault support; the CH53A/D 
provides heavy assault support. Based on the Marine Corps budget, it 
will take 29 years to replace the CH-46E and CH-53A/D with the MV-22. 
What is the anticipated structural life expectancy for the CH46E and 
CH-53A/D?
    Answer. In February 1996, Naval Air Systems Command extended the 
structural life of the CH-46 to 15,000 hours. The estimated airframe 
fatigue life limit for the CH-53D is 10,000 hours. The CH-53A is no 
longer in service.
    Question. When will the CH-46E and CH-53A/D reach their anticipated 
structural life expectancy? How many of each type of helicopter will be 
in the inventory at that time?
    Answer. The first CH-46E will reach the 15,000 hour service life 
limit in fiscal year 2010. Based on the current MV-22 acquisition plan, 
the estimated CH-46E inventory in fiscal year 2010 will be 43 aircraft.
    Based on an estimated airframe fatigue life limit of 10,000 hours, 
operational CH-53Ds begin to reach their fatigue life limit in fiscal 
year 2000 with an inventory of 46 aircraft. The CH-53D will require a 
Service Life Assessment Program (SLAP) to determine future life 
extension requirements. The CH-53A is no longer in service.
    Question. Are the actual operational hours exceeding the planned 
hours for the CH-46E and CH-53A/D? If so, please explain.
    Answer. Actual utilization is not exceeding budgeted utilization. 
Budgeted versus actual utilization is shown for the CH-46E and the CH-
53D. The CH-53A is no longer in service.

                               Utilization
------------------------------------------------------------------------
                                                           CH-46E\1\
                                                     -------------------
                                                      Budgeted   Actual
------------------------------------------------------------------------
FY 95...............................................      25.5      24.3
FY 96...............................................      25.6      21.9
FY 97*..............................................      25.4      18.2
------------------------------------------------------------------------


 
                                                           CH-53D\1\
                                                     -------------------
                                                      Budgeted   Actual
------------------------------------------------------------------------
FY 95...............................................      21.5      19.3
FY 96...............................................      22.4      18.0
FY 97*..............................................      22.3      11.1
------------------------------------------------------------------------
\1\Reflect 3 months of reporting.


    CH-53D transition to Hawaii prevented achievement of budgeted 
utilization during FY 95/96.
    Question. For the record, please provide the planned retirement 
schedule for the CH-46E and the CH-53A/D based on the current MV-22 
acquisition plan.
    Answer. The lengthy 24-year ``procurement-to-delivery'' profile of 
the MV-22 prevents a rapid transition and retirement of the aging CH-
46E and CH-53D fleet. Current plans call for a ``one-for-one'' 
transition of our CH-46E and CH-53D aircraft. Based upon current 
delivery schedules, we will initiate the transition of our first CH-46E 
Squadron during fiscal year 2001 and transition the last Medium Lift 
Squadron during fiscal year 2015.
    Question. The fiscal year 1998 budget request includes funds to 
improve the CH-46E and the CH-53D. The upgrades include installing the 
global positioning system and new radios on the helicopters. For the 
record, please provide a list of the budgeted improvements/upgrades for 
the CH-46E and CH-53A/D. Do you believe making only those improvements, 
which are currently funded, will make the CH-46E and CH-53A/D 
operationally safe until after the year 2015? Why?
    Answer. These aircraft will be safe to operate. The Marine Corps' 
modernization program ensures that medium helicopters will be safe to 
operate until planned replacement by the MV-22.
    The CH-46 fleet is undergoing a Dynamic Component Upgrade Program 
which replaces rotor heads, critical components in the flight control 
system, and certain drive train and transmission components. This 
upgrade will remove all the burdensome operating limitations now in 
place on the CH-46.
    The CH-53D will undergo a service life assessment to determine 
future life extension requirements. Accelerating the V-22 procurement 
will help us to avoid a Service Life Extension Program on either the 
CH-46 or the CH-53D.
    Budgeted improvements/upgrades for the CH-46E and CH-53D are as 
follows:
CH-46E
Global Positioning System
AN/ARC-210 SINCGARS capable radios
Dynamic Component Upgrade
Night Vision Goggle Head Up Display (NVG HUD)
CH-53D
Global Positioning System
AN/ARC-210 SINCGARS capable radios
Night Vision Goggle Head Up Display (NVG HUD)
Night Vision Goggle Compatible Exterior Lighting
    Question. The CH-53E is a heavy cargo helicopter. Originally 
fielded in the mid-1980's, the CH-53E will remain the Marine Corps 
inventory until after 2015. The CH-53E will be replaced with the 
``National Rotorcraft Transport.'' What is the anticipated structural 
life expectancy of the CH-53E?
    Answer. The H-53E Service Life Assessment Program (SLAP) interim 
report determined that the H-53E airframe fatigue life is 6,750 hours. 
The SLAP is scheduled for completion in May 1997 at which time Sikorsky 
will release the final report.
    Question. When will the CH-53E reach its anticipated structural 
life expectancy?
    Answer. At the current utilization rate, the first CH-53E will 
reach the 6,750 hour airframe fatigue life limit in the fiscal year 
2000 timeframe with the last CH-53 planned to reach its fatigue life 
limit in the fiscal year 2017 timeframe.
    Question. Are the actual operational hours (of CH-53E) exceeding 
the planned operational hours? If so, by how much?
    Answer. Recent execution in our tactical heavy lift squadrons have 
not exceeded our budgeted hours. Actual utilization versus budgeted 
utilization since fiscal year 1995 is as follows:

------------------------------------------------------------------------
                                                 Utilization
                                   -------------------------------------
                                          Budget             Actual
------------------------------------------------------------------------
FY95..............................               20.5               21.8
FY96..............................               20.6               16.6
FY97\1\...........................               20.4              13.8
------------------------------------------------------------------------
\1\Based upon 3 months of reporting.


    The fiscal year 1996/1997 decline in utilization can be directly 
attributed to our swashplate maintenance problem. This problem is being 
corrected and we should see a utilization increase in the future.
    Question. The Marine Corps ``Rotary Wing Modernization Plan'' 
proposes a Service Life Extension Program (SLEP) for the CH-53E 
beginning in 2000. For the record, please describe the proposed SLEP--
include the anticipated cost, schedule, and proposed upgrades. Also 
include the new structural life expectancy of the SLEP CH-53E.
    Answer. As presently funded, the proposed SLEP for the H-53E will 
correct critical airframe structure components identified in the 
interim Service Life Assessment Program (SLAP) report. Correction or 
modification of these critical areas will extend the service life out 
to 12,000 hours. Within the Future Years Defense Plan, $38 million is 
applied to the H-53E SLEP. The SLAP is scheduled for completion in May 
1997. At that time, the SLAP report will be reviewed in order to 
determine program content. Subsequently a firm schedule and funding 
profile will be developed.
    Question. The ``National Rotorcraft Transport'' (NRT) will replace 
all of the services heavy cargo helicopters sometime after 2015. To 
date, no funds have been requested to begin the development of the NRT. 
Since the Marine Corps and the Army's heavy lift cargo helicopters are 
aging, both services are planning service life extension programs. What 
is the anticipated cost of the NRT program? Would it make more 
economical and operational sense to accelerate the NRT rather than 
extend the life of the Marine Corps' CH-53E and the Army's cargo 
helicopter? Why or why not?
    Answer. Estimated costs for the NRT are unknown at this time since 
the program is still in the requirements definition phase. However, 
acceleration of the NRT would not affect the Marine Corps' requirement 
to extend the service life of the CH-53E. Based on historical program 
development, any economical delivery of the NRT would occur after the 
first CH-53E reaches its airframe structural limit of 6,750 hours in 
fiscal year 2000.
    Question. The fiscal year 1998 budget request includes $80 million 
to begin an upgrade program for the Marine Corps Cobra Attack and Huey 
Utility helicopters. In October 1996, the GAO issued a report stating 
the Marine Corps program to upgrade HUEY utility aircraft may not be 
cost effective. The report stated that greater savings may be achieved 
if the Marine Corps replaced HUEY's in the fleet with new Black Hawk 
helicopters. DoD is assessing the Marine Corps HUEY upgrade program and 
will issue a report later this month. It is our understanding that the 
DoD requested that all of the services attempt to use common 
helicopters. The Navy, Air Force, and Army all use Black Hawk 
derivatives. The Marine Corps evaluated using Black Hawk for its 
utility mission but decided it would be too costly to buy and support. 
Therefore, the Marine Corps has decided to upgrade 100 HUEY utility 
helicopters. What are the unique Marine Corps requirements that can not 
be met with the Black Hawk?
    Answer. Although both the UH-1N and the Blackhawk meet our 
operational requirements, the Blackhawk costs more to procure, costs 
more to operate over the life of the program, requires more manpower to 
support, and has a significantly larger logistics footprint. The larger 
logistics footprint and manpower requirements would have a negative 
impact on our ability to deploy aboard amphibious ships and move our 
squadrons via strategic airlift.
    Question. What is the coast of the HUEY upgrade program? Is it 
adequately funded? If not, what are the shortfalls?
    Answer. The UH-1N upgrade program recently singed an Engineering, 
Manufacturing, and Design (EMD) contract for $134 million and 
anticipates the procurement cost to be $1003.1 million for 100 upgraded 
aircraft. The program is fully funded.

                                                     Funding
                                              (Then Year $ Million)
----------------------------------------------------------------------------------------------------------------
          H-1 upgrade            FY97    FY98    FY99    FY00    FY01    FY02    FY03   To complete     Total
----------------------------------------------------------------------------------------------------------------
RDT&E.........................      70    80.7    90.3     152   108.3      51      20         12.6        584.9
APN...........................       0       0       0       0       0    73.7   216.3      2,595.5      2,885.5
----------------------------------------------------------------------------------------------------------------


    Question. What is the current procurement schedule for the HUEY 
upgrade program?
    Answer.

                                                Delivery Schedule
----------------------------------------------------------------------------------------------------------------
                                             FY04   FY05   FY06   FY07   FY08   FY09   FY10   FY11   FY12   FY13
----------------------------------------------------------------------------------------------------------------
4BN#......................................      5     12     12     12     12     12     12     12     11  .....
4BW#......................................      0      5     12     24     24     24     24     24     24     19
----------------------------------------------------------------------------------------------------------------

    Question. What is the per unit cost of the HUEY upgrade? What are 
the estimated operating and support costs?
    Answer. The UH-1N upgrade program recently signed an Engineering, 
Manufacturing and Design (EMD) contract for $134 million and 
anticipates the procurement cost to be $1003.1 million for 100 upgraded 
aircraft. According to the Institute for Defense Analysis (IDA) the 
operating and support costs for the UH-1N are $2.375 billion over 28 
years. The per unit cost for the upgraded UH-1N is $10.49 million (OSD 
PA&E report dated September 16, 1996.
    Question. What was the estimated unit cost of a Black Hawk? Is the 
estimated cost based on a multiyear contract or single year? What are 
the estimated operating and support costs?
    Answer. The estimated unit cost of the Blackhawk is $14.04 million 
(OSD PA&E report dated September 16, 1996. This cost was based on a 5 
year multiyear contract with a procurement schedule of 36 aircraft per 
year. According to the Institute for Defense Analysis (IDA) the 
operating and support costs for the Blackhawk are $3.018 billion over 
28 years. This compares with a $2.375 billion cost for the 4BN.
    Question. What is the anticipated structural life expectancy of the 
upgraded Huey? What is the anticipated structural life expectancy of 
the Blackhawk?
    Answer. The anticipated structural life expectancy of the upgraded 
Huey will be 10,000 flight hours. The anticipated structural life 
expectancy of the Blackhawk is 10,000 flight hours.
    Question. For the record, please provide the logistic support costs 
and manpower requirements for the HUEY and the Black Hawk.
    Answer. The Institute for Defense Analysis, in the conduct of the 
DOD Helicopter Commonality Study, estimated the operations and support 
(O&S) costs for the upgraded UH-1N to be $2.375 billion as compared to 
$3.018 billion for the Blackhawk. The Naval Air Systems Command's 
HARDMAN maintenance manpower requirements model estimates an additional 
288 Marines are required to maintain the UH-60/AH-1W combination over 
the requirement for the upgraded UH-1N/AH-1W mix. The O&S costs include 
manpower and logistics costs and are calculated using fiscal year 1996 
constant dollars for the period of fiscal years 2004 to 2032.
    Question. What is the cost impact on the Cobra upgrade program if 
the Huey upgrade program is canceled?
    Answer. The cost of the Cobra upgrade program will increase by $90 
million in procurement costs if the Huey upgrade is canceled.

          Marine Corps Ground Systems Research and Development

    Question. The Marine Corps fiscal year 1998 budget request for 
ground systems research and development is $230 million. This is $43 
million--or 18% less than last year's appropriated amount. These funds 
are used to develop and test countermine systems, assault vehicles, and 
command, control and communications system. Marine Corps Advance 
Concept Technology Demonstrations are also funded in this account. 
General Oster, is the Marine Corps ground systems research and 
development program adequately funded? If not, what is the risk to 
future readiness?
    Answer. No, our research and development account is not adequately 
funded. With our fiscal year 1998 topline down by 4.5% from fiscal year 
1997 in terms of real spending power, striking a balance was no easy 
task. In order to fund our top priorities--maintaining near-term 
readiness and sustaining momentum of quality of life initiatives, we 
were forced to shift funds from investment accounts. In order to ensure 
the future readiness of the Corps, however, we must adequately fund the 
timely development of combat capabilities. If additional funds were 
available, I would accelerate the development of the following 
programs:

                                                           $ in Millions
Program:
    Commandant's Warfighting Lab.................................. $19.8
    Marine Enhancement Program....................................   0.6
    Advanced Amphibious Assault Vehicle...........................  10.1
    Light Weight 155MM Howitzer...................................   3.6
    Tactical Remote Sensor Systems................................   1.5
    Marine Common Hardware Suite Mgmt & Development...............   0.7
    Tactical Electronic Reconnaissance Processing & Evaluation 
      System......................................................   1.0

    Question. Advanced Concept Technology Demonstrations (ACTD) and DoD 
sponsored initiatives developed to accelerate and facilitate the 
application of mature advanced technologies to solve military problems 
and provide new operational capabilities to the filed sooner than the 
normal acquisition process. For the record, please provide the ACTD's 
planned for fiscal year 1998. Please include prior year funding, 
planned funding for fiscal year 1998, and future funding requirements. 
Also include any Defense-wide Research, Development, Test and 
Evaluation funds which have or will be provided for each ACTD.
    Answer. The only Marine Corps funded ACTD is Extending the Littoral 
Battlespace (ELB ACTD). This ACTD is jointly sponsored by the USMC and 
the USN. Marine Corps funding is contained in RDT&E, N, PE 0603640M, 
Advanced Technology Demonstrations, Project C2223, Advanced Technology 
Demonstrations. Funding for this ACTD is as follows: fiscal year 1997, 
$5M; fiscal year 98, $10M; fiscal year 99, $10M; fiscal year 00, $10M; 
fiscal year 01, $10M; fiscal year 02, $1M; fiscal year 03, $1M.
    The Marine Corps participates generically in the Joint Countermine 
ACTD. The total cost of this ACTD includes direct funding from OSD as 
well as generic support from the Army, Navy and Marine Corps RDT&E 
accounts. This ACTD ends in fiscal year 1998. USN funding is as 
follows: fiscal year 1997 $0.9 million, fiscal year 1998 $0.8 million.
    Question. What process is in place to determine which ACTD 
technologies should be fielded? How do you ensure that the technology 
will be reliable and operable in military operations?
    Answer. ACTD's have a User Sponsor assigned as part of the 
management structure. The User Sponsor is responsible for assigning an 
Operational Manager who is charged, in conjunction with the 
Demonstration Manager, with the execution of the System Demonstration. 
Additionally, the User Sponsor is responsible for identification of the 
ACTD's Measure's of Effectiveness (MOE's) and ultimately the evaluation 
of the technology's military utility and suitability.
    ACTD's are chartered to look at both mature and emerging 
technologies that can contribute to significant new operational 
concepts. Thus, ACTD's are as operationally oriented as they are 
technology oriented. Technologies selected for demonstration are 
evaluated for their potential contribution to the concept and will 
still go through a series of limited objective demonstrations in order 
to assess their maturity, interoperability, safety, and reliability, 
availability and maintainability with the objective of a major system 
demo as a culminating event.
    The User Sponsor will incorporate Operational Test activity 
personnel as part of his evaluation team. After the major system demo, 
successful technologies will be transitioned to the formal acquisition 
process for procurement and other further development.
    Question. How do you ensure that operating and logistics costs for 
successful ACTD technologies can be supported in the budget?
    Answer. After a successful ACTD, technologies determined to have 
military utility will be left with the operating forces as residuals. 
The ACTD office has budgeted for the support of residuals for two years 
until the formal acquisition process can assume management 
responsibility for these items. Transition planning must be started 
early in the ACTD to ensure that necessary funds are programmed and 
budgeted for operating and logistics costs. Once budgeted and upon 
transition to Milestone III, Approval for Production, systems which 
commenced development as Advanced Technology Demonstrations are funded 
individually in the Operation & Maintenance, Marine Corps and 
Procurement Marine Corps appropriations budget requests.
    Question. For the record, please provide a list of the technologies 
fielded as a result of the ACTD process. Please include testing, 
fielding and support costs for each system.
    Answer. The Marine Corps has not had any technologies fielded as a 
result of the ACTD process. The only ACTD to which the Marine Corps has 
committed fiscal year 1998 funding is the Extending the Littoral 
Battlespace (ELB) ACTD. The ELB ACTD is tied closely to the Marine 
Corps' Commandant's Warfighting Laboratory and the Navy's Fleet Battle 
Experiments. This ACTD process for the Marine Corps began in January 
and technologies and concepts demonstrating military utility and 
suitability will be transitioned into acquisition.
    Question. What are your views as to how the present ACTD program is 
structured? How can it be improved?
    Answer. The ACTD program is managed by the Deputy Under Secretary 
for Defense (Acquisition and Technology) ((DUSD (AT)). The program 
provides the Services and the Commanders in Chief (CINCs) with an 
alternative approach to streamline the acquisition cycle while 
concurrently demonstrating new operational concepts for enhanced 
warfighting. The ACTD process allows for more informed acquisition 
decisions based upon greater user community involvement early in the 
process. ACTD's provide much greater understanding for technology and 
concepts prior to a committed acquisition program.
    The Extending the Littoral Battlespace (ELB) ACTD has been underway 
for approximately 2 months. Due to inexperience in this area over a 
reasonable length of time, the Marine Corps can not adequately assess 
the ACTD process or structure. As the ELB/ACTD program evolves and 
matures, there will be numerous lessons learned which will be applied 
to future ACTD programs.
    Question. The Marine Enhancement Program (MEP) is an initiative 
which provides non-developmental, commercially available equipment 
which can be quickly tested, evaluated and fielded for the Marine 
Infantryman. The Marine Corps is requesting $4 million for MEP in 
fiscal year 1998; $2.5 million for research and development and $1.5 
million for procurement. What is the average acquisition timeline for 
programs funded in MEP?
    Answer. The goal of the MEP acquisition cycle is to take advantage 
of procurement reform legislation and initiatives to field meaningful 
and important items in shorter than normal timeframes. The average goal 
is comprised of one to two years for research, development, testing, 
and evaluation and one to three years for procurement. Of additional 
importance is the occasional opportunity to test and procure items in 
the same year funds are appropriated.
    Question. What MEP systems will be tested and evaluated in fiscal 
year 1998? When will those systems be fielded?
    Answer. The MEP systems to be tested and evaluated in fiscal year 
1998 are as follows: Improved Extreme Cold Weather Clothing System; 
Improved Medium Pack with Assault Pack; Family of Body Armor; Rifle 
Combat Optics; Hardened Day/Night Sight; Lightweight Helmet; Improved 
Sun/Wind Goggles; Fire Fly Marking System; Assault Snow Shoe; Cold 
Weather Sled; Multi-Purpose Cart; and, Expedient Portable Shower Bag. 
These systems will be fielded in the fiscal year 1999-2003 timeframe.
    Question. The Army has a similar initiative, the Soldier 
Enhancement Program. What process is in place to ensure that there is 
no unnecessary duplication between the two programs?
    Answer. A Memorandum of Agreement delineates Army and Marine Corps 
responsibilities. Also, Marine Corps personnel just attended a Joint 
Conference with the Army during March 3-6, 1997. Further, continual 
coordination exists between the Marine Corps and Army personnel to 
ensure unnecessary duplication does not occur.

               High Mobility Multipurpose Wheeled Vehicle

    Question. The High Mobility, Multipurpose Wheeled Vehicle (HMMWV) 
is the light tactical vehicle for all of the services. The HMMWV has 
been in production since the 1980s. The Army is planning a service life 
extension program (SLEP) for the HMMWV. Does the Marine Corps have a 
requirement for a HMMWV SLEP? If so, please provide the anticipated 
acquisition cost of the program and optimal fielding schedule for the 
Marine Corps HMMWV SLEP?
    Answer. We have not yet determined whether we will remanufacture 
our existing fleet or buy new HMMWVs. However, in order to make a fully 
informed decision, we recently completed (January, 1997) a Life Cycle 
Cost Estimate (LCCE) for a HMMWV remanufacture (SLEP). The LCCE 
estimated the SLEP cost for 17,626 USMC HMMWVs to be $642 million in 
fiscal year 1998 constant budget dollars. Optimal remanufacture and 
fielding quantities are 10% to 15% of the USMC HMMWV fleet each year 
(1,763 to 2,644 vehicles per year).
    Question. Would it be more cost effective to procure new, rather 
than remanufacture old HMMWV'S? Please explain.
    Answer. Based on the current life cycle cost estimate, the 
remanufacture of the existing fleet appears to be the most cost 
effective acquisition approach to meet the needs of the Marine Corps. 
The decision to either buy new HMMWV's or remanufacture existing 
HMMWV's will be based on responses to the U.S. Army's future ``Request 
for Proposal'' (due to be published during fiscal year 1997) for HMMWV 
remanufacture. Based on the costs bid in these future proposals, a 
fully informed procurement decision can be made regarding the overall 
cost effectiveness of either ``remanufacturing or buying new.''
    Question. What is the economic life expectancy of a remanufactured 
HMMWV? Of a new HMMWV?
    Answer. The service life expectancy of both a remanufactured HMMWV 
and a new HMMWV is 14 years.
    Question. The Army plans on terminating HMMWV production in fiscal 
year 1999. According to Army officials, the HMMWV is a ``world class 
off road vehicle''; however, ``supportability'' is becoming an issue. 
Furthermore, the Army believes that the HMMWV is ``only marginally 
meeting new requirements.'' Do you agree with the Army's assessment of 
the HMMWV program? If so, what supportability issues are you 
experiencing?
    Answer. The existing HMMWV meets the current and projected Marine 
Corps requirements for the ``Light Tactical Vehicle Fleet.'' It is our 
understanding that the Army has a heavier payload requirement for its 
light fleet than the Marine Corps does. This may explain the statement, 
``only marginally meeting requirements.'' Parts and logistics support 
for USMC HMMWV fleet are considered adequate.
    Question. What new requirements will not be met by the current 
HMMWV? Could those deficiencies be resolved by modifying the current 
vehicle? If not, why?
    Answer. No new requirements will be unfilled by the current HMMWV.
    Question. Given the cost and development schedule of other tactical 
vehicles program, do you think it makes sense to develop a new HMMWV? 
Why or why not?
    Answer. The USMC does not have a current or projected requirement 
for a newly developed HMMWV.

                  Advanced Amphibious Assault Vehicle

    Question. The Marine Corps is developing the Advanced Amphibious 
Assault Vehicle (AAAV). The AAAV will replace the Amphibious Assault 
Vehicle which was fielded in the 1970's The AAAV will transport Marines 
from a ship to the beach and will also used as a land fighting vehicle. 
Mr. Douglass, last year you identified the AAAV as a program that could 
be accelerated by one year if additional funds were made available. 
According to your testimony, the accelerated program required 
increasing the budget request by $20 million in fiscal year 1997 and 
$23 million from 1998 to 2002. Congress provided the additional $20 
million in fiscal year 1997. The fiscal year 1998 program schedule 
shows a Milestone II decision in 2001, a low rate production decision 
in 2004, and an initial operating capability in 2006. Ironically, this 
is the same schedule you included with your fiscal year 1997 budget 
request. Last year you testified that each one of these events would 
occur one year earlier if the additional funds were provided. Why is 
there no change in the AAAV schedule?
    Answer. In our Fiscal year 1997 Report to Congress on AAAV we 
provided the funding required to accelerate development one year and 
restore the program to its original funding level. The report 
identified the need for $20 million in fiscal year 1997 which would 
contribute four months of the 12 month acceleration. This is now being 
accomplished. The remaining funds displayed would be required to 
achieve the additional eight months.
    Since the submission of the fiscal year 1997 report, the AAAV prime 
contractor has been selected and as such, has afforded us an 
opportunity to relook at other ways to accelerate AAAV.
    Question. The fiscal year 1998 schedule does show that Full 
Operational Capability has been accelerated by one year, from 2014 to 
2013. Since the Future Years Defense Plan includes budgets for only 
five years when will the accelerated program take place, after 2003? 
What is the anticipated cost of the ``accelerated'' AAAV program from 
2004 to 2013?
    Answer. In April of this year we will submit to Congress a revised 
plan and its associated costs.
    Question. Since the Navy did not provide the additional funds 
required to accelerate the AAAV, what impact, if any, did the 
congressional add have on the AAAV program?
    Answer. All acceleration plans deal with the AAAV's development 
schedule leaving production resources beyond fiscal year 2004 
unaltered.
    Question. As discussed earlier, the AAAV will replace the 
Amphibious Assault Vehicle (AAV) which was fielded in the 1970's. Based 
on the AAAV procurement schedule which ends in 2030, some AAV's will be 
almost 60 years old when they are retired. What is the anticipated 
economic life for the AAV?
    Answer. Current plans call for an AAAV Initial Operational 
Capability (IOC) in fiscal year 2006 and Full Operational Capability 
(FOC) in 2013. The hull life of the AAV was designed for 50 years which 
would indicate a useful life until approximately calendar year 2022. A 
depot inspection to repair only as necessary is scheduled for each AAV 
every four to five years. With the exception of some normal surface 
cracking, which is quickly and easily repaired, no structural defects 
have yet been detected and the AAV hull life will likely exceed its 50 
year design parameter.
    The cost to repair in the field and during scheduled depot 
inspections is increasing, but adequately funded at this time. Studies 
have been conducted to reduce the expected cost growth with age 
(vehicle rebuilding and component replacement). These efforts should 
maintain AAV affordability until replacement by the AAAV begins in 
fiscal year 2006. Through a combination of continuing improved 
reliability and maintainability changes and cost reduction efforts 
within the depot, the economic life of the AAV should reliably extend 
through the final fielding of the AAAV.
    Question. When will the AAV reach its anticipated economic life?
    Answer. The cost of maintaining the AAV is increasing with its age. 
Projections indicate that by the time the replacement AAAV reaches Full 
Operational Capability (FOC) in fiscal year 2013, we will spend over a 
billion dollars maintaining the current AAV fleet through cyclical 
repairs in the depot. Yet, this maintenance solution remains less 
expensive than buying replacement AAVs. The marine Corps systems 
Command and marine Corps Logistics Base in Albany, GA have jointly 
investigated a number of ways which would reduce the cost of ownership 
from between 20% to 40% and ensure the affordability of the AAV until 
it is completely retired.
    Question. Since it was fielded, what upgrades have been made to the 
AAV?
    Answer. The procurement schedule for the production of 1013 AAAV's 
ends 2012, with FOC in 2013. Additional procurement appropriation 
funding is required beyond 2012 to sustain the AAAV through its 
remaining life cycle. Since fielded the following upgrades have been 
made to the AAV:
          Service Life Extension Program (1984-86)
          Replaced Engine
          Added P-900 Armor
          Incorporated Electric Drive Gun Turret
          Enhanced Applique Armor
          UpGunned Weapons Station
          Automatic Fire Sensing and Suppression System
          Rotary Bow Plane
          Improve Reliable and Maintainable Transmission
          Improved Radiator
          SINCGARS Radios
    Question. Has the AAV gone through a service life extension 
program? If so, when and was the vehicle ``remanufactured'' or were 
just specific components replaced? Please explain.
    Answer. Yes. The service life extension program (SLEP) was 
conducted from 1984-1986. The vehicle was stripped down to the hull. 
Hull modifications were made to the AAV to improve water dynamics and 
to incorporate a new engine. All other components were removed and 
either new or rebuilt replacements were installed. The procurement 
schedule for the production of 1013 AAAV's ends in 2012, with FOC in 
2013. Additional procurement appropriation funding is required beyond 
2012 to sustain the AAAV through its remaining life cycle.
    Question. The Marine Corps is not considering a service life 
extension program for the AAV. Last year the committee was told there 
are no anticipated cost estimates for such a program and you believe 
that the AAV can remain operational over the next few decades. What are 
the potential problems that may arise when using a 30, 40, or 50 year 
old amphibious assault vehicle?
    Answer. The Marine Corps is not considering a service life 
extension program (SLEP) for the AAV. To address the increasing cost to 
maintain the aging AAV fleet, a study has been completed for rebuilding 
the AAV and applying reliability and maintainability modifications. The 
Marine Corps is evaluating the results of that investigation for 
affordability.
    Some problems associated with the aging AAV asset are as follows: 
the diminishing manufacturing resources for parts, normal wear and 
fatigue on mechanical and electrical components, compliance with 
changing environmental constraints, old technology not easily 
compatible with latest innovations, and many years exposure to the 
harsh climatic elements in which the Marine Corps normally operates.
    The procurement schedule for the production of 1013 AAV's ends in 
2012, with FOC in 2013. Additional procurement appropriation funding is 
required beyond 2012 to sustain the AAAV through its remaining life 
cycle.

                        Marine Corps Ammunition

    Question. The Marine Corps is requesting, $98.8 million for 
ammunition. Last year, the Congress provided $132.1 million. Does the 
fiscal year 1998 President's budget adequately fund the marine Corps' 
requirement for ammunition and sustain the capabilities of the 
industrial base? If not, what are the shortfalls?
    Answer. The fiscal year 1996 Marine Corps ammunition requirements 
study significantly lowered Marine Corps War Reserve (WR) Requirements. 
This reduction in the WR has allowed the Marine Corps to prudently 
shift assets that had previously been earmarked for WR to training. The 
Fiscal Year 1998 President's Budget for ammunition funds the annual 
training requirement and funds the combat requirement in the program 
years. The residual readiness requirement and strategic readiness 
requirement are not completely funded for some ammunition items. The 
status and impact of the Fiscal Year 1998 President's Budget on the 
industrial base can only be determined by the US Army Industrial 
Operations Command (IOC).
    Question. Does the fiscal year 1998 budget request fully fund the 
Marine Corps combat training requirements for ammunition? If not, what 
is the shortfall and what is the impact on your war reserve?
    Answer. The Fiscal Year 1998 President's Budget adequately funds 
the Marine Corps ammunition requirements. The budget funds the annual 
training requirement and meets the combat requirement in the program 
years. It reflects an acceptable balance between ammunition 
requirements and other high priority Marine Corps requirements. 
Nonetheless, some ammunition shortfalls do exist. These can be caused 
by adjustments in geographical positioning, production delays, new 
training items and changes in training requirements, or when large 
quantities of ammunition are relegated to an unserviceable condition 
code. At this time the Marine Corps has identified the following 
shortfalls:
    a. Ctg, 40mm practice Linked M918 (DODIC B584) will be at 16% of 
the Approved Acquisition Objective (AAO) at the end of fiscal year 1998 
Funded Delivery Period (FDP).
    b. Charge, Demolition Assembly M183 (DODIC M757) will be at 33% of 
the AAO by the end of the fiscal year 1998 FDP.
    c. Ctg, 5.56mm Training Rounds M200 (DODIC A080) will be at 42% of 
the AAO at the end of the fiscal year 1998 FDP.
    d. Ctg, 5.56mm Training Rounds M200 Linked (DODIC A075 will be at 
32% of the AAO at the end of the fiscal year 1998 FDP.
    War reserve ammunition is used to satisfy training requirements 
only in isolated situations where procurement deliveries are not 
keeping up with training demands and the item has such high training 
priority that a case-by-case decision is made to support limited 
training with war Reserve ammunition.
    The fiscal year 1996 ammunition requirements study significantly 
lowered Marine Corps War Reserve requirements. This has allowed the 
Marine Corps to shift assets that had previously been earmarked for War 
Reserve to training. These former war Reserve assets are not considered 
as excess since they support training. This drawdown of the former War 
Reserve supports near term readiness. When these assets are drawndown, 
ammunition procurement levels will have to be increased to support the 
long term readiness requirement.
    As stated above, the Marine Corps does drawdown War Reserve to meet 
training, but only in isolated cases. This affects short term readiness 
since the assets are replaced as soon as possible (typically when 
delivery of ordered ammunitions occurs).
    Question. In fiscal year 1998, the Marine Corps conducted a study 
to reevaluate ammunition requirements. The result of the study was a 
$1.4 billion drop in war reserve requirements. Based on the study, the 
Marine Corps determined that $621 million budgeted for war reserve 
ammunition could be applied toward training ammunition. Briefly 
describe the Marine Corps ammunition study. What were the assumptions, 
the methodology and the conclusions.
    Answer. The decrease in the War Reserve Requirement was based on 
improvements to the Marine Corps' ammunition model and scenario 
changes. In fiscal year 1996, the model looked at 2 near simultaneous 
Major Regional Contingencies (MRCs), lasting approximately 90 days each 
as per the Defense Planning Guidance. Marine Forces were based on Joint 
Strategic Capabilities Plan (JSCP) allocation. Input to the study was 
provided by Marine Battalion Commanders, Executive Officers, Operations 
Officers, and by the Marine Corps Intelligence Activity. Direct study 
oversight was provided by a Marine Corps study group with periodic 
briefings to a General Officer Steering Group for recommendations and 
concurrence. The study input was run through two computer models, which 
were improved to better represent the way Marines fight. The model 
incorporated superior integration of the effects of Naval Surface Fire 
Support and Naval Aviation into our methodology, and provided more 
realistic attrition algorithms. The Scenario changes involved smaller 
enemy forces and a shorter combat time frame. The study concluded with 
the War Reserve Requirement for POM 98.
    Question. The ammunition study resulted in a drastic change in the 
ammunition requirements for the Marine Corps. It is our understanding 
that the change in requirements was based on a change in Marine Corps 
doctrine. Please explain the changes in Marine Corps doctrine.
    Answer. The decrease in the War Reserve Requirement was based on 
improvements to the ammunition modelling capability and scenario 
changes rather than doctrinal changes. The model improvements better 
represent the way we fight. They incorporate superior integration of 
the effects of Naval Surface Fire Support and Naval Aviation into our 
methodology, and provide more realistic attrition algorithms. The 
scenario changes involved smaller red forces allocated to the Marine 
Corps ground forces and a shorter combat time frame.
    Question. The study determined that $833 million of artillery war 
reserve requirements were not necessary based on current inventory 
levels. For the record please provide a break-out of the type of 
artillery round, the acquisition requirement type, and the current 
inventory levels for artillery rounds currently in the inventory.
    Answer.

------------------------------------------------------------------------
                                                              Sept. 30,
            DODIC               Nomenclatuore      TM/AAO        1996
                                                              Inventory
------------------------------------------------------------------------
D003.........................  Charge,                6,935       72,236
                                Spotting
                                Projectile.
D501.........................  PROJ, 155MM            5,971       27,697
                                APERS ADAM-L.
D502.........................  PROJ, 155MM           20,502       56,045
                                APERS ADAM-S.
D505.........................  PROJ, 155MM           13,697      196,142
                                ILLUM.
D510.........................  PROJ, 155MM            1,827        2,474
                                COPPERHEAD.
D514.........................  PROJ, 155MM           15,653       62,758
                                RAAM-S.
D515.........................  PROJ, 155MM            5,189       30,245
                                RAAM-L.
D528.........................  PROJ, 155MM           13,497     1089,362
                                SMOKE WP.
D532.........................  CHG, PROP 155MM      247,461      306,675
                                RED BAG.
D533.........................  CHG, PROP 155MM      101,326      586,916
                                WHITE BAG.
D539.........................  CHG, PROP 155MM            3          123
                                DUMMY.
D540.........................  CHG, PROP 155MM       76,701      592,425
                                GREEN BAG.
D541.........................  CHG, PROP            288,904      865,476
                                15L5MM WHITE
                                BAG.
D544.........................  PROJ, 155MM HE.      234,161      698,440
D550.........................  PROJ, 155MM           28,657       60,689
                                SMOKE WP.
D563.........................  PROJ, 155MM           70,676      909,022
                                HEDP (ICM).
D579.........................  PROJ, 155MM          157,041       12,729
                                HERA.
D864.........................  PROJ, 155MM DP-       65,421      171,424
                                ICM BASEBLEED.
------------------------------------------------------------------------

    Question. The Marine Corps ammunition study did not define 
industrial base issues. When will you evaluate the impact of the 
ammunition study recommendations on the industrial base?
    Answer. The Office of the Secretary of Defense has not defined how 
regeneration of the industrial base is to be addressed in the budget 
process for items which can not be produced within the Defense Planning 
Guidance timeframe. Industrial base regeneration requirements following 
a major regional conflict have been provided to the US Army Industrial 
Operations Command for use in accurately sizing the munitions 
industrial base.
    Question. Did the ammunition study aggregate old munition 
quantities with modern munitions quantities to determine the levels of 
ammunition on hand? If so, which modern munitions would need to be 
procured to replace old munitions?
    Answer. The Marine Corps ammunition study established the War 
Reserve Requirement for Preferred Munitions only. The Marine Corps 
ammunitions. Older munitions are drawn down as substitutes for training 
where applicable. This process ensures Preferred Munitions are 
available for combat, while making efficient use of current assets for 
training.
    Question. Last year, the Committee requested that the Marine Corps 
submit a report regarding the type and acquisition objective for 
kinetic energy tank rounds. What is the status of the report?
    Answer. Information regarding the type and acquisition objective 
for kinetic energy tank rounds was submitted in the response to a 
Congressional Data Request (CDR). That CDR included the following 
statements:
    Based upon Congressional direction, the Marine Corps has reviewed 
the requirement for kinetic energy tank ammunition and made the 
following determinations:
    a. The current War Materiel Requirement (WMR) for 120mm kinetic 
energy rounds for the M1A1 main battle tank is 15,481 model M829A1 
rounds (DODIC C380). The model M829A2 round is not included in this 
requirement nor is there a specific Marine Corps requirement for the 
M829A2.
    b. The currently fielded M829A1 is capable of defeating the 
majority of targets. The added capability of the M829A2 does not 
provide enough of a performance advantage over the M829A1 to justify 
making the M829A2 the preferred munition.
    c. The Marine Corps believes that there is a greater cost benefit 
in waiting for the significant performance improvements expected to be 
offered by the M829A3 (currently undergoing testing).
    Question. It is our understanding that there has been a significant 
increase in the cost of explosives manufactured at the Holston 
Ammunition Plant--up to a 500% increase. Last year, Congress provided 
funds to procure items which use explosive material manufactured at 
Holston. Briefly describe the situation at the Holston Ammunition 
Plant. How does the Marine Corps proposed to resolve the issue?
    Answer. The ammunition item prices for explosives produced at 
Holston were significantly increased based upon the new anti-terrorist 
legal requirement to ``tag'' the explosive material portion of the 
ammunition called C4. Exact technical explanations are available from 
the U.S. Army Industrial Operations Command. Re-utilization of old C-4 
components by melting and inserting ``tags'' is one alternative to 
reduce the increase in price. Additionally, the Marine Corps will begin 
to search for competitively priced off-shore tagged C4 and ammunition 
sources.
    Question. Will you use fiscal year 1997 funds to procure the items 
which require explosives manufactured at Holston? If not, will you 
reprogram the dollars?
    Answer. Yes. The Marine Corps intends to procure items requiring 
explosives manufactured at Holston. Some funds will be used to tag and 
reutilize the existing C-4 explosive material in order to lower the 
cost of the Mine Clearing Line Charges and the Demolition Charges.
    Question. For the record, please provide a listing of the items 
which require explosive material manufactured at Holston. Please 
include the amount appropriated for each item.
    Answer. The amounts appropriated in fiscal year 1997 for items 
which require explosive materials manufactured at Holston are as 
follow:
          M183 Demolition Charges, $19. 6 million
          M59A1 Mine Clearing Line Charges, $16.7 million
          M58A4 Mine Clearing Line Charges, $8.0 million
          M830A1 120mm HEAT-MP-AA Cartridges, $6.9 million
    Question. The DoD established the Conventional Ammunition Working 
Fund (CAWF), a working capital fund, to standardize ammunition 
procurement. Since a large number of conventional ammunition items 
share common components and materials, DoD believed that it made 
economical sense to have a single manager buy the conventional 
ammunition for the all services. The initial order it funded by the 
CAWF; upon receipt of the ammunition the service reimburses the CAWF. 
It is our understanding that the CAWF will be eliminated in fiscal year 
1999. What do you believe will be the impact of that decision?
    Answer. The Marine Corps cannot yet ascertain the impact of closing 
the CAWCF in fiscal year 1999. The replacement procedures have not yet 
been approved by the Office of the Secretary of Defense. The potential 
loss of fixed standard pricing for ammunition concerns the Marine 
Corps. This loss could result in increased price changes during the 
execution of the budget which would cause a lower quantity of rounds to 
be procured. In practice, orders are not processed within the CAWCF 
until funding is received from the Service requiring the ammunition.
    Question. What are your views of the CAWF? How can it be improved?
    Answer. The Marine Corps has supported the CAWCF with proposed 
improvements in financial tracking, discipline and control over support 
costs. These support costs are commonly referred to as surcharges, 
i.e., engineering, industrial stocks, and quality assurance. The Marine 
Corps also supported the CAWCF in acquisition reform to reduce lead 
times and to better determine actual costs of ammunition.
    Question. DoD has not made a decision on what acquisition process 
should replace the CAWCF. What is the Marine Corps position?
    Answer. The Marine Corps is an active member of the Ammunition 
Process Improvement Team (APIT) that has joint Service membership. The 
APIT is chaired by OSD and tasked with proposing the follow-on funds 
and procedures for ammunition procurement after the CAWCF is closed. A 
final recommendation has not been forwarded for review.

              Chemical Biological Incident Response Force

    Question. Last year Congress provided $10 million to establish the 
Chemical Biological Incident Response Force (CBIRF). This year, the 
Marine Corps is requesting $1 million to continue the effort. The 
CBIRF's mission is to respond to terrorist chemical and biological and 
toxic industrial chemical incidents. What did the fiscal year 1997 
funds provide?
    Answer. Purchase of certified commercial off the shelf state of the 
art equipment for detection, decontamination, force protection, 
medical, communications and general support. Fiscal year 1997 funds 
will provide the following to CBIRF: Level ``A'' Suits, Level ``A'' 
(Durable) Suits, Level ``A'' Gloves, Protective Sleeves, Level ``B'' 
Suits/Coveralls, Self Contained Breathing Apparatus, Portable Air 
Compressor, Multi Gas Monitor, Personal Gas Detectors, PH Tester, 
Autovent System, Automatic Chemical Agent Director Alarm, Biological 
Detector, Photoionization Tester, Air/Liquid Detector Tube System, 
Handheld Pulse Oximeter, and Portable Defibrillator. In addition, over 
200 other items authorized in the Table of Authorized Material will be 
procured during fiscal year 1997.
    Question. For fiscal year 1998 you are requesting $1 million for 
CBIRF research and development activities. Please explain what 
initiatives are funded in fiscal year 1998.
    Answer. Technologies being looked at include the following: Phase 
Change Cooling Garment, Hand-washing Portable Decontamination System, 
Advanced Handheld Chemical/Industrial Hazard Detector Plume modeling, 
Bio-Sensors, Chem/Bio Mass Spectrometer. Additionally, live agent and 
testing on commercial equipment to ensure acceptability for CBRIF 
mission will be performed.
    Question. According to your budget documents the CBRIF will be 
equipped with off-the shelf equipment, yet your budget includes no 
procurement dollars until 2000. What research and development 
initiatives are in your future year defense plan? Does your budget 
include adequate funds to field those systems you will be developing? 
If not, what is the shortfall?
    Answer. Last year's funds were used to procure those end items 
deemed urgent in providing a reasonable CBIRF response capability. If 
an additional $15 million were provided, the remaining ``off-the-
shelf'' end items would be procured, thereby completing the outfitting 
of CBIRF.
    The CBIRF R&D budget supports the following technology capabilities 
that will be developed and tested in the fiscal year 1999-2003 
timeframe: Bio Samplers with Ultra Violet Long Wave Lamps, Gas 
Chromatographer, Spill Control Systems, Decontamination Apparatus 
(Trailers, Shelters, and Vehicles), Field Deployable Labs, Chemical/
Biological Protective Shelters, Medical Microscopic Isolator, Tele-
medicine Capability (Mini Camera, Mobile Video Tele-Conferencing), and 
Fiber Optic Wave Guide Biological Detectors (Testing), Lightweight 
Portable Decontamination System, and an ability to interface with Joint 
Warning And Reporting Network Communication links.
    Accordingly, the procurement dollars budgeted in fiscal year 2000-
2003 represent purchase of the above items as they transition out of 
development and into production.
    Question. Given their mission, it is essential to provide the CBIRF 
with equipment that provides protection from chemical and biological 
weapons and toxic industrial chemicals. To date, what equipment have 
you provided to the CBIRF? What equipment is still required? Is funding 
for that equipment provided in the budget? If so, please provide the 
type of equipment, acquisition schedule, and cost.
    Answer. Protection procured to date for CBIRF includes: Level ``A'' 
Suits, Level ``A'' Boots, Self Contained Breathing Apparatus, Portable 
Air Compressor, Level ``B'' Suits, Level ``A'' (Durable) Suite, Level 
``A'' Gloves, Protective Sleeves.
    The following items have not yet been procured: Saratoga Suits, 
Quick Donning Masks, Bio Hazard Suits, additional C2 Canisters, 
Toxicological Agent Protective Aprons, Skin Decon Kits, Chemical 
Footwear Covers, Chemical Protective Gloves, Chem-Bio Protective Mask 
(M40) helmet covers, and First Aid Kits. Funding for these items is not 
included in the FY98 Budget due to topine constraints. However, if an 
additional $15 million was provided, these remaining CBIRF procurement 
items would be procured.
    Question. The proposed unit strength for the CBIRF will be 350 to 
400 marines. What is the current strength? When will you achieve your 
planned unit strength?
    Answer. The current strength for CBIRF is 345. A total manpower 
strength of 374 is scheduled to be achieved during fiscal year 1998.

                              Mine Warfare

    Question. Mine warfare was identified as a major deficiency during 
Operation Desert Storm. Mr. Douglass, please describe the Navy's mine 
warfare strategy.
    Answer. Navy has developed a mine warfare strategy based on 
progressive introduction of mine countermeasures (MCM) capabilities 
developed to become an integral element of fleet operations. The vision 
is to provide MCM functionality to the commander with a mix of 
dedicated and organic capability, rather than relying solely on our 
current force of dedicated MCM assets. The immediate focus is defined 
by a Near-term Campaign Plan which encompassed 1996 and 1997 programs 
and initiatives. This plan identified shortfalls in mine warfare 
capabilities and programs which could resolve these deficiencies in the 
shortest period of time with the greatest increase in capability. The 
next element, the Mid-term Campaign Plan, is defined by the budget 
years, fiscal years 1998 to 2003. This Plan continues the initiatives 
and expands on the programs of the Near-term Plan. These investments 
stress the steady improvement of mine countermeasures readiness and 
sustainability, and progressive funding of initiatives to eliminate 
capability gaps and integration of MCM into the fleet. The final 
element, the Far-term Campaign Plan, focuses beyond the current budget 
with an emphasis on those science and technology developments which 
have the most promise for solving capability shortfalls. The Navy's 
mine warfare strategy is an evolutionary effort that has demonstrated 
over the past two years stability in its planning and commitment for 
its successful execution.
    Question. What major mine warfare programs are in your budget, and 
are they fully funded?
    Answer. Most mine warfare programs do not fall within the ``major'' 
acquisition program category. Mine warfare capabilities are being 
developed as many minor acquisition efforts managed by the Program 
Executive Office for Mine Warfare. The largest mine warfare acquisition 
program we have, the mine countermeasures ships (MCM and MHC classes) 
are nearing completion with only three MHCs remaining to be delivered 
within the next year.
    Funding for mine warfare programs receives attention at the highest 
levels of Navy, the Joint Staff and OSD. In accordance with Public Law 
102-190 Section 216, both Navy and the Chairman, Joint Chiefs of Staff 
determine that the programs contained in the Mine Countermeasures 
master plan have sufficient funds in the President's Budget. The 
Undersecretary of Defense (Acquisition and Technology) also reviews the 
plan before certifying to Congress that Navy has sufficient resources 
for its execution.
    Question. What mine warfare funding shortfalls remain?
    Answer. In the formulation of the fiscal year 1997 Mine Warfare 
Plan, the resource sponsor for Mine Warfare, Director, Expeditionary 
Warfare Division (N85) identified some funding shortfalls that required 
resolution to execute initiatives in the Near-term Campaign Plan. As 
part of the fiscal year 1997 budget submission, offsets were identified 
for the RDT&E and OPN shortfalls. The only remaining funds to be 
resolved are $6.155 million of OMN for the Near-term Campaign Plan 
initiatives of: readiness and substainability; route survey and 
database development; and the Mine Warfare Readiness/Effectiveness 
Measuring (MIREM) Program. Since OMN is one year money, this shortfall 
is being addressed in the on-going mid-year budget review.
    With regard to the fiscal year 1997 budget, there are ongoing 
efforts to coordinate the release of Congressional plus-up funds for 
fiscal year 1997 for specific mine warfare programs. These funds are 
intended to accelerate the delivery and development of our more 
promising programs such as the Integrated Combat Weapons System (ICWS) 
and the field evaluation of Advanced Technology Demonstration (ATD) 111 
and Magic Lantern® for the Airborne Laser Mine Detection System 
(ALMDS).
    Question. Under current plans, when will modern mine warfare 
equipment actually be delivered to the field?
    Answer. Our Mine Countermeasures ships (MCM and MHC classes) are 
among the most modern in the world. We have completed the MCM class 
construction program and have only three MHC class ships remaining to 
be delivered.
    As an indication of our vision to transition MCM capabilities to 
the fleet, the Remote Mine-hunting System (RMS) is being developed to 
provide our surface conbatants the capability to conduct independent 
mine hunting operations. RMSs is progressing towards accelerated fleet 
introduction. The prototype unit, RMS(V)2, completed an at-sea exercise 
with the Kitty Hawk Battle group in the Persian Gulf in January 1997. 
The low rate initial production (LRIP) version, RMS(V)3 will be 
introduced in Fiscal Year 1999 with the final operational version, 
RMS(V)4, reaching initial operational capability IOC) in fiscal year 
2003.
    From the airborne MCM perspective, we have provided a contingency 
airborne Light Detection and Ranging (LIDAR) capability to detect 
floating and moored mines in the near surface region using the Magic 
Lantern (Deployment Contingency) (ML(DC)) system. The Reserves received 
the first of three ML(DC)) units this past December. A restart of 
Airborne Laser Mine Detection System (ALMDS) is being planned for the 
1999 budget.
    The submarine force is actively pursuing an MCM role through the 
development of a clandestine mine reconnaissance system with tethered 
Near-term Mine Reconnaissance System (NMRS). This system is on schedule 
for a limited capability introduction 1998. The operational autonomous 
version, the Long-term Mine Reconnaissance System (LMRS), is planned 
for IOC in 2003.
    Other programs, such as the Distributed Explosive Technology (DET) 
and the Shallow Water Assault breaching System (SABRE) are on schedule 
to provide our amphibious forces the capability to counter landing zone 
mines ``in stride.'' Both of these systems passed Milestone II this 
past year, and will achieve Milestone III in 1999.

                        Manufacturing Technology

    Question. The Navy's manufacturing technology program provides 
funding to improve the way in which Navy weapon systems are 
manufactured, thereby lowering their cost. The Congress has added 
between $30 to $50 million to the Navy's manufacturing technology 
budgets in each of the last three fiscal years. It would not have been 
hard for the Navy to guess that this is a Congressional interest item. 
Mr. Douglass, is the Navy's manufacturing technology program a good 
program?
    Answer. Yes, Manufacturing Technology (MANTECH) is the only process 
technology development program we have. MANTECH has historically 
provided a significant return on investment, (average of about 20:1).
    Question. Why does the Navy traditionally underfund it each year in 
budgets to Congress?
    Answer. Few programs get all the money they believe is necessary. 
Process technology does not compete well against product technology, 
especially in a declining budget scenario. Process technology is 
perceived to benefit industry rather than weapons systems--a 
misconception.
    Question. Please explain why there are no funds requested for 
manufacturing technology in your 1998 budget, and whether you 
personally believe this is wise.
    Answer. Historically, the Congress has appropriated funds in excess 
of the President's Budget request, and such was the case in fiscal 
yearr 1997. While the Department does support a robust MANTECH program 
linked to our acquisition program, fiscal realities have required that 
difficult choices be made to balance competing valid requirements. This 
was the basis for using $36 million of the fiscal year 1997 
appropriations to ``forward fund'' MANTECH in fiscal year 1998. During 
the coming year, we will be conducting an assessment to determine just 
what the most appropriate sustainable funding level for MANTECH should 
be for fiscal year 1990 and following years.
    Question. The Committee understands that industry has submitted 
about $300 million of proposals to the Navy for manufacturing 
technology projects that may offer high payback to the Navy. How would 
you implement these proposals if there are no funds in the budget?
    Answer. MANTECH issues come from both industry and the Navy. Our 
data base currently contains over $300 million in issues (not 
proposals).
    Our Executive Steering Committee has prioritized these issues and 
found that just over $100 million have truly significant impact in 
terms of return on investment on the affordability of our weapon 
systems.
    The forward funding strategy would provide $36 million for 
execution in fiscal year 1998. Funding levels for fiscal year 1999 and 
future years will be reappraised during the coming year.

                          University Research

    Question. The Navy is the Defense Department's executive agent for 
university research. The Office of Naval Research (ONR) negotiates and 
administers DOD research contracts with universities. A few years ago, 
abusive overhead charges to government contracts (for example, at 
Stanford) was a major issue. Mr. Douglass, where do we stand today on 
the issue of reform of the Defense Department's university research 
contracts?
    Answer. The problem was not with the awarding of research 
contracts, but with the indirect costs that were charged to these 
contracts. The Navy revised its indirect cost rate setting procedures 
by consolidating the negotiation function at its headquarters and 
establishing an expert negotiation staff.
    Question. How many DoD contracts with academic institutions still 
have unresolved, prior-year overhead rate issues?
    Answer. Over the last three years, DoD has resolved over 125 open 
prior-year overhead rate issues and is current at all our cognizant 
universities, except for one.
    Question. What is being done to simplify the procedures used to 
determine indirect overhead rates charged to government contracts?
    Answer. The Navy is using more predetermined rates, on a multi-year 
basis, where business conditions permit.
    Use of multi-year predetermined rates reduces the overall audit and 
negotiation costs to both the Government and universities. DoD's policy 
to rely on A-133 audits, prepared by independent public accountants, 
will also reduce the Government's auditing costs.
    Question. What is being done to streamline the number of government 
personnel who negotiate, administer, and audit our currently cumbersome 
systen?
    Answer. The Navy has six people assigned to the negotiation of 
indirect cost rates and audit resolution matters at universities. These 
functions were previously handled by 14 Field Offices.
    Question. How much is contained in the Navy's fiscal year 1998 
budget for contracts with universities for any purpose, and how does it 
compare to the 1997 level?
    Answer. Within the total Fiscal Year 1998 RDT&E, Navy Budget 
request, we plan to spend approximately $365 million at educational 
institutions, of which approximately $132 million will go to UARCs 
(APLs/ARLs). This is approximately $16 million lower than fiscal year 
1997, with UARCs being approximately $22 million lower.
    Question. Admiral Pilling, we discussed with you today many severe 
shortfalls in equipment for Navy combat ships. You are head of Navy 
requirements. What is the Navy's requirement for this level of annual 
spending with universities?
    Answer. The Navy long-term strategy has relied on maintaining a 
technological superiority over potential adversaries. This is even more 
important as we reduce and modernize our fleet assets. New enabling 
technologies for developing superior warfighting systems are dependent 
upon new knowledge and concepts produced by basic research, largely 
conducted in universities. Basic research in the initial and 
fundamental step in the process of scientific discovery and has a 
considerable impact on the development cycle time and operational 
capability of a broad range of military systems. The maintenance of our 
technological superiority in the long term is directly dependent on our 
sustaining a robust program of basic research focused on naval relevant 
issues.

                            A-12 Litigation

    Question. DOD terminated the A-12 aircraft (a fighter-sized B-2 
shaped aircraft) years ago, and has been in court with its contractors 
ever since. Mr. Douglass, what is the status of A-12 litigation?
    Answer. We expect that a judgment in the amount of approximately 
$1.1 billion plus interest will be entered against the United States in 
the near future, which will then provide the opportunity for appellate 
review in the United States Court of Appeals for the Federal Circuit.
    Question. What legal decisions were made last year, and what do 
they mean to the Navy?
    Answer. On June 12, 1996, the Court of Federal Claims ruled: 1) 
that only incurred costs remain to be determined in deciding the amount 
of plaintiffs' termination for convenience recover, and 2) that in 
determining the monetary relief for the plaintiffs, the Court will not 
consider a loss adjustment, or plaintiffs' entitlement to equitable 
adjustments, or profit. On December 13, 1996, the Court issued an 
opinion elaborating upon the June 12, 1996, Order. It said that the 
issues under ``2)'' above will not be considered because one party or 
the other would be unfairly prejudiced due to limitations on discovery 
by the Executive for national security reasons, and that plaintiffs' 
damages will be limited to incurred costs with certain adjustments. On 
February 5, 1997, the parties stipulated that allowable incurred costs 
for purpose of any judgment will be $3.749 billion, with various 
adjustments resulting in a net judgment to be entered in the amount of 
$1,071,365,444.
    Question. What events lie ahead?
    Answer. A judgment will probably be entered in the near future and 
the case will be appealed by both parties to the United States Court of 
Appeals for the Federal Circuit.
    Question. When do you expect court proceedings to end?
    Answer. We expect a final judgment to be issued by the Court of 
Federal Claims in the near future, and we expect that appeals will be 
filed by both parties. It will probably be at least a year before the 
Court of Appeals issues an opinion. We expect that the case will then 
be remanded to the Court of Federal Claims for further proceedings in 
accordance with the decision of the Court of Appeals. It is difficult 
to speculate when all court proceedings will end.
    Question. Should a judgment be made against the government, what is 
the range of likely dollar values involved and how would these be paid?
    Answer. A judgment will likely be entered against the United States 
in the near future in the amount of approximately $1.1 billion plus 
interest as computed under the Contract Disputes Act. When the 
accumulated interest through March 31, 1997 is added to the principal 
amount of the judgment, the total will be approximately $1.49 billion. 
The government is not required to pay a judgment until after all 
judicial proceedings have been completed, including further proceedings 
in the Court of Federal Claims after any remand. We expect that the 
judgment will be reversed on appeal.
    In general, a judgment under the Contact Disputes Act involving a 
Navy contract is paid in the first instance from the judgment fund, 
which is administered by the Department of the Treasury. Treasury then 
seeks reimbursement from the Navy. Any reimbursement must be made from 
funds currently available for obligation at the time of the judgment or 
from funds appropriated by Congress in the future. No judgment in this 
case will be paid until all judicial proceedings are completed.
    Question. What would be the effect on Navy modernization budgets if 
a court judgment were rendered and upheld against the Navy?
    Answer. We do not know when a court judgment would be rendered or 
upheld against the Navy. Therefore, it is too speculative to determine 
what effect, if any, such a judgment would have on Navy modernization 
budgets.

                             TSSAM Lawsuit

    Question. The government terminated the A-12 contract for 
``default'', but terminated the TSSAM (Tri-Service Standoff Attack 
Missile) for ``the convenience of the government''. Both programs 
suffered similar problems in terms of cost, schedule, and poor 
performance after expenditure of billions of dollars each. Termination-
for-default means that the contractor is held liable for overruns, 
while under a termination-for-convenience the contractor is not 
penalized for its poor performance. Secretary Douglass, the Committee 
is surprised to learn that the TSSAM contractor (Northrop-Grumman) has 
filed suit against the government to recover $750 million of 
``uncompensated performance costs, investments, and a reasonable 
profit'' on this terminated program. What are your views on the merit 
of this lawsuit?
    When the contract was originally terminated for convenience, didn't 
the government and the contractor reach agreement on a fair settlement 
cost? If so, what has changed now?
    How do you characterize the contractor's performance on the Navy 
portion of the program?
    Did the government get its money's worth from the $3 billion 
investment made in this program?
    How much could the government have to spend to defend itself in 
court against this lawsuit?
    Answer. While the Department of the Navy (Navy) is a participant in 
the TSSAM program, TSSAM contract administration is a matter under the 
cognizance of the Air Force. With respect to the litigation, the 
Department of Justice, working with the Air Force, represents the 
United States in this case.
    Accordingly, although the Navy will cooperate in any way possible 
to assist the Air Force and Department of Justice with this matter, I 
must defer to the Air Force and Department of Justice with respect to 
answers to these questions.
    Question. Where would the Navy get its share of $750 million if it 
had to pay additional TSSAM costs under a court penalty? Would it 
likely come from weapons modernization funding?
    Answer. Generally, a court judgment against the United States is 
paid from the judgment fund, and an agency is required to reimburse the 
judgment fund from its available funds or by obtaining additional 
appropriations.
                         UNFUNDED REQUIREMENTS
    Question. What are the top ten unfunded requirements in each R&D 
and procurement account in your service?
    Navy Answer. Navy's fiscal year 1998 budget, in my view, reflects 
our commitment to sufficiently fund critical long-term recapitalizaiton 
programs while protecting the near-term readiness of our forces. I 
remain concerned, however, about overall procurement levels. 
Accelerating procurement of certain platforms and systems would be 
desirable if we are to maintain a ready force into the next century. We 
also recognize that we must continue to decrease our maintenance 
backlogs in ships, aircraft and real property. Additional funds 
provided by you last year enabled us to do just that.
    This year, in addition to our maintenance backlog, a number of 
long-range programs would benefit from increased funding, should such 
resources be made available. Along with the Integrated Ship Self-
defense and Cooperative Engagement Capability Programs discussed in my 
previous answer, I would like to accelerate procurement of ships (DDG-
51 and LPD-17), aircraft (F/A-18 E/F and E-2C), and weapons systems 
(Navy Area Theater Ballistic Missile Defense, Tomahawk, and Joint 
Standoff Weapon). High-priority RDT&E investments such as CVN-77, Navy 
Theater-Wide TBMD, Naval Surface Fire Support, and MANTECH could also 
benefit. A prioritized list detailing how we would use any additional 
funds is attached.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Marine Corps Answer.
    (Note: In some cases Official Marine Corps Unfunded Lists include 
less than ten items.)
    The top unfunded requirements in R&DT&E (Ground) in millions of 
dollars are:

          $19.8--Commandant's Warfighting Lab.
          $0.6--Marine Enhancement Program.
          $10.1--Advanced Amphibious Assault Vehicle.
          $3.6--Light Weight 155MM Howitzer.
          $1.5--Tactical Remote Sensor Systems.
          $0.7--Marine Common Hardware Suite Development & Management.
          $1.0--Tactical Electronic Reconnaissance Processing & 
        Evaluation Syst.

    The top unfunded requirement in RDT&E (Aviation) are:

          $3.9--AV-8B Safety, Reliability and Operational Enhancement.

    The top unfunded requirements in Procurement, Marine Corps are:

          $42.6--Base Telecommunications Infrastructure.
          $17.0--Javelin Medium Antitank Weapon System.
          $65.1--Light Tactical Vehicle Replacement Program.
          $18.2--Items Less Than $10 Million.
          $(9.2)--Combat Vehicle Appended Trainer.
          $(6.2)--International Standards Organization Bed.
          $(0.4)--Improved Direct Air Support Center PIP.
          $(1.6)--Combat Rubber Reconnaissance Craft.
          $(0.8)--Light Armored Vehicle--Reliability & Maintainability.
          $15.1--Chemical/Biological Incident Response Force Equipment.
          $22.1--Power Equipment, Assorted.
          $11.1--MX 11620 Generation III 25 mm Image Intensification 
        Tubes.
          $24.3--Items Less Than $10 Million.
          $(0.4)--Close Quarters Battle Weapon.
          $(3.2)--M2 Flatrack.
          $(3.5)--Logistics Information Systems.
          $(2.4)--Defense Message System.
          $(1.2)--Underwater Breathing Apparatus.
          $(1.7)--Marine Enhancement Program.
          $(1.5)--Special Effects Small Arms Marking System.
          $(3.3)--Military Motorcycle Replacement.
          $(3.0)--Advanced Demolition Kit.
          $(4.1)--Tactical Electronic Reconnaissance Processing & 
        Evaluation Syst.
          $12.2--Shop Equipment Contact Maintenance.

    The top unfunded requirements in Procurement of Ammunition, Marine 
Corps are:

          $5.0--Ctg, 40mm practice Linked M918 (DODIC B584).
          $15.0--Charge, Demolition Assembly M183 (DODIC M757).
          $2.0--Ctg, 5.5mm Training Rounds M200 (DODIC A080).
          $1.0--Ctg, 5.56mm Training Rounds M200 Linked (DODIC A075).

    Question. Identify all production programs for which funds are 
included in the fiscal year 1998 budget request where fiscal 
constraints have prevented acquisition of sufficient quantities in 
either fiscal year 1998 and/or the accompanying FYDP to meet validated 
military requirements/inventory objectives.
    Navy Answer. These procurement items are listed in the previous 
copy of the CNO's Priorities List for fiscal year 1998 Additional 
Congressional R&D and Procurement Program list.
    Marine Corps Answer. FY 1998 fiscally constrained procurement 
programs (PMC, PANMC and APN) which could benefit from additional 
funding (to procure additional quantities to meet validated military 
requirements/inventory objectives) are listed below. All items are in 
the FYDP which accompanies the FY 1998/1999 President's Budget.

Procurement Marine Corps:
                                                         ($ in Millions)
    Base Telecommunications Infrastructure....................      42.6
    Javelin Medium Antitank Weapon Systems....................      17.0
    Light Tactical Vehicle Replacement Program................      65.1
    Combat Vehicle Appended Trainer...........................       9.2
    International Standards Organization Bed..................       6.2
    Improved Direct Air Support Center Pip....................       0.4
    Combat Rubber Reconnaissance Craft........................       1.6
    Light Armored Vehicle-Reliability/Maintainability.........       0.8
    Chemical/Biological Incident Response Force...............      15.1
    Power Equipment Assorted..................................      22.1
    MX 11620 Gen III 25mm Image Intensification Tubes.........      11.1
    Close Quarters Battle Weapon..............................       0.4
    M2 Flatrack...............................................       3.2
    Logistics Information Systems.............................       3.5
    Defense Message System....................................       2.4
    Underwater Breathing Apparatus (UBA)......................       1.2
    Marine Enhancement Program................................       1.7
    Special Effects Small Arms Marking System (SEASAMS).......       1.5
    Military Motorcycle Replacement...........................       3.3
    Advanced Demolition Kit...................................       3.0
    Tactical Electronic Reconnaissance Processing and 
      Evaluation System (TERPES)..............................       4.1
    Shop Equipment Contact Maintenance (SECM).................      12.2
Procurement Ammunition, Navy and Marine Corps:
    Ctg. 40mm Practice Linked M918 (DODIC B584)...............       5.0
    Charge, Demolition Assembly M183 (DODIC B584).............      15.0
    56mm Ctg. 5.56mm Trng Rounds M200 (DODIC A080)............       2.0
    Ctg. 5.56mm Training Rounds M200 Linked (DODIC A075)......       1.0
Aviation:
    AV-8B (1 A/C, 22 T-AV8B Engines, Simulators)..............     236.5
    V-22 (11 A/C, Spares and AP for Additional 9).............   1,094.0
Shipbuilding and Conversion, Navy:
    LPD 17 (1 Ship)...........................................     746.0

    Question. What initiatives are currently approved in an outyear POM 
which could either be done cheaply and/or be fielded earlier by 
initiating them in fiscal year 1998?
    Indicate program by appropriation account along with an estimated 
funding stream for each of the five subsequent fiscal years (assuming a 
fiscal year 1998 start) along with potential savings that could be 
achieved.

    Navy Answer. The previous copy of the CNO Priorities List contains 
the top Navy investment areas where additional fiscal Year 1998 funding 
would be of benefit, to both accelerate the pace of new equipment 
purchases, and to save money in the outyears of the fiscal year 1998-
2003 Future Years Defense Plan (FYDP). Savings would accrue in fiscal 
years 1999-2003 years because of increased acquisition quantities, 
higher learning curves, or earlier completion of total program buys. 
Specific funding streams for each fiscal year depend, however, on such 
things as contract re-negotiations, adjustments in research & 
development and procurement profiles, and other decisions that would 
have to be worked as part of the fiscal year 1999 Program Review this 
summer and fall
    Marine Corps Answer. There are many items, both ground and 
aviation, that could be fielded earlier. These items are listed in the 
table below. The second column of the table represents the amount of 
the program that can be accelerated into fiscal year 1998. Columns 
three through seven represent the current funding stream of each 
program. The items that could be fielded more quickly are as follows:

----------------------------------------------------------------------------------------------------------------
                PMC                   Enh. Amt      FY 99        FY 00        FY 01        FY 02        FY 03
----------------------------------------------------------------------------------------------------------------
Base Telecom Infrastructure.......         42.6         16.8         16.7         17.3         17.5          0.0
Javelin Medium Antitank Weapon....         17.0         83.4         81.7         28.8          0.0          0.0
Lt. Tac. Veh. Replacement.........         65.1          0.0         57.4         56.6         65.0         80.9
CVAT..............................          9.2          0.0         13.0         13.8         21.8         30.1
ISO Beds..........................          6.2          0.0          0.0          0.0          0.0          0.0
IDASC PIP.........................          0.4          1.4          1.6          1.6          1.6          1.6
Combat Rubber Reconn Craft........          1.6          2.6          1.0          1.0          1.1          1.1
LAV-RAM...........................           .8          1.4          1.7          1.3          1.7          2.0
CBIRF.............................         15.1          0.0          1.0          1.6          1.4          1.0
Power Equipment, Assorted.........         22.1          4.1          4.3          4.6          4.7          4.9
MX11620 Gen III Tubes.............         11.1         10.9          0.0          0.0          0.0          0.0
Close Qtrs Battle Weapon..........           .4          0.0          0.0          0.0          0.0          0.0
M2 Flatrack.......................          3.2          3.2          0.0          0.0          0.0          0.0
Logistics Info System.............          3.5          5.9          2.9          3.0          3.0          3.1
Defense Message System............          2.4          4.6          7.7          3.4          0.0          0.0
Underwater Breathing App..........          1.2          1.1          0.5          0.5          0.5          0.5
Marine Enhancement Program........          1.7          2.1          1.8         11.3         11.6          1.8
Sp. Effects Small Arms Mk.........          1.5          0.4          0.0          0.0          0.0          0.0
Military Motorcycle...............          3.3          2.3          0.0          0.0          0.0          0.0
Advanced Demolition Kit...........          3.0          3.0          0.0          0.0          0.0          0.0
TERPES............................          4.1          0.0          4.0          0.0          3.0          0.0
Shop Equip Contact Maint..........         12.2         11.4          0.0          0.0          0.0          0.0
            PANMC
Ctg. 40mm Prac. Linked (B584).....          5.0          9.7          9.7          6.7          6.7          7.8
Ctg. Demo Assembly (M757).........         15.0         20.0          0.0          0.0         10.0          0.0
Ctg. 5.56mm Trng Round (A080).....          2.0          7.7          5.3          5.3          5.3          5.3
Ctg. 5.56mm Trng Lnkd (A075)......          1.0          4.6          3.0          3.0          3.0          3.0
            APN
AV-8B (1 A/C, 22 T-AV8B Engines,          236.5  ...........  ...........  ...........  ...........  ...........
 Simulators)......................
V-22 (11 A/C, Spares & AP for           1,094.0        676.1        739.5        976.2      1,302.3      1,561.5
 (additional 9)\1\................
VH-3/60 Simulators................         10.0  ...........  ...........  ...........  ...........  ...........
F/A-18D (2 A/C and Spares)........         93.8  ...........  ...........  ...........  ...........  ...........
            RDT&E (AVN)
AV-8B Safety, Reliability and               3.9  ...........  ...........  ...........  ...........  ...........
 (Operational Enhancement)........
----------------------------------------------------------------------------------------------------------------
\1\The additional funds added in Fiscal Year 1998 for the V-22 would accelerate the program more rapidly towards
  the most efficient production rate of 36 aircraft per year. This rate would save the total program
  approximately $1.2 billion (a unit cost savings of $2.7 million per aircraft) and, combined with estimated
  inflation savings of $4.8 billion, would enable the program to save approximately $6 billion.


    Question. Provide a list of R&D or production programs or projects 
for which funding is included in the fiscal year 1998 budget that are 
stretched out beyond technically attainable schedules primarily due to 
lack of funding in fiscal year 1998 and/or the outyears.
    Navy Answer. The R&D and procurement programs included in the 
President's Fiscal Year 1998 Budget request are adequately funded to 
meet current schedule goals.
    Marine Corps Answer. There are no Marine Corps systems acquisition 
programs stretched out beyond ``technically attainable schedules'' 
primarily due to a lack of funding in the Fiscal Year 1998 budget and/
or the outyears. However, many programs are budgeted at minimum 
sustaining rates or are budgeted in subsequent years due to fiscal 
constraints. Programs which could benefit, if additional fiscal year 
1998 funds were provided are as follows:
PMC:                                                                ($M)
    Base Telecommunications.......................................  42.6
    Javelin Medium Antitank Weapon................................  17.0
    Light tactical Vehicle Program................................  65.1
    Combat vehicle Appended Trainer (CVAT)........................   9.2
    International Std Organization (ISO) Bed......................   6.2
    Improved Direct Air Support Center (IDASC) PIP................   0.4
    Combat Rubber reconnaissance Craft (CRRC).....................   1.6
    Light Armored Vehicle--LAW-RAM................................   0.8
    Chemical/Biological Incidence Response ForcePower Equipment, 
      Assorted....................................................  22.1
    MX 11620 Gen III 25MM Image Intensification Tubes.............  11.1
    Close Qtrs Battle Weapon......................................   0.4
    M2 Flattrack..................................................   3.2
    Logistic Information System...................................   3.5
    Defense Messaging System......................................   2.4
    Underwater Breathing Apparatus (UBA)..........................   1.2
    Marine Enhancement Program (MEP)..............................   1.7
    Special Effects Small Arms Marking System (SESAMS)............   1.5
    Military Motorcycle Replacement...............................   3.3
    Advanced Demolition Kit.......................................   3.0
    Tactical Electronics Reconnaissance Processing and Evaluation 
      (TERPES)....................................................   4.1
    Shop equipment Contract Maintenance (SECM)....................  12.2
PANMC:
    Ctg. 40 mm practice Linked M918...............................   5.0
    Charge Demolition Assembly M183...............................  15.0
    Ctg. 5.5mm Training Rounds M200...............................   2.0
    Ctg. 5.56mm Training Rounds M200 Linked.......................   1.0
R&D (GRND):
    Commandant's Warfighting Lab (CWL)............................  19.8
    Marine enhancement Program (MEP)..............................   0.6
    Advanced Amphibious Assault Vehicle (AAAV)....................  10.1
    Light Weight 155 MM Howitzer (LW155)..........................   3.6
    Tactical remote Sensor System (TRSS)..........................   1.5
    Marine Comman Hardware Suite (MCHS) Development and Management   0.7
    TERPES........................................................   1.0
APN:
    AV-8B (1 A/C, 22 T-AV-8B Engines, Simulators)................. 236.5
    V-22 (11 A/C, Spares, and AP for Additional 9)...............1,094.0
    VH-3/60 Simulators............................................  10.0
    F/A-18D (2 A/C and Spares)....................................  93.8
R&DT&E (AVN):
    AV-8B Safety, Reliability & Operational Enhancement...........   3.9
SCN:
    LPD-17........................................................ 746.0

    Question. Indicate all programs for which procurement funding is 
included in your fiscal year 1998 budget that would be good candidates 
for multiyear procurement funding, assuming additional funding were to 
be available in fiscal year 1998 and the outyears. Provide for these 
programs a comparison of the current acquisition funding stream 
compared to a potential multiyear profile (assuming a fiscal year 1998 
start), along with the additional up-front investment that would be 
required and the potential savings that would be likely.
    Navy Answer. At this time, the Department of the Navy has no 
candidates for multiyear procurement funding. However, we are 
continually evaluating programs to assess potential benefits of a 
multiyear procurement strategy and may propose candidates in future 
years.
    Marine Corps Answer. There are no ground equipment programs for 
which procurement funding is included in the fiscal year 1998 budget 
that would be good candidates for multiyear procurement (MYP) funding 
assuming additional funding were to be available in fiscal year 1998 
and the outyears.
    For my aviation programs, the most likely candidates for MYP 
contracts are the MV-22 and the AV-8B.
    The ideal time to begin multiyear procurement for the MV-22 is with 
the first full rate production lot (fiscal year 2001). OPEVAL completes 
in the first quarter of fiscal year 2000 which would allow initiation 
of MYP in fiscal year 2001 in a fully evaluated, stable configuration. 
Initiation prior to fiscal year 2001 could result in subsequent 
significant configuration changes, based on OPEVAL results.
    MYP for the MV-22 is expected to save between 4-10% of the cost of 
the aircraft. This could be in addition to the 23% savings already 
realized and the $2.7 million savings (fiscal year 1994 constant 
dollars) per aircraft we will realize with an increase to a more 
economic rate of 36 MV-22s per year.

                                                     Annual
                                                 [$ in millions]
----------------------------------------------------------------------------------------------------------------
                  Fiscal year                      FY02       FY03       FY04       FY05       FY06      Total
----------------------------------------------------------------------------------------------------------------
Quantity......................................         18         24         24         24         24        114
Gross P-1.....................................     1279.8     1587.3     1689.3     1609.3     1528.8     7694.5
Less AP.......................................      -99.2     -121.6     -115.8     -148.4     -145.8     -630.8
Advance Procurement...........................      121.6      115.8      148.4      145.8      144.6      676.2
                                               -----------------------------------------------------------------
      Total Annual............................     1302.3     1561.5     1721.9     1606.6     1527.6     7719.9
 
                                                    Multiyear
 
Quantity......................................         18         24         24         24         24        114
Gross P-1.....................................     1279.8     1523.6     1647.8     1569.0     1489.4     7509.6
Less AP.......................................      -99.2     -154.3     -270.1     -270.1      -77.2     -870.9
Advance Procurement...........................      154.3      270.1      270.1       77.2      175.8      947.5
                                               -----------------------------------------------------------------
      Total Annual............................     1335.0     1639.3     1647.8     1376.1     1588.0     7586.2
                                               =================================================================
      MYP SAVINGS.............................      -32.7      -77.8       74.1      230.5      -60.4      133.7
----------------------------------------------------------------------------------------------------------------

    In the AV-8B Remanufacture contract is an eight percent cost 
savings. The AV-8B current and multiyear profiles are:

                                                     Annual
                                                 [$ in millions]
----------------------------------------------------------------------------------------------------------------
                       Fiscal year                            FY98       FY99       FY00       FY01      Total
----------------------------------------------------------------------------------------------------------------
Quantity.................................................         11         12         12          9         44
Airframe/CFE.............................................      192.4      210.2      214.1      173.1      789.8
Gross P-1................................................      300.1      334.4      322.8      297.6     1254.9
Less AP..................................................      -22.4      -18.9      -19.4      -15.0      -75.8
Adv Procurement..........................................       18.9       19.4       15.0        0.0       53.3
                                                          ------------------------------------------------------
      Total annual.......................................      296.6      334.9      318.4      282.6     1232.5
 
                                         Multiyear
Quantity.................................................         11         12         12          9         44
Airframe/CFE.............................................      177.0      193.4      197.0      159.2      726.6
Gross P-1................................................      284.1      316.9      304.1      282.6     1187.7
Less AP..................................................      -22.4      -37.3      -52.7      -43.6     -156.0
Adv Procurement..........................................       62.2       53.6       17.8        0.0      133.6
                                                          ------------------------------------------------------
      Total Annual.......................................      323.8      333.2      269.2      239.0     1165.2
                                                          ======================================================
      MYP SAVINGS........................................      -27.3        1.7       49.2       43.6       67.3
----------------------------------------------------------------------------------------------------------------

    The AV-8B Multiyear option will require Congressional approval to 
enter into a contract with an unfunded liability which may result if 
the program is either prematurely canceled or the Navy is otherwise 
unable to meet its contractual obligations.
    Question. Identify any procurement programs in the fiscal year 1998 
budget where provision of additional procurement funds in fiscal year 
1998 would have a very favorable impact on production unit prices.
    Navy Answer. Provision of additional procurement funds in fiscal 
year would have a favorable production unit price impact on the 
following programs:
          F/A-18E&F
          E-2C
          DDG-51
          Tomahawk
          Info Technology-21
          Acoustic Rapid COTS Insertion
    Marine Corps Answer. The Marine Corps can identify no ground 
equipment programs where additional fiscal year 1998 procurement funds 
would have a significant impact on budgeted production unit prices. 
However, in the case of the Javelin program, the additional $17 million 
contained in the fiscal year 1998 Budget Enhancement List provides a 
significant capability enhancement. These funds procure 186 missiles 
for six Marine battalions earlier than scheduled in the fiscal year 
1998 President's Budget. No additional cost savings are realized in the 
Javelin multi-year contract containing three years of level pricing.
    In the area of aviation support, additional funds in FY 1998 for 
the V-22 would allow for acceleration of the program more rapidly 
towards the most efficient production rate of 36 aircraft per year. 
This rate would result in total program savings of approximately $6 
billion ($1.2 billion as a result of unit cost savings of $2.7 million 
per aircraft, and $4.8 billion in estimated inflation savings).
    Question. Identify each production program in the fiscal year 1998 
budget whose main rationale is to sustain a minimal industrial base.
    Navy Answer. The Navy has no production programs in the fiscal year 
1998 budget whose main rationale is to sustain a minimal industrial 
base.
    Marine Corps Answer. There are no Marine Corps procurement programs 
in fiscal year 1998 whose main rationale is to sustain a minimal 
industrial base.
    Question. Please indicate in total and for the top 20 largest 
weapon systems both the peacetime operating requirement (separately) 
for spare parts funded either as initial spares in procurement accounts 
or as consumable spares in NWCF, and the percentage of requirement met 
through the fiscal year 1998 budgeted level of funding. Project how 
this would change by the end of the FYDP.
    Navy Answer. Peacetime Operating Stocks and War Reserve material 
for operating forces are managed in the wholesale supply system and 
carried in the Navy Working Capital Fund (NWCF). The spares requirement 
for fiscal year 1997 associated with the Navy's top 20 weapon systems, 
expressed by obligation, are listed below. Table values are in millions 
of dollars.
SYSTEM:                                                          FY 1997
    F/A-18....................................................     550.4
    Helos (H-46, H-53, H-60, AH1W) (Considered as 4 systems)..     393.2
    F-14......................................................     188.2
    Avionics RADARS--common (Considered as 2 systems).........     153.9
    P-3.......................................................     137.2
    AV-8B.....................................................     119.0
    E2/D2 (considered as 2 systems)...........................     112.5
    S-3.......................................................      77.5
    CASS (Consolidated Aviation Support System................      75.4
    MK 15 Close-In Weapon System..............................      39.3
    General Purpose Test Equipment............................      36.3
    Carrier Planned Equipment Replacement (CARPER)............      34.6
    AEGIS.....................................................      22.2
    Elec Suspended Gyro Navigation............................      13.9
    LM2500 Engine.............................................       8.0

(Source: Fiscal Year 1998/1999 President's Budget, Exhibit 3B)

    Supply System Inventory Requirement:
    War Reserve...............................................    $369.0
        Total Wholesale Inventory Requirement.................  11,212.9

Source: (SSIR, 30 Sep 96)

    Navy combines peacetime operating support and war reserve 
requirements for these and all installed equipment/components into 
onboard spare parts allowances termed Consolidated Shipboard Allowance 
Lists (COSAL) for ships and submarines, and Aviation Consolidated 
Allowance Lists (AVCAL) for aircraft embarked on air-capable ships.
    Allowances discussed above provide demand or readiness-based parts 
support with insurance items to support a set endurance period, 
nominally 90 days, without resupply. The wholesale systems stocks 
material to support the consumption and replenishment of allowance 
material and other anticipated maintenance requirements. The Supply 
System Inventory Requirement represents the total wholesale supply 
system requirement in support of the Navy and includes $369 million for 
war reserve material.
    Financed as part of the Navy Working Capital Fund (NWCF) account, 
the wholesale supply system provides outfitting and replenishment 
spares to support Navy customers. This investment account fully funds 
program requirements and is balanced to Navy's overall requirement. 
Maintenance of weapon systems and stock replenishment of parts used by 
operating forces are supported in the OM&N appropriation through the 
Flying Hour/Steaming Hour Programs which are similarly balanced to the 
overall requirement.
    Initial spares to support new weapon systems or upgrades to 
existing systems being introduced into the operating forces are 
budgeted and funded as initial spares in Navy's three investment 
accounts. Through fiscal year 1998, these accounts are fully funded.
    Marine Corps Answer. The fiscal year 1998 funding contained in the 
President's Budget for the Procurement Marine Corps budget line item 
titled ``Spares and Repair Parts'' is sufficient to meet peacetime 
operating requirements.
    Question. Please indicate any potential FMS sales that are being 
discussed that could influence production unit prices once consummated, 
not including those whose impact is already factored into the 
production unit prices portrayed to Congress in the fiscal year 1998 
budget.
    Navy Answer. Sales are projected for the below listed weapon 
systems:
    Harpoon; Standard Missile; P-3 Upgrade; MK-41 (VLS); MK-48 (GVL); 
CIWS; AEGIS; E-2C Upgrade; F/A-18 C & D; LAC (AAV); LAV (Variant Kits); 
Predator; AH-1W; SH-60B; AEWC; ASPJ; MK-46 Torpedo; AIM-7M; HARM; AIM-
9L/M/S.
    Marine Corps Answer. Currently the United States Marine Corps 
(USMC) has 103 foreign military sales (FMS) agreements with twenty two 
(22) countries. To the extent that the USMC was aware of FMS, for these 
efforts, the associated unit cost impacts are reflected in the fiscal 
year 1998 President's Budget. There will continue to be opportunities 
for additional FMS agreements in the future but there are no potential 
sales known over those included in our budget.
    Question. Please indicate what policy your service uses for major 
R&D and production programs, such as ``budget to contract target cost'' 
or ``budget to ceiling contract cost'' or ``budget to most likely 
cost'', and identify which of your major programs in the fiscal year 
1998 budget deviate from this policy and the attendant rationale.
    Navy Answer. The Department of the Navy budgeting policy for major 
R&D and production programs is to budget to the most likely cost. This 
budget quality estimate is developed through detailed review and 
analysis of costs of the engineering characteristics and requirements 
associated with the item under development or production. There are no 
programs which deviate from this policy.
    Marine Corps Answer. When budgeting for a program for which a 
contract has been awarded, the maximum liability, including award/
incentive fees, is initially budgeted. Adjustments are made as 
appropriate throughout the life of the contract. For a program where a 
contract has not been awarded, a ``most likely cost'' approach is 
generally used.
    Question. Please indicate what your service uses to provide a 
budget within R&D and production programs for unknown allowances and/or 
economic change orders, and identify any programs in the fiscal year 
1998 budget which deviate from this policy and the attendant rational.
    Navy Answer. The Department of the Navy budgeting policy for major 
R&D and production programs relative to unknown allowances and/or 
allowances for engineering change orders is directly related to the 
maturity of the program in the acquisition process. Maturing 
productions are afforded a small allowance for emergent engineering 
change orders based upon the specific historical acquisition and 
engineering analysis experience of that program. New start endeavors 
for which this experience is absent but for which a reasonable estimate 
can be determined based upon the acquisition history of similar 
programs are afforded a somewhat larger allowance incorporating lessons 
learned. The fiscal year 1998 budget was prepared in accordance with 
this policy.
    Marine Corps Answer: Marine Corps acquisition programs are managed 
to an Acquisition Program Baseline Agreement (APBA) with objective and 
threshold values which permit limited cost/program growth. Changes in 
excess of the established thresholds require reporting and action by 
the Milestone Decision Authority. Tradeoffs within the program 
consistent with the principles of Cost as An Independent Variable 
(CAIV) are further used to reduce risk and manage cost. Engineering 
Change Orders (ECOs) or any other cost elements are budgeted at levels 
consistent with the most likely values indicated by the program life 
cycle cost estimate or other documents. A limited number of recurring, 
level-of-effort programs such as power generation equipment and 
environmental control equipment are currently being baselined to also 
conform to the APBA approach to program management. Additionally, minor 
modification budget lines used primarily to address emergent readiness 
and safety issues are not amenable to baselining.
    Question. Please identify any R&D or production program which as a 
contract for which all or a portion is budgeted in fiscal year 1998 for 
a contract award fee larger than $10 million. Provide amount budgeted 
for the award fee, the basis on which the amount was calculated (e.g. 
100% fee based on the contract), and the historical performance of the 
contractor in terms of percentage of award fee awarded during prior 
award fee periods under the same contract.
    Navy Answer. The following programs have contracts in which all or 
a portion is budgeted in fiscal year 1998 for a contract award fee 
larger than $10 million.
    The budget for the Joint Strike Fighter Program includes $24.2 
million in fiscal year 1998 for award fee under the Concept 
Demonstration Program contract with Pratt and Whitney. The available 
award fee amount for each period of the contract was determined as a 
percentage of the total available award fee, based on the amount and 
importance of work to be performed in each period. The key events for 
the fiscal year 1998 award fee determinations are first engine to test 
and first lift system and nozzle to test. This is a new contract and no 
award fee payments have been made yet.
    A portion of the fiscal year 1998 RDT&E budgeted amount for the F/
A-18E/F program is for contract award fees larger than $10 million. 
Award fee amounts are budgeted in fiscal year 1998 for both the F/A-
18E/F airframe and engine engineering and manufacturing development 
contracts in the amount of $21.7 million and $22.8 million, 
respectively. Pursuant to contractual obligations, the budgeted amounts 
are based upon 100 percent of the available contract award fee pool 
which is due to be paid in fiscal year 1998. The following table 
illustrates the percentages of award fee awarded under each contract 
thus far.

                              [In percent]
------------------------------------------------------------------------
                                                  Airframe      Engine
------------------------------------------------------------------------
Lowest percentage.............................           85           84
Highest percentage............................           97           96
Cumulative Average to Date....................           94           90
------------------------------------------------------------------------

    The V-22 program's airframe engineering and manufacturing 
development contract is a cost plus award fee contract. The program 
budgets for 100 percent of the award fee liability incurred each year. 
In fiscal year 1998 the award fee liability is $29 million over two 
award fee periods. Historically, the contractor has been awarded 
approximately 85-100 percent of the award fee available pool.
    Marine Corps Answer. There are no fiscal year 1998 Marine Corps 
ground allocation of RDT&E,N or Procurement Marine Corps programs which 
have a contract award fee larger than $10 million.
    Question. Please identify all R&D and production programs/projects 
for which Congress appropriated funds in fiscal year 1997 which since 
the Appropriations Act was enacted have been either terminated or 
significantly down-scoped. For each, indicate the status of the fiscal 
year 1997 and any earlier active fiscal year funds where funds have 
been diverted to another purpose.
    Navy Answer. There has not been any significant downscoping of 
budgeted programs or new program terminations since submission of the 
Fiscal Year 1997 President's Budget in March 1996. Program adjustments 
reflected in our current estimates are due to rebalancing of resources 
consistent with rephrasing of requirements and revision of production 
and delivery schedules. Accordingly, since so terminations or 
significant downsizings have occurred, no prior year funds have been 
diverted.
    Marine Corps Answer. The only Fiscal Year 1997 program that has 
been terminated since the Fiscal Year 1997 Appropriations Act is the 
Marine's Off-Route Smart Mine Clearing System (ORSMC). This action was 
taken due to fiscal constraints. This adjustment is in line with 
briefings provided to your staff subsequent to this action as well as 
submission of the Fiscal Year 1998 President's Budget.
    Question. Identify all ACTD funding in the RDT&E, Navy 
appropriation account in each fiscal year 1997 through the FYDP. 
Indicate total cost of each listed ACTD and whether other service 
appropriations are contributing funds for it.
    Navy Answer. The Department of the Navy has RDT&E funding related 
to three ACTD's, the Precision Signal Intelligence (SIGINT) Targeting 
System (PSTS); the Joint Countermine ACTD, and Extending the Littoral 
Battlespace ACTD.
  Precision Signal Intelligence (SIGINT) Targeting ACTD--(funding in 
                               thousands)
    FY 97--12,299;
    FY 98--7,467;
    FY 99-03--4,766.
    The total cost of this ACTD and related core funding is 
$24,532,000. No funds from other services or DOD are included in this 
total cost.
             Joint Countermine ACTD--(funding in thousands)
    FY 97--90,738;
    FY 98--76,810;
    FY 99-03--ACTD ends in FY98.
    The total cost of this ACTD includes direct funding from OSD as 
well as generic supporting ``core funding'' from Army, Navy and Marine 
Corps RDT&E accounts.

OSD...........................................................    68,900
Military services.............................................   585,330
                    --------------------------------------------------------------
                    ____________________________________________________

                                                                 654,238

    Extending the Littoral Battlespace ACTD--(funding in thousands)
    There is no funding in the current Navy FYDP for this ACTD. A 
program plan and funding levels for future years is being developed.
    The Marine Corps has funding in the FYDP as follows:
    FY 97--5,000;
    FY 98--To be determined;
    FY 99-03--To be determined;
    Total cost projections for the ACTD are pending development.
    Marine Corps Answer. The only Marine Corps funded ACTD is Extending 
the Littoral Battlespace (ELB ACTD). This ACTD is jointly sponsored by 
the USMC and the USN. Marine Corps funding is contained in RDT&E,N, PE 
0603640M, Advanced Technology Demonstrations, Project C2223, Advanced 
Technology Demonstrations. Funding for this ACTD is as follows:

----------------------------------------------------------------------------------------------------------------
                                        FY97       FY98       FY99       FY00       FY01       FY02       FY03
----------------------------------------------------------------------------------------------------------------
ELB ACTD...........................        $5M       $10M       $10M       $10M       $10M        $1M        $1M
----------------------------------------------------------------------------------------------------------------


    The Marine Corps participates generically in the Joint Countermine 
ACTD. The total cost of this ACTD includes direct funding from OSD as 
well as generic support from the Army, Navy and Marine Corps RDT&E 
accounts. This ACTD ends in Fiscal year 1998. U.S. Navy funding is as 
follows: fiscal year 1997 $0.9 million, fiscal year 98 $0.8 million. 
The one program where extra investment could provide the highest 
payback is additional dollars for the V-22.

    [Clerk's note.--End of questions submitted by Mr. Young.]
                                         Wednesday, March 12, 1997.

                     AIR FORCE ACQUISITION PROGRAMS

                               WITNESSES

ARTHUR L. MONEY, ASSISTANT SECRETARY OF THE AIR FORCE FOR ACQUISITION
LT. GENERAL GEORGE K. MUELLNER, PRINCIPAL DEPUTY ASSISTANT SECRETARY OF 
    THE AIR FORCE FOR ACQUISITION, U.S. AIR FORCE

                              Introduction

    Mr. Young. The Committee will come to order.
    We are pleased to welcome Mr. Arthur Money, the Assistant 
Secretary of the Air Force for Acquisition, and Lt. General 
George Muellner, Principal Deputy Assistant Secretary of the 
Air Force for Acquisition.
    Gentlemen we thank you for being with us today and we 
appreciate all the good testimony that you have given us over 
the years.
    Yesterday I made a fairly lengthy opening statement at the 
hearing with Secretary Widnall and General Fogleman. I am not 
going to repeat that this morning, but I think you basically 
know what it was about.
    We are concerned about our aviation programs. We are 
concerned about the fact that we are not really making as much 
of an investment in new tactical airplanes as maybe we should. 
And so you know that and I am not going to bore you with that 
statement all over again.
    [Chairman Young's prepared statement follows:]

    This morning we are pleased to welcome Mr. Arthur L. Money, the 
Assistant Secretary of the Air Force for Acquisition, and General 
George K. Muellner, Principal Deputy Assistant Secretary for 
Acquisition. Gentlemen, thank you for coming today.
    The Air Force's fiscal year 1998 budget continues the trend of 
emphasizing near-term readiness to carry out contingency missions, but 
unfortunately at the price of delayed modernization of Air Force weapon 
systems. The Air Force's 1998 budget requests $29.8 billion for 
procurement and R&D. Though this is $600 million higher than fiscal 
year 1997, when inflation is taken in to account it is once again lower 
than last year's appropriated amount. In fact, from fiscal year 1990 to 
1998, the Air Force modernization accounts have declined 51% in real 
terms. And as we have noted for some time, we are concerned that 
continued delayed modernization of your weapon systems will lead to a 
long-term readiness problem, potentially resulting in unnecessary 
casualties in some future conflict.
    The decline in Air Force modernization leads to some starting 
observations about your budget:
     The 1998 Air Force budget funds only 3 tactical aircraft, 
the lowest quantity in the 50 year history of the Air Force.
     The Air Force budget allocates less for aircraft 
procurement than the Navy--for the second year in a row!
     And we see that already inefficient production rates have 
been reduced further: For example, the budget proposes a cut in JSTARS 
production from 2 aircraft per year to just 1 in fiscal year 1998.
    Even the Air Force's highest priority, the F-22 stealth fighter, 
does not escape reductions. F-22 production over the FYDP has been cut 
approximately in half compared to last year's plan.
    The Committee is also interested in hearing about programs that are 
new in this budget, or that are just now taking shape. For example, 
starting in 1998, the Air Force and Army budgets include $318 million 
over a two year period to provide upfront US funding for a NATO JSTARS 
program. The Committee is concerned that NATO has not yet decided to 
buy JSTARS and that the program could be underfunded by as much as a 
billion dollars. Also, this program comes at a time in which the Air 
Force has cut the US JSTARS program.
    The Committee would also like to hear more about the Airborne Laser 
program. Though the Air Force was still working out the scope of the 
program last year, we went ahead and provided funds to begin 
development. This year we learn that it will cost $11 billion to 
develop, procure, and operate 7 aircraft.
    Finally, the Committee is very interested in hearing about the 
reported cost growth to the F-22 program. The R&D program has increased 
by $2 billion and as I already mentioned, production quantities have 
been cut approximately in half over the Future Year Defense Plan. We 
know the Air Force is working hard to eliminate a potential $13 billion 
cost growth in production, and we look forward to hearing how that will 
be accomplished.
    So, I have outlined the issues we need to discuss today. As I have 
said too often since becoming Chairman, it appears that we are on the 
road to a severe long term readiness problem in the Air Force. 
Hopefully, you can convince us that the situation is better off than 
your acquisition budget would indicate. We want to work with you to 
identify and remedy the most pressing shortfalls, and to eliminate 
programs in your budget where budget growth is not needed.

    Mr. Young. Mr. Murtha, do you have any opening commitments? 
Then what we would like for you to do is proceed any way that 
you would like. Your statements in their entirety will be 
placed in the record, and just feel free to summarize them any 
way you wish, and then we will have some questions for you.

                     Summary Statement of Mr. Money

    Mr. Money. Mr. Chairman, Congressman Murtha and committee 
staff, General Muellner and I are in fact delighted to be here 
with you again to speak about the Air Force Modernization 
Program. We welcome this opportunity to continue the frank and 
open discussion that we have had over the past years concerning 
the Air Force program.
    As you are keenly aware, the Air Force RDT&E and 
procurement program is an important part of the fiscal year 
1998 budget request. It consists of a time-phased approach that 
is coupled with aggressive acquisition reform initiatives, all 
designed to ensure that the Air Force is properly postured to 
provide the Nation a global engagement capability at an 
affordable price as we move into the 21st Century.
    Today we plan to provide you a thorough review of the 
overall program, highlight key activities and events, and 
discuss, explain, and clarify any issues and concerns you may 
have.
    As we did last year, General Muellner will walk and, in 
fact, talk you through the presentation using the poster boards 
here, and together he and I will answer any questions and 
discuss any key issues that you may have.
    We will talk about the TACAIR modernization and highlight 
the importance of this program to the Nation and to the Joint 
Force Commanders. We will explain how the F-22 and the Joint 
Strike Fighter both fit as crucial pieces into this plan, and 
will address the affordability issues.
    In addition, we will include a discussion on the F-22 Joint 
Estimate Team, the JET review results, the program 
restructuring, and explain how this proactive initiative is 
patterned after a similar review, one we used to pull out the 
C-17 program. However, I might point out here that these issues 
on the F-22 are being addressed much earlier in time than they 
were on the C-17 program.
    We will talk about our space superiority program and show 
you how we will continue to modernize in these areas. We will 
discuss the bomber force and highlight our efforts and 
enhancements in this area. We will include a discussion on the 
precision weapon program and we will address for you the 
timelines for integrating these systems on the weapons program. 
On those weapons platforms, excuse me. We will discuss our 
Information Superiority Program and show what efforts we have 
under way to ensure that the joint team is ready to achieve 
dominant information awareness.
    We will also discuss our Global Mobility programs, address 
the S&T, science and technology investments and show you how we 
are expanding our acquisition reform efforts moving beyond the 
Air Force Lightning Bolts all designed to help us move into the 
21st Century. It is our intent to spend as much time as you may 
desire in these areas and to ensure you are fully comfortable 
with these issues.
    We truly feel that the budget request balances investments 
across this entire range of combat and support capabilities 
while sustaining the technology base. We are committed to 
provide the Joint Force Commanders with the best capabilities 
possible in the shortest time practical at the most affordable 
price, providing effective weapons systems and services in the 
most efficient process.
    This overall plan provides the warfighters the entire 
spectrum of combat capabilities and at the same time maintains 
and sustains the critical technology base. Working together, 
partnering with you in Congress, the warfighter, industry, the 
administration, as we execute this plan, we can and will 
proceed into moving the Air Force and this Nation into the 21st 
Century.
    So, Mr. Chairman, that is all I wanted to say at the 
beginning, we will proceed with the plan.
    Please ask questions as we go.
    Mr. Young. Okay. Thank you very much.
    Mr. Young. General, we will be happy to hear from you.
    [Clerk's note.--The charts referred to by General Muellner 
are printed on page 340.]

                 Summary Statement of General Muellner

    General Muellner. My intent is again to lead you through 
the program, and I encourage any questions you might have.

                     MEETING THE WARFIGHTERS' NEEDS

    (CHART 2) The focus of my discussion today will be on what 
we call our Air Force core competencies, these are the 
capabilities or abilities that we provide to the joint 
warfighting elements to execute our National Strategy as 
captured in Joint Vision 2010 and as mentioned in the Air Force 
piece of that, which is global engagement.
    I point these out only in that we will be talking to each 
of these areas and our programs all fall within them.
    They are fed, as Mr. Money just defined, an acquisition 
program that is based upon a time-phased modernization. What 
that means is that we are right now fielding C-17s, airlift 
capability, finishing up the bomber modernization efforts and 
then we will be starting our TACAIR modernization phase. So 
these are time-phased in the budget process.
    Nurturing this is a streamlined acquisition approach and we 
are driving for ever-increased efficiency in our 
infrastructure. Same is true, as I will point out, in providing 
additional agility to our sustainment operations so that we can 
operate more expeditionary and do so in a more efficient 
manner. The end result of this, as Mr. Money just pointed out, 
is that we believe this time-phasing, along with the 
streamlined acquisition and sustainment, is what gives us an 
affordable program.

                            AIR SUPERIORITY

    (CHARTS 3 AND 4) Let me start with the Air and Space 
Superiority side. Air Superiority, and you all have seen this 
chart before, obviously, we assemble one of the most important 
elements and it is the first thing that the Joint Force 
Commander asked us to provide. When you have it, you can have 
freedom of action on the battlefield and prosecute the campaign 
as you want it. When you don't have it, then you are at the 
mercy of your adversary. So clearly we believe air superiority 
is something that is very, very important to this Nation or as 
Secretary Perry coined, air dominance, something that we really 
like to have, and clearly we are focused on keeping that record 
alive.
    As we look at our Air Superiority Programs, the two that I 
am going to spend most of the time talking about will be the F-
22 program and the Airborne Laser. Just on the relationships 
side we have two key programs that will persist into the 
outyears, the Advanced Medium Range Air-to-Air Missile, AMRAAM, 
program is executing very well. It is meeting or exceeding all 
of the warfighter's requirements, in some cases, by significant 
amounts, and the cost itself continues to come down.
    Just this year we had a down-select for our next-generation 
infrared, IR, missile, a joint program under Navy helm. That 
contract was won by Hughes and that program is in execution. So 
we will have two frontline missiles on our force in the 
outyears, as will the Navy.
    What I would like to do now is address the F-22 program, 
please.

                             F-22 Aircraft

    (CHART 5) As you know, this is a revolutionary step forward 
in that it combines the first highly maneuverable low-
observable platform, one that can operate at high supersonic 
speeds on the battlefield efficiently for the first time and 
has an integrated avionics suite that really brings all the 
off-board and on-board information to the decisionmaker, which 
is the operator. This provides them dominant battlefield 
awareness.
    Right now we are in the engineering and manufacturing 
development phase of that program. And we are ahead of schedule 
for first flight, which will occur in the last part of May of 
this year. The official rollout of that airplane is on the 9th 
of April, and we would certainly encourage your attendance at 
that in Marietta. That airplane is actually in the fuel barn as 
we speak. So that program is executing out very well and all 
performance parameters are exceeding the warfighter's 
requirements.

                            F-22 RESTRUCTURE

    (CHART 6) As a result of the importance of this program, we 
put together a Joint Estimating Team to go out and look not 
only at the EMD program to ensure that we had confidence that 
we could execute it, that we understood the various risk areas 
and we have adequately resourced it, but also to look ahead at 
the production program to ensure that we understood the 
production costs and what the cost drivers were. And we have 
used this very effectively, as Mr. Money pointed out, on the C-
17, also on the Joint STARS program, and so we put it in place 
here. And an issue came about a year ago at this time when we 
started that particular program.

                    C-17 AND F-22 SOFTWARE PROBLEMS

    Mr. Murtha. Have you had the software problems with the F-
22 that you had with the C-17?
    General Muellner. With the C-17?
    Mr. Murtha. Yes.
    General Muellner. We have not seen any of the software 
problems to date. We are still growing the software. The flight 
control software for the first flight airplane has actually 
been flown already in the Vista F-16. We are still, at the 
most, 30 percent through the entire software build for the 
entire weapons system. But first flights off, we are actually 
ahead of schedule, sir.
    Mr. Murtha. What is the difference between the way you did 
this and the way you did the C-17 that will eliminate that 
problem?
    General Muellner. We did this the way we ended up doing the 
C-17, which was in a very structured standpoint of A-level, B-
level, C-level specs and flow-down and such.
    Mr. Murtha. You remember in the C-17, you had one 
contractor that only had a few people working on it? You had to 
fire that contractor and hire a new one, so you have a 
flowchart that recognizes that problem and you solved it.
    General Muellner. Yes, sir, and I will tell you one of the 
stressing elements in this program and one of the areas that we 
managed very closely and in all of the programs is the access 
to software programmers. They are a shortfall across the 
industry. And these companies and the government manages those 
assets very, very carefully.
    Mr. Money. Let me just add to that, Congressman Murtha, and 
foot-stomp two things here. We are obviously learning from one 
program to another. Having all the flight control software 
tested already on an F-16 Vista, so all the software needed for 
the first flight and, in fact, for the first three vehicles, is 
already done, been tested. The next major step, if you will, in 
software, the General will talk about in a minute, is in the 
avionics area. That doesn't enter until aircraft 4, and that is 
a major issue, and we are putting all the heat we can, all the 
attention we can into that area. But it is a significant issue, 
about 1.6 million lines of code.
    Mr. Murtha. But if you change any way you do the 
procurement--we visited a couple of times with McDonnell-
Douglas on the C-17, and they said part of the problem is we 
have to go clear back to the Pentagon in order to get changes 
made. It was really an unbelievable paperwork problem. Is that 
all eliminated?
    General Muellner. Yes, sir, I guarantee you our office in 
the Pentagon is the last place we have them come to for changes 
on their software. We have a structure in the field that 
incorporates those changes. We have a very extensive test 
process, as indicated with the Vista F-16, to wring those out, 
and there is an Independent Review Team that reviews all of 
these actions prior to first flight and every successive 
milestone. There are people separate from the program office 
and separate from the contractors that are doing this.
    Mr. Murtha. These cost estimates ought to be fairly 
realistic at this point because you have taken care of the 
problems early on, is that what you are saying?
    General Muellner. You are absolutely right.
    Mr. Murtha. Unless the numbers that you asked for go down.
    General Muellner. Certainly rate and quantity will affect 
the unit costs, but we have more definitions of these costs now 
at the early stage in the program than we ever had in the past.
    Mr. Money. Lockheed is the prime contractor and we hold 
them responsible and accountable for all of that, so the paper 
trail doesn't need to come to the Pentagon. We do review that 
periodically, monthly, in fact, with Lockheed.
    The second point is regardless of the quantity, the 
software isn't changing. That same amount of software is 
required if we have 100 units or 400 units.

               F-22 JOINT ESTIMATING TEAM RECOMMENDATIONS

    (CHART 7) General Muellner. Sir, the JET team came back 
with several recommendations, and one is they looked at the EMD 
program and their recommendation was that we needed to add 
additional resources to that EMD program to assure that we had 
the risk under control before we stepped forward in the 
production.
    The second part of that--and they focused on the avionics 
as we have been talking about. This is the first aircraft where 
we have had an integrated avionics suite rather than individual 
federated things. So in this case they focused additional 
attention to how we integrated avionics.
    As a result of this, we added a total to the EMD program, 
of about $2.1 billion. That was made up of two elements. We 
added a $1.45 billion transfer by slowing the production ramp, 
moving some of that money out of the total program top line 
back into the development side. And at the same time, we 
restructured our test program which freed up $706 million. So 
the end result is that we had to add to the EMD program that 
amount of money significantly reducing the risk from the 
standpoint of getting the production side of the airplane ready 
to go before we set forward into production.
    Contractors and the government sat down and looked at 
production cost estimates. The production cost estimates said 
that if we did not effectively manage those production costs, 
there could be upwards of a $13 billion increase in cost.
    As a result of that, the contractors and government sat 
down, put a plan in place. And that plan which was agreed to by 
Norm Augustine, Karl Kropek, are the two primary CEOs, 
definitizes how they took that cost out of the program. And on 
the next chart I will give you some examples of that.
    Mr. Money. So by doing this restructuring now, I believe we 
have a much more executable program. We are putting in money 
early to lower those production costs later. So I think you 
will see that it makes more sense than what we had planned a 
year or so ago.

                      F-22 COST SAVING INITIATIVES

    (CHART 8) Mr. Young. General, as you go through that chart, 
will you point out realistically what are the paper savings and 
what are the real savings?
    General Muellner. I would offer to you on this chart, as 
well as in our production cost estimate, of course they were 
all paper at this point because we are talking about something 
in the 2004-2005 time frame that we are dealing with. But in 
reality everything on this chart in both columns are 
initiatives that have been put in place in other programs and 
implemented. So from that standpoint, they are not conjecture. 
They are issues that we have hard data on.
    In fact, Alan Mulally, who is the new President of Boeing 
Military, when he sat in our CEO meeting here the other day he 
said we have all of these things in place right now in the 777. 
So they are not indeed conjecture; they are proven techniques 
that we have used in other programs, that is why we brought 
them into this program, sir.
    Specifically, the ones that we already have well-
definitized is specific process improvements and the insertion 
of technologies to deal with obsolescence of parts and things 
of that nature on the production line and in the production 
vehicles. A multiyear approach similar to what we use in the F-
16, and by that is that the contractor does not go out and ask 
for his subtier vendors to price a lot of 6 airplanes or 12 
airplanes, but rather they look ahead and try to get economies 
of scale in the way they do that, the way to deal with the 
warranties. It turned out that we were overbooking what we were 
requiring for warranties because of the way we were supporting 
the weapons system during its initial fielding, and the same is 
true on the subcontracts and material management.
    For instance, across the entire Lockheed company now they 
are able to buy as a company as opposed to one division. As a 
result of that, they get much better economies of scale in 
their material management programs. Those things have now been 
incorporated in the program.
    As we look at as other activities out here, again looking 
at the F-16, the F-16 average, a 10 percent savings by using a 
rotating 3-year, multiyear approach from the standpoint of 
buying stock and programming ahead.
    Lean Enterprise, we just consummated a Lean Aircraft 
Initiative. It is similar to what the auto industry had and MIT 
has been leading with the aerospace industry. We have 
incorporated those benchmarking procedures into this particular 
program.
    And the last part of it is that we have rolled in the 
acquisition reform techniques that we have been nurturing and 
developing in other programs like JDAM, where we go to 
performance-based contracting and we get out of the business of 
telling the contractor how to do something and just tell them 
what it is we want them to do. The end result of this gives us 
very, very high confidence that what the contractors committed 
to with the government, that is that there would be no 
production cost increase, indeed is realizable, and that is 
what we expect out of the program.
    Mr. Dicks. Mr. Augustine signed this, correct?
    General Muellner. That is correct.
    Mr. Young. I want to have that chart placed in the record 
to go along with your commentary so that we will have a record 
of the chart.
    Mr. Money. Let me just foot-stomp and give the General a 
chance to grab a little drink here. Two things when we met with 
the CEOs on the 19th of December and reviewed the JET team 
output, the production costs at that time, if no actions were 
taken, if business as usual, was going to be in the $60 billion 
area. We said this is totally unacceptable. We need to work 
this back to the original budget, the $48 billion production 
number.
    The work that has gone on between December and now--we just 
this Monday had a 5-hour meeting with the CEOs that the General 
referred to. What has come out of that is we in fact have plans 
in place with meat on the bones to get that cost back down to 
$48 billion.
    Now, you undoubtedly hear a lot of things that are going on 
in the Pentagon, a group in the Pentagon called the Cost 
Analysis Improvement Group, CAIG, is still at the $60 billion 
number. My answer to why there is a difference is that they are 
looking at historical models of what has happened in the past. 
Clearly we are looking forward to what can be done, and this 
comment that Mr. Mulally made came out of the commercial side 
of Boeing: My God, there is nothing new here, we have been 
doing this on the commercial side.
    This is good government. We have taken the initiative to 
get the costs down and have meat on the bones and plans. Those 
plans obviously have to be executed, and you can watch that 
over the next 20 years. But I am very confident here, sitting 
here saying with clear conscience that the most probable cost 
for the production cost of this aircraft will in fact be $48 
billion, and we are not stopping there, we are continuing to 
drive efficiencies into the program.
    Mr. Dicks. On that point, isn't it true that when you 
compare the C-17 and the F-22, there is a universe in 
difference. In fact, one of the things we had to do in the C-17 
program was go back and insert technology.
    As I understand it, we are using commercial practice. CAD/
CAM or Computer Aided Design/Computer Aided Manufacturing, all 
of this is part of this program from the inception. So it is 
really very different than the problems we faced with C-17, in 
my judgment.
    Mr. Money. Absolutely right. And all the things that we are 
talking about, the difference between the 60 number and getting 
back to 48, is well beyond the normal learning curves. These 
are new initiatives, new practices, modern technology being 
applied and so forth.
    Mr. Murtha. I hope that you will get a better savings than 
we got on the C-17. An awful lot of us thought that the savings 
that you folks were so anxious to get the ball here that you 
caved. I hope you worked the pencil. All the services want to 
get a multiyear, that they--we got a little bit better with 
ours, but we still--I think you could have gotten better.
    Mr. Money. Yes, sir, I hear you, and thank you for your 
help on C-17. And we will do a better job on this before we 
come to you for the multiyear. We won't come to you for the 
multiyear until this design is stable and we have a good 
program. We have a lot of work to do yet, so we are a year or 
two away from talking to you about that.
    Mr. Hobson. I am not sure, I have a lot of respect for you 
guys, I think you do a good job, but I don't understand all of 
this at this point.
    I have one question on this particular problem. As I 
understand it, people talked about a $15 billion cost overrun. 
Does that take you from the $48 to the $60 billion?
    Now, I understood that about half of that was due to 
expected inflation rates. And the problem I have is that you 
never find out where all of this came from and how it got 
started. Everybody gets promoted and retired and are gone and 
we all live with it. I want to know you are telling me things 
that are going to be put in so it doesn't happen again, or it 
didn't happen that way, or there are other savings out there? 
So you are going to work this back in? You are still going to 
have $8 no matter what you do--$8 billion.
    Mr. Money. No, sir.
    Mr. Hobson. What you are telling us on paper, anyway, and 
there is a commitment being made. I want to go through this 
again. I hope to be here a little longer.
    You have taken the action that you guys are comfortable 
with. And as I say, you have a lot of integrity with me. That 
all of this stuff is handled--I mean, if Baxter understands it 
is handled, and you guys understand that it is handled, you 
still have some problems with your other people down in your 
shop getting them to agree that that is where you are. Is that 
what is being said here today?
    General Muellner. Yes, sir, indeed.
    Let me explain the inflation issue for you. The $15 billion 
that you described, about $8 of that--$8 billion of the $13 
billion on the production side and on the EMD side, $743 
million of the $2.1 billion was due to the fact that we in the 
government program inflation about 2.2, now 2.1 percent.
    This segment of industry is experiencing an inflation rate 
up in the order of about 3.2 percent. When the cost-estimating 
team went out and looked at what the projected costs were based 
upon forward cost projections based on labor contracts, 
material costs and everything else, they used the 3.2 percent 
number. As a result of that, that gave you the delta between 
what we in the government can program based upon the OMB-
provided rates.
    The commitment by the contractors that Kropek and Norm 
Augustine signed was to take the cost out of the program to 
account for that inflation difference also. So the answer is 
that $15 billion, $13 of that $15 billion has been taken out of 
the program by those cost-saving initiatives you saw on the 
previous chart that is correct.
    Mr. Hobson. Okay.
    Mr. Money. We had very candid discussions with the 
contractors and said we cannot handle a cost growth due to 
inflation if there is a different rate here. That is all 
incorporated, so we talk about then year dollars here.
    Mr. Hobson. I assume they do; these are smart people. They 
cannot come back here and say, folks, you know, this is a 
different ball game. I think you all have to remember that the 
other way they get you on this is the same old way in building 
contracts. That is if you all change the specs and what you 
want this airplane to do and not do, they got you.
    General Muellner. Yes.
    Mr. Hobson. And that is what happens every time we do this, 
the gotcha's get you.
    General Muellner. Sir, our warfighters understand that 
well, and those are the ones that generally have the 
requirements creep. They are very sensitive to that. And, 
indeed, they have been willing to trade to ensure that we 
preserve the affordability of the program.
    Mr. Money. Let me just add one thing just to emphasize what 
General Muellner--just at that time, General Hawley, the 
Commander of Air Combat Command, ACC and General Hawley, the 
Director of Requirements, have been involved with every step we 
have taken here. So the warfighter is totally on board with 
this. We have a stable requirement. We have a stable program, 
so we are going forth with that--and let's finish this here--
but all of those things have been taken into consideration so 
we won't come back to Congress and say we need more money. $48 
billion is what is needed to produce 438 airplanes, and that is 
where the program is.
    Mr. Young. General, why don't you proceed with your charts 
and presentation, and then we will come back to more questions.

                            F-22 UNIT COSTS

    (CHART 9) General Muellner. When you aggregate that all 
together, and to agree with the point that Congressman Hobson 
just made, is the commitment of this airplane--this is a chart 
similar to the one that we showed you last year, and that is 
the reason I used it again--this is indeed the flyaway cost in 
constant-year dollars similar to what we showed you last year. 
This is indeed the unit procurement cost in then year dollars, 
again similar and what you see is some very, very small changes 
up and down here. But the bottom line is that they have 
remained constant, consistent with what we just said.

                         AIRBORNE LASER PROGRAM

    (CHART 10) Now, sir, let me move on to the other element in 
the Air Superiority that I think is a new and important 
capability, and that is the issue of the Airborne Laser. The 
Airborne Laser is again a revolutionary way of dealing with 
theater ballistic missiles. All the other approaches we have 
got are what we call catcher's-mitt approaches, where we try to 
shoot them down in the incoming phase.
    The important thing here is to try to shoot them down when 
they are in the launch phase, the boost phase. When you do 
shoot them down, if they have warheads that have either 
chemical, biological or nuclear content, that warhead then 
falls on the enemy rather than on us.
    What the Airborne Laser gives us is the ability to reach 
out with a speed-of-light weapon, intercept these things in the 
boost phase. These capabilities have been maturing for years.
    This is the first program where we have really tried to 
field these on an airplane. The airplane, as you can see, is a 
747-400 aircraft. We had a source selection earlier this year 
to select between two contractors, Boeing won that contract and 
they are indeed the integrator to integrate this laser on that 
airplane.
    We are in a phase of the program right now called Program 
Definition and Risk Reduction. This will result in an airborne 
demonstration against a boosting missile out in the 2002 time 
frame. Eventually resulting in a seven-aircraft fleet; Interim 
Operational Capability, IOC of about 2006.
    Again, several important technologies have come along, not 
only the laser technology, but even more important than that, 
the ability for adaptive optics and atmospheric compensation to 
ensure that we do indeed get a good energy on the target. An 
event-driven, milestone-driven program. And we have exceeded 
every one of our demonstration milestones along the way, so we 
have a lot of confidence in this program, and right now, as I 
said, it has entered the demonstration phase.

                           SPACE SUPERIORITY

    (CHART 11) Sir, if I could, I would like to now move into 
the Space Superiority side, and I would like to talk about the 
key programs. There are a lot of other success stories here, 
and we are making good progress, not the least of which is that 
we are using acquisition reform to save upwards of $500 million 
over the five year defense program in the last block of GPS 
satellites we put on contract.
    The two programs I would like to talk about are keystones, 
one of them is the Space-Based Infrared Program. This is a 
keystone not only for continuing our threat-warning 
capabilities that the Defense Support Program now provides, but 
also a significant underpinning in the outyears to theater and 
national missile defense. I will talk about this more.
    And then I would like to talk about where we are going in 
launch vehicles, because we have to drive down the cost per 
pound of getting things into orbit, and that is the keystone 
for doing that.

                      SPACE BASED INFRARED SYSTEM

    (CHART 12) The Space Based Infrared System SBIRS program, 
constitutes two major elements: A high element composed of 
geosynchronous and high-earth orbiting, six of those in that 
constellation, and then what has been referred to as the space 
and missile tracking system, or the SBIRS low concept is a low 
constellation of satellites which provides increased tracking 
coverage and accuracy.
    So if you look at these high ones as providing threat-
warning intelligence characterization, these are the low ones 
that really constitute what you need to intercept theater 
ballistic or ballistic missiles launched at the CONUS.
    The key part of this program is we are in the engineering, 
manufacturing development phase for the high constellation. 
With help from the Hill, we have accelerated the SMTS or SBIRS 
low portion and are in the program definition and risk 
reduction phase. It was originally going to have capability up 
in 2006. We have accelerated that to 2004. That program remains 
technically and from a schedule standpoint, high risk, and the 
reason is we have accelerated that technology, and some of the 
sensors technology in particular, is going to need that length 
of time to play out. So we do have a 2004 capability on the 
books right now. We laid the money into the budget to 
accelerate that program and we are off executing it right now.

                   EVOLVED EXPENDABLE LAUNCH VEHICLE

    (CHART 13) On the EELV side, again we just finished a 
competition. We went from four contractors competing for this 
very important mission area, down to two that are now remaining 
in the competition. As you can see, they are McDonnell Douglas 
and Lockheed Martin. The important part of their concepts, they 
are a family of systems, if you will, that give us full 
coverage up from the small-medium category, all the way up to 
the heavy-lift capability. And if we look at our mission models 
all the way out in the outyears, we need to have capability 
across that whole range of potential lift, and orbit placement 
capabilities.
    The key focus of this program is to decrease the cost to 
orbit by anywhere from 25 to 50 percent, depending on what 
orbit and what payload you are talking about. A significant 
reduction in what it is going to cost us as we expand in the 
case of the Air Force, from an air-and-space force to a space-
and-air force as we see ourselves doing in the future. And, 
again, this program is now in the competition between these two 
contractor teams.

                             GLOBAL ATTACK

    (CHART 14) Sir, if I could I would like to move into the 
Global Attack area here. In this particular area I am going to 
focus on the fact that in our fighter force we are necking down 
in the outyears the primary fighters and the attack aircraft 
that we will be using will be the F-22 and the JSF. But also, 
of course, the bomber force. And I will describe for you what 
we are doing in both the case of the B-1 and the B-2, in many 
cases with your help, to accelerate the conventional capability 
on those platforms.

                               B-1 Bomber

    (CHART 15) Sir, in the case of the B-1, again with your 
help, we have accelerated a Joint Direct Attack Munition, JDAM 
capability coupled with an ALE-50 towed decoy. We will have 
eight airplanes that have moved up a year and a half, into the 
first quarter of 1999, to get that capability fielded on the 
airplane. So we will have those eight airplanes that will be 
capable of carrying Joint Direct Attack Missions with the ALE-
50.
    They already have improvements to the on-board 161 program, 
so these airplanes now have reasonably good survivability. Not 
as good as they will have downstream when we get the defensive 
systems upgrade, but they can go out and prosecute attacks 
within most of our theaters with some packaging help.
    The other key capabilities that we are bringing on board 
brings along the whole family of attack weapons systems that 
use GPS-aided information; the Joint Standoff Weapon, JSOW, 
which is a Navy program which now gives us 40 to 50 mile 
standoff; the wind-corrected munitions dispenser, which allows 
us to drop at medium and high altitude, again, with high 
accuracy and not worry about winds and other issues like that.
    And finally, the Joint Standoff Missile. This is a very, 
very important one because it is a highly survivable long-range 
standoff weapon that allows us to go after precision targets 
with a thousand-pound penetrating warhead. These capabilities 
are all programmed for fielding on the airplane. We see no 
technical risk in doing that.
    Probably the most significant technical challenge, and it 
is an integration challenge as opposed to a technology itself, 
is the Defensive Systems Upgrade Program. This program, the 
content of it will be two major elements: One of them will be 
the IDECM, the Integrated Defensive Electronic Countermeasure 
program, the Navy-developed program that is going on a wide 
range of platforms. That coupled with the ALR-56, which is a 
very proven radar homing and warning system which we have on a 
lot of our systems now, an upgraded version of it, will 
constitute this Defensive Systems Upgrade Program. That is the 
program that is structured to go on the B-1, and we are off in 
the process of executing that right now.
    Mr. Young. General, I am interested in the ribbon at the 
bottom that says B-1 is the backbone of the bomber force. Tell 
us how many combat missions the B-1 has flown?
    General Muellner. It hasn't flown any yet, sir.
    Mr. Young. That is what I thought. When I came to this 
Congress in 1971, the B-1 was a big issue. I was one of the 
very strong supporters of the B-1. And I have always wondered 
why we talk about the B-1 but we have never done anything with 
it, I am sure this is not in your shop or in your area of 
jurisdiction, but you tell a very positive story here--but the 
B-1 has never been used in a combat role, strategic or 
conventional.
    General Muellner. Sir, when I was Director of Requirements 
at Air Combat Command when we stood up that command and we 
brought the bomber force in from then Strategic Air Command 
into Tactical Air Command, and merged the two together, we put 
heavy focus on making the B-1 a strong conventional player, 
because it has really good capability if you can get the 
weapons on board in support of conventional warfighting.
    It was an airplane that prior to that had been focused on 
the strategic aspect of delivering nuclear weapons. We have 
spent the time since then, and we used to say the airplane was 
in the penalty box for a long time. We weren't able to do some 
of the things necessary to it because of its previous history.
    Since then we have brought weapons on board and upgraded 
the computer systems and upgraded defensive systems so that it 
can be an active participant in theater warfighting and 
conventional warfighting, and I think we are on a good track to 
do that.
    Mr. Young. How old is the oldest airframe?
    General Muellner. Sir, we will have to take that one for 
the record. I do not know offhand. I do know when I was at 
Edwards in the late 1970s and the 1980s--of course, we were 
testing the airplane then, so obviously----
    Mr. Dicks. It has got to be early 1980s.
    General Muellner. Yes, sir, that is my guess.
    Mr. Dicks. Early 1980s is when we started getting the B-1.
    [The information follows:]

    No B-1A airframes are flying nor were any converted to B-
1Bs. The oldest operational B-1B was delivered to the Air Force 
at Dyess AFB in June 1985.

    Mr. Young. Just one second, I just wanted to say that I 
still remain a strong supporter of the B-1, and I hope that all 
of these good stories that we hear about the B-1 happen some 
day.
    General Muellner. Sir, they are happening, as we speak, in 
exercises. You know, I think you have seen some of the 
exercises, two B-1s launches out of Dyess, refuel en route, 
join up with the carrier battle group in the Med, and drop on 
Corsica, and then return to Dyess. Those sorts of global power 
missions are being flown. They are flown as part of Green Flags 
and Red Flags, the things you need to normalize this capability 
in conventional warfighting.
    Mr. Dicks. Just on this point, many of us in this Committee 
and on the Armed Services Committee have been very concerned 
about the pace of getting these weapons on the B-1s and the B-
2s. Could you put in the record for us when we are going to get 
these weapons on all of the B-1s, and all of the B-2s, so we 
can have a real clear picture of what the plan is, how much 
money is in there?
    General Muellner. Absolutely, sir.
    [The information follows:]

    The B-1 present and future weapons capability is as follows:

------------------------------------------------------------------------
             Weapon              Carriage        RAA            FOC
------------------------------------------------------------------------
Mk-82..........................        84  Current.......  Current.
Mk-62 Naval mine...............        84  Current.......  Current.
CBU-87/89/97...................        30  Current.......  Current.
JDAM...........................        24  FY99..........  FY01.
WCMD...........................        30  FY02..........  FY04.
JSOW...........................        12  FY02..........  FY06.
JASSM..........................        24  FY02..........  FY06.
------------------------------------------------------------------------
RAA--Required Assets Available (3 aircraft plus support infrastructure).
FOC--Full Operational Capability (all 95 B-1s modified).

    The total cost to integrate CBUs, JDAM, WCMD, JSOW and JASSM on the 
B-1 is $1.65 billion. Included in this cost is upgrade of the mission 
planning system, simulators, and upgrade to the aircraft infrastructure 
necessary to integrate and employ GPS-aided and other future weapons. 
The infrastructure upgrade includes GPS, secure communications, 1760 
smart data bus, and a new computer suite. The computer suite upgrade 
will enable the B-1 to employ multiple types of smart weapons on a 
single sortie and provide for future growth. The computer upgrade will 
also improve the cost of ownership of the B-1 by reducing the annual 
sustainment cost of the system by $40 million a year after FOC.
    An additional $0.94 billion is funded to improve the survivability 
of the B-1. These upgrades are essential for the B-1 to employ weapons 
in the low to medium threat environment. The ALE-50 towed decoy 
provides interim protection against certain threats. The Defensive 
System Upgrade Program (DSUP) reuses components of the ALE-50 system, 
but will provide a more robust self-protection capability against a 
multitude of threats. DSUP will also improve the cost of B-1 ownership 
through a sustainment savings of $60 million a year after FOC. The 
fielding dates of the survivability enhancements are:

------------------------------------------------------------------------
                                           RAA                FOC
------------------------------------------------------------------------
ALE-50 Towed Decoy................  FY99.............  FY03.
DSUP..............................  FY02.............  FY08.
------------------------------------------------------------------------

    The B-2 present and future weapons capability is as follows:

------------------------------------------------------------------------
             Weapon              Carriage        LOC            FOC
------------------------------------------------------------------------
Mk-84 (2000 lb)................        16  Current.......  FY99.
GAM............................        16  Current.......  N/A.
GAM-113 (4700 lb)..............         8  FY98..........  FY99.
Mk-82 (500 lb).................        80  FY98..........  FY99.
Mk-62 Naval mine...............        80  FY98..........  FY99.
CBU-87/89/97...................        34  FY98..........  FY99.
M-117 (740 lb).................        36  FY98..........  FY99.
JDAM...........................        16  FY98..........  FY99.
JSOW...........................        16  FY99..........  FY99.
JASSM..........................        16  FY03..........  FY03.
------------------------------------------------------------------------
LOC--Limited Operational Capability (initial capability).
FOC--Full Operational Capability.

    The total cost to integrate GAM-113 and JSOW on the B-2 is $13 
million and $72 million respectively. These funds were part of the FY 
97 Congressional plus-up. Cost to integrate JASSM is estimated at $137 
million. Included in this cost is upgrade of the mission planning 
system, simulators, and upgrade to the aircraft infrastructure 
necessary to integrate and employee these weapons. The B-2 is also 
developing a generic weapon interface system in conjunction with JSOW 
integration to facilitate integrating future weapons. the remaining 
weapons are part of the B-2 baseline program.

    Mr. Dicks. We have added money in the past because of our 
concern. But you have this platform that has been around since 
the early to middle 1980s and it is now going to be 2002 before 
we get real capability on the airplane. And I worry that by the 
time we get there, the plane is going to be pretty darn old.

                              PGM OVERVIEW

    (CHART 15a) General Muellner. Sir, you have this chart in 
your backups, if you would like to look at it closely. What 
this shows you is the fielding schedule on these weapons on 
each of the weapons systems that you see here.
    In some cases that fielding schedule is driven by 
capabilities of the airplane that are needed. For example, a 
new computer, a new database. In some cases it is driven by 
availability of the weapon. The JASSM program and the JSOW 
program are still in development; those weapons have not been 
fielded yet. And some of the early capability will go on the 
bomber force, in the case of the JASSM in particular. And we 
will add to that the costs associated with each one of them. 
They are not on those charts.
    Mr. Dicks. I think one of the revolutionary aspects of this 
weapon is the cost. For example, JDAM is $13,000 a weapon 
compared to Conventional Air Launched Cruise Missile, CALCM at 
$3 million, or Tomahawk at $1.2 million. Even though these 
platforms are expensive and have had difficulties, you have 
still got the potential of putting them together with smart 
weapons at a lower cost than standoff weapons, and they are 
much more effective. You have got the ability to go against 
fixed targets, mobile targets, advancing armor and relocatables 
and underground targets. That is pretty impressive.
    How many B-1s are we going to do this on? Is it 70 you are 
talking about?
    General Muellner. Yes, sir, we are going to modify the 
whole fleet. We have 95 total aircraft available; 95 B-1s.
    Mr. Dicks. Do we plan to keep 91 B-1s in the inventory?
    General Muellner. Ninety-five Total Active Inventory, TAI. 
I am not sure what the primary weapons code will be. We will 
have to find that out for you. But it is something less than 
that.
    We always have attrition reserves in that built-in. But 95 
total aircraft is what the inventory is for that, and our 
intent is to modify the entire inventory so we have attrition 
reserve and TAI airplanes built in. We will find out what the 
exact number is.
    [The information follows:]

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
B-1B........................................................        98-1         98-2         98-3         98-4
PTAI........................................................          16           16           16           16
PMAI........................................................          51           52           53           54
BAI.........................................................           7            7            7            7
AR..........................................................          19           18           17           16
TEST........................................................           2            2            2            2
                                                             ---------------------------------------------------
      TOTAL.................................................          95           95           95           95
----------------------------------------------------------------------------------------------------------------

    Mr. Dicks. One show-stopper was the necessity of getting a 
certain kind of bomb racks authorized. Are the bomb racks part 
of this program now?
    General Muellner. When we talk about capability, that means 
everything is on the airplane, including the software, which we 
were talking about early, the racks, the necessary support 
equipment so you have combat capability there. It is not just 
the availability of a weapon and an airplane. That is combat 
capability which is reflected on these charts.
    Mr. Hobson. When would you have the capability if the 
President called you tomorrow and said we have got to go to 
war, you are not going to take B-1s now; you are going to take 
B-52s first?
    General Muellner. No, sir, it would depend on what the 
President asked for. In the case of the ALE-50, we just tested 
that and demonstrated it. The B-1 can drop hard bombs and drop 
Cluster Bomb Units, CBUs and can penetrate in doing that. But 
the answer is we would use a mix, depending on what the 
specific targets are.
    Mr. Dicks. But are there no smart weapons on the B-1B as of 
today? The B-2 has smart weapons with the Global Positioning 
System Aided Targeting System/Global Positioning System Aided 
Munitions, GATS/GAM, which have been tested and certified to 
drop.
    Mr. Murtha. This wasn't all the Air Force's fault. Remember 
the deal was we put a limitation of $20.5 billion, which I was 
against, I knew we should have improved it as we were building 
it. And instead, we stuck with the $20.5 billion, and many of 
the improvements that would have added cost, but were 
eliminated because of this cost limitation.
    General Muellner. Yes, sir, that was one of the great 
benefits we had at Air Combat Command. About the same time we 
took over the airplanes, the folk on the conventional side, we 
came out of that penalty box that you just described for us.
    Mr. Dicks. I think the other point is as frustrated as a 
lot of us are about the pace of getting the smart conventional 
weapons on the B-1 and the B-2, the reality is that these 
weapons are just coming into the inventory. So they have been 
in development. The marriage of the platform is now occurring 
because we are now getting these weapons. It isn't like we had 
these weapons sitting around and JDAMs and JSOW just appeared.
    General Muellner. We are going to start our first initial 
production on JSOWs this year. We are--JSOW is in the same 
state and JASSM is downstream. The Wind-Corrected Munitions 
Dispenser is a brand-new contract, we just had a down-select 
recently and, in fact, under protest now. We haven't been able 
to kick that off, but these weapons, as the Congressman pointed 
out, are just coming on board. So we are moving rapidly in this 
area to be able to exploit both the global range and the 
ability to range the battlefield all-weather that the bomber 
force gives us. These are all-weather munitions, as opposed to 
laser-guided bombs, which require favorable weather conditions.
    Mr. Money. The defensive systems were not there with the 
ALE-50. And it was just tested in the last week; we have a 
better defensive system that will enable the operational folks 
to use that if needed, and that we are continuing to upgrade 
the defensive system. Just one more point. The chief of staff 
called both General Muellner and I in and said this needs to be 
fixed. This is high on our list, and we are fixing it.

                              B-2 AIRCRAFT

    (CHART 16) General Muellner. Moving on to the B-2, what you 
see is just one of the B-2 GAM/GATS tests. As was pointed out, 
the B-2 has near-precision capability on it with the GAM/GATS, 
which is the GPS-aided munition, and a special targeting scheme 
that allows it to improve over just the basic JDAM-like 
capability.
    Mr. Lewis. General, could I interrupt you for just a 
moment. Excuse me, Mr. Chairman. I have to chair a Committee 
down the hall, so I won't be able to be here. I would almost 
like to yield my time to Mr. Dicks. I was watching C-SPAN the 
other night, and there were those Members of Congress making a 
presentation regarding the fact that the Department of Defense, 
the greatest pool of discretionary money we have, continues to 
spend three times more on the procurement side than any 
potential enemy is spending. There is quite an elaborate 
display that lays the foundation for what is going to be 
arguments presented to us on the Floor regarding whatever we 
propose. I suggest all of us review that tape that must be 
available, just because it provides interesting information.
    Having said that, there are those of us who would suggest 
that there is a different window out in front of us presently. 
That window involves Russia being in very, very serious 
economic difficulty. While she continues to spend huge portions 
of her total available capital on defense, a very, very 
significant piece of that is going just to try to meet the 
payroll of their personnel that they have in such large numbers 
around the country.
    It is suggested that as we look to the new millennia that 
China is the big target in terms of our interest that we are 
concerned about concerning peace. But there is a window of 
opportunity perhaps.
    The question that swirls in my mind, is do we have an 
opportunity here for a shifting of gears that would cause us, 
to move forward with conventionality of B-1, but, more 
importantly, to move more quickly towards that aircraft with 
such a tremendous reach that is so important to us? 
Conventional capability of the B-2 is what I am suggesting.
    Are you internally thinking through the feasibility of a 
major shift in gears that might say, you know, if this window 
is really here, if our intelligence, and I don't know what they 
say, indeed, should we be pushing the B-2 button harder and in 
terms of results, more effectively than we have?
    General Muellner. Sir, we have indeed taken a hard look at 
that. I think you have heard the Chief and the Secretary talk 
about our long-range planning activities that we are just in 
the later stage of that. It has been going on for the last year 
and a half. As a part of that, we look at varied options for 
the future, and, as a result of that, backed that down into 
what our force structure needs.
    If you look at all those options for the future, though, 
regarding whether it is a China as a peer competitor or some of 
the other potential coalitions that could pose that sort of 
threat, you still end up with a major regional contingency 
focus and a lot of these lesser regional contingencies.
    There are still out in the future, as we see it, a lot of 
potential engagements similar to what we had to go through with 
Iraq here back in the early 1990s time frame. So as a result of 
that, we need a balanced force structure that gives us not only 
the enablers, which is certainly what the B-2 is, we need some 
of those enablers to be able to go in and rip apart the 
integrated air defense system. We also need a more affordable 
element of the force structure in larger numbers, which is 
going to allow us to deliver the mass of weapons that we need 
across the whole range of the battlefield.
    Mr. Lewis. You talk about 95 aircraft, all conventional 
over time, rethinking what we do with the last 35 of those, 
whether there is reprogramming potential. It is that sort of 
question that I don't know if you are prepared to answer in 
some other forum.
    General Muellner. Well, sir, we would be glad to sit down 
and discuss with you how we went through our rationale and what 
our force structure demands were driven by those various 
options in the future. QDR is obviously looking at that issue, 
and General Ralston probably highlighted that or will when he 
comes over. That is exactly the focus, to look at the range of 
options for the future and see where we have headroom to move 
in other areas.
    Mr. Money. Secretary Cohen is also with his new team at the 
Pentagon addressing the issues, and the strategy of what will 
come out of that--being quick, decisive and flexible--what will 
come out of that will be more apparent over time. We will match 
the force with that.
    Mr. Dicks. We just received a letter from the President 
again reassuring us that they will in the Deep Attack Weapons 
Mix Study and in the quadrennial review look at all these 
comparisons between various capabilities, B-2 versus other 
capabilities. I have been reassured again that that is going to 
be done before the quadrennial defense review is completed. So 
we are finally going to get the kind of analysis that I think 
all of us on this Committee at least feel we ought to do.
    General Muellner. One comment about the B-2, an interesting 
weapon, I will point this out again later, is that the GPS 
munition I talked about earlier, they found a very effective 
way to take that same guidance kit and put it on the BLU-113 
weapon. This is the 4,700 pound weapon developed for Desert 
Storm, a high-penetrator weapon. It is the one that grew out of 
the artillery tube. It turns out that that same GPS-guidance 
capability will give us the ability in the case of the B-2 to 
carry eight of these weapons internally and go after high-value 
hard targets.
    We are well along the way. In fact, we are using the 
additional funds you all helped us with this last year to bring 
that capability on board and that weapon is in development. In 
fact, we have done our first separation tests already.

                          JOINT STRIKE FIGHTER

    (CHART 17) If I could just briefly comment on the Joint 
Strike Fighter. From the Air Force's standpoint, this is the 
low end of the infamous hi-lo mix, like the F-16 is to us. It 
is the truck, if you will, of the fighter force in the out 
years. There is competition now head to head between Lockheed 
Martin, and Boeing. It is a tri-service program, of course, the 
U.S. services, with a variant of this airplane satisfying the 
Air Force, the U.S. Navy, and the U.S. Marine Corps' needs.
    This program is in the concept definition phase right now 
where each of these contractor teams will build flying 
demonstrators of their variants of the airplane. Those will fly 
just prior to the turn of the century. It is very, very 
important to this airplane from the U.S. Air Force's standpoint 
not only for it to be effective on the 2010 battlefield, but 
also for it to be affordable. So there is heavy emphasis on 
that, not only from the Air Force, but from all three of the 
services.
    I might add right now the United Kingdom, the Royal Navy is 
already part of this program. There are three other of our NATO 
allies that have indicated intent in bringing money to the 
table to join the program also. Canada is expected to join here 
within the next couple of weeks.

                         RAPID GLOBAL MOBILITY

    (CHART 18) We talk about global mobility. Obviously, the 
mainstay of our focus in global mobility is indeed the C-17 
program. I will give you a quick update on that program as it 
is, indeed, executing out very, very well.

                             C-17 AIRCRAFT

    (CHART 19) Indeed, with your help, we did indeed get the 
multiyear. That multiyear saved us in excess of $1 billion when 
you look at the airplane and the engine. The airplane has been 
performing very, very well. We have 30 aircraft operational out 
in force. It is just finishing and is waiting for final 
certification for its necessary airdrop certification.
    The program right now is hard at work with the new 
requirement that the Army brought forward to be able to operate 
and deliver Army armor in the semi-prepared fields and what 
have you. We expect to have certification to be able to do that 
by the mid-summertime frame.
    Mr. Money. I might point out here, Mr. Chairman, that the 
last 17 C-17s have all been delivered early and with great 
quality, excellent quality. So this program, albeit it has had 
a hell of a start, is now clicking on all cylinders, and we are 
meeting every milestone. I appreciate Congressman Murtha's 
comment about the multiyear, but clearly the program is on a 
great path.
    Relating this back to the F-22, we see the F-22 emulating 
this in a general sense, but we have addressed the F-22 issues 
much earlier in the program.

                         PRECISION WEAPONS PLAN

    (CHARTS 20, 21, and 22) General Muellner. To look at the 
weapons themselves, and we have already talked about a lot of 
these, so I can step through them quickly, we are still 
procuring and fielding our laser family of weapons. The GBU-28 
is that big 5,000 pound weapon I just described. There is a GPS 
version called the GAM-113. This will be a B-2 weapon only 
initially because it is primarily focused on the GAM/GATS 
capability and the ability to carry it internally is important 
for signature control. Obviously Mavericks persist and we have 
just upgraded those for improved reliability.
    JASSM is improved and will be our primary standoff weapon 
in the future. That, coupled with the JDAM and the wind-
corrected munitions dispenser, that allows us the direct attack 
that we have talked about, which is a very effective way to 
prosecute attack, especially with things like the Wind 
Corrected Munitions Dispenser, WCMD against advancing armor 
formations and things of that nature, where you have to deal 
with a large array of armor or other vehicles on the 
battlefield.
    Of course, with the Navy we are participating with the 
Joint Standoff Weapon. That will be an important weapon 
specifically for our bomber force. It gives it that 40-50 mile 
stand off with a wide array of munitions, both anti-armor and 
anti-personnel type weapons.
    Mr. Dicks. Could I ask one question on that point. Does 
JASSM give you enough range to deal with the SA-10 problem?
    General Muellner. Yes, it does. If you look at the 
signature of something like say, the B-2, it clearly does. With 
most of our other high-value weapons systems, you can get in 
within the 40 to 50 miles. You can't, for instance, though, 
against a SA-10 take a conventional airplane in an SA-10 netted 
environment. You still need some stealth to get into that 
range, because the SA-10C is a very effective air defense 
system.
    Mr. Dicks. So initially you need some standoff.
    General Muellner. Yes, sir, you need an enabler like the B-
2 and the F-22 to take down the defense to now where you can 
deal on it with a one-on-one basis.
    Mr. Money. Or go to a JASSM.
    Mr. Dicks. Which is better once we get it.
    General Muellner. Again, the GPS has been a great success 
story for the contractor-government team in that they have put 
this program together very, very rapidly. Indeed, it has 
demonstrated really good capability in the initial test to 
date.
    We will have some demonstration capability within the next 
several months of actually dropping a live weapon against a 
target that we have used the entire system to metric against.
    JASSM competition again is ongoing. The two contractors 
that are in that heated competition are McDonnell-Douglas, who 
builds the JDAM, by the way, and Lockheed Martin here, who 
builds at least one wind-corrected munitions dispenser 
contract. They are both focusing on this area.
    I might add, both of them are highly leveraged in 
commercial content, Global Positioning System/Inertial 
Navigation System (GPS/INS), and so are straight out of the 
commercial production line to keep the price down on these 
systems.
    They are in a competition right now. The initial fielding 
of this will be on the B-52 just because we are going to use 
that for a test aircraft, and then the rest of the bombers flow 
according to the plan you saw on the previous chart.
    I might add one thing on the cost of that. Right now the 
estimated cost of that is under $400,000 a round. At the time 
of cancellation, the Tri-Service Standoff Attack Missile, 
TSSAM, the program it replaced, the estimate was up around $1.3 
million a round. So that is what commercial focus, commercial 
content, and getting rid of all those mil specs and mil 
standards does for you.

                  JOINT DIRECT ATTACK MUNITION (JDAM)

    (CHART 23) JDAM, of course, is probably the best success 
story. It is indeed $14,000 a round, as we talked about.
    Mr. Dicks. That is cost growth. It is up from $13,000 to 
$14,000.
    General Muellner. It depends on what round you are talking 
about.
    Mr. Money. When we get to round 84,000, it will be at 
$13,000.
    General Muellner. It depends on which round you are talking 
about. The end result of this is they brought in a lot of 
commercial content and they have made this program work.
    The one problem they are having with it right now is they 
are about 60 days behind just because we have accelerated the 
program so rapidly. Some of the second tier vendors are having 
difficulty delivering the GPS Inertial Measurement Units, IMUs, 
as rapidly as they can. Other than that, the accuracy has 
exceeded all of our requirements on all of the tests, and we 
have a very large database here already.

                            PGM CAPABILITIES

    (CHART 24) Mr. Money. Congressman Dicks, here was your 
favorite chart from last year.
    Mr. Dicks. Good.
    General Muellner. Again, what this chart just shows you is 
from the Air Force perspective what our family of weapons is 
going to be in the outyears and they reflect that same thing. 
This is a function of standoff formation. This is as a function 
of either a submunition all the way up to precision accuracy.
    The next chart, please.
    Mr. Young. Gentlemen, we have a vote now. Mr. Hobson will 
chair the Committee until we get back. It won't take us long.
    Mr. Hobson. Why don't you continue on, General.

                        INFORMATION SUPERIORITY

    (CHART 25) General Muellner. We are going to get into the 
information superiority area. I would comment that what we show 
on here are primarily platforms, but I would like to preface 
this comment with the fact that we are also working those 
information superiority issues very, very hard that do not 
involve platforms, and that is protection of our databases from 
a standpoint of a defensive standpoint, and also building 
offensive capability to use information warfare. It is an 
effective warfighting tool.
    There is heavy emphasis on protection of our weapons system 
databases and systems primarily focused by Electronic Systems 
Center up at Hanscom, where they go through every weapons 
system and provide a vulnerability assessment back to the 
program office, and a detailed definition of what has to be 
done to indeed have robust Information Warfare, IW 
capabilities.
    We look at the platform, the primary contributors to 
situational awareness are, of course, the Airborne Warning and 
Control System, AWACS and Joint STARS aircraft from an air and 
ground surveillance standpoint.
    ------. What you see here and will see in the program I 
described are efforts to maintain and improve these 
capabilities on these weapons systems, but also a new focus of 
moving into the world of unmanned aerial vehicles to pick up 
some of these loads, especially in areas where we want to have 
persistent long-standing surveillance over a portion of the 
battlefield.
    You see the Predator which we currently have fielded, and I 
will describe it in a little more detail. We have the Global 
Hawk and the Dark Star, both of which will fly again this year.

                          JOINT STARS AIRCRAFT

    (CHART 26) First I will talk a little about the Joint 
STARS. We have two production aircraft on the ramp. They are 
being employed on a daily basis. As you know, they employed 
again in Joint Endeavor. They performed as well there, 
performed very well there, as they had in Desert Storm. So the 
warfighters love this weapons system.
    Right now we are in the midst of negotiations with our NATO 
allies. There is a program called NATO AGS, or alliance ground 
surveillance, over there, where they are evaluating the Joint 
STARS to make a decision this fall in the November time frame 
as to whether to start up a Joint STARS program in NATO similar 
to the AWACS program that they have in NATO.
    We are moving to a fleet of 19 aircraft. In this last year, 
we have put major investment in the program to get commercial 
content on board to ease the transition of technologies, 
commercial work stations, commercial computers, and, as a 
result of that, that helps us deal with the out year issues of 
obsolescence of key parts and so on.
    Mr. Money. General Muellner can speak with firsthand 
knowledge, flying 50 sorties of JSTARS in the desert.

                              PREDATOR UAV

    (CHART 27) General Muellner. Sir, on the Predator, we are 
operating that today in Hungary. It is providing good support 
of the warfighter. We have had challenges doing that in the bad 
weather months, because the system was not capable of flying 
under icing conditions and also because of the low ceiling.
    We are working on the icing problem. We have an aircraft 
that is up, either is or today or will be flying in the next 
week or so, up in Duluth, Minnesota, doing the icing test in 
order to certify the deicing mod and new engine on the airplane 
that will give it the ability to operate.
    The training and sustainment operations are set up at 
Indian Springs outside of Las Vegas, and it is currently 
supporting these deployments.
    Mr. Money. I might point out here Secretary Perry moved the 
operation and maintenance of the Predator to the Air Force 
starting 1 July, and subsequent to that the program has an Air 
Force officer in charge reporting through a Navy Program 
Executive Office, PEO, but directly to me. So all the high 
altitude, long-enduring Unmanned Aerial Vehicles, UAVs are 
within one spot within the Air Force.
    Mr. Hobson. I might say I was there, and that was their 
real problem with it. They liked it when they could use it, but 
they couldn't use it when they should be using it.
    General Muellner. Unfortunately, that program, of course, 
is an Advance Concept Technology Development, ACTD, part of the 
initial ACTD all-weather support operations, and were not part 
of what demonstrated. As we transition that from an ACTD to a 
long-standing combat capability, we had to build in that 
capability and also build in the procedures to be able to 
operate it under lower weather conditions and also to give it 
the capability to climb through weather to get out to its 
target area. That was the big problem.
    Mr. Money. We have gone to school on that in that the other 
two high altitude, long enduring, Dark Star and Global Hawk, 
are still in ACTD. But we stood up a System Program Office, SPO 
at Wright Patterson, 2 years in advance of that program 
transferring to the Air Force so we can alleviate transition 
problems from an ACTD into an operation.

                          AGILE COMBAT SUPPORT

    (CHART 28) General Muellner. To talk about the last of the 
core competence, I would like to talk a minute about what we 
are doing in the combat support area because this is a 
different way of doing business from our standpoint.
    We are focused on really getting down our deployment tail 
for our weapons systems. By that I mean that when we deploy an 
F-15 squadron somewhere, it takes upwards of 17 C-141s to get 
those 24 airplanes, necessary people, and equipment to where 
they can operate.
    Mr. Dicks. How long does that take, General?
    General Muellner. A normal squadron will move out--our 
squadrons are on a one, two, three basis. So the first wing, as 
you know, was deployed to Dhahran. Within 24 hours they were on 
the ground. So we have mobility commitments that would move 
those folks out over a 3-day period.
    Mr. Dicks. If you had to move 1,000 airplanes from CONUS 
out to the Gulf, just roughly how long would it take? A month? 
A month and a half?
    General Muellner. The TPFD, which is the time-phased force 
deployment staff, which the Joint Staff puts together, has for 
each theater an integrated plan to do that. Under a different 
forum we could run through that with you. But it is a long 
time. Not for the air side. We tend to be fairly ready to go 
immediately.
    Mr. Dicks. You have to get all the equipment out there, 
don't you, in order to fight?
    General Muellner. Absolutely. But remember, when I said the 
17 C-141s, that took that 24 aircraft squadron and put them on 
the ramp at Dhahran ready to fight. Now, they had missiles when 
they got there and there were other missiles brought in. There 
were the people and support.
    Mr. Dicks. That is 24 airplanes.
    General Muellner. Twenty-four airplanes for the 17 C-141s.
    In the case of the F-22 and the JSF, we are talking about 
bringing that from 17 141s to 8 141s. We have cut the airlift 
requirement in half, and it is going to go down even more in 
the case of the JSF.
    Mr. Young. Let me ask, General, basically on management of 
our time here, how many more charts do you have and how much 
more time do you have in that presentation?
    General Muellner. We have six more, and they are pretty 
quick.
    Mr. Young. Okay. Because I want to give Mr. Nethercutt 
time. He has not had any opportunities at all today. Why don't 
we go ahead and proceed with the charts, and then let Mr. 
Nethercutt have the first round of questioning.
    General Muellner. The other key elements of this obviously 
are modernizing our loaders to support the airlift operation, 
and of course the C-17 is a key part of that. The other key 
part of it is improving our transportation and information 
systems so we can track spare parts. This is the Federal 
Express, call up, know exactly where your part is at approach.

                         SCIENCE AND TECHNOLOGY

    (CHART 29) Well, sir, underpinning this whole thing is our 
science and technology, S&T program. That total program in the 
1998 budget is about $1.2 billion. As you can see, it is pretty 
well balanced against the 6.1, 6.2, and 6.3 areas, with the 
heavy focus in the 6.2 area, but still a significant amount out 
in the 6.3.
    These are the transitional technologies starting to take 
place, mostly contracted out, which has been the focus of our 
Air Force operations. We are continuing to do this while we are 
continuing to draw down our work force to the tune of about 30 
percent.
    These are the key focus areas in the President's 1998 
budget. You can see the shifting focus of where we think we 
need to invest in the future and also dealing with some things 
with aging aircraft. We clearly have and will have aging 
aircraft which is also a big problem for the conventional 
airline industry in the civil end of it.
    On the S&T, these are major focus areas in the future that 
you see.

                           ACQUISITION REFORM

    (CHART 30) Acquisition reform continues to do well. I have 
given you a couple of examples already. Right now just from the 
Air Force perspective, we have freed up $17 billion that would 
have had to be invested in other things, that is either savings 
or cost avoidance, as a result of things like JDAM, like the 
multiyear and C-17 and so on. So that is money we can invest to 
keep from having a modernization bow wave.
    A key part of that also is we are doing that and a key part 
of that is we are also drawing down our work force. This is the 
efficiency part that Mr. Money talked about of efficiently 
producing effective weapons systems.

                   WIND CORRECTED MUNITIONS DISPENSER

    (CHART 31) Here is a good example. This is a contract that 
was just recently won. I might add it is in protest right now, 
so I can't go into a lot of detail about it. It was won by 
Lockheed Martin. It is for the wind-corrected munitions 
dispenser. This is the tail kit that goes on the munition. That 
was expected to cost upwards of $25,000 a round. The actual bid 
price that they came in with is just under $9,000. So, again, 
streamlining, commercial content, which there is a lot of in 
here, really pays off. Getting rid of those mil specs and 
standards and letting the contractor go off and figure how to 
do it, not us telling him how to do it, $850 million saved 
across the expanse of that program.
    Mr. Money. Actually I think the money is greater than that 
in that we have a 20-year warranty on that so the depot and 
those issues are not going to be there. We go back to the 
manufacturer with that warranty.

                                SUMMARY

    General Muellner. Bumper to bumper. If it breaks, they take 
it back and give us a new one.
    (CHART 32) In summary, the bottom line is, one, we are 
keeping a high focus on modernization. We believe it is our 
future and we have to do that for our warfighters. We are 
trying to do that by freeing up investment through acquisition 
streamlining and also at the same time our warfighters 
understand it is important to keep those weapons systems 
affordable, so they are learning how to understand the cost of 
their requirements and they are factoring that into their 
decisions. Thus far, we have been successful in using the 
combination of those things to keep our key programs on track.
    Sir, that completes all the charts. I would be glad to take 
any other questions, sir, that you might have.
    [The joint statement and Charts of Mr. Money and Lt. 
General Muellner follow:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Young. Okay. Thank you very much for a very interesting 
presentation this morning.
    I would like to yield now to Mr. Nethercutt, who has not 
had an opportunity to ask any questions.

                         AIRBORNE LASER PROGRAM

    Mr. Nethercutt. Thank you, Mr. Chairman, and members of the 
Committee. Welcome, General, and Secretary Money. I was at 
another hearing, I am sorry, that is the story of our lives 
around here. I apologize for missing your presentation. I was 
glad to hear a little of it and I look forward to reading the 
materials.
    To the extent you have talked about the airborne laser 
already, I apologize. Let me just follow with a question, if 
you could, please answer, either or both.
    I think this is a good program. I am supportive of the 
development of ballistic missile defense generally, and I think 
this is a good component of the Pentagon's missile defense 
architecture.
    I sense, at least my understanding is, that the airborne 
laser is funded and managed by the Air Force. The other missile 
programs are managed by the Ballistic Missile Defense 
Organization, BMDO. What is the reason for that and why was the 
program transferred?
    General Muellner. Well, sir, the reason it was initially 
transferred out of BMDO is on the advice and recommendation of 
the Congress. In 1992, the Congress directed that those 
programs that were more than 10 years out from a transition 
standpoint should be transitioned back to the services. That 
was done, and the Air Force picked up that responsibility, and 
the BMDO transferred an amount of money when that occurred.
    Post-Desert Storm, as we looked at the need to deal with 
the ballistic missiles, the one area that was not being covered 
was the boost phase.
    There was at that time one approach that surfaced, which 
was to use a kinetic kill, an Advanced Medium Range Air-to-Air 
Missile, AMRAAM, if you will. What we found when we looked at 
doing that, we were going to have to have so many orbiting 
interceptors so close to where the missile was launched that 
you needed very good intelligence. The reason was because of 
the time of flight of the missile. You had to get your airplane 
pointed, detect the launch, launch this AMRAAM, and then it had 
to close very rapidly, because you had an accelerating missile.
    As we looked at that, it became obvious that wasn't a 
viable solution. We couldn't get enough velocity out of the 
missiles.
    What had matured in previous demonstrations and was coming 
along rapidly was a speed-of-light weapon. So, indeed, we 
solved the velocity issue and at the same time came up with a 
solution that allowed us to stand off and not have to put all 
those airplanes orbiting in enemy territory.
    As a result of those key technologies that make it up, the 
laser technology, the adaptive optics, the atmospheric 
compensation, we put together demonstration milestones which 
they successfully completed that allowed us to go through this 
phase of the program.
    Mr. Money. I was just out on the West Coast last Friday. We 
had a program review and that program is off to a great start. 
We are past the physics. The physics in this are proven. It is 
a packaging job, an engineering job of getting it on an 
airplane. With time, we will get there. Ultimately, then we 
will have a weapon that, as the General said, reacts at the 
speed of light and roughly $1,000 a round. It gets the missile 
while it is up and it will fall on whoever launched it. For all 
those reasons, I think we have a winner here, and it is just a 
matter of getting through the program and to the engineer.

                          JOINT STRIKE FIGHTER

    Mr. Nethercutt. I think you are right, it is a winner. I 
was briefed this week and informed it has had great success, 
and there are exciting developments to come. So I encourage you 
to keep going.
    General, I noted in your testimony when I was here a little 
while ago that the Joint Strike Fighter appeared to be 
affordable, I wrote down your words. I think that is a great 
testament to this idea that we need to initiate serious 
procurement reforms, certainly in the Air Force and the other 
services, and this Joint Strike Fighter is really a good 
example of that.
    I am wondering if after the reform legislation in 1994 and 
1995, you have any other recommendations about what Congress 
can do to streamline the procurement process and make it more 
efficient? Are there any regulations that are holding you back 
that are unnecessary that we should pay attention to? If you 
can answer either now or for the record, I would be grateful.
    General Muellner. I think we will take that for the record 
for you.
    I would just offer to you, I had the opportunity to start 
the Joint Strike Fighter program and work that hard. I can tell 
you that the vast majority of the encumbrances we had before 
have already been removed. Our problems really right now are 
the institutionalizing of that and the behavior of the service 
acquisition folks, and even with the contractors. The 
contractors really need to change the way they accommodate and 
do business. We are seeing that change.
    The comment I made earlier from Alan Mulally from Boeing 
that says what we are doing, everything we have been doing in 
the commercial field we are now bringing into the defense 
world. That is an important issue which I think we are now 
incorporating. We will be happy to provide you additional 
information.
    [The information follows:]

    The legislative relief Congress provided in 1994 and 1995 
has improved our flexibility to streamline the Air Force 
procurement process. We believe that the previously provided 
legislative relief is adequate for now. Our challenge is to 
change the acquisition culture, and to institutionalize the 
increased flexibility.
    However, there are still areas for which legislative change 
is necessary to improve the efficiency of the process. For 
example; The Davis-Bacon Act, which was enacted in 1931, is 
applicable to construction type (construction, alteration/
repair) contracts in excess of $2,000. What this means is that 
the Contracting Officer is required to do labor checks to 
ensure the applicable minimum wages/benefits are being paid by 
the contractor. This imposes a significant administrative 
burden on Contracting personnel. Congress, through FASA, 
provides for acquisitions to be made via commercial procedures; 
yet for construction type contracts, the Davis-Bacon Act still 
applies. Therefore, true efficiency has not been achieved. 
There are other laws, such as the Service Contract Act, Walsh-
Healy Act, and Copeland Act, which, like the Davis-Bacon Act, 
are still applicable to commercial item contracts. Therefore, 
we would recommend that commercial item contracts be exempt 
from these Acts.
    As part of our ongoing Lightning Bolt initiatives, we 
recently had a team look at reducing the cycle time between 
requirements identification and contract award. The team's 
final report was just published in February 1997. The final 
report listed 63 proposed best practices and suggested 14 
possible areas for legislative relief. We are currently 
reviewing these suggestions to determine if they should be 
included in any future requests for legislative relief.

    Mr. Money. The only other thing I would just add to that, 
Congressman, is funding stability is paramount. We are in this 
phase now over the next 4 years of two contractors building two 
models, one model each that will be tested in two 
configurations, and then we will down select. The more stable 
that program is now and in the early parts of production, will 
pay off great benefits.
    On F-22, when we disrupted that program, for every dollar 
we took out, we had to put three back in. So funding stability 
is very, very important.
    Mr. Nethercutt. We are trying up here.
    Mr. Money. You bet. We appreciate that.

                        UNMANNED AERIAL VEHICLE

    Mr. Nethercutt. I just have one final question, if I may. I 
had the chance to go to California last August and look at 
Global Hawk, as it was being constructed. I missed your formal 
presentation, but I think unmanned aerial vehicles have great 
potential. To the extent you can in this hearing, give us some 
idea of what you see as the future of UAVs, either by design or 
capability, and what your view is from the Air Force 
standpoint?
    General Muellner. We certainly endorse your views, not only 
on Global Hawk but that whole family. There are a lot of these 
persistent surveillance missions, Inverse Synthetic Aperture 
Radar (ISAR) type missions, where a persistent UAV is an ideal 
solution for it. Clearly as Global Hawk matures, as Dark Star 
matures, which gives us better survivability deep and so on, 
they can pick up a big segment of what we have to do with 
manned flights, or cover an area where we are unable to do 
anything right now.
    We are going beyond that in our focus. We had a summer 
study last year from the Air Force Scientific Advisory Board 
that has recommended other areas to focus UAVs. One of the ones 
that seems to jump out at you is the area to deal with a 
persistent suppression of enemy air defenses, to be able to put 
a platform up over the enemy air defenses so that if you come 
up on the net, we are going to kill you right now. And right 
now we are off working a program with Defense Advanced Research 
Project Agency, DARPA, put together a demonstration program, to 
stem off aggressively in that program.
    Another area is the area of com relays. Right now we are 
moving to where we are going to depend totally on satellites 
for an awful lot of our--even in theater bandwidth 
requirements. It is not clear why you can't take a Milstar-like 
package and rather than putting it on a bus up in space, put it 
on a Global Hawk and put it up at high altitude over the 
battlefield to give the commanders on the battlefield that same 
sort of connectivity.
    We are moving off in that direction with a joint 
demonstration, again with DARPA and the Army to go off and 
demonstrate that potential. So we see a lot of benefit in the 
UAV field opening up.
    Mr. Money. I will add to that and put the chart up to 
remind us we are very much enthused about that. That manifests 
itself in the Air Force a couple ways. I mentioned earlier we 
stood up a SPO in Wright Patterson to handle Global Hawk and 
Dark Star 2 years before they transferred to the Air Force.
    The Air Force is also initiating a battle lab down in 
Eglin, and the main reason for that is how to incorporate 
CONOPS, concept of operations, deconfliction, those types of 
things, so we can integrate UAVs into the force.
    In the long term, we too see, especially in the long 
enduring mode, we will far exceed what a man can do, and 
probably overtime, but it is way too early, this Global Hawk 
might be an U-2 replacement. But I just want to caution people, 
we need to prove this, have that technology mature so maybe 10 
years from now we can be addressing that issue.
    [Chart follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    
    Mr. Nethercutt. You mentioned the issue of satellite 
vulnerability--you may have seen the report last week about the 
revelations regarding satellite vulnerability. So to the extent 
that Global Hawk is consistent with trying to reduce these 
vulnerabilities, I think it is well worth doing.
    General Muellner. It opens up the envelope to give us much 
more robust and probably more affordable solutions.
    Mr. Money. I don't see one replacing the other in toto. It 
is a combination, then, of getting the maximum optimizing the 
mix, if you will.
    Mr. Nethercutt. I understand. Thank you for your work and 
thank you for your testimony.
    Mr. Young. Has Global Hawk flown yet?
    General Muellner. No, sir.
    Mr. Young. You had the roll-out of the vehicle?
    General Muellner. The roll-out was several weeks ago out in 
San Diego. Both it and Dark Star after its accident will fly 
this summer and fall time frame.
    Mr. Money. August.
    Mr. Young. Where do you plan to fly it?
    General Muellner. Global Hawk I think is flown out of--will 
be flown out of Edwards. Dark Star is also flown out of 
Edwards. It is being jointly managed by NASA, Dryden and the 
contractors; and the Global Hawk is Air Force Flight Test 
Center and the contractor teams.

                           ACQUISITION REFORM

    Mr. Young. As we proceeded throughout your presentation 
today, for those of us that have been following these issues 
for a long time, we detect some improvement in the way that we 
are approaching some of these acquisitions. It looks like you 
are getting a little more for the money because of the changes 
in the way you are letting the contracts.
    A person in the Pentagon who is quite important when it 
comes to the area of money and purchasing, et cetera, and I 
will not identify the person, said that there are a lot of 
other improvements that could be made in acquisition. One 
improvement deals with very small contracts that could actually 
be purchased with a credit card rather than going through the 
whole contracting procedure, which in some cases he said 
actually costs more than the product that you were purchasing.
    What can we do about that? What can we do to be able to do 
a smart approach to this type of acquisition reform that would 
let us eliminate the bureaucracy that really isn't necessary 
and that is costing more than the product?
    General Muellner. Sir, I will give you an example as an 
answer. What it shows is the problem is culture; it is not 
regulation right now.
    A couple of months back I gave an award to an outstanding 
young scientist in the Air Force, a Ph.D. out at Edwards who 
just invented a new high-temperature plastic. In talking to him 
and his wife at lunch, I asked him what his greatest challenge 
was. I thought he was going to give me some exotic technical 
issue. He said, I can't get chemicals.
    This plastic compound he invented was with off-the-shelf 
chemicals. You can buy it in almost any store. I said, why 
don't you use your credit card to go buy them, your 
International Merchants Purchase Authority Card, (IMPAC) Card? 
He said, well, they won't let me use it. This is a Ph.D. 
inventing this new high-temperature plastic for rocket motors.
    So when we ran the audit trail, somebody up the chain of 
command made the decision, well, we can't entrust this 
individual out there in the field with these credit cards. So 
now that individual has a credit card. He literally drives into 
Lancaster and buys the chemicals he needs or sends somebody in 
to get them when he needs them.
    The ability to do that is out there right now. It is 
difficult in some cases to get over many, many years of writing 
out purchase orders, getting them validated and stamped by four 
or five levels, which in reality added little value to the 
whole process and certainly added cost. So I think we have made 
a lot of progress.
    John Hamre has been pushing that really hard down at the 
services. The services I think are responding very positively 
to that approach.
    Mr. Money. I might add, the IMPAC Card has made an impact. 
I don't know off the top of my head, but I think we are in 
the--30,000, 40,000 people are using them. I was over in Europe 
this last June. It hadn't got there. It is there now. There are 
some problems with paying the bills and all that kind of stuff, 
but it is being fought through. If you would like for the 
record I can get you back the magnitude of purchases that are 
now ongoing, and we are working through the culture and the new 
way of doing business.
    [The information follows:]

    Approximately 78% of micropurchases (actions under $2,500) 
are now being done using IMPAC in the Air Force. The statistics 
for fiscal year 1997 as of the end of February, show 352,699 
actions valued at about $119 million have been procured by the 
Air Force. Currently, the Air Force has 23,724 cardholders.

    Mr. Money. I might add, Mr. Chairman, that I have been here 
confirmed in this job a little over a year now, and what I have 
seen just in the last year has been remarkable. But we are not 
there yet. It is clearly a cultural shift. I am still asked the 
questions about, well, do you want me to do my job or do you 
want me to do this acquisition reform stuff. When we get that 
being that is my job, we will be there. We have a ways to go. 
Every day I see a positive sign.
    This wind-corrected munition, there are examples coming in 
every day. I don't hear that this is an all uphill--we have 
some negatives to work through as well. But I think back to 
what Goldwater-Nichols, the thought and the insight Congress 
had back there, put in an acquisition executive with industrial 
experience in place, but then augmenting that with a general 
here like General Muellner that has 8 years of test, Purple 
Heart, been around, fought wars and so forth, bringing that 
together. Then with a person like Darleen Druyun, a 
professional, been in the business a long time. That 
combination of events is clicking on all cylinders.
    I appreciate you saying that, and we keep trying every day 
to improve the system. I am really serious about the warfighter 
sets the requirements. That ensures the effectiveness of the 
weapons system. My job, our job, then is to ensure the 
efficiency of the process, the getting there. This whole thing 
about better, faster, cheaper, and smoother, we live every day. 
So I appreciate that comment.

      INTERNATIONAL MERCHANTS PURCHASE AUTHORIZATION CARD (IMPAC)

    Mr. Young. Mr. Money, tell us about the IMPAC Card. Is that 
a credit card through a commercial bank, much like a Visa or 
MasterCard, or is it like an American Express card, or is it a 
government institution of one type or another?
    Mr. Money. It is in fact a credit card. I am going to fall 
off real quick.
    General Muellner. It is a credit card. I think it is a 
commercial bank, if my recollection is correct. I think it is 
one in Denver. We will find out the specifics for you.
    [The information follows:]

    Since January 1989, the General Services Administration 
(GSA) has been contracting for purchase cards for Federal 
agencies. The government-wide purchase card is called the 
International Merchants Purchase Authorization Card (IMPAC), 
which is a VISA charge card program managed by Rocky Mountain 
Bank Card System, Inc. (RMBCS) through contract with GSA.

    General Muellner. The intent was to get out of the business 
of managing those accounts, get the government out of that 
business. So it is indeed a commercial application that is used 
and the entire tracking and auditing system that is used with 
it is commercial in nature also, i.e., not done by the 
government.
    Mr. Young. Give us a summary, if you would for the record, 
we won't take the time to do it now, as to how many of these 
credit cards have been issued, what type of person in the 
process is authorized to use it, what kind of audit trail there 
is to make sure that there are no abuses. We would like to know 
more about that, and any suggestions that you might have as to 
whether it should be expanded or where it might be used to save 
additional money.
    The Speaker has challenged me as Chairman of this 
subcommittee to find a way to turn the Pentagon into a 
triangle. That indicates to me you take two legs out of five. 
That is 40 percent. I don't know if we can do 40 percent. But 
we do have that challenge, to find ways to get more for the 
dollar. A lot of the cost in the Pentagon is bureaucratic.
    We were told at a hearing just recently that there are more 
shoppers in the Pentagon than there are soldiers in the entire 
United States Marine Corps. I don't know if that is true or 
not, but the source that came up with that information I think 
is a very reliable source.
    One of our witnesses said maybe we can make it a square, 
maybe not a triangle. But anyway, the idea is to try to squeeze 
out the additional bureaucracy that we really don't need. I 
think this IMPAC Card is an example of the fact that it can be 
done if we look hard enough and work hard enough to do it.
    Mr. Money. I apologize again for not having those numbers 
off the top of my head. We will get those to you.
    [The information follows:]

    Currently, the Air Force has authorized 23,724 IMPAC 
cardholders to procure goods and services under $2,500 directly 
from vendors. The cardholders can be anyone in a given 
functional area appointed by an Approving Official which is 
usually a supervisor who is in the same chain of command. When 
appointed, the cardholder is trained in IMPAC procedures by the 
Installation IMPAC Program Coordinator who is a contracting 
expert. Purchase activities are monitored and verified that the 
transactions are valid. Various oversight mechanisms to include 
Installation Program Coordinators, Inspector Generals, and 
Auditors are active at all levels in the Air Force to ensure 
integrity in the system is maintained. Management reports are 
issued by RMBCS to assist program management officials in 
tracking and monitoring card usage. Various internal reviews 
and audits have indicated there are no significant deficiencies 
or abuses of the Air Force's management of the IMPAC Card 
Program. We do support expanded use of the credit card. 
Currently, we focus on the legislatively established micro-
purchase limit of $2,500.

    Mr. Money. In fact, let me just chain on to what you said. 
We have, in fact, brought down the acquisition work force 28 
percent. We are getting closer to the 30, the commitment 
mandate of getting to 35. We are getting there. We have limited 
the size of SPOs to roughly 50 people. There are a few still 
above that, but they are coming down. So all that, we are 
marching to, and as you eliminate people and so forth and 
fewer, there is less mischief in my mind that can be created, 
less low or no-value added work going on. So we are approaching 
that. We still have a ways to go. I appreciate that comment.

                            INDUSTRY MERGERS

    Mr. Young. Let me ask another question along the same line 
of streamlining, modernizing and acquisition. This might appear 
to be a negative, but we are seeing an awful lot of mergers in 
industry. What is that going to do in the long run to the 
competitive nature of the business, the availability, the 
maintaining of the industrial force? What are these mergers 
doing now and what do you see them doing in the future?
    Mr. Money. Up until now I frankly think the mergers have 
been good. We are still overcapacity in a lot of areas and by 
bringing down the industry that sorts that out for itself, 
albeit up until now we still have two competitors in every 
general field. We are rapidly approaching that with the 
tentative Raytheon-Hughes-TI. That could bring down the U.S. to 
one air-to-air missile maker. Frankly, that is not going to 
disturb us for roughly 10-plus years.
    AMRAAM, we have already worked those against Hughes and 
Raytheon together and gotten from $1.87 million per copy down 
to roughly $292,000 per AMRAAM. So, so far it hasn't been an 
issue.
    We are still overcapacity in a lot of areas, so in this 
sense the marketplace is sorting itself out and predetermining 
or determining where it ought to be. So a long-winded answer 
that it hasn't been a problem yet, although when we get down to 
only one U.S. manufacturer in a particular area, then to have a 
competition obviously, you open it up to overseas. Then we 
haven't had to address that issue yet.
    General Muellner. One additional comment, if I could, in 
that area.
    When we look at industrial base, we tend to focus on 
manufacturing capability. I would offer to you that the 
technological edge that we have on the battlefield is not only 
based upon manufacturing but the ability to innovate original 
designs, develop them and field them. We had reached a stage, 
at least in the basic aircraft industry, we had so many 
competitors, and there were so few new starts that that initial 
design capability was atrophying out.
    So in a lot of respects, necking down of the industry to 
two main competitors now in this area or three main competitors 
is productive for maintaining those design capabilities, 
because we probably have starts, enough demonstrators to keep 
those design teams intact, keep them productively employed 
doing what they do best.
    Mr. Young. But you have got to keep enough competition in 
the industrial base to have an incentive to think ahead and 
create these new designs. If you don't have the competition, 
then, why hire a big expensive design team or team of creators 
to go out there when there is nobody competing with you anyway?
    I think I tend to agree that the mergers have been good to 
this point, but I am concerned about what the future might be 
in eliminating the competition that has been really very good 
for the industry and very good for the national defense effort.
    Mr. Money. Absolutely. Secretary Perry mentioned several 
years ago that we are overcapacity and in fact encouraged 
industry to downsize. That is happening.
    As you just pointed out and we talked about, when it gets 
down to only one in the U.S., then we have a different issue 
and we have to work through that. We are about to have to 
address that issue.
    Mr. Young. Mr. Dicks, do you have further questions?

                          Remarks of Mr. Dicks

    Mr. Dicks. The only point I would say on this question is 
that when you do merge these companies, you do get rid of a 
substantial amount of overhead, which does help make this work. 
If you have Boeing and McDonnell Douglas and Lockheed Martin, 
you have two very strong competitors in most areas, as we have 
seen by the charts you put up.
    One of the reasons that I have been so strongly committed 
to the B-2 is because of the charts you put up earlier today. 
Those charts demonstrate the capability you get once all these 
smart weapons are on this long-range aircraft.
    The thing that really drives this home in my mind is this 
question, and General Peay of CENTCOM, alluded to this at 
breakfast this morning, that one of the crucial detriments in 
getting forces equipment or TACAIR into the theater of 
operations in the event of hostilities was the availability of 
overflight access through the airspace of several countries, or 
the loss of overflight permission or the loss of use of even 
one en route base--all of which could drastically affect his 
ability to introduce TACAIR and troops to the Gulf region.
    So, again, we are always premising our strategy here on 
being able to immediately move men and weapons and airlift into 
an area. What if the country says, we don't want you to come 
in, like the Saudis did recently when we had the problem in 
Iraq and we had to negotiate with them for some time frame?
    That is why some of us believe that a long-range stealthy 
bomber with all these smart weapons gives you a revolutionary 
capability. What we worry about is that the studies that have 
been done by RAND and Jasper Welch and others that indicate 
that 21 B-2's simply don't allow you the sortie rate necessary 
to really take maximum use of the potential.
    What I worry about from your perspective is this is a big 
industrial base issue now. There are a lot of people who are 
not nearly as sanguine about our ability to go back and start a 
new stealthy bomber at some point in the future. Now, if you 
keep this industrial base open, this line we have keeps the 
costs down, and you can continue to get a number of these B-2s 
over the next several years and improve your capability, 
especially in the early going.
    This is where I think people are not really looking at the 
potential of this bomber. If you can leave Whiteman Air Force 
Base and with one aerial refueling, with wind-corrected 
munition dispenser and sensor fuzed weapon, and attack Saddam, 
moving from Iraq into Kuwait, that is a revolutionary 
capability. You can't do that with TACAIR, in my judgment. You 
will not have enough normally in theater. You have some in 
theater. If you have to move 1,000 airplanes, that, as you 
suggested, that is going to take a considerable period of time. 
In the early going, the first 14 days, especially when you have 
zero warning, as we did in World War II, in Korea, and in the 
Gulf War, we had zero actionable warning time, having a long-
range bomber with these capabilities seems to me to be exactly 
what you would want to have.
    And what I worry about is that we seem to have missed this. 
General Fogleman and I talked about this yesterday. Even 
without lockout, even if you don't worry about chemical or 
biological weapons contaminating these fields, you have still 
got the political problem of are you going to have these fields 
accessible or is the conflict going to be in an area where you 
even have fields available to you.
    So there is this potential of time delay. It seems to me 
that is where there is a period here in the first several weeks 
of any of these engagements where long-range stealthy bombers 
that can operate autonomously would have enormous importance. 
That is why we keep bringing this issue up. It isn't that we 
don't like the Air Force. We love the Air Force. But this is 
just one area where we think you guys need to take another look 
at this.

                ENHANCED GROUND PROXIMITY WARNING SYSTEM

    Since my time is limited, I want to get one question on 
another subject, and that is the safety of our people. I am 
told if Secretary Brown had the enhanced ground proximity 
warning system on this plane, the plane would not have flown 
into a mountain.
    Now, the Secretary of Defense has ordered the Air Force to 
go out and procure this equipment. We wouldn't have the lost C-
130, and if American Airlines had the enhanced ground proximity 
warning system on it, it wouldn't have flown into the mountain 
down in South America.
    To me, the fact that American Airlines on all 7,000 of its 
airplanes is going to put the system on, says something.
    I was under the impression you were going to put $264 
million in this budget to carry out the recommendations under 
phase one, including flight data recorders, cockpit recorders, 
ground point warning system, emergency locator, transmitter on 
the 89th Air Wing, for the distinguished visitor and 
operational support aircraft.
    Has that happened? Is that in this budget? Nobody can seem 
to find it.
    General Muellner. Yes, sir. Navigation safety upgrades, 
which are the ones you are talking about, are indeed in this 
budget. We added that in last year. As you recall, we came in 
for some reprogramming authority to get that started.
    Mr. Dicks. Could you help my staff by locating that for us?
    General Muellner. We have got the numbers now. I don't know 
what the exact number is.
    [The information follows:]

    Yes, funds for Phase One of the Navigation & Safety 
Equipment Baseline were included in the budget request. The Air 
Force requested approximately $10 million to accelerate GPS 
integrations and $31 million for safety equipment. This funding 
was an increase from the FY97 President's Budget. No single 
line item exists for these funds. The funds are requested in 
the individual weapon systems and are included in the aircraft 
procurement modification requests for those weapon systems. The 
$264 million figure was composed of $59 million in FY95/FY96 
reprogrammings, $10 million FY97 Chief of Staff Plus-Up 
request, and $65 million added to the FY98 President's Budget 
(FY98-03). Congress approved the reprogramming request and 
appropriated $82 million of the FY97 Plus-Up request. The $57.3 
million FY97 shortfall was accommodated through force structure 
changes, revised acquisition strategies/cost estimates and 
safety program content revisions.

    Mr. Dicks. I have a few questions here, just to give us a 
sense of how you are going to deal with this problem which I 
will place in the record. Because to me, if we can just save 
one airplane, one crew, I am told these systems are $50,000 
apiece, and it seems to me we need to get them on the airplane. 
It is obvious that these systems work, and I am kind of 
curious. Is there some resistance or is it budgetary problems?
    General Muellner. No, sir. It clearly has been a budgetary 
issue in the past. The focus has been putting those systems on 
the airplanes that have the highest ground contact issue, and, 
i.e., those have tended to be in some cases fighters. Some of 
the fighters have had those. The Fourth Generation Ground 
Collision Avoidance System (GCAS), which is what American 
Airlines is putting on--as you know, the American Airlines did 
have GCAS on it. It wasn't predictive, though. It was a 
reactive GCAS and gave them a pull-up too late to respond to 
it. The Fourth Generation GCAS is indeed what we are putting on 
all of our airplanes. Indeed, we have an investment account 
that goes out to the FYDP to put those on all the airplanes.
    Mr. Dicks. Thank you. The gentleman has been very 
reasonable.
    Mr. Young. Mr. Hobson.

                           LAB CONSOLIDATION

    Mr. Hobson. I have a couple questions to ask you, one about 
lab consolidation. You are developing this long-range Vision 21 
plan to reorganize labs and test evaluation centers in the next 
century. You have got an option consolidating the four Air 
Force labs and the Office of Scientific Research in this single 
lab. It is not due until 1998. Are there going to be any lab 
changes between now and then?
    Mr. Money. Congressman Hobson, the whole idea here of going 
to a single laboratory does not have in it relocation 
geographically. The idea is much like Congressman Dicks 
mentioned a moment ago, when you are merging companies, you 
scrape off some of the overhead that is duplicative. That is 
what we are trying to do there. We see a fair amount of 
savings. Probably you are talking about a few tens of people 
moving, primarily in the planning function, to centralize that 
in Dayton, bringing that out of each of the other labs. But 
overall, we believe that will make a much more efficient 
operation.
    We are not disturbing the scientists and the engineers, if 
you will, but just the duplicative overhead functions, mostly 
centered around planning.
    We are not moving the labs. They are staying where they are 
geographically. As I said, there may be a few tens of people 
being relocated. We think it is the right thing to do. Frankly, 
it helps in the drawdown in the Dorn amendment and so forth. We 
are working on it. It is about to be started to be implemented 
in the next couple of months.

                           CONTRACT PROTESTS

    Mr. Hobson. It is going to be implemented. Okay. All right. 
I would like to talk to you sometime a little more about that.
    The other thing, just a comment, one area that I see as a 
potential problem, the increased cost and everything, is this 
protest system you have got. Somebody needs to look at that 
protest system. We don't have a lot of time here, but I just 
think if you look at that at some point.
    Mr. Money. I will be glad to get you back some more data on 
that. Actually the number of protests are going down. They are 
dropping roughly 100 a year from several hundred, albeit there 
are a few. I believe part of the reason for the reduction in 
that is that we do a much better job debriefing both the 
winners and the losers of why they won or lost.
    Mr. Hobson. Probably only hear from the guys that won.
    Mr. Money. The ones we hear about are the big ticket items 
and so forth.
    Mr. Young. As we have more mergers, there are less 
companies out there to make the protests.
    [The information follows:]

    Data on number of General Accounting Office (GAO) protests received 
against Air Force procurements for the last five years:

FY92..............................................................   440
FY93..............................................................   493
FY94..............................................................   358
FY95..............................................................   331
FY96..............................................................   246

    The Air Force attributes the downward trend in protests to more 
meaningful debriefings given to unsuccessful offerors. Debriefings 
conducted by the contracting officer explain to a contractor the 
strengths and weaknesses of its proposal. The contracting officer may 
also comment on the technical evaluation and overall strengths and 
weaknesses of the winning proposal.

                         INFORMATION TECHNOLOGY

    Mr. Hobson. In the information technology, Air Force 
Materiel Command, AFMC is considering some restructuring and 
development management technology stuff. You spent a lot of 
time talking to me about that. Is that stabilized now or what 
are we looking at?
    General Muellner. Yes, sir. If you are talking about the 
relationship between MSG, SSG, down at Gunter and Hanscom, I 
think that has stabilized. As we talked to you before, the work 
load doesn't change. That was just a case of how the management 
operation would proceed to MSG from Hanscom.

                          AIRCRAFT PROCUREMENT

    Mr. Hobson. Okay. I guess the last thing, Mr. Chairman, is 
that with all these three airplanes that you are looking at out 
there, we are talking about a combined cost of about $350 
billion, I think, someplace in there. Are you giving any 
thought to purchasing two airplanes, cancelling one of the 
three, or moving forward?
    General Muellner. Sir, I think from the Air Force 
perspective, we have taken a hard look, as you saw I think from 
the earlier chart, we are necking down from a large number of 
airplanes down to two. We will have in the outyears an F-22, 
and a variant of it, and a Joint Strike Fighter, JSF, and a 
variant of that, as the only airplanes on the ramp.
    We have focused on the affordability. We don't have a bow-
wave problem in the Air Force dealing with this. The reason is 
that our C-17 airlift funding is ending before we start this 
procurement. Our bomber force modernization will have occurred, 
and so we have time-phased this activity. And basically it is 
the fighter force's turn to be modernized to move away from 
what was bought and procured in the late-1970s and early 1980s 
and is now aging out and will be replaced. So this time-phased 
activity will make us have an affordable solution.
    Mr. Hobson. These two professionals here have been very, 
very refreshing and very refreshing to work with, and I 
appreciate their activity.
    Mr. Young. Mr. Hobson, I certainly would concur with the 
statement you have just made.
    And thank you for your interesting questions.
    Mr. Nethercutt.
    Mr. Nethercutt. No further questions.
    Mr. Young. With no further questions--we have reached our 
time limit. We do have additional questions that we would like 
to submit to you in writing and ask you to respond for the 
record, if you would.
    The Committee will be adjourned now until 10 o'clock 
tomorrow morning, when we will meet in an open hearing in Room 
2226, the Rayburn building, on the fiscal year 1998 budget 
request with the Secretary of the Army and the Chief of Staff 
of the Army. And then tomorrow afternoon, another open hearing 
in this room, H-140, on Army Acquisition Programs.
    And with nothing further, the Committee is adjourned.
    [Clerk's note.--Questions submitted by Mr. Young and the 
answers thereto follow:]

                             F-22 Aircraft

    Question. Mr. Secretary, the FY 1998 budget includes several 
changes to the Air Force's high priority F-22 stealth fighter program. 
The development program has increased in cost by $2 billion and has 
been stretched 9 months. Last year, the Air Force planned to procure 
128 aircraft including 4 pre-production vehicles during the period FY 
1998 to FY 2003. The current budget reduces this quantity by 58, almost 
a 50% reduction over the same period. Secretary Money, your statement 
touches on the cost growth of the program, but can you tell us more 
about what caused the program growth and changes to the program as a 
result?
    Answer. The Joint Estimate Team (JET) recommended a program 
restructure which added time and funding to the EMD program to ensure 
the achievement of a producible, affordable design prior to entering 
production. This resulted in the addition of $2.2 billion to the EMD 
program and an extension of nine months. This funding requirement was 
offset by eliminating three test aircraft ($706 million) and slowing 
the production ramp ($1.45 billion). The additional funding is 
contained within the F-22 total program budget through the FYDP. The 
primary drivers of the cost growth in EMD include better information on 
touch labor (actuals from the first EMD aircraft builds versus 
parametrics); additional flight test time based on historical rates 
from other programs; and a projection that more time will be required 
to complete avionics integration.
    For the production phase, the JET identified the possibility of a 
$13 billion costs growth, $8 billion of which is due to the 
identification of an industry unique rate of inflation in this high 
technology segment of the economy. The remainder of this potential cost 
growth is due to higher than expected touch labor and material costs. 
The CEOs and senior Air Force leaders signed a formal memorandum of 
agreement (MOA) in December 1996 committing the government/contractor 
team to, at a minimum, remain within the current production budget. 
Currently the contractor and government teams are implementing plans to 
maintain production unit cost at or below current levels.
    Despite the changes to the program, the warfighter will continue to 
receive the F-22's revolutionary capabilities on time at an affordable 
cost.
    Question. Secretary Money, the Air Force now plans to buy only two 
aircraft in the first year of production. Please compare using then 
year dollars flyaway cost of these first aircraft to that estimated 
last year for the first production aircraft.
    Answer. The FY98 President's Budget reflects an average unit 
flyaway cost for the first 2 production aircraft (Lot 1) of $392 
million compared to the FY97 President's Budget estimate of $149 
million for the first 4 production aircraft (Lot 1). The FY98 
President's Budget average unit flyaway would become $313 million if 4 
aircraft were bought in Lot 1 versus 2 aircraft.
    As documented by the Joint Estimate Team, the early production 
program is more costly than previously envisioned. The total potential 
production cost growth of $13 billion has been eliminated by the 
implementation of a number of cost avoidance initiatives. Payback from 
these initiatives begins in small increments in 2000, but significant 
payback does not occur until 2004.
    Question. Is two aircraft an efficient quantity to buy in the first 
year? Would it be smarter to buy more in the first year?
    Answer. Two aircraft is an efficient quantity to buy in the first 
year of production. This approach balances the higher early production 
program estimate with the production funds available. Purchasing more 
in the first year would contradict our plan to increase system maturity 
relative to the production ramp rate (6 fewer production aircraft at 
EMD end in the restructured program).
    Question. Please compare in then year dollars the flyaway cost of 
the first 128 aircraft in last year's budget plan compared to this 
year.
    Answer. The flyaway cost of the first 128 aircraft in last year's 
budget plan was $13.5 billion compared to this year's $16 billion. As 
documented by the Joint Estimate Team, the early production program is 
more costly than previously envisioned. Total potential production cost 
growth of $13 billion has been eliminated by the implementation of a 
number of cost avoidance initiatives. Payback from these initiatives 
begins in small increments in 2000, but significant payback does not 
occur until 2004.
    The Air Force/contractor team has high confidence that, at a 
minimum, production cost growth will be zero because: (1) team 
commitment to long-term affordability is documented in a formal 
memorandum of agreement signed by the Chief Executive Officers of 
Lockheed-Martin (Mr. Norm Augustine) and Pratt & Whitney (Mr. Karl 
Krapek); and (2) Lockheed-Martin, Boeing, and Pratt & Whitney are 
incentivized to improve efficiencies due to the Joint Strike Fighter 
competition.
    Question. The GAO reports that there was some disagreement within 
DOD about inflation indices and that as a result the current F-22 
budget could be significantly understated. Can you explain this issue 
to the Committee?
    Answer. There is no disagreement within DOD about inflation 
indices. The OSD Acquisition Decision Memorandum (ADM), issued 11 
February 1997 after the DAB review, directed the F-22 progrma to use 
OMB rates but take account of existing forward pricing agreements. The 
Air Force applied Forward Pricing Rate Agreements rates, which had 
already been negotiated, through FY01 and applied OSD rates in FY02 and 
beyond. These rates have been incorporated into the FY98 President's 
Budget.
    Question. How much could the F-22 production cost be understated 
from FY 1998 to FY 2003?
    Answer. F-22 production costs are not understated from FY 1998 to 
FY 2003. Beyond the FYDP, the potential for a difference in industry 
inflation projections versus DOD projections has been accounted for in 
the implementation of cost avoidance initiatives which maintain 
production costs at or below current levels. Of the potential $13 
billion in production cost growth, $8 billion is attributed to this 
potential difference in inflation projections.
    Question. Last year, the Committee appropriated $81 million for 
long lead components for 4 pre-production vehicles. The Air Force has 
eliminated the pre-production vehicles from the budget and now proposes 
to use the $81 million in FY 1997 to buy-out obsolete parts. Given that 
the F-22 is the most advanced aircraft ever developed and is still 7 
years from being operationally fielded, why does the Air Force need to 
buy obsolete parts before the aircraft even goes into production?
    Answer. Obsolete parts are an electronics industry fact of life, 
where parts availability life is approximately 2 to 5 years vice the F-
22 production duration of 13 years. The Out of Production Parts (OPP) 
issue is one affecting programs throughout the aerospace industry. 
However, the F-22 program has a plan to properly manage this potential 
cost and schedule driver.
    F-22 OPP funding requirements for FY97 and throughout production 
have been identified. No additional funding will be needed but the 
program requires congressional approval for use of FY97 appropriated 
funds for OPP. FY97 OPP requirements include: (1) cost for partial 
redesign, primarily avionics; (2) cost to procure parts for production 
aircraft when schedule is insufficient to redesign or to avoid multiple 
redesign costs. By allowing for redesign and incorporating a more open 
system architecture, the program will achieve greater reliability due 
to the incorporation of more modern, up-to-date technologies while 
making future obsolescence easier to correct.
    Loss of FY97 funding forces a one year slip in the production 
program. Avionics hardware would not be available for production when 
needed and the inflation effect alone equates to approximately $1 
billion.
    Question. Please tell the Committee what you see as the biggest 
risk areas remaining for the F-22.
    Answer. The biggest risk areas remaining for the F-22 are 
production cost containment and integrated avionics capability.
    Regarding production cost containment, the Joint Estimate Team 
identified the potential for $13 billion in cost growth. However, 
effective implementation of our Production Cost Reduction Business Plan 
will keep the cost of the F-22 at or below our current production 
budget of $48.3 billion.
    With respect to avionics, the F-22 will feature a capability not 
previously achieved in a fighter weapon system, the integration of 
numerous sensor inputs to provide the pilot a complete, unambiguous 
picture of the surrounding environment. The major development risks for 
F-22 avionics are well understood. In fact, the recent program 
restructure added development time, expanded ground test facilities, 
and added flight test time due to the anticipated complexity of the 
avionics effort.
    Question. Why is there no money budgeted for Engineering Change 
Orders in the First year of F-22 Production?
    Answer. The F-22 program has money budgeted for Engineering Change 
Orders (ECOs) in FY99, the first year of production. Approximately 
$51.3 million is allocated for the Air Vehicle ECOs and $8.2 million is 
allocated for Engine ECOs.
    The F-22 program used Air Force historical percentages to estimate 
overall ECO values, with Airframe totaling 4%, Avionics totaling 8%, 
and Engines totaling 3%. F-22 ECO data was unintentionally omitted from 
the FY98 President's Budget procurement documentation due to format 
changes from the coordination process.

                        Modernization Shortfall

    Question. The Air Force fiscal year 1998 budget requests $29.8 
billion for procurement and R&D. Though this is $600 million higher 
than FY 1997, in real terms it is once again lower than the fiscal year 
1997 appropriated amount. The funding provides for only 61 new aircraft 
though 75% are for Civil Air Patrol and pilot training. Only 3 are 
tactical aircraft. Secretary Widnall and General Fogleman, is the Air 
Force's fiscal year 1998 modernization budget adequate?
    Answer. The Air Force's FY98 modernization budget is adequate, 
though barely. The program the Air Force submitted reflects a very 
careful balance between sustaining our readiness for operations over 
the near term and building our forces for the demands we will face in 
the decades to come. The Air Force uses a time-phased modernization 
plan that synchronizes the size and timing of multiple programs to fit 
in the available budget authority. Consequently, there may be years 
when we wouldn't buy any tactical aircraft or we'd buy only a few, as 
we're buying other needed items.
    The FY98 modernization budget reflects this philosophy. In the 70s, 
we developed and built first the F-15, then the F-16. Today, after 
downsizing the number of wings as a result of the end of the Cold War, 
we're fully manned to our Primary Aircraft Authorization (PAA). The 
three F-15s we're buying fulfill a requirement for tactical attrition 
reserve aircraft, and they're the only tactical aircraft we're buying 
this year. Our continued ability, though, to provide command of air and 
space depends on maintaining our current course for the F-22. In FY98, 
we're funding development efforts for both F-22 and Joint Strike 
Fighter, and we begin buying F-22s in FY99. Though we're only buying 
three tactical airframes in FY98, we are making a strong commitment in 
this budget to preserve our tactical force.
    We are buying 18 Joint Primary Aircraft Training System (JPATS) 
aircraft and 27 general aviation aircraft for Civil Air Patrol search 
and rescue, which comprise the vast majority of the airframes we're 
purchasing. They, however, represent only 1% of aircraft procurement 
funding. The rest goes to buy other high priority needs in our 
modernization plan. We're buying nine C-17s for $2.3B (40% of aircraft 
procurement funding) to fill our highest near-term priority, airlift. 
We're also buying two large VC-X aircraft (Boeing 757s designated the 
C-32A), one E-8C JSTARS, and one C-130J--aircraft which help fulfill 
our balance program. We must also balance across other areas, such as 
munitions and space to fulfill our Global Engagement requirements. This 
mix of purchases reflects the best value for the Air Force needs, 
balances the funding between readiness and modernization, and meets the 
requirements for a time-phased modernization plan.
    Question. What is the risk to the future readiness of the Air Force 
of such low procurement rates of weapons?
    Answer. There is some risk to future readiness caused by low 
current procurement. The Air Force will face higher Operations and 
Support costs as the aircraft fleet ages which, to some extent, takes 
resources away from readiness. However, the relatively low procurement 
rates in fiscal year 1998 reflect the cyclical nature of tactical 
aircraft procurement and a fiscal year 1998 ``snapshot'' is a poor 
indicator of overall future readiness. Principally, it doesn't capture 
our time-phased modernization program which balances current readiness 
with future readiness (modernization) goals.
    In recent years, we've been able to take a ``break'' in 
procurement, especially with tactical combat aircraft. This is a direct 
result of the strong buildup of forces in the early to mid-eighties and 
the subsequent drawdown in forces in the early nineties after the end 
of the cold war. We were able to retire our oldest systems as part of 
the drawdown leaving ourselves a fairly young force. Now this ``break'' 
is over and we recognize we don't have the ability to build all the new 
systems we need at once. Consequently, we set out a time-phased 
modernization program that began by first addressing the most pressing 
near-term requirements, then the midterm, and finally the far-term 
needs. This sequenced modernization schedule avoids large overlaps in 
funding requirements between major procurement programs. The result is 
that we can modernize all parts of the force within a fairly constant 
investment share of our total budget authority. However, any delays in 
procuring aircraft per our modernization plan (e.g. F-22, Joint Strike 
Fighter) would have significant readiness impacts.
    Question. What major requirements are not funded in the fiscal year 
1998 budget?
    Answer. The budget the Air Force submitted is a balanced budget, 
fully supporting National Military Strategy requirements. We have fully 
funded all areas required to maintain and improve our capabilities. 
There exist, however, areas where we could realize cost savings and 
efficiencies by accelerating the procurement or increasing the quantity 
of some of our modernization/improvement programs. To this end, the Air 
Force has created a list of our FY98 Unfunded Priorities. This list is 
rank ordered by relative importance, with the number 1 item being our 
most critical issue. This 34 item list was provided to the House 
Appropriations Committee in the first part of March 1997. An additional 
copy is provided here for your review.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Question. What are your top four modernization programs? Are they 
fully funded in fiscal year 1998? Are they optimally funded in the 
accompanying fiscal years of the Future Years Defense Plan (FYDP)?
    Answer. The Air Force uses a time-phased modernization plan that 
synchronizes the size and timing of multiple programs to fit in the 
available budget authority. Our modernization programs are divided into 
four major areas: near-term, near mid-term, later mid-term, and long-
term priorities. Near-term top priority is the procurement of the C-17 
Globemaster III airlifter. This program funds a multi-year procurement 
contract for desperately needed inter- and intra-theather airlift 
capability. Our near mid-term priority is Bomber Conventional Upgrades. 
This funds airframe modifications and procurement of Precision Guided 
Munitions that enhance reliability and capability of our current 
conventional bomber forces. Our later mid-term priority is air and 
space technology. This priority funds the Evolved Expendable Launch 
Vehicle (EELV), Space-Based Infrared System (SBIRS), and Airborne Laser 
(ABL). Our long-term priority is air superiority. This funds the 
Engineering Manufacturing Development (EMD) for F-22 and Joint Strike 
Fighter.
    All of these programs are fully funded in FY98. We do list a line 
item for Precision Guided Munitions on the FY98 Unfunded Priority List. 
This, however, reflects a desire to accelerate the procurement of these 
munitions and their integration rather than a shortfall in the existing 
program. By implementing the time phased modernization plan outlined 
above, we are able to include all these priorities within the available 
FYDP budget. We are able to achieve our modernization objectives 
without creating ``bow waves'' in out-year budgets. This plan ensures 
that the Air Force continues to provide global capabilities to meet 
National Military Strategy requirements.

                           Additional Funding

    Question. Last year, you were very candid about identifying your 
top unfunded requirements to the Committee and working with us to 
provide additional funding for many of them. I hope you will continue 
that cooperation with us. Would you please describe your top unfunded 
priorities and why the fiscal year 1998 budget is not sufficient in 
these areas?
    Answer. Our top unfunded priorities are described in the FY98 Air 
Force Unfunded Priorities List. The Air Force annually reviews all 
programs and priorities based on the available Air Force budget. Given 
current financial constraints, were could not afford the items on the 
FY98 Unfunded Priorities List and stay within the Air Force topline. As 
you can see, the FY98 Unfunded Priorities List accelerates critical 
modernization, readiness, and people programs.
    Question. What are the potential savings if the Congress were to 
provide additional funding in fiscal year 1998 for these items, either 
by buying them earlier than now planned or by lower production unit 
costs through procurement at higher quantities? Please put the costs 
and savings in the record.
    Answer. Our list of unfunded requirements is based principally on 
meeting modernization, readiness, and people requirements, not on 
potential savings. For example, Sensor to Shooter accelerates our 
ability to share digital data among combat platforms. If additional 
dollars are provided, we would fund item on the FY 1998 Unfunded 
Priorities List which may not result in direct financial savings. 
Purchasing these items earlier does afford some cost savings associated 
with inflation. In general, however, the emphasis was on capability 
rather than cost avoidance.
    Question. What are your highest unfunded O&M or personnel 
requirements?
    Answer. The Air Force FY98 Unfunded Priorities List is a 
combination of modernization, readiness, and people programs. Our 
highest O&M and personnel requirements on the list include:

------------------------------------------------------------------------
                    O&M                               Personnel
------------------------------------------------------------------------
Force Protection..........................  Community Support.
KC-135 Depot Maintenance..................  Dormitory Housing.
Real Property Maintenance.................  Family Housing.
                                            Recruit Advertising.
------------------------------------------------------------------------

    Question. Which of these items are on any of the CINC Integrated 
Priority Lists?
    Answer. For the FY98-03 Integrated Priority Lists, four CINCs 
(STRATCOM, PACOM, EUCOM, and SOCOM) listed Quality of Life as IPL 
requirements. Issue #9 (Community Support), issue #12 (RPM) and issue 
#21 (Housing O&M/Construction) on the FY98 Unfunded Priority List 
support these Quality of Life Initiatives.
    The Number 1 items on the FY98 Unfunded Priority List is Force 
Protection. Due to the bombing of Khobar Towers in June 1996, this 
issue was identified by 7 of the 10 warfighting CINCs on their FY99-03 
Integrated Priority Lists. Recognizing this recently arisen critical 
need, the Air Force has fully funded this requirement in the FY99-03 
APOM. CINC EUCOM has publicly stated that Quality of Life Improvements 
remain his Number 1 priority, both on and off his Integrated Priority 
List. EUCOM is the only remaining CINC (of the original four) to carry 
forward Quality of Life from the FY98-03 IPL to the FY99-03 IPL. The 
Air Force is diligently working to fund those programs which support 
this requirement.

             Joint Surveillance Target Attack Radar System

    Question. Secretary Money, last year you provided the Committee 
with a list of priorities for additional funds. On that list, the Air 
Force's number one priority was the procurement of an additional JSTARS 
aircraft. Ms. Secretary, your fiscal year 1998 budget cuts the JSTARS 
program from 2 aircraft to only 1. We now understand that the Air Force 
made this reduction in May of last year at the same time your priority 
list was circulating in Congress. Why did you ask Congress for 
additional funds for a program you were in the process of cutting?
    Answer. If you look at the single year of FY 1998, it appears we 
cut the program. However, a review of our actions across the Future 
Years Defense Program (FYDP) during the same period shows we took 
action to strengthen the program. Due to higher priority requirements 
and fiscal constraints the Air Force decreased FY 1998 procurement 
quantity from 2 aircraft to 1. However, the Air Force also fixed JSTARS 
outyear funding shortfalls caused by procurement cost increases in the 
FYDP as a whole. During FY 1998 Program Objectives Memorandum (POM), 
the Air Force decreased the FY 1998 procurement quantity from 2 
aircraft to 1 and funded all 19 aircraft in the FYDP. During FY 1998 
Budget Estimate Submission (BES), the Air Force de-funded the 
nineteenth aircraft in FY 2003 in anticipation of FY 1997 Congressional 
plus-up. During FY 1998 President's Budget, in consultation with the 
Air Force, OSD re-funded the nineteenth aircraft in FY 1999.
    Question. Would you describe a procurement rate of one as 
``efficient''?
    Answer. The Air Force realizes it is more efficient to buy more 
than one aircraft per year; however, budget constraints precluded that 
in FY 1998. The FY 1998 flyaway cost for one aircraft is $313 million 
and the FY 1999 average flyaway cost for two aircraft is $265 million. 
The average flyaway cost for the JSTARS fleet of 19 aircraft is $261 
million. Current contractor facilities support aircraft induction every 
five months.
    Question. For this coming year, how can we work with you to 
understand the priorities you are committed to sustaining in future 
budgets?
    Answer. Communication is the key to increased understanding of the 
Air Force's commitment to providing the most capable Air Force, both 
today as well as in the future, while operating within a constrained 
budgetary environment. The Air Force has always balanced its 
modernization versus readiness requirements, providing current and 
future capability to deter aggression. We are committed to maintaining 
and increasing our capabilities while minimizing the risk associated 
with modifying program funding profiles. Your awareness of this ``risk 
versus requirement'' dilemma will allow us the flexibility to continue 
to provide the most capable Air Force both now and in the future.

                              NATO JSTARS

    Question. The FY 1998 budget proposes a new start program to 
provide NATO with its own JSTARS aircraft. Since NATO has not decided 
it wants JSTARS, the administration decided to budget for much of the 
US cost share up front to keep the program on a fast track. Please 
explain the benefits of the NATO JSTARS program.
    Answer. Employment of Joint STARS to satisfy NATO's Alliance Ground 
Surveillance (AGS) requirements provides several political and military 
advantages. Politically, it provides a cooperative development 
opportunity, reinforcing Alliance solidarity, at a time when common 
military goals and defense needs in Europe are at a critical junction. 
Militarily, it provides NATO with a common ground surveillance 
capability building on US combat experience and concepts of operation. 
It reduces taskings on US force structure to operate in NATO areas of 
responsibility (AORs), such as Bosnia. At the same time, NATO's core 
capability would be interoperable with reinforcing US elements in a 
broader crisis. In addition to the political and military advantages, 
cooperative development of system improvements reduces the cost of 
upgrades to the US fleet.
    Question. Estimates of the US share for NATO JSTARS range from $800 
million to $1.3 billion. Secretary Money, what is your best guess of 
the final US share?
    Answer. US estimates will vary relative to number of NATO nations 
that participate in the program. The minimum cost estimate of $800 
million reflects the maximum number of participating NATO nations (16). 
The maximum cost estimates of $1.3 billion is based on the 
participation of approximately 12 NATO nations. Until a decision is 
made, we have no better estimate.
    Question. Why does the budget plan include only $318 million for 
the program, less than half of even the low estimate of the US share?
    Answer. The out-year US budget will be determined in the FY00 
Program Objective Memorandum (POM) after actual cost shares and program 
scope are determined. The Conference of National Armaments Directors 
(CNAD) will decide on the procurement of a fixed wing core capability 
in November 1997
    The US has budgeted the cost necessary to keep the Alliance Ground 
Surveillance (AGS) program on the ``fast track'' schedule to deliver 
NATO an AGS capability by 2000. The $318 million (Air Force and Army) 
in the US budget pays for all but $100 million of the total program 
effort in FY 1998 and 1999. We expect NATO to fund the remaining $100 
million in FY 1999. The $318 million the US invests up front would be 
credited to the total US contribution.
    Question. What are your plans to budget for the balance of the 
funding requirement?
    Answer. The Conference of National Armaments Directors (CNAD) will 
decide on the procurement of a fixed wing core capability in November 
1997. The out year US budget will be determined in the FY00 Program 
Objective Memorandum (POM) after actual cost shares and program scope 
are determined.
    Question. Are the efforts funded in FY 1998 unique to NATO 
requirements, or could they benefit the US JSTARS program?
    Answer. The $32.6 million of Air Force RDT&E funding is for NATO 
unique requirements with $3.5 million of that among for system program 
office operations. The FY 1998 efforts are focused on modifications to 
facilitate operations in NATO. These funds will benefit the US program 
indirectly by improving its interoperability with the NATO Command and 
Control System.
    Question. Is it prudent to initiate this costly NATO program at the 
expense of other modernization priorities, including the US JSTARS 
program?
    Answer. Initiation of this program benefits the US program because 
the cooperative development effort includes some radar upgrade work 
planned, but not funded in the US program. Reduced Operations Tempo 
(OPTEMPO) and Personnel Tempo (PERSTEMPO) demands on US forces and 
systems also provide cost avoidance.

                         Airborne Laser Program

    Question. Last year, the Air Force requested funds to initiate a 
program that will integrate a high power laser into 747 aircraft with 
the mission to destroy tactical ballistic missiles in the boost phase. 
The program will develop, procure, and operate 7 aircraft at a cost of 
$11 billion. Mr. Secretary and General Muellner, one of the major areas 
of risk on this program is taking existing laser technology and 
reducing its weight sufficiently for aircraft use. What is the current 
weight of the existing ground laser demonstrator?
    Answer. The weight of this ground demonstrator is 5,535 pounds. 
This was a ``non-flightweighted'' prototype laser module designed to 
demonstrate the Contractor's ability to meet power and chemical 
efficiency requirements.
    Question. What is the weight requirement for the laser module that 
will go on the aircraft? What are the Air Force weight reduction 
proposals for meeting this requirement?
    Answer. The flightweighted laser module weight requirement is 2,920 
pounds. The laser module design successfully met its weight requirement 
at the Critical Design Review an dis being manufactured now using 
composite, plastic, and milled-out metal components.
    Question. Another area of risk on the program is our lack of 
detailed understanding of atmospheric conditions in the regions of the 
world where we would expect to use the laser. How much does the 
atmospheric conditions affect the operation of the laser? How would you 
characterize our understanding of these conditions?
    Answer. Atmosphere does affect the Airborne Laser's (ABL) lethal 
laser range and laser dwell time performance. As atmospheric conditions 
worsen, the dwell time required to destroy theater ballistic missiles 
increases and additional laser fuel is consumed. The ABL will 
predominantly engage missile at co-equal or higher altitude, well above 
most of the earth's atmosphere. Therefore, a large majority of the 
potential atmospheric impact is eliminated by flying and engaging 
missiles at a high altitude. Currently, a wide range of ``real world'' 
atmospheric conditions are included in our models, simulations, and 
tests. Results of these efforts show ABL will meet the user's 
operational requirements with margin.
    We are confident we understand the environment and have collected 
sufficient atmospheric data to establish the ABL design point. To 
increase our knowledge of the atmosphere's variability, we will 
continue to expand the existing database by collecting atmospheric 
measurements worldwide.
    Question. Please outline the other areas of risk for this program 
and how you plan to manage these risks?
    Answer. Risk management is an integral component of the Airborne 
Laser (ABL) systems engineering process and documented in the 
Integrated Task and Management Plan. In addition to the risk management 
of issues associated with aircraft weight and the atmosphere, other 
risk areas identified include beam control and software development. 
The government/contractor team is mitigating beam control risk by 
performing: (1) scaled beam control tests at Phillips Lab and MIT's 
Lincoln Lab; (2) functional tests on the contractor's beam control 
brassboard; (3) active illuminator laser tracking of boosting missiles 
at White Sands Missile Range; and (4) integrated weapon system beam 
control tests at low and high power.
    The ABL team is mitigating software development risk by: (1) using 
best commercial practices; (2) emphasizing commercial and government 
off the shelf software reuse; (3) focusing on open systems 
architecture; (4) identifying software development as award fee 
criteria; (5) early rapid prototyping in the software integration lab; 
and (6) establishing an outside software risk reduction team for 
independent oversight.
    Question. The Ballistic Missile Defense Office is charged with the 
mission of prioritizing and funding tactical missile defense. yet, the 
Air Force has chosen to fund the Airborne Laser program internally 
independently of BMDO. Why is the Air Force committed to funding this 
ambitious program even at the expense of other Air Force priorities?
    Answer. In 1992, as a result of HR 5006, Congress directed all SDIO 
(now BMDO) programs that would not be fielded within 10 years be 
transferred to the appropriate service. The Airborne Laser (ABL) was 
subsequently transferred to the Air Force. The Air Force then fully 
funded the ABL in the FY98 Program Objective Memorandum.
    The Air Force is committed to the ABL program because it is a key 
element of the Air Force's 21st Century architecture and Join Vision 
2010. It is a truly revolutionary system which contributes directly to 
each of the Air Force's core competencies: air superiority; global 
attack; rapid, global mobility; precision engagement; information 
superiority' and agile combat support. ABL's maximum potential as a 
multi-role platform is still to be determined and, as a result, the Air 
Force is conducting studies to fully exploit its capabilities. These 
potential additional missions include cruise missile defense, 
suppression of enemy air defense, imaging surveillance, and high value 
airborne asset protection which includes self-defense.
    Question. As you are aware, DoD is pursuing several programs to 
counter the tactical ballistic missile threat. How do you respond to 
the concern that the next available missile defense dollar should go 
towards reducing the risk on these core systems rather than towards a 
new system?
    Answer. Funding Airborne Laser (ABL) will greatly enhance the Joint 
Theater Missile Defense (TMD) architecture. Although not designated one 
of the original core programs, ABL is now a fundamental component of 
the multi-layered TMD architecture and will provide many unique 
capabilities to the theater commander. By destroying missiles early in 
their boost phase of flight, ABL will become the first layer of active 
defense and will enhance the overall effectiveness of the 
architecture's ``system-of-systems.'' Destroying missiles early in 
their flight is an enormous deterrent against weapons of mass 
destruction as the theater ballistic missiles will potentially fall 
back on the enemy's own territory. ABL also provides the architecture a 
more robust capability against potential TMD countermeasures like early 
release of missile submunitions, decoys, and well coordinated mass 
raids. In addition, the ABL can self-deploy within hours to anywhere in 
the world, rapidly providing a force projection capability for our 
deploying forces.
    Question. Please discuss the other missions that could be performed 
with the Airborne Laser and which of these you are already committed to 
incorporating into the baseline system.
    Answer. The Airborne Laser (ABL) is currently being designed for 
the primary mission of Theater Missile Defense; however, the Air Force 
envisions the ABL will mature into a multi-role platform due to the 
inherent capabilities of the high energy laser. To maximize ABL's 
revolutionary capabilities, the Air Force is studying adjunct missions 
during the Program Definition and Risk Reduction (PDRR) phase for 
possible inclusion into the ABL baseline in the Engineering and 
Manufacturing Development (EMD) phase. The adjunct missions are imaging 
surveillance, cruise missile defense, suppression of enemy air defenses 
and high value airborne asset protection which includes self-
protection.
    Formal studies will evaluate weapon system modification risks, 
costs, and benefits of performing the adjunct missions. Modest efforts 
were begun on these studies in FY97; however, the bulk of the study 
efforts will be performed in FY98/FY99. The studies will be completed 
prior to PDRR Critical Design Review in 1999. Decisions will be made at 
the time for inclusion of any of the adjunct missions into the EMD 
baseline.

                 Acquisition Cycle vs. Technology Cycle

    Question. We are all too familiar with the accelerated pace of 
technological change these days. A home computer we buy today can be 
outdated in as little as 15 months. In some cases, software can be 
outdated in just 6 months. For the military, the problem is especially 
acute because of the years required to develop and field new weapon 
systems. Secretary Money, what is the Air Force doing to address this 
serious issue, especially in the area of computers that permeate our 
aircraft, missiles, and command and control systems?
    Answer. We are implementing Open Systems. The Open Systems approach 
encourages the use, where applicable, of commercial products, 
processes, specifications, and standards. By relying more on commercial 
products and standards, we expand the industrial base for acquisition 
and sustainment and we are better positioned to deal with obsolescence 
and the need to incorporate new technology.
    A key thrust of Open Systems is ``performance-based requirements.'' 
Emphasis on performance relies on the idea that we can reduce costs by 
eliminating government ``how to'' requirements up front in weapon 
systems acquisition. Management of performance at the interface level 
instead of detailed parts encourages the use of components across a 
wide range of systems and, when necessary, facilitates replacement with 
state-of-the-art (commercial) technologies.
    In addition, we are striving through various acquisition reform 
efforts to drive the acquisition cycle inside/within the technology 
cycle of computers, software and deploy thus enabling the Air Force to 
deliver equipment/capability in the same technology generation as it 
was conceived.
    Question. Your statement talks about fitting he acquisition cycle 
within the technology cycle. How do you propose to do this, especially 
with large and complex weapon systems?
    Answer. One of the primary tenets of acquisition reform has been 
cycle time reduction. Systems bound by over regulation and inefficient 
processes simply cannot get ``rubber on the ramp'' before the newly 
fielded equipment is technologically (or possibly operationally) 
obsolete. This past year, I announced ``Lightning Bolt #10,'' a reform 
initiative chartered to examine the acquisition cycle and look for 
innovative, ``out-of-the-box'' ways to reduce the time it takes to get 
from a defined need to fielded hardware. The Lightning Bolt #10 team 
focused on the critical time between receipt of a warfighter 
requirement and contract award. Their final report identified 63 best 
practices and 14 recommendations for statutory and regulatory relief 
that, when implemented, could reduce the time it takes to get on 
contract by as much as half. And this is only the beginning. Our 
strategic goals incorporate our desire to achieve cycle time reductions 
throughout all phases of a system's life. We are just beginning to get 
our hands around the crucial processes and practices that drive cycle 
time. Re-engineering these practices is our long-term goal.
    Let me illustrate with a specific example. Air Force Materiel 
Command's Electronic Systems Center (EXC), located at Hanscom AFB, 
Massachusetts, is rapidly moving forward in its implementation of a 
``spiral development process,'' a revolutionary concept in the 
acquisition of computer hardware and software. Spiral development is 
unique in that it is designed to respond to user requirements within 
the context of the commercial computer industry, where hardware can 
become obsolescent in less than two years. It became apparent to the 
managers and engineers at ESC that the standard, conservative way of 
doing business was ensuring that old hardware ended up in the 
warfighter's hands--better machines and software could be purchased on 
the open market. EXC is constructing a process which will move new 
equipment to the user in 18 months--a real-life example of ``fitting 
the acquisition cycle inside the technology cycle.''
    Question. Is it true that the F-22 will become operational in FY 
2004 with so-called ``486'' processors that are at least two 
generations older than the ``Pentium Pro'' processors available today 
for our kids to use at home?
    Answer. The F-22 does not use the 486 processor--the F-22 main 
processor is the Intel 80960, a 32 bit superscaler device more 
comparable to a Pentium processor than the 486. The current processor 
will meet the warfighters' needs at the lowest cost with acceptable 
technical risk when the F-22 becomes operational in FY 2005 (November 
2004). However, the F-22 plans to upgrade to a faster processor and 
decrease the number of processors in production Lot 6 (FY04) with a 
decrease in recurring cost. Significant nonrecurring cost is required 
to ``chase'' the latest technology, our mandate is to meet the 
warfighters' needs at the lowest total cost.
    Question. Is there some way we can field our most modern and 
sophisticated aircraft with modern computer technology?
    Answer. To minimize concurrency and avoid multiple redesign costs, 
a technology baseline must be established prior to critical design 
review. Moreover, significant nonrecurring cost is required to 
``chase'' the latest technology. The F-22 plans to upgrade to newer 
technology in an incremental fashion by grouping lot buys. The goal is 
to make all hardware within a group identical. Hardware across groups 
may not be identical, but will be form, fit, function and interface 
compatible and transparent to the warfighter. The F-22 mandate is to 
achieve a producible design that meets the operational need at the 
lowest cost with acceptable technical risk.

                Making the Air Force More Expeditionary

    Question. The Air Force is increasing its emphasis on expeditionary 
forces, able to deploy from the United States in a matter of days or 
even hours. Improving this capability requires changes in the way we 
organize, equip, and support our forces. Secretary Money, can you tell 
us what you are doing on the acquisition side to become more 
expeditionary?
    Answer. The acquisition community enhances the USAF's ability to 
become more expeditionary by addressing the first three components of 
the Air Force's four element modernization plan--time phased 
modernization, managing programs effectively, and revolutionizing 
current business practices. The warfighter depends on us to conduct 
fast-paced acquisitions which can seize upon developing technologies, 
enabling our forces to respond in near real-time to the exigencies of 
the moment. Our success or failure will be measured by our ability to 
re-create business practices that can respond quickly, flexibly, and 
cost effectively, and which can leverage the commercial marketplace for 
new technology to apply to both new and existing systems. Air Force 
acquisition's ability to bring tools to the warfighter ``faster, 
cheaper, and better,'' has already contributed significantly to this 
nation's ability to employ expeditionary air forces. Allow me to 
illustrate with three examples.
    The advanced concept technology demonstrators are one means of 
accelerating the technology development process and fielding 
applications more expeditiously. Predator UAV use in Bosnia is one good 
example of this approach.
    Our weapons' development programs are remarkable success stories in 
our quest for cost control through acquisition streamlining. The recent 
contractor downselect of the Wind Corrected Munitions Dispenser (WCMD) 
highlights this potential for cost avoidance. Originally projected to 
come in at $25,000 per tailkit, both competing contractors submitted 
proposals for under $10,000 unit cost, reflecting a total program 
savings of over $850M--money which could be used to support additional 
needs of the AEF.
    The F-22 will provide the battlefield air dominance prerequisite 
for successful joint expeditionary warfare in the 21st century. It is 
incumbent on the Air Force acquisition community to bring this 
revolutionary capability into the inventory on cost, on schedule.
    All that having been said, however, we must not lose sight of the 
fact that for an AEF to be effective, it must deploy rapidly--
minimizing airlift requirements is a key enabler of this capability. 
The Air Force has recently ``stood up'' an AEF Battle Lab at Mountain 
Home, who's charter includes exploring ways to reduce the logistics 
``footprint'' of all deployable weapons systems--new, as well as 
fielded. Acquisition's greatest air expeditionary impact will be felt 
by delivering products tailored to reduce deployment requirements. Here 
are several examples.
    Our newest platform development programs, the Airborne Laser (ABL), 
the F-22, the Joint Strike Fighter (JSF), and the CV-22 are all 
designed with supportability in mind. The ABL is a self-deployable 
weapons system which can arrive worldwide within 24 hours, providing 
ballistic missile defense for both-in-place and deploying allied 
forces. In the fighter arena, the F-22 and the JSF are both committed 
to reducing, by over half, the current number of aircraft C-141 
equivalents required to deploy a squadron of comparable earlier 
generation fighters. In support of special operations, the CV-22 will 
eventually replace 88 rotary and fixed wing aircraft of various types, 
simultaneously increasing capability as well as reducing the deployment 
logistics burden currently imposed by an aging and diverse fleet.
    For our fielded fighters, there are several notable examples of the 
progress being made in reducing ground support equipment. In both the 
F-15 and F-16 the Avionics Intermediate Shop (AIS) will soon by 
replaced by a more capable and consolidated array of avionics test 
equipment, resulting in an airlift-required reduction of over 2 C-141 
equivalents per squadron deployed. The F-16 is also migrating to an on-
board oxygen generating system (OBOGS) staring in 2001, which will 
entirely eliminate the current liquid oxygen (LOX) squadron deployment 
requirement and free up another one-half of a C-141 equivalent.
    The Conventional Mission Upgrade Program (CMUP), which is an 
ongoing effort to increase B-1 combat capability through lethality, 
survivability, and supportability, will make its logistics mark through 
a significant improvement in the defensive countermeasures system it 
upgrades. The current 17.5 hour mean-time-between-failure (MTBF) ALQ-
161 system of 120 line replacement units (LRUs), weighting over 5000 
lbs, will be supersedes by a more capable installation of only 34 LRUs, 
weighting 1000 lbs, with a MTBF of 112 hours--dramatically reducing the 
deployment requirements of this backbone of the bomber fleet.
    As you are well aware, the acquisition community was instrumental 
in facilitating multi-year procurement of the evolving core of our air 
expeditionary airlift capability, the C-17. This aircraft, with its 
high launch reliability, ease of maintenance, as well as its superb 
ground maneuverability and rapid onloading/offloading capability, can 
globally transport more people and equipment into austere or 
constrained airfields than any other airlifter.
    Finally, current weapons' developments are engaged in a two-pronged 
attack on deployment footprints. First, given the inherent adverse 
weather capability and improved accuracy of our newest Precision Guided 
Munitions, the number of aircraft sorties necessary, as well as the 
number of bombs expended, to destroy a given target will dramatically 
decrease. Depending on the CINC's campaign plan, this factor will allow 
him the flexibility to shift some of the airlift normally reserved for 
large quantities of (dumb) munitions to other priorities. Second, 
several in-development miniaturized munitions, such as the ``small 
smart bomb,'' have the potential to be as lethal as currently fielded 
counterparts 2 to 4 times their size. Such munitions could permit the 
Air Force to carry more weapons per platform, as well as significantly 
reduce the logistics footprint of the total number of weapons deployed 
to a given theater.
    Question. Are there areas that require further attention in your 
view?
    Answer. The acquisition community must continue to be proactive in 
sponsoring the supportability upgrades which contribute to the overall 
health and deployability of our maturing fleet. Even though initial 
fielding of our newest developmental weapons systems--those which have 
a reduced logistics footprint designed in--will commence in the not too 
distant future, we must remain conscious of the fact that a viable AEF 
will depend on our current aircraft inventory for a number of years to 
come.
    Question. Your statement mentions ``Agile Combat Support'' and 
``Focused Logistics''. Please explain these concepts as they relate to 
the Air Force.
    Answer. Agile Combat Support will improve transportation and 
information systems to allow time-definite resupply, reduce the lift 
requirement to get materials and troops to the field, and streamline 
the infrastructure providing parts and supplies to reduce cycle times. 
Agile Combat Support will yield the revolution in combat support 
discussed in Joint Vision 2010's tenet of Focused Logistics.
    Focused Logistics will be the fusion of information, logistics, and 
transportation technologies to provide rapid crisis response, to track 
and shift assets even while enroute, and to deliver tailored logistics 
packages and sustainment directly at the strategic, operational, and 
tactical level of operations. The operational concept of Focused 
Logistics will provide the Joint Force Commander with an Air Force that 
is more mobile, responsive, efficient, and significantly more potent. 
Future Air Force logistics will maximize both technology and resource 
management reinvention techniques to achieve and provide unparalleled 
combat power to the joint warfighter.

                           B-2 Bomber Program

    Question. Gentlemen, last year the Congress added funding to 
accelerate integration of advanced precision weapons on the B-2. Does 
the FY98 budget continue this integration at the accelerated pace?
    Answer. The accelerated weapons programs funded with the FY97 $116 
million Congressional Add are fully funded and require no additional 
funds in FY98. The Air Force will use the FY97 Congressional Plus-up to 
integrate:
           GPS Aided Munition (GAM) 113: Very Hard Target Kill 
        Capability;
           Joint Stand-Off Weapon (JSOW); and
           Generic Weapons Integration System (GWIS): Reduces 
        Cost and Schedule to Integrate Additional Weapons.
    Question. Compare the IOC for each advanced precision weapon on the 
B-2 between last year's Air Force budget plan this year's.
    Answer.

------------------------------------------------------------------------
          Precision weapon                FY97 PB            FY98 PB
------------------------------------------------------------------------
GAM (2000-POUND)...................  FY96.............  FY96
JDAM (2000-POUND)..................  FY98.............  FY98
GAM-113 (4700-POUND)*..............  N/A..............  FY98
JSOW (1000-POUND)*.................  N/A..............  FY99
JASSM..............................  FY02.............  FY03
------------------------------------------------------------------------
*Funded with FY97 $116 million RDT&E Congressional Plus-up.

    Question. Your budget plan this year cut $212 million from the B-2 
in fiscal year 1999 as compared to last year's plan. Please explain 
what was cut and why.
    Answer. Air Force reduced B-2 fiscal year 1999 RDT&E funding by 
$212 million during fiscal year 1998 PB deliberations to resolve Air 
Force funding shortfall. Impacts of this reduction:
           Eliminates Block 30 Upgrade of two EMD test 
        aircraft, and
           Delays JASSM IOC one year to FY03.
    Partial restoration of funding shorfall currently being worked in 
Air Force POM process:
           Accepts one Block 30 aircraft delivery on time, one 
        nine months late, and
           Accepts JASSM IOC of FY03.
    Question. Secretary Money, what is the Air Force's cost estimate to 
procure nine additional B-2 aircraft starting in FY 1998? For the 
record, please provide a funding profile, by year, reflecting the Air 
Force cost estimate.
    Answer. The Air Force has no government estimate since we have no 
requirement. We have never requested the Program Office to prepare an 
estimate. Such a detailed estimate would require in excess of 120 days 
(150 days and several million dollars).
    Question. From an acquisition standpoint, what are the pros and 
cons of buying additional B-2s starting this year?
    Answer. The Air Force does not plan to buy more than 21 operational 
B-2s:
           Funding for more B-2s is not practical within 
        current Air Force budget and force structure, and
           Additional B-2s would contribute significantly to US 
        combat capability--however, issue is affordability, not 
        capability.

                             C-17 Aircraft

    Question. Mr. Money, can you update the Committee on the status of 
the C-17 multiyear contract?
    Answer. The C-17 multiyear contract is on track, and will save 
$1.025 billion over seven years. The airframe contract was signed on 1 
Jun 96 for the last 80 C-17s. The associated engine multiyear contract 
option was awarded in December 96. It provides for 320 Pratt & Whitney 
engines, which are derivatives of the commercial Boeing 757 engine. The 
first multiyear contract aircraft is the P-41, which will be delivered 
summer of 1998.
    Question. The Committee is aware of concerns from the Army 
regarding the suitability of the C-17 for airdropping soldiers and 
equipment and landing on semi-prepared runways. Can you explain these 
issues and the status of their resolution?
    Answer. The C-17 airdrop issues are resolved. On 31 Jan 97, six C-
17s in formation airdropped 612 paratroopers, successfully completing 
the Air Force/Army formation personnel airdrop test effort. This effort 
validated the formation spacing required to prevent paratroopers from 
interacting with aircraft wake vortices.
    The Air Force will work with the Army to procure and field a 
universal static line and continue follow-on operational testing to 
further develop airdrop tactics. There is no issue with equipment 
airdrop--C-17s are routinely performing this mission. Minor 
modifications to airdrop systems and some changes to airdrop procedures 
resulted from operational experience.
    Joint test effort exists to characterize the C-17's capability to 
operate routinely on semi-prepared runways. Testing involves numerous 
measurements of semi-prepared surfaces to quantify their effect on C-17 
performance. This information is then input into the C-17 mission 
computer so the aircrew can predict aircraft performance. Testing also 
helps identify expeditionary runway design criteria, construction 
procedures, equipment requirements, and maintenance criteria. Data 
collection was accelerated. Planned capability release in the Summer of 
1997.
    Question. As you know, one of the criteria for multiyear 
contracting is stability in design. The budget this year includes 
additional funding for several configuration changes to the aircraft 
that were not planned last year including precision approach 
modifications, a new radio, dual row airdrop, and a CINC communications 
program called Silver Bullet. From FY 1998 to 2003, the same period as 
the multiyear, the Air Force plans to spend $882 million in research 
and development for the C-17. Gentlemen, is the C-17 configuration 
stable during the multiyear?
    Answer. The C-17 configuration is stable under the multiyear 
strategy, but a changing world and the aircraft's computer-intensive 
design result in new requirements and the need for upgrades. The 
environment in which the C-17 operates is not stable. Evolving 
requirements of the International Civil Aviation Organization and the 
Federal Aviation Administration concerning future air traffic control 
systems and air navigation system are forcing major avionics changes 
Air Force-wide. The Air Force is developing Global Access, Navigation & 
Safety roadmaps.
    CINCTRANS has identified the requirement for a precision approach 
capability for rapid deployment to austere airfields, based on 
operational limitations experienced in deploying to Bosnia last year. A 
modification is being developed to meet that requirement.
    Question. Why do we need to spend another $822 million in research 
and development on this aircraft?
    Answer. Operational experience continues to highlight areas for 
improvement as occurs with any new aircraft. R&D investment sustains 
computer-intensive aircraft (like F-15 and F-16) and integrates new 
required capabilities. Changes in avionics and tactics drive software 
changes. Software changes in one computer affect software in other 
computers because of the high degree of integration in the aircraft. 
All enhancements are retrofitted into delivered aircraft and 
incorporated in the production line to ensure the user a homogeneous 
fleet of aircraft.

                        Mission Planning Systems

    Question. The Air Force and Navy have developed separate aircraft 
mission planning systems that perform almost identical functions. To 
operate the two systems--the Air Force Mission Support System (AFMSS) 
and the Navy Tactical Aircraft Mission Planning System (TAMPS)--draw 
information from various databases including digital map databases, 
weather databases, threat databases, etc. Unfortunately, the Navy and 
Air Force use separate databases at tremendously added cost. Mr. Money, 
how much money is the Air Force spending on its mission planning system 
in FY 1998, including all funding from individual aircraft and weapon 
program?
    Answer. The Air Force is spending approximately $136.4 million in 
FY 1998 to support mission planning. Of that amount, $56.4 million 
funds the Air Force mission planning system core software and hardware 
in support of the AFMSS and sustainment of several legacy mission 
planning systems. This reflects continuation of new software 
development and procurement of ground and portable workstations, and 
hardware retrofit. It continues over 50 Aircraft/Weapons/Electronics 
(A/W/E) integration efforts, interoperability with Command, Control, 
Communications, and Intelligence Systems and major data base producers, 
and research and development for Global Command and Control System 
migration. This also includes annual operating and maintenance costs. 
Most of the dollars, nearly $80 million, funds over 50 A/W/Es which 
there is little overlap between USAF and USN. These A/W/Es are service 
unique, platform specific, require specialized system software, and 
discrete digital Transfer Devices. They are programmed in the 
individual aircraft and weapons system program elements.
    Question. Mr. Money, in your opinion, does it make sense for the 
two services to develop incompatible mission planning systems?
    Answer. The services recognize the value of a common mission 
planner. Since the 1993 initiation of the Interservice Mission Planning 
Working Group, the Air Force and Navy have pursued joint efforts to 
achieve compatibility. To date, joint efforts with proven success 
include: standard data for fuel planning, current development of stores 
planning/weaponeering application, shared Precision Guided Missile 
target sets, and a common data base for imagery and digital maps 
provided by the National Imagery and Mapping Agency. The Air Force and 
Navy are finalizing a memorandum of agreement which addresses a joint 
migration strategy to pursue a Defense Information Infrastructure, 
Common Operating Environment. The objective is to field a Global 
Command and Control System complaint, interoperable mission planning 
system which meets the requirements of each service.
    Question. Is there a plan in DOD to eventfully migrate the Air 
Force and Navy systems towards common modules and databases? If so, can 
you discuss the schedule? Can the schedule be accelerated? At what 
cost?
    Answer. The Air Force and Navy are currently developing a plan and 
acquisition strategy to jointly pursue Air Force and Navy mission 
planning system migration to the Global Command and Control System 
(GCCS). Our objective is to field a GCCS complaint mission system which 
meets the requirements of each service by 2002. The migration plan will 
focus on evolutionary development to a Defense Information 
Infrastructure, Common Operating Environment. A Joint Integrated 
Process Team was chartered to produce an acquisition strategy to 
develop common mission planning components. Discussions on schedule, 
costs, and programmatics started on 6 Mar 1997. It is too early in the 
migration process to establish a firm schedule and cost figures. Most 
importantly, planned migration efforts can not distract from our first 
priority, which is to keep the current Air Force and Navy programs on 
track to deliver an operational system that satisfies the users' 
current operational requirements.
    Question. Please characterize the amount of savings you would 
expect if these mission planning systems become more common?
    Answer. The migration plan and acquisition strategy currently under 
development will address the cost savings potential. Currently, it is 
premature at this stage in our migration study efforts to estimate cost 
savings. Our objective is to seek savings in software engineering and 
development, hardware procurement, and operations and maintenance.

                         F-16 and F-15 Aircraft

    Question. The FY 1998 budget includes just 3 tactical combat 
aircraft--all F-15E Strike Eagles. The budget includes no funds for 
additional F-16's. What is your total requirement for F-16's?
    Answer. Beginning with the FY 1998 budget, the Air Force 
requirement for F-16C aircraft is 1340. This number includes combat 
coded, test, training, backup, and attrition reserve. The Air Force has 
funded 1312 F-16C aircraft through FY 1997. There is no procurement of 
F-16C aircraft funded in the FY 98 President's Budget, leaving the Air 
Force 28 aircraft short of its requirement.
    Question. What is the funded inventory through FY 1997?
    Answer. The Air Force has funded 1312 F-16C aircraft through FY 
1997. There is no procurement of F-16C aircraft funded in the FY 98 
President's Budget, leaving the Air Force 28 aircraft short of its 
requirement.
    Question. Why didn't the Air Force budget for additional F-16s in 
FY 1998?
    Answer. The Air Force procured twelve F-16C aircraft in the FY 1996 
and FY 1997 budgets. In FY 1998, continued severe funding constraints 
forced the Air Force to fund other higher priority programs.
    Question. What is the current status of the media reported Saudi 
FMS interest in the F-16?
    Answer. There has been no formal request from the Kingdom of Saudi 
Arabia (KSA) for the purchase of F-16 aircraft. The Saudi Arabian 
Minister of Defense and Aviation announced publicly that he did not 
intend to discuss an aircraft sale when he visited Washington in 
February, and the issue was not discussed in his talks with the 
Administration, including Secretary of Defense Cohen.
    Question. What is the funded backlog of F-16s, including FMS?
    Answer. Please see the attached delivery schedule, representing the 
delivery of currently funded USAF and FMS F-16 aircraft orders. While 
the chart depicts expected deliveries of the FY97 USAF F-16 buy of six 
aircraft, please note all funding for the FY97 buy ($154.9 million) is 
currently on OSD withhold.
    [Chart follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    
    Question. What is the total F-15E requirement?
    Answer. Beginning with the FY 1997 budget, the total requirement 
for F-15E aircraft is 219. This number includes all combat coded, test, 
training, backup, and attrition reserve. The funded inventory of F-15E 
aircraft through FY 1997 is 213. There is funding for the procurement 
of three additional F-15E aircraft in the FY 98 President's Budget, 
leaving the Air Force three aircraft short of its requirement.
    Question. What is the funded inventory through FY 1997?
    Answer. The funded inventory of F-15E aircraft through FY 1997 is 
213. There is funding for the procurement of three additional F-15E 
aircraft in the FY 98 President's Budget, leaving the Air Force three 
aircraft short of its requirement.

                         F-16 and F-15 Engines

    Question. Defense Daily reported that General Hawley, head of Air 
Combat Command and General Donald Sheppard, head of the Air National 
Guard, have complained of constant, costly problems with thousands of 
F-15 and F-16 engines. Can you tell Congress about the problems with 
these engines?
    Answer. Statistically the F100 and F110 series engines have been 
the safest fighter engines in USAF history, but safety and maintenance 
problems continue during operations. The biggest concern is related to 
vibrational stresses in the fan area and high thermal and mechanical 
stresses in the turbines. Other parts of the engines have also had 
problems, but their impact has not been as serious. Corrective action 
plan are developed and executed as new failure modes are encountered. 
Root causes for all these problems have been identified, field risk 
management procedures are in-place, and corrective actions are being 
developed and implemented. Some hardware redesigns are being developed 
under the Component Improvement Program (CIP) and these changes are 
aggressively being qualified and incorporated. Until fixes are 
implemented, operational units are performing more frequent inspections 
and failure-prone parts are being replaced more often.
    Question. The (20 Feb Defense Daily) article suggested that engine 
components were not being installed in a timely manner because of 
budget problems. How do you respond to this?
    Answer. The budget is adequate to fix all engines safety problems, 
however, additional funding could be used to address reliability and 
maintainability (R&M) problems. The solutions to the majority of 
current safety problems require hardware redesigns and retrofits. All 
identified safety redesigns have been completed or are well on their 
way to completion. MAJCOMs have committed to the incorporation of these 
redesigned/improved parts by identifying funds required to retrofit 
their fleets. The strategy and pace for each hardware retrofit program 
represents a balance of risk, hardware availability, maintenance 
workload, readiness and funding. The impact of safety issues on scarce 
Component Improvement Program (CIP) and MAJCOM modification and 
operations and maintenance (O&M) funding is significant though, and 
severely limits our ability to fix non-safety R&M problems. Additional 
funding for the CIP program to support reliability and maintainability 
upgrades is currently #7 on the Chief of Staff of the Air Forces' FY98 
unfunded priority list.
    Question. Last year, the Congress added funds for the F-15C/D 
engine upgrade. The Committee was pleased to see that the Air Force 
continued this program in the FY 1998 budget. Will this upgrade program 
address the problems experienced by ACC and the Air National Guard? 
What else can be done to address this problem?
    Answer. The F-15 C/D engine upgrade is not currently planned for 
ACC or the Air National Guard. The engine upgrade program converts 
existing F100-PW-100 engines to the F100-PW-220E configuration on F-15 
C/D aircraft overseas (at PACAF and USAFE) where there is the highest 
payback. Meanwhile, every effort is being made to incorporate fixes for 
all F100-PW-100 safety issues. The Component Improvement Program (CIP) 
is used to fix safety and reliability and maintainability problems on 
existing engines. CIP is adequately funded to support all known safety 
problems, however, funding for non-safety reliability and 
maintainability is limited. Additional funding for the CIP program to 
support reliability and maintainability upgrade is currently #7 on the 
Chief of Staff of the Air Forces' unfunded priority list.

                 Joint Air-to-Surface Standoff Missile

    Question. JASSM is a highly accurate stealthy cruise missile that 
will be launched from Air Force and Navy strike aircraft and Air Force 
long range bombers. Please update the Committee on the status of the 
JASSM program.
    Answer. JASSM is finishing up the 9th month of the 25.5 month 
Program Definition and Risk Reduction phase. Both Lockheed Martin and 
McDonnell Douglas have completed their preliminary design and have 
entered the critical design phase on hardware and software items. In 
addition, both contractors are well into air vehicle development--to 
include extensive modeling and simulation efforts as well as wind 
tunnel testing on threshold aircraft (B-52H, F-16C/D, F/A-18E/F). The 
Air Force is generally satisfied with the contractors' progress on 
JASSM.
    Question. Now that the development contracts have been awarded, 
what is the total development cost currently projected? What is the 
total procurement cost?
    Answer. The total development cost currently projected for JASSM is 
$716.8 million of which $648.5 million is funded by the Air Force and 
$68.3 million is funded by the Navy. The Air Force funding for 
development includes the Program Definition and Risk Reduction (PDRR) 
contracts awarded to Lockheed Martin and McDonnell Douglas in June 
1996, the Engineering and Manufacturing Development (EMD) contract to 
one of those two contractors in July 1998, integration of JASSM on the 
Air Force threshold aircraft (F-16 Blk 50 and B-52H), all required test 
support (flight test, live fire test, aircraft modifications, target 
construction, etc), and associated program and mission support costs. 
The Navy funding for development includes integration on the Navy 
threshold aircraft (F/A-18E/F) and testing unique to the Navy 
requirement. The Air Force missile procurement budget is $1,793.4 
million for the programmed buy of 2400 weapons. The Air Force's 
requirement for production funding begins in FY00 for low rate initial 
production. The Navy currently has no funds in the FYDP for JASSM 
procurement.
    Question. What are the major areas of risk on the program?
    Answer. The Joint Program Office has identified the following two 
areas as potential schedule risks for the overall JASSM development 
effort:
    a. F-16 aircraft integration (moderate risk). The F-16 Operational 
Flight Program (OFP) which adds JASSM capability is scheduled for 
fielding in December 2003. January 2004 is the Acquisition Program 
Baseline threshold date for F-16/JASSM Required Assets Available (RAA). 
Thus the OFP tape is the primary schedule risk area for F-16 threshold 
aircraft integration. Developmental test tapes will be produced to 
support JASSM PDRR and EMD flight test to mitigate F-16 integration 
risk.
    b. Mission planning (moderate risk). The mission planning for a 
seeker is not easy and could pose a schedule risk. Mission planning 
performance is a critical component to the total system performance. 
Mission planning elements considered by the JASSM contractors include 
acquisition of target ``signature'' data, database preparation and 
distribution, integration of products into existing structure, 
weaponeering and aircraft sortie generation, and the final preparation 
of mission planning products. Additionally, the mission planning must 
be compatible with the air tasking order (ATO) cycle. The system must 
take advantage of existing Air Force and Navy intelligence, C41, and 
mission planning systems (Air Force Mission Support System (AFMSS) and 
Tactical Aircraft Mission Planning System (TAMPS)). A JASSM mission 
planning module will be incorporated into both the AFMSS and TAMPS.
    Question. What is the Air Force doing to manage these risks?
    Answer. F-16 Aircraft Integration: The JASSM Joint Program Office 
(JPO) chartered a Joint Interface Control Working Group (JICWG) to 
manage risk associated with missile/aircraft integration, including the 
F-16. The JICWG includes the JASSM JPO, host aircraft System Program 
Offices (SPOs)/Program Management Agencies, JASSM prime contractors, 
aircraft prime contractors, and other involved Government agencies. The 
JICWG along with Memoranda of Agreement (MOAs) and Associate Contractor 
Agreements (ACAs) among government agencies and contractors will be 
used to reduce risk during the Program Definition and Risk Reduction 
phase. In addition, developmental test tapes will be produced to 
support JASSM PDRR and EMD flight test to mitigate aircraft integration 
risk.
    Mission Planning: The JASSM mission planning effort, including risk 
reduction, is managed through the JASSM mission planning Intelligence 
Support Working Group (ISWG). The ISWG includes the JASSM JPO, the 
AFMSS SPO, TAMPS JPO, JASSM prime contractors, and Government 
intelligence and mission planning agencies. Formal agreements between 
participating organizations include: (1) Interface impact assessment, 
interface problem and integration resolution through the ISWG; (2) 
Documentation to establish, define, and control interface requirements; 
and (3) Higher level interface management under the purview of the 
Interface Control Steering Group and the Interface Management Board. 
MOAs are being established between appropriate organizations, and ACAs 
will be required between the mission planning, aircraft, and weapon 
contractors.

                    Large Aircraft Reengine Programs

    Question. In the past several years, there has been a lot of 
interest in both industry and the Pentagon in replacing old engines in 
many of the Air Force's large aircraft with modern, fuel efficient, 
highly reliable commercial engines. Congress has already funded 
reengine programs for the KC-135 tanker and the RC-135 Rivet Joint. 
Reengine programs for AWACS, B-52, and JSTARS are also under 
consideration. Secretary Widnall, has the Air Force developed a 
comprehensive strategy for dealing with the need to reengine these 
aircraft? If so, can you outline this strategy to the Committee?
    Answer. A study is being initiated to look at feasibility of a 
comprehensive program. The potential operational benefits are longer 
effective time on station, higher altitudes, higher reliability, 
improved fuel efficiency, and reduced noise. Cost analysis studies show 
independent reengining of aircraft types are not cost effective, 
however, a comprehensive reengining program could offer potential 
sayings from economy of large numbers; cheaper, more reliable engines; 
and new/innovative ideas.
    Question. Last year, reengining the AWACS was the sixth priority on 
the Air Force unfunded priority list and Congress provided funding to 
initiative the program. We now understand the Air Force completed a 
study in August 1996 and concluded that such a program might not be 
cost effective and so the Air Force did not fund the program in FY 1998 
and out. What is the basis of the study's conclusion that reengining 
AWACS is not cost effective? Why didn't the Air Force inform the 
Committee of this conclusion in August prior to the Appropriation 
Conference in September?
    Answer. The study found that the reduced operations and support 
costs for a re-engined AWACS fleet (increased fuel efficiency, 
decreased maintenance, etc.) did not recoup the large investment costs 
required for re-engining. There was no cost payback in O&S in either 
the lease or buy scenario for operations of the fleet through the 
expected life of the system (2025). A summary of the study findings 
will be submitted to Congress by 1 April 1997 per the FY 1997 
Appropriations Conference Language.
    The cost study results presented in late August 1996 showed there 
was no cost benefit to re-engine AWACS for operations through 2025. Re-
engining does, however, provide operational benefits such as increased 
surveillance volumes, improved time on station, and reduced noise. It 
was not until late CY 1996 (after the Conference actions closed) that 
the Air Force made the final decision not to pursue re-engining in the 
FY 1998 President's Budget.
    Question. Last year, the Congress asked the Air Force to evaluate a 
proposed B-52 engine lease program. Now that you have had a chance to 
evaluate the proposal, what are the pros and cons of such a lease 
program?
    Answer. The Air Force has completed its report on B-52 re-engining 
and will forward the report to Congress in the near future.
     The PROS of the new Allison/Rolls Royce RB211 engines include 
improved operational capability and improved maintainability. Some 
examples: solves the JP-8 cold start problem with the current TF33 
engine, reduces takeoff fuel loads for training; reduces scheduled 
engine removal rate, makes engine design more robust and resistant to 
foreign object damage, and provides an engine which is 33% more fuel 
efficient.
    The CONS include affordability, high termination liability, 
statutory issues and unknown future force structure. The estimated 
additional cost is over $1.3 billion. There is high termination 
liability; over $2 billion in FY08. the Air Force would need statutory 
relief to permit a contracting officer to lease ``equipment'' long-
term. Anti-Deficiency Act. 31 U.S.C. section 1341 prohibits obligations 
in advance or in excess of appropriations by Congress. A long-term 
lease would obligate the government to support the aircraft fleet as 
currently projected, not allowing for force structure changes which may 
occur from QDR or subsequent realignments.
    Question. How does the Air Force propose to proceed with respect to 
B-52 engines?
    Answer. Based on studies to date, the Air Force currently does not 
have plans to make any major changes to B-52 engines (TF33s).

                          Information Warfare

    Question. Information Warfare involves the disruption of an 
adversary's information systems. For example, instead of using a smart 
bomb to destroy a command and control center, we could instead use a 
computer virus to achieve the same end. The good news is that the 
United States, being on the forefront of information technologies, is 
in an excellent position to develop offensive capabilities. The bad 
news is that we are more dependent on information systems, and 
therefore, more vulnerable to disruption of these systems. John Deutch, 
as director of the CIA, assessed computer-based ``cyber'' attacks as a 
threat second only to nuclear arms and other weapons of mass 
destruction. There are numerous computers in our aircraft, our 
missiles, and our command and control systems. What are you doing to 
ensure the systems you are procuring for the Air Force will be safe 
from such ``cyber'' attacks?
    Answer. Efforts are underway within the Air Force Material Command 
(AFMC) to institutionalize an Information Warfare Vulnerability 
Assessment and Risk Management (IW VA/RM) process for all procurements 
as part of each Program Protection Plan. IW VA/RM addresses system 
security from program concept phase through the system procurement life 
cycle in risks versus system vulnerabilities, threat, vulnerability 
countermeasures, and cost benefit analysis. Current weapon systems that 
have been evaluated utilizing Vulnerability Assessment and Risk 
Management process with systems assessments are Joint STARS, F-15E, and 
the Theater Battle Management System.
    Question. Do you feel the Air Force is currently ahead or behind 
the threat as it relates to defending our systems from ``cyber'' 
attack?
    Answer. We are aggressively defending our systems from ``cyber'' 
attacks, but the threat is increasing. The Air Force is beginning to 
field the Base Information Protection (BIP) portion of the Combat 
Information Transport System (CITS) to address the following areas:
     Boundary Protection which prevents unauthorized external 
access of data and systems.
     Intrusion Detection which detects near-real-time security 
anomalies in computer network activity.
     Internal Control which prohibits mis-use of systems and 
data through posture reporting.
     Recovery Systems which recovers from damage caused by 
breach in network security.
     Denial of Service Attacks which protects from structured 
attacks inhibiting network services.
    The Air Force has a research and development program in place to 
address technology advances and keep ahead of future threats.
    Question. What are your suggestions for how we may best add 
resources to reduce our vulnerability to such attacks:
    Answer. The Air Force fully supports the funding for Information 
Warfare (IW) in the Presidents' budget as the minimum set of measures 
to protect and defend Air Force information systems against IW attack 
and to manage the risks associated with such attacks. The Air Force 
must, however, also address our vulnerabilities to evolving IW threats.
    We may best add resources to reduce our vulnerabilities to IW 
attacks as follows:
     Increase education and training in threat awareness and 
information system administration and protection.
     Implement the formal IW Risk Management and Vulnerability 
Assessment Program that the Air Force developed to provide programs 
with the skills and tools to conduct their own IW vulnerability 
assessment and support risk management decisions.
     Provide the capability to integrate IW protection across 
Air Force weapons and information programs and systems to ensure that 
critical mission functions are not interrupted.
    The Air Force would use added resources to emphasize support tools 
to IW warfighting units to monitor systems for IW attacks, and to 
provide IW situational awareness, C2 decision aids, and damage 
assessment/recovery. These tools are essential for counter information 
modernizing planning and requirements development. To achieve these 
objectives, the Air Force estimates that $2.0 million would be needed 
each year (FY99 to FY03) for a total of $10.0 million. The Air Force is 
examining ways to fund this offset through a realignment of internal 
Air Force resources.
    Question. How is the military's growing interdependence with 
civilian information infrastructure going to impact the vulnerability 
of the Air Force now and in the future?
    Answer. Air Force systems vulnerability will need to be evaluated 
due to their dependence on the civilian information infrastructure. 
Systems evaluations will need to address this dependence and ensure 
that they are protected and can contain damage and ensure that mission 
critical functions continue. This vulnerability impact is being studied 
by the Presidential Commission on Critical Information Protection 
(CIP). The DOD has a CIP working group with a sub-group for Information 
Assurance to address these issues.

              Tri-Service Standoff Attack Missile Lawsuit

    Question. The government terminated the A-12 contract for 
``default'', but terminated the TSSAM (Tri-Service Standoff Attack 
Missile) for ``the convenience of the government''. Both programs 
suffered similar problems in terms of cost, schedule, and poor 
performance after expenditure of billions of dollars each. Termination-
for-default means that the contractor is held liable for overruns, 
while under a termination-for-convenience the contractor is not 
penalized for its poor performance. Secretary Money, the Committee is 
surprised to learn that the TSSAM contractor (Northrop-Grumman) has 
filed suit against the government to recover $750 million of 
``uncompensated performance costs, investments and a reasonable 
profit'' on this terminated program. What are your views on the merit 
of this lawsuit?
    Answer. The TSSAM contractor filed a lawsuit against the United 
States in the United States Court of Federal Claims on 2 December 1996. 
The United States is being represented in the lawsuit by the Department 
of Justice. Because the matter is in litigation, I am not able to 
answer questions about this lawsuit.
    Question. When the contract was originally terminated for 
convenience, didn't the government and the contractor reach agreement 
on a fair settlement cost? If so, what has changed?
    Answer. There was no agreement at that time.
    Question. How do you characterize the contractor's performance on 
this program?
    Answer. I cannot comment since this matter is in litigation.
    Question. Did the government get its money's worth from the $3 
billion investment made in this program?
    Answer. I cannot comment since this matter is in litigation.
    Question. How much could the government have to spend to defend 
itself in court against this lawsuit?
    Answer. The Department of Justice is defending the United States in 
this case. I cannot comment since this matter is in litigation.
    Question. Where would the Air Force get its share of $750 million 
if it had to pay additional TSSAM costs under a court penalty?
    Answer. Generally, a court judgment against the United States is 
paid from the judgment fund, and an agency is required to reimburse the 
judgment fund from its available funds or by obtaining additional 
appropriations.
    Question. Would it likely come from weapons modernization funding?
    Answer. Generally, a court judgment against the United States is 
paid from the judgment fund, and an agency is required to reimburse the 
judgment fund from its available funds or by obtaining additional 
appropriations. It is my understanding that cases of this size may last 
for several years, and I cannot project into the future from what 
particular sources any ultimate judgment against the United States 
might be paid.

                      Joint Strike Fighter Program

    Question. The 1998 budget requests $931 million for concept 
development of the Joint Strike Fighter which would become the largest 
acquisition in the history of the Department of Defense in terms of 
total cost. Mr. Money, what is the status of the Joint Strike Fighter 
development program?
    Answer. The Joint Strike Fighter Program (JSF) plans to develop and 
deploy a family of aircraft that affordably meets the next-generation 
strike needs of the Air Force, Navy, Marine Corps and allies. JSF 
Program activities are centered around three distinct objectives that 
provide a sound foundation for start of Engineering and Manufacturing 
Development (E&MD) in 2001:
          (1) facilitating the Services' development of fully 
        validated, affordable operationally requirements;
          (2) lowering risk by investing in and demonstration key 
        leveraging technologies that lower the cost of development, 
        production and ownership; and
          (3) demonstrating operational concepts.
    A multi-year $2.2 billion JSF Concept Demonstration effort 
commenced in November 1996 with competitive contract awards to Boeing 
and Lockheed Martin for Concept Demonstration Programs. These competing 
contractors will build and fly concept demonstrator aircraft, conduct 
concept unique ground demonstrators, and continue refinement of their 
ultimate delivered weapon system concepts. Specifically, Boeing and 
Lockheed Martin will demonstrate commonability and modularity, STOVL 
hover and transition, and low speed handling qualities of their 
respective weapon system concepts. Pratt and Whitney is providing 
propulsion hardware and engineering support for both Boeing's and 
Lockheed Martin's on-going JSF Concept Demonstration efforts. The JSF 
Alternate Engine Program, with General Electric, continues technical 
efforts related to development of an alternate engine for production in 
order to reap the financial and operational benefits of competition.
    Early warfighter and technologies interaction continues as an 
essential aspect of the JSF requirements definition process, and is key 
to achieving JSF affordability goals. To an unprecedented degree, the 
JSF Program is using cost-performance trades early as an integral part 
of the weapon system development process. The Services' completion of 
the Joint Operational Requirements Document is planned in FY 2000 to 
support the Milestone II decision in FY 2001 for start of E&MD.
    A sizable technology maturation effort is underway to reduce risk 
and life cycle cost (LCC) through technology maturation and 
demonstration. The primary emphasis is on technologies which have been 
identified as high payoff contributors to affordability, 
supportability, survivability and lethality. Numerous demonstrations 
have been accomplished and others are in process to validate 
performance and LCC impact to component, subsystem, and the total 
system.
    Question. Last year, concern was expressed by the House National 
Security Committee over the viability of the ASTOVL variant of the 
aircraft for the Marines (to replace AV-8B Harriers). Please discuss 
the issue and how it was resolved, and please verify for us that the 
Defense Department is committed to developing an ASTOVL variant of the 
aircraft.
    Answer. Last year the House Authorization bill stated that no JSF 
funds could be spent for Advanced Short Take-Off/Vertical Landing 
(ASTOVL) development. Neither the House Appropriations bill nor the 
Senate Authorization and Appropriations bills contained that language. 
In fact the House Appropriations bill contained language stating that 
the JSF STOVL variant must be developed ahead of or concurrently with 
the other variants. Neither of the final FY97 Defense Authorization of 
Appropriations bills contained STOVL prohibitions. We believe that 
support for ASTOVL development to be strong both on the committee and 
in the House.
    The Defense Department is fully committed to development of a STOVL 
JSF variant for the Marines. The JSF program is fully funded within the 
FYDP and STOVL is an integral part of it.
    As you know we are in the Program Definition and Risk Reduction 
phase (PH&RR) of JSF now. The Concept Demonstration portion of PH&RR 
requires each industry team to build two flying demonstrators, one 
conventional and one STOVL. Demonstration of STOVL hover and transition 
is a key aspect of this phase and is required by the Single Acquisition 
Management Plan. The Concept Demonstration program provide two 
different STOVL approaches and aerodynamic configurations, and 
maintains a competitive environment between contractors prior to 
Engineering and Manufacturing Development (E&MD). Additionally 
propulsion development continues during this phase with a byproduct of 
STOVL development being significant improvements in single engine 
durability and reliability for all variants. In short, we feel that we 
have a strong STOVL development program within JSF and we are committed 
to maintaining it.
    Question. Most of us remember the Air Force's ``Great Engine War'', 
where a billion dollars were spent to bring second contractor into the 
fighter engine business and which resulted in better engines at 
significantly lower cost. DoD recently signed a $97 million ``alternate 
engine'' contract for the Joint Strike Fighter. Please explain your 
strategy and your plan to use $10 million provided by Congress for risk 
reduction to facilitate this effort.
    Answer. During the JSF Concept Development Phase, all three 
competing weapon system contractors chose the Pratt and Whitney F-119 
or derivative as the primary propulsion system for the Concept 
Demonstration Phase. Recognizing the financial and operational benefits 
of competition, the JSF Program is pursuing the development of a 
competitive engine for production.
    Phase I of this effort began in FY 1996 with a General Electric 
study effort to determine the comparative Life Cycle Cost and 
performance of the GE F110 and YF120 derivative engines in each of the 
preferred weapon system concepts. Based on the study results, the 
government selected the YF120 engine derivative for continued 
development. Phase I initiated preliminary design risk reduction 
studies, systems design/integration, cycle refinement, and component 
design and associated technology maturation for the YF120 derivative 
engine. Phase II, which commenced in FY 1997, will continue detailed 
design and begin hardware testing of the YF120 engine, culminating in 
core testing beginning in FY 1999. The JSF Engineering and 
Manufacturing Development program will continue development of an 
alternate engine, with production competition currently planned 
effective with Production Lot 5.
    Congress appropriated an additional $10 million for FY 1997 
competitive engine efforts. This funding will be used for a variety of 
risk reduction efforts including the following: turbine rig test and 
analysis, core integration, core supportability, material 
characteristics, weapon system concept integration, and diagnostics.
    Question. Please discuss your plans for cooperation with other 
nations in this program, and what they bring to the table in terms of 
capabilities and financial contributions.
    Answer. The JSF Program Office has established a framework to 
accommodate international participation during the concept 
demonstration phase of the program. Currently, the United Kingdom is on 
board as a full collaborative partner, with emphasis on the JSF STOVL 
(Short Take-Off and Vertical Landing) variant. The UK is contributing 
$200 million to the program for this phase. The Netherlands, Norway and 
Denmark will soon join the program as associate partners, with primary 
interest in the JSF CTOL (Conventional Take-Off and Landing) variant. 
The total planned financial contribution for this effort is $32 
million; signature of the multilateral agreement is planned in April 
1997. The Canadians have formally requested to join the program and 
negotiations are expected to commence in April 1997. Numerous other 
countries have received briefs on the program and are interested as 
well.
    Benefits to be derived from international participation in the 
program include a harmonization of the requirement with our allies 
which will lead to improved interoperability, strengthened 
international ties and lower overall program cost as a result of future 
anticipated international buys of the JSF (i.e., lower unit cost).
    Firm financial contributions and associated efforts are 
incorporated in JSF Program plans and funding and are reflected in FY 
1998 President's Budget requests.

                       Cheyenne Mountain Upgrades

    Question. Cheyenne Mountain is the Nation's strategic facility for 
warning of an incoming nuclear attack on our country. During the last 
two decades, the Air Force has had great difficulty effectively 
modernizing the computers within the facility. Mr. Money, what is the 
status of the computer upgrades at Cheyenne Mountain?
    Answer. To improve resource management and implement the remaining 
portions of the CMU program in an incremental acquisition, a four-
phased replan of the remaining CMU program were proposed and approved 
by the user community, SAF/AQ, and the Office of the Secretary of 
Defense's Command, Control, Communications and Intelligence (C3I) 
Systems Committee in August 1994.
    The first phase was scheduled for completion of basic Air, Space 
and Missile Warning efforts by 30 November 1995. This effort was 
successfully completed, installed, and operationally accepted by the 
User on 13 Sept 1995. A second (Missile Warning Mission) phase, closely 
integrated with the Space Command's Integrated TW/AA software releases, 
was to be completed by an objective date of June 1996. This effort was 
successfully completed, installed, and tested by AFOTEC by 16 August 
1996, and fully operationally accepted by CINCSPACE on 11 Oct 1996. A 
third (Air Warning Mission) phase, also closely integrated with the 
Space Command's Integrated TW/AA software releases, was to be completed 
by an objective date of June 1997. This effort was successfully 
completed, installed, and completed Operational Assessment on 28 Feb 
1997. Air Mission Operationally Acceptance and Approval is on schedule. 
A fourth (Space Warning Mission) phase is scheduled for completion by 
an objective date of June 1998. This effort is on schedule. An 
integrated system IOT&E will follow phase four and is scheduled for 
completion by March 1999. This effort is on schedule.
    Overall Status: The Cheyenne Mountain Upgrade Program is on 
schedule to be completed, installed and fully operational by 31 March 
1999.
    Question. What actions has the acquisition community taken to 
strengthen the management of these programs, and what success have you 
had?
    Answer. The Integrated TW/AA Community, including the acquisition 
community has taken a number of actions to strengthen the overall 
Cheyenne Mountain program. Many of these actions were taken as part of 
the 1994 replan of the Cheyenne Mountain Upgrade (CMU) program and have 
previously been reported to the Congress.
    Cooperative approach to CMU Implementation. The key, and most 
critical action has been the establishment of a mutually cooperative 
approach among the acquisition, user, and test communities in the 
completion, installation and test of the CMU program. The actions noted 
in our 1995 report to the Congress, and our successful actions since 
then are a result of all elements of the various communities working 
together.
    Integrated Tactical Warning/Attack Assessment System Program 
Office. To more effectively manage the support of the Integrated TW/AA 
network and the Cheyenne Mountain Complex, AFMC, and SAF/AQ established 
an Integrated TW/AA SPO under the Air Force Program Executive Office 
for Command, Control, and Communications. The SPO contains the CMU, 
Missile Warning and Space Surveillance Systems (MWSSS), and CINC Mobile 
Alternate Headquarters (CMAH) programs. This IWSM SPO is now 
responsible for the Integrated TW/AA C4, the Integrated TW/AA ground 
based missile warning and space surveillance sensors, and the mobile 
command centers. The Integrated TW/AA SPD is located in Colorado 
Springs and provides direct response and support for the NORAD/Space 
Command Users.
    Systems Engineering, Integration and Text (SEIT) Team. The 
establishment of an integrated team of experts from Electronic Systems 
Center (ESC), AFSPC, the CMU contractors, and the testers to identify 
and solve, on-site, CMU problems has been critical to the 
implementation of the replan. This team, working with the users, 
testers, and the contractors, ensures that the scheduled CMU work is 
understood, that all critical deficiencies have been corrected, and 
that the system is ready for testing. If problems are identified, the 
SEIT team priorities the solution effort with an action plan involving 
all stakeholders including the user and test communities, and expedites 
the solutions. The team also identifies and resolves Integrated TW/AA 
issues which must be worked with NORAD, USSPACECOM, AFSPC and other 
Integrated TW/AA organizations. The SEIT is also responsible for all 
CMU integration activities, including integrated test scheduling.
    Integrated Planning and Scheduling. The close integration of all 
the schedules for the contractors, System Program Office (SPO), and 
user events in Cheyenne Mountain has been key to deconflicting the 
development, test and operational work in the SWSC and Cheyenne 
Mountain. With CMOC in the lead, test accountability has been 
established through metrics and mandatory weekly/monthly updates. The 
Integrated Scheduling team now has a clear understanding of what time 
and resources are available, and what the user, developer and testers 
needs are for the system in any Phase. With this understanding, the 
scheduling team, the SEIT, the SWSC, and AFSPC can now rapidly respond 
to and reliably schedule corrective actions and testing.
    Test Management And Training. The SPO assigned a top-level test 
manager (senior O-5) to the CMU effort to provide senior on-site 
oversight and decision making of all development testing. As part of 
this enhancement of the CMU test capability the SPO also provided 
training to hundreds of SPO, contractor and user test managers, test 
monitors and test directors. This significantly expanded the number of 
people available to conduct development tests and resolves one of the 
major test resource contention problems.
    Interface Control Document (ICD) Development. Inadequate interface 
descriptions for the Integrated TW/AA programs and interfaces has been 
a continuing problem. While CMU is only a small part of this Integrated 
TW/AA system problem, ESC, Air Force Materiel Command (AFMC), the Space 
System Support Group (SSSG), and AFSPC have been working since 1992 to 
identify the interfaces and build a joint Integrated TW/AA ICD database 
containing the interface descriptions and data. Approximately 167 
interfaces in 68 Integrated TW/AA subsystems have been identified to 
date with system documentation on-going.
    AFMC Integrated TW/AA System of Systems Management. To improve 
overall Integrated TW/AA system management and engineering, AFMC has 
established a General Officer Broad Area Review (BAR) group to oversee 
the management of the entire Integrated TW/AA system. Under this group, 
AFMC has also established a Colonel level action group (O-6 AG) to 
provide a single AFMC Integrated TW/AA point of contact to address 
issues that cut across Integrated TW/AA systems. The group, chaired by 
the Integrated TW/AA System Program Director (SPD), is responsible for 
development and sustainment, from an interoperability perspective, of 
Air Force systems that are part of the Integrated TW/AA network. 
Membership is from Integrated TW/AA SPO (CMU, Missile Warning and Space 
Surveillance Systems (MWSSS) and CINC Mobile Alternate Headquarters 
(CMAH)), Atmospheric Early Warning Systems (AEWS), Space Based Infrared 
System (SBIRS), and NUDET Detection Systems (NDS) system program 
offices.
    SWSC Integration Into AFMC. We have completed the integration of 
the SWSC into the Cheyenne Mountain Complex program within the 
Integrated TW/AA SPO. This action puts all the software development and 
support capability for Cheyenne Mountain under the integrated direction 
of the Cheyenne Mountain Complex Integrated Weapon System Management 
(IWSM) program manager to more effectively respond to the operational 
needs of AFSPC.
    Oversight. SAF/AQ has continued a regular cycle of management 
reviews in Colorado Springs. These process reviews are jointly held 
with AFSPC and provide senior (SAD/AQ, AFSPC/CV, ESC/CC, AFOTEC/CC, 
AFPEO/C3 and CMOC/CC) review and assessment of the progress of the CMU 
effort. These reviews have been held about every four months. The next 
review is scheduled for 23 May 1997.
    Question. How much is in the 1998 budget for Cheyenne Mountain 
upgrades, by project and in total?
    Answer. R&D funding for Program Element 0305906F NCMC-TW/AA Systems 
in FY98 totals $7.362 million, broken out by project as follows: 
Project 3880 Cheyenne Mountain Upgrade $0.603 million, Project 3881 
Integrated TW/AA $5,132 million; and Project 4409 Legacy Interfaces 
$1.627 million. Procurement funding in the Cheyenne Mountain Complex P-
1 line totals $0.737 million, none of which is for the Cheyenne 
Mountain Upgrade. In the Comm-Electronics Modifications P-1 line, 
$5,261 million is allotted to Cheyenne Mountain Complex modifications, 
broken out as follows: Mod#S529382 Tech Control (Bytex) $4.000 million; 
#S604622 Electronic Warfare Workstation $0.575 million; and S604622 
Miscellaneous Low Cost Mods $0.686 million.
    Question. What is the current cost estimate of each of the projects 
within the Cheyenne Mountain Upgrade in then year dollars, and how does 
this compare to the last program funding baseline?
    Answer. The Acquisition Cost in the Acquisition Program Baseline 
for the Cheyenne Mountain Upgrade program has not changed from $1663.0 
million in change 2 to the APB, dated 09/03/92. The APB is not broken 
out by project, only by R&D ($1294.0 million) and Procurement ($369.0 
million). The current cost estimate (from the Cheyenne Mountain Upgrade 
31 Dec 96 SAR) is $1750.6 million, $1407.3 million in R&D and $343.3 
million in Procurement. The current estimate is $87.6 million or 5.3% 
higher than the 1992 APB estimate. By project, the R&D funds are: 
Project 3880 CMU $1297.1 million; Project 3881 Integrated TW/AA $62.7 
million; and Project 4409 Legacy Interfaces $47.5 million. The 
Procurement funds ($343.3 million) are all CMU. The Acquisition Cost 
Estimate in the SAR does not include post-CMU R&D funding in the 
Integrated TW/AA project (3881) from FY00 to FY03, totaling $16.1 
million, nor any of the Comm-Electronics Mod funding for the Cheyenne 
Mountain Complex, totaling $54.7 million from FY98 through FY03.
    Question. When will all the upgrades be completed, installed and 
fully operational?
    Answer. All the modifications to Cheyenne Mountain planned as part 
of the Cheyenne Mountain Upgrade Program will be completed, installed 
and fully operational by 31 March 1999.

                Evolved Expendable Launch Vehicle (EELV)

    Question. The Evolved Expendable Launch Vehicle (EELV) is being 
developed to replace the current fleet of medium and heavy lift class 
launch vehicles with a more affordable family of space launch vehicles. 
The fiscal year 1997 budget request for EELV is $63.3 million to 
support pre-EMD work prior to one contractor for development and 
production in June of 1998. What are the major goals of the EELV 
program in this year and in fiscal year 1998?
    Answer. The EELV Pre-Engineering, Manufacturing, and Development 
(Pre-EMD) contract was awarded in Dec 96. The Air Force goal during 
this fiscal year is the continued contractor development of the system 
design, demonstrate key technologies, update Life Cycle Cost estimates, 
and support of the Environmental Impact Analysis Process (EIAP). In 
FY98, the goal is to complete the Pre-EMD contract and downselect to 
one EMD contractor in Jun 98. The Pre-EMD contracts will mature the 
design and produce the EELV developmental, product, and interface 
control specifications. To award the EMD contract and downselect to one 
contractor, we will issue a Request For Proposal (RFP), conduct a 
Downselect Design Review (DDR), and seek Milestone II approval to enter 
EMD.
    Question. What are the current cost reduction goals for the EELV 
program vice the costs of the Titan, Atlas, and Delta launch programs?
    Answer. The EELV program goal is a cost reduction of 25-50% in Life 
Cycle Cost over current systems. This equates to approximately $5-10 
billion (constant FY95 dollars) in savings from 2002-2020.
    Question. Describe the Air Force's acquisition strategy for EELV 
after the downselect.
    Answer. After the downselect in approximately Jun 98, the Air Force 
will have one contractor execute the EMD phase of the program. At this 
time, the government anticipates a $1.6 billion, Cost Plus Award Fee 
contract, with a period of performance of 6 years. The winning 
contractor will conduct a tailored critical design review not later 
than Dec 98. The contractor will conduct two system test flights to 
collect payload environmental data, validate manufacturing processes, 
modify and activate launch facilities and support systems, and obtain 
the necessary environmental and operating permits. After the system 
test flight of the medium lift variant in FY01, and six medium 
operational launches in FY02, DoD will hold Milestone III review in 
FY03, where OSD will review progress and decide whether to approve the 
system for full rate production. In FY03, the Air Force will fly the 
test flight of the EELV heavy lift variant.
    Question. What percentage of total EELV development costs are 
related to the heavy lift variant?
    Answer. EELV is being developed as a system and each of the two 
contractor concepts satisfies a variety of payload requirements with 
different family configurations built around the common core and common 
upper stages. There is no clear distinction, other than perhaps a 
fairing unique to a heavy variant and the cost associated with the 
heavy test flight. Therefore, there is no separate, distinguishable 
amount related to development of the heavy capability.
    Question. Have there been any revisions to the national mission 
model being used by the Air Force to compute EELV program savings since 
last year? If so, what are they?
    Answer. Yes. The projected savings for the EELV program was based 
was on the Jan 96 National Mission Model (NMM) and in Dec 96, the NMM 
was updated. The launch vehicle quantities remained the same, however, 
some mission launch dates moved slightly to the right. These launch 
schedule changes had a negligible effect on the projected $5-10 billion 
cost savings for the EELV program.
    Question. Is it still economical for the government to develop the 
heavy lift variant of EELV given the extremely limited number of heavy 
launches assumed in the national mission model?
    Answer. Yes. Due to the high cost of the Titan IV program, the 
small marginal cost of developing the EELV heavy lift variant, and the 
estimated 25-50% cost reduction for heavy lift, it is still economical 
to develop the heavy lift variant of EELV.

                  Spaced Based Infrared System (SBIRS)

    Question. The Space Based Infrared System (SBIRS) is being 
developed as the follow on to the Defense Support Program (DSP) to 
provide initial warning of a ballistic missile attack on the United 
States, its deployed forces or its allies. The system will consist of 
satellites in geosynchronous, highly elliptical and low earth orbits. 
The low earth portion of SBIRS, the space missile tracking system 
(SMTS), will support theater missile defense requirements. Describe the 
present acquisition strategy for SMTS.
    Answer. SBIRS Low (formerly SMTS) supports all four mission areas 
of the overall SBIRS program: missile warning, ballistic missile 
defense, technical intelligence and battle space characterization. 
SBIRS Low contributes the unique capability of post boost mid-course 
track to both theater and national missile defense missions. SBIRS Low 
will enter a full and open competition for Pre-EMD in 2Qtr FY99. Two 
contractors will be selected and will complete a System Design Review 
and a System Functional Review with a down select to one EMD contractor 
in 2Qtr FY01. First launch is scheduled for 3Qtr FY04.
    Question. Why did the Air Force find it necessary to compete the 
SMTS flight demonstration system?
    Answer. To foster competition and to have technical alternatives 
given the high risk involved and relative immaturity of the system 
concepts.
    Question. Describe the results of the SMTS critical design review 
earlier this year.
     Answer. The TRW Flight Demonstration System contract conducted a 
successful CDR in December of 1996. All of the CDR entry and exit 
criteria were satisfactorily dispositioned. A complete FDS system 
design concept was presented. Based on simulations, analyses and 
measured component level data, the design's projected capability 
exceeds all threshold FDS key performance measures. Similarly, all 
lower level technical performance measures are being met or exceeded. 
The design is mature, but there are still significant challenges in 
fabrication, assembly and test. A payload pathfinder and spacecraft 
electrical mock-up will be put through rigorous ground tests to 
validate system interfaces and functional capability before completing 
fabrication and delivery of flight hardware and software. The planned 
on-orbit test program is designed to provide the data most critical to 
making a deployment decision in the first year of FDS test operations. 
The second year of on-orbit test will expand the demonstrated 
performance envelope and build confidence in the SBIRS Low concept. The 
ground system fabrication has begun and a demonstration of some of the 
expected control screen displays was provided.
    Question. What would you characterize as the principal technical 
and producibility risks for SMTS at this time?
    Answer. The primary technical risks include:
          --Long wave infrared sensors and cryocooler technologies to 
        support stressing cold-body targets;
          --Integration into an overall system;
          --Autonomous on-board processing and operations; and
          --Real-time command/control in support of multiple mission 
        areas.
    The main producibility risks include:
          --Obtaining the level of radiation hardening required at an 
        affordable price;
          --Production build up for rates required to support FY04 
        deployment; and
          --Achieving long-life and stressing capabilities at an 
        affordable price.
    Question. It is the Committee's understanding that the fiscal year 
1998 budget request for SBIRS supports a 2004 launch date for the first 
operational SMTS satellite. Is this accurate? Is any additional funding 
required to maintain this schedule?
    Answer. The FY1998 budget request did include the estimated funding 
required to support an FY04 first launch. The projected funding is 
based on a cost assessment conducted in early FY97. This is the best 
estimate available at this point in time. This estimate will be updated 
at a SBIRS FY97 DAB and again refined in FY99 during the SBIRS Low Pre-
EMD.

                       Acquisition Program Issues

    Question. Should extra funds be made available for the Defense 
Department this year, the Committee would like to know where some 
investments can be made which would have a potentially high payback. 
What are the top ten unfunded requirements in each R&D and procurement 
account in the Air Force?
    Answer.

------------------------------------------------------------------------
                    R&D                              Procurement
------------------------------------------------------------------------
1. Sensor to Shooter......................  1. Force Protection.
2. Engine Component Improvement Program...  2. Global Air Traffic
                                             Management.
3. Aging Aircraft.........................  3. Navigation Safety Phase
                                             II.
4. Precision Guided Munitions.............  4. Base Information
                                             Protection.
5. Range Standardization & Automation.....  5. Sensor to Shooter.
6. Global Command & Control System........  6. Bomber Modernization.
7. AWACS Extend Sentry....................  7. F-15C/D PW-220E Engine.
8. Spacetrack.............................  8. Precision Guided
                                             Munitions.
9. Nuclear Command and Control............  9. Range Standardization &
                                             Automation.
10. Threat System Modeling Vehicles.......  10. Mission Operations.
------------------------------------------------------------------------

    Note: Sensor to Shooter, Precision Guided Munitions, and Range 
Standardization & Automation are on both lists because they require 
both R&D and procurement appropriations.
    Question. Identify all production programs for which funds are 
included in the fiscal year 1998 budget request where fiscal 
constraints have prevented acquisition of sufficient quantities in 
either fiscal year 1998 and/or accompanying FYDP to meet validated 
military requirements/inventory objectives.
    Answer.
                            AIR SUPERIORITY
    Sensor to Shooter: Additional fiscal year 1998 procurement funds is 
ranked number five on the CSAF's FY98 Unfunded Priorities List. This 
initiative accelerates the ability to share digital data among combat 
platforms and ground control stations using Link 16, a standard 
datalink message format and waveform. The initiative requires $24.0 
million for Link 16 procurement on the B-1, $5.2 million for Link 16 
procurement on the F-15C/D, and $7.5 million for Link 16 procurement 
for Ground Tactical Control Stations (GTACS).
    Bomber Modernization: The B-52 modernization program includes an 
Electro-optical Viewing System (EVS) Reliability and Maintainability 
(R&M) upgrade. This program consolidates electronic hardware increasing 
Mean Time Between Failure Rates. Additional fiscal year 1998 
procurement funds ($2.9 million) will accelerate this upgrade to 
increase maintainability of aging equipment. It is number 10 on CSAF's 
Unfunded Priorities List.
    F-15C/D PW-220E Engine: The PW-220E engine modification provides 
improved safety, performance, reliability, and operability, reduced 
maintenance and logistics support and reduced life cycle cost. Funding 
an additional $73.2 million in fiscal year 1998 will accelerate the 
upgrade of 1.5 squadrons (27 PAA) and will result in a savings of 
approximately $28.3 million across the life cycle of the weapons 
system. This initiative is number 13 on CSAF's Unfunded Priorities 
List.
    Precision Guided Munitions: Current inventories of GBU-28 and CALCM 
weapons are below established requirements. These weapons are force 
multipliers, allowing better mission effectiveness while reducing 
attrition, sorties required, conflict duration, and collateral damage. 
An additional $35.6 million in fiscal year 1998 will accelerate 
procurement of these weapons and IOC dates of each by one year. This 
initiative is number 14 on CSAF's Unfunded Priorities List.
    HH-60G FLIR: There are currently tow different FLIR systems for the 
HH-60G in the Air Force inventory. The Q-16 Forward Looking Infrared 
(FLIR) is designed for full HH-60 integration. The Q-22 is a less 
expensive and less capable substitute purchased with drug enforcement 
funds by the Reserve Component. Additional funds in fiscal year 1998 
will allow procurement of the remaining 43 Q-16 sets to equip the total 
force HH-60 fleet planned for acquisition in FY04-05. The current 
Hughes assembly line is scheduled to close in FY98. Acquisition in 
fiscal year 1998 will avoid line shutdown/startup costs in FY04. These 
additional FLIRs will also preclude having to transfer existing FLIRs 
between units and aircraft to meet current operational requirements. 
Because the HH-60s have already been wired for accepting this FLIR, no 
additional installation costs are required. This initiative is number 
18 on CSAF's Unfunded Priorities List.
    F-15E Attrition Reserve Aircraft: The F-15E is the sole platform 
which can employ the GBU-15/AGM-130 data-link weapons and GBU-28 
hardened/buried target weapons. It also maintains air-to-air 
capabilities. The current Air Force planned inventory is three aircraft 
short of the requirement. An accelerated buy of these three aircraft in 
fiscal year 1998 ($100.8 million) will result in a savings of $165 
million in fiscal year 1999. This initiative is number 26 on CSAF's 
Unfunded Priorities List.
    F-16 Support Equipment: The Avionics Intermediate Shop (AIS) is 
used for test, repair, reprogramming, and modification of F-16 avionics 
LRU's. Older systems are no longer transportable and will have parts 
obsolescence problems within three years. The Air Force has procured 32 
Improved Avionics Intermediate Shops (IAIS) with several multi-year 
contracts, with a requirement to procure 17 additional IAIS sets. An 
additional $31.5 million in fiscal year 1998 will fund 7 Improved 
Avionics Intermediate Shops. This initiative is number 28 on CSAF's 
Unfunded Priorities List.
                                MOBILITY
    GATM: New start, only funds previously identified include $8.5 
million in FY98 for VC-25 initial capabilities. FY98 request includes 
$67.7 million for initial funding of Global Air Traffic Management 
(GATM) as mandated by ICAO/FAA.
    Nav Safety Phase II: The FY98 request includes $126.3 million in 
funding for SECDEF directed aircraft safety modifications. Equipment 
procurement for Phase II includes Global Positioning System (GPS), 
Enhanced Ground Proximity Warning System (EGPWS), Emergency Locator 
Transmitter (ELT), Flight Data Recorder/Cockpit Voice Recorder (FDR/
CVR), and Terminal Collision Avoidance System (TCAS) for mobility 
aircraft not currently equipped. The phase II Nav/Safety request 
initiates installation of fourth generation Enhanced Ground Proximity 
Warning Systems on all passenger aircraft and starts the installation 
of safety components on other than DV/OSA passenger aircraft. The Air 
Force is updating program requirements, executability, costs, and 
identifying aircraft retirements to more accurately define the cost. 
Air Force will provide Congressional notification of SECAF waiver for 
aircraft retiring within 5 years prior to obligation of funds.
    KC-135 DPEM: No procurement funding is tied to this issue. DPEM is 
funded from O&M accounts (3400). The FY98 request for $54.6 million 
funds the short fall of KC-135 Depot Maintenance.
    C-130 Support: The FY98 request includes $48.0 million for C-130J 
interim contractor support (ICS), support equipment and spares which 
were not fully funded by FY96 and FY97 Congressional adds of C/EC/WC-
130Js. This initiative is ranked number 22 on CSAF's FY98 Unfunded 
Priority List.
                             SPACE/NUCLEAR
    Range Standardization and Automation (RSA) Program: Fiscal 
constraints prevent timely development and acquisition of key 
components of the integrated Spacelift Range System. These fiscal 
constraints delay attainment of improved operational capabilities and 
defer operations and maintenance savings essential to the continuing 
viability of the Air Force space program.
    SCAMP terminals: Due to fiscal constraints on military satellite 
communications (MILSATCOM) terminals program, the FY98 budget request 
does not include the $9.5 million required for the installation and 
integration of 14 Extremely High Frequency (EHF) Single-Channel Anti-
jam Man-Portable (SCAMP) satellite communication terminals to provide 
Milstar connectivity to the tanker bases (6.0 million) and electro-
magetic pulse (EMP) hardened input/output devices (laptops and 
printers) for 87 EHF SCAMP terminals for CINCSTRAT ($3.5 million). The 
SCAMP terminals will provide Milstar connectivity to the tanker bases 
for secure, survivable Emergency Action Message (EAM) dissemination to 
ensure survivable force direction and reportback to strategic airborne 
assets.
    MEECN: Due to fiscal constraints on the Minimum Essential Emergency 
Communications Network (MEECN) Defense Improved Emergency Messaging 
Automated Transmission System (IEMATS) Replacement Command and Control 
Terminals (DIRECT) program, the FY98 PB request does not include $8.5 
million in procurements costs. DIRECT has a validated requirements to 
be fielded no later than 2Q FY 99 to match the scheduled AUTODIN 
closure. The FY98 PB delivers two (2) of the required eight (8) suites 
by 2Q FY99 and the remaining six by 2QFY00, one year late. By funding 
$8.5 million of procurement funds in FY98, all eight DIRECT systems can 
be delivered in FY99.
                               LOGISTICS
    Vehicular Equipment: The Vehicular Equipment procurement account in 
the Other Procurement, Air Force (3080) Appropriation has a requirement 
to replace over 40,000 vehicles; the fiscal year 1998 budget request 
asks for funds to buy only 2,370. An additional $95 million would be 
readily executable in fiscal year 1998 and would permit much needed 
modernization by funding procurement of an additional 3,000 vehicles. 
Among other vehicles, $95 million would buy over 300 flight line 
tractors, 150 forklifts, 90 construction vehicles, and 80 law 
enforcement vehicles; all critical to day-to-day Air Force operations.
    Deployable Radioscopic X-ray Devices: The FY98 budget includes $0.2 
million for nine X-ray devices for use by Explosive Ordnance Disposal 
(EOD) teams during contigency operations. Another 51 X-ray devices at 
$1.1 million are required and are unfunded in FY98. These unites 
provide a more reliable, real-time analysis of unexploded ordnance 
devices and, therefore, reduced risk to EOD personnel.
    M16A2 Modification Kits: Fielding of the improved M16A2 
modification kits for M16 rifles can be accomplished earlier and 
potentially cheaper if funds are provided in FY98.

------------------------------------------------------------------------
                                                              FY98
                 Appropriation 3011*                  ------------------
                                                       Millions    Kits
------------------------------------------------------------------------
Current Program......................................      $6.0   22,414
Unfunded Requirement.................................       2.0    7,242
Total Requirement....................................       8.0   29,656
------------------------------------------------------------------------
*Appropriation 3011 is munitions.

    The kits modify existing equipment to fire steel-jacked bullets 
with greater accuracy, range and penetration; they provide three-shot 
burst firing (vice full-automatic), modern sights, new handguards and 
stock.
                             COMMUNICATIONS
    National Airspace System: Additional fiscal year 1998 procurement 
funds in the amount of $7.0 million has been ranked a number two 
priority on the Air Force's FY98 unfunded priority accelerated list. 
This effort to procure an additional 9 digital voice switches will 
accelerate replacement of analog voice switches. This acceleration will 
improve availability and reliability of air traffic control operations.
    Additional procurement funds are required in the FYDP to meet 
validated military requirements/inventory.

----------------------------------------------------------------------------------------------------------------
                                                                      1999      2000     2001     2002     2003
----------------------------------------------------------------------------------------------------------------
Current FYDP......................................................     54.6      56.3     58.9     66.6     51.5
Plus Up...........................................................     32.78     44.9     42.3     66.9     39.4
----------------------------------------------------------------------------------------------------------------

    This plug up would allow the Air Force portion of the NAS 
modernization program to complete approximately 54 unfunded sites 
located in the CONUS and Europe. This equipment will provide complete 
interoperability between the FAA and all CONUS and European sites. 
These procurements can be accomplished with existing contracts. In 
addition, this equipment will have a positive impact on the cost of 
maintaining the existing air traffic control equipment currently in 
use.
    Question. What initiatives are currently approved in an outyear POM 
which could either be done more cheaply and/or be fielded earlier by 
initiating them in fiscal year 1998? Indicate program by appropriation 
account along with an estimated funding stream for each of the five 
subsequent fiscal years (assuming a fiscal year 1998 start) along with 
the potential savings that could be achieved?
    Answer.
                            AIR SUPERIORITY
    Sensor to Shooter: This initiative accelerates the ability to share 
digital data among combat platforms and ground control stations using 
Link 16, a standard datalink message format and waveform. Required 
procurement funding for FY 98 and beyond is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                  Title                     APPN     FY98     FY99     FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
F-15C/D (160)...........................     3010      5.2     17.1     33.6      1.3      0.0      0.0     57.2
B-1 (6).................................     3010     24.0      0.0      0.0      0.0      0.0      0.0     24.0
GTACS (20)..............................     3080      7.5      0.0      0.0      0.0      0.0      0.0      7.5
                                         -----------------------------------------------------------------------
      Total.............................  .......     36.7     17.1     33.6      1.3      0.0      0.0     88.7
----------------------------------------------------------------------------------------------------------------

    This initiative accelerates a much needed combat capability, and 
therefore may not reflect specific cost savings in procurement, 
however, the force enhancement provided by Link 16 will create a 
synergistic effect which will result in higher combat effectiveness and 
shorter combat duration.
    Bomber Modernization: The B-52 modernization program includes an 
Electro-optical Viewing System (EVS) Reliability and Maintainability 
(R&M) upgrade. This program consolidates electronic hardware increasing 
Mean Time Between Failure Rates. Required procurement funding for FY98 
and beyond is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                  Title                     APPN     FY98     FY99     FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
B-52 EVS R&M............................     3010      2.9      0.0      0.0      0.0      0.0      0.0      2.9
----------------------------------------------------------------------------------------------------------------

     This initiative will result in potential savings of $42.5 million 
over a 40 year life cycle of the weapons system.
    F-15C/D PW-220E Engine: The PW-220E engine modification provides 
improved safety, performance, reliability, and operability; while 
reducing maintenance and logistics support. Required procurement 
funding for FY 98 and beyond is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                  Title                     APPN     FY98     FY99     FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
F-15A/B/C/D.............................     3010     73.2      0.0      0.0      0.0      0.0      0.0     73.2
----------------------------------------------------------------------------------------------------------------

    This additional funding in fiscal year 1998 will accelerate the 
upgrade of 1.5 squadrons (27 PAA) and will result in a savings of 
approximately $28.3 Million across the life cycle of the weapons 
system.
    Precision Guided Munitions: The GBU-28 and CALCM weapons are force 
multipliers, allowing better mission effectiveness while reducing 
attrition, sorties required, conflict duration, and collateral damage. 
Additional funding in fiscal year 1998 will accelerate procurement of 
GBU-28 and 10 CALCM Block II penetrator missile kits. Required 
procurement funding in FY98 and beyond is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                  Title                     APPN     FY98     FY99     FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
CALCM (10)..............................     3020     18.8     25.4     25.0     30.0      0.0      0.0     99.2
GBU-28 (152)............................     3011     16.8    150.0    150.0      0.0      0.0      0.0    316.8
----------------------------------------------------------------------------------------------------------------

    Additional funding of $18.8 million in fiscal year 1998 will 
accelerate CALCM Block II IOC by one year, and an additional $16.8 
Million will accelerate procurement of the GBU-28, which is well below 
its required inventory.
    HH-60G FLIR: Additional funds in fiscal year 1998 will allow 
procurement of the remaining 43 Q-16 sets to equip the total force HH-
60 fleet planned for acquisition in FY04-05. Required procurement 
funding in FY98 and beyond is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                  Title                     APPN     FY98     FY99     FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
HH-60 FLIR (43).........................     3010     33.6      0.0      0.0      0.0      0.0      0.0     33.6
----------------------------------------------------------------------------------------------------------------

    These additional FLIRs will preclude having to transfer existing 
FLIRs between units and aircraft to meet current operational 
requirements. Because the HH-60s have already been wired for accepting 
this FLIR, no additional installation costs are required. Acquisition 
in fiscal year 1998 will avoid line shutdown/startup costs in FY04.
    F-15E Attrition Reserve Aircraft: The Air Force is currently three 
short of the F-15E requirement. Unfortunately, fiscal constraints 
prevented funding of these aircraft in the FY98 budget. Required 
procurement funding in FY98 and beyond is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                 Title                    APPN     FY98      FY99      FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
F-15E.................................     3010    100.8     -165.0      0.0      0.0      0.0      0.0    100.8
----------------------------------------------------------------------------------------------------------------

    This initiative will result in approximately $65 million cost 
savings in economy of scale, and also avoids approximately $25 million 
in shutdown/overhead costs due to concurrent production with Saudi F-
15s.
    F-16 Support Equipment: The Avionics Intermediate Shop (AIS) is 
used for test, repair, reprogramming, and modification of F-16 avionics 
LRU's. Older systems are no longer transportable and will have parts 
obsolescence problems within three years. The Air Force has procured 35 
Improved Avionics Intermediate Shops (IAIS) with several multi-year 
contracts, with a requirement to procure 14 additional IAIS sets. 
Required procurement funding for these sets is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                  Title                     APPN     FY98     FY99     FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
F-16....................................     3010     31.5     36.0      0.0      0.0      0.0      0.0     76.5
----------------------------------------------------------------------------------------------------------------

    This initiative will result in significant decreases in shipping/
depot costs and will also significantly reduce the deployment 
requirements of F-16 units. Deployment savings have been confirmed at 
approximately $2 million per year for every 12 aircraft that deploy. 
Manpower requirement have decreased from 18 to 8 for the Improved AIS 
kits, and airlift requirements have decreased from over 30 pallets down 
to just 2.
                        INFORMATION SUPERIORITY
    AWACS Extend Sentry: The effort (PE 27417F), currently #22 on the 
CSAF FY98 Plus-Up Priorities List, is a candidate for earlier and 
cheaper ``fielding''. Extend Sentry is an aggressive sustainment effort 
which takes the AWACS program into the 21st century, decreases air 
aborts, and addresses Reliability, Maintainability, and Availability 
(RM&A) issues. Extend Sentry is not a program per se, but a 
comprehensive list of individual projects with a common goal of 
increasing aircraft availability through reduced maintenance/depot 
downtime and addressing long-standing operational deficiencies.
    The additional funding requested (by appropriation) is as follows:
                                                                    FY98
3600..............................................................  28.1
3010..............................................................  27.0
3400..............................................................   4.1
                                                                  ______
    Total.........................................................  59.2

    These funds will be used to fund several currently unfunded Extend 
Sentry projects. Savings achieved will be in reduced maintenance man-
hours, reduced on-equipment maintenance hours, reduced number of 
aborts, and reduced Programmed Depot Maintenance (PDM) flow days, thus 
increasing overall RM&A of the AWACS fleet.
    It is important to note that, as a collection of individual 
projects, Extend Sentry can be implemented on an incremental basis 
consistent with available funding, thus any increase in funding will 
allow the incremental achievement of program objectives at an earlier 
date.
                                MOBILITY
    GATM: NA--GATM is not currently funded.
    Nav Safety Phase II: NA--Nav Safety Phase II is not currently 
funded.
    KC-135 DPEM: NA--DPEM is not an acquisition program.
    C-130 Support: NA--This unfunded priority is not an acceleration, 
but fixes unfunded ICS, support equipment, and spares for aircraft 
already in the USAF program. The concepts of fielding the weapon system 
cheaper or earlier do not apply.
                 SPACE/NUCLEAR COMMAND AND CONTROL (C2)
    Range Standardization and Automation (RSA) program: The upgraded 
communications, range safety, remote control, status display, and 
mobile telemetry systems could be fielded earlier and more cheaply by 
adding $36.8 million of RDT&E and procurement funding in FY 1998 to 
accelerate the program to the original schedule. The added RDT&E and 
procurement funding would increase the estimated FY 1998 RDT&E and 
procurement funding total to $157.7 million. The estimated RDT&E and 
procurement funding stream for FY 1999 through FY 2003 averages $140.2 
million per year. This estimate includes potential RDT&E and 
procurement savings averaging $14.0 million per year in FY 2000 through 
FY 2002. Beginning in FY 2003, the estimate includes operations and 
maintenance savings of $20.0 million per year.
    Spacetrack: Providing an additional $39.1 million for program 
activities saves $7.5 million over the FYDP. Given the additional $39.1 
million, the outyear funding required, by appropriation, is as follows.

----------------------------------------------------------------------------------------------------------------
                                                        FY98      FY99      FY00      FY01      FY02      FY03
----------------------------------------------------------------------------------------------------------------
RDAF Adjustment.....................................     +22.6  ........  ........  ........  ........  ........
Total RDAF Required.................................      51.2      14.1      12.5       0.0       0.0       0.0
OPAF Adjustment.....................................      +1.3  ........  ........  ........  ........  ........
Total OPAF Required.................................       8.7       1.5       1.3       4.0       4.0       4.0
OMAF Adjustment.....................................     +15.2  ........  ........  ........  ........  ........
Total OMAF Required.................................      59.0      48.0      50.1      60.6      57.3      62.7
----------------------------------------------------------------------------------------------------------------

    Global Positioning System (GPS) Accuracy Improvement: Initiative is 
currently projected to provide a 32% increase in accuracy for our 
warfighters in April 2000. The requested FY98 funding increase ($6 
million) would allow us to accelerate delivery of this dramatic 
improvement to provide a majority of the capability (18-28% accuracy 
improvement) by November 1998.

----------------------------------------------------------------------------------------------------------------
                                                        FY98      FY99      FY00      FY01      FY02      FY03
----------------------------------------------------------------------------------------------------------------
RDAF Adjustment.....................................      +6.0  ........  ........  ........  ........  ........
Total RDAF Required.................................      12.3       2.6  ........  ........  ........  ........
----------------------------------------------------------------------------------------------------------------

    MEECN: The FY98 PB starts procurement of the Minimum Essential 
Emergency Communications Network (MEECN) Extremely High Frequency (EHF) 
capability for the ICBM Launch Control Centers in FY99. By adding $1.5 
million for Request for Proposal (RFP) package development, the RFP 
package could be developed and released in FY98 allowing contract award 
to occur at the beginning of FY99 avoiding approximately six months of 
RDT&E schedule delay.

----------------------------------------------------------------------------------------------------------------
                                                        FY98      FY99      FY00      FY01      FY02      FY03
----------------------------------------------------------------------------------------------------------------
RDAF Adjustment.....................................      +1.5  ........  ........  ........  ........  ........
Total RDAF Required.................................       1.5      12.5      23.6      12.0       0.0       0.0
----------------------------------------------------------------------------------------------------------------

    SCAMP: The Extremely High Frequency (EHF) Single-Channel Anti-jam 
Man-Portable (SCAMP) satellite communication terminals outyear funding 
is currently being addressed in the FY99 APOM. Decisions on the funding 
are not yet complete. The SCAMP terminals will provide secure, 
survivable Milstar connectivity to strategic forces.
    $9.5 million in FY98 would procure for CINCSTRAT (a) installation 
and integration of 14 SCAMP terminals and (b) electro-magnetic pulse 
(EMP) hardened input/output devices for 87 SCAMP terminals. The input/
output devices will be utilized at tanker bases and with bomber 
dispersal terms to insure survivable force direction and reportback. 
Cost savings and earlier fielding could be achieved if $9.5 million in 
Other Procurement was provided in FY 98. $0.3 million would be saved 
due to inflationary costs and discontinuing the current communications 
system (the Ground Wave Emergency Network (GWEN)) would result in $20 
million of operations and maintenance cost avoidance.

----------------------------------------------------------------------------------------------------------------
                                                        FY98
                                                        Start     FY99      FY00      FY01      FY02      FY03
----------------------------------------------------------------------------------------------------------------
OPAF Adjustment.....................................      +9.5  ........  ........  ........  ........  ........
Total OPAR required.................................       9.5       0.4       0.0       0.0       0.0       0.0
----------------------------------------------------------------------------------------------------------------

    Nuclear-detonation Detection System (NDS): Outyear funding is 
currently being addressed in the budget process. Decisions on the 
funding are not yet complete.
    FY98 program start funding profile:

----------------------------------------------------------------------------------------------------------------
                FY98 Start                    FY98      FY99      FY00      FY01      FY02      FY03      Total
----------------------------------------------------------------------------------------------------------------
RDAF Required.............................       1.4       2.8       3.4       3.6       4.0       4.3      19.5
OPAF Required.............................       1.8       1.3       2.2       2.5       3.8      10.6      22.2
                                           ---------------------------------------------------------------------
      Total...............................       3.2       4.1       5.6       6.1       7.8      14.9      41.7
----------------------------------------------------------------------------------------------------------------

    Funding profile for FY99 program start:

----------------------------------------------------------------------------------------------------------------
                FY99 Start                    FY98      FY99      FY00      FY01      FY02      FY03      Total
----------------------------------------------------------------------------------------------------------------
RDAF Required.............................  ........       3.8       5.1       5.8       7.5      13.2      35.4
OPAF Required.............................  ........       1.5       2.0       2.2       2.9       5.0      13.6
                                           ---------------------------------------------------------------------
      Total...............................  ........       5.3       7.1       8.0      10.4      18.2      49.0
----------------------------------------------------------------------------------------------------------------

    Funding profile for FY00 program start:

----------------------------------------------------------------------------------------------------------------
                FY00 Start                    FY98      FY99      FY00      FY01      FY02      FY03      Total
----------------------------------------------------------------------------------------------------------------
RDAF Required.............................  ........  ........       8.4       9.8      12.2      14.8      45.2
OPAF Required.............................  ........  ........       3.3       3.8       4.0       5.9      17.0
                                           ---------------------------------------------------------------------
      Total...............................  ........  ........      11.7      13.6      16.2      20.7      62.2
----------------------------------------------------------------------------------------------------------------

    The potential savings to the program (assuming FY98 Start) are $7.3 
million over an FY99 program start and $20.5 million over a FY00 
program start.
                               LOGISTICS
    The POMM approved a 12-year modernization program (fiscal year 1999 
through fiscal year 2010) for the Vehicular Equipment procurement 
account (Budget Program 82) in the Other Procurement, Air Force (3080) 
Appropriation. An additonal $95 million in fiscal year 1998 would start 
the modernization program one year earlier and result in outyear 
(fiscal year 2010) savings of $127.1 million. Current POM funding 
stream: FY99--$203.6 million; FY00--$261.4 million; FY01--$226.2 
million; FY02--$234.8 million; FY03--$269.8 million.
    Fielding of the improved M1642 modification kits for M16 rifles can 
be done earlier and potentially cheaper if funds are provided in FY98. 
The total funded FYDP requirement of almost 51,400 kits can be procured 
in FY98. The kits modify existing equipment to fire steel-jacketed 
bullets with greater accuracy, range and penetration; they provide 
three-shot burst firing (vice full-automatic) modern sights, new 
handguards and stock.

Appropriation 3011*

Total Current Program:
    FY98..........................................................   6.0
    FY99..........................................................   2.8
    FY00..........................................................   2.0
    FY01..........................................................   4.0
    FY02..........................................................     0
    FY03..........................................................     0
                                                                  ______
      Total.......................................................  14.8

*Appropriation 3011 is munitions.

    Exact savings are difficult to quantify, but at the minimum, we can 
save approximately $.4 million in inflation costs.
    Question. Provide a list of R&D of production programs or projects 
for which funding is included in the fiscal year 1998 budget that are 
stretched out beyond technically attainable schedule primarily due to 
lack of funding in either fiscal year 1998 and/or the outyears.
    Answer. The following programs would fall under this category: 
Spacetrack; Eastern Ranges; the Minimum Essential Emergency 
Communications Network (MEECN) projects for Modified Miniature Receive 
Terminals (MMRT) and Defense Improved Emergency Messaging Automated 
Transmission System (IEMATS) Replacement Command and Control Terminals 
(DIRECT); Military Satellite Communications (MILSATCOM) terminals; the 
Global Command Support System-Air Force (GCSS-AF); the B1B Conventional 
Mission Upgrade Program (CMUP) Block D Simulator; and the B-1B CMUP 
Defensive System Upgrade Program (DSUP) Low Rate Initial Production 
(LRIP).
    Question. Indicate all programs for which procurement funding is 
included in your fiscal year 1998 budget that would be good candidates 
for multiyear procurement funding, assuming additional funding were 
available in fiscal year 1998 and the outyears. Provide for these 
programs a comparison of the current acquisition funding stream 
compared to a potential multiyear profile (assuming a fiscal year 1998 
start), along with the additional up-front investment that would be 
required and the potential savings that would be likely.
    Answer. There are no additional programs that would be good 
candidates for multi-year procurement except those that are currently 
funded with multi-year procurement.
    Question: Identify any procurement programs in the fiscal year 1998 
budget where provision of additional procurement funds in fiscal year 
1998 would have a very favorable impact on production unit prices?
    Answer.
                            AIR SUPERIORITY
    F-15E Attrition Reserve Aircraft: To meet the 20 Fighter Wing 
Equivalents (FWE) force requirement, the Air Force needs to procure 3 
F-15E attrition reserve aircraft in addition to the 3 which are 
currently in the fiscal year 1998 budget. These aircraft must be 
procured no later than FY98 to take advantage of current foreign 
military sales (FMS) to Saudi Arabia. Buying these additional 
quantities in concert with FMS sales saves between $32 million and $38 
million per aircraft.
                                 SPACE
    Range Standardization and Automation (RSA): This is an 
infrastructure program developing instrumentation, communications, and 
control & display systems for a wide rang of functions at two 
geographically separate locations. A major program objective is 
equipment standardization to save acquisition and support costs. 
Consequently, large quantities of communications and computer equipment 
will be procured. Due to fiscal constraints, large quantity purchases 
planned for fiscal year 1998 are being broken up into smaller buys, 
increasing overall program cost. $36.8 million additional funds in 
fiscal year 1998 will alleviate this situation and allow the program to 
resume the plan for the large quantity buys. Accordingly, the unit 
costs will be reduced by the economies of scale possible with increased 
procurement funds.
                               LOGISTICS
    Vehicular Equipment: Most of the budget lines in the Vehicular 
Equipment procurement account (Budget Program 82 in the Other 
Procurement, Air Force (3080) Appropriation) would realize unit price 
savings by buying substantially higher quantities. Many of the vehicles 
are procured through GSA, whose contracts in most cases call for lower 
unit prices for increased quantities or contain clauses which allow the 
Air Force to negotiate directly with contractors for lower prices for 
higher quantities. In addition, inflation costs would be saved by 
buying the vehicles in fiscal year 1998 rather than in a later fiscal 
year.
                               PERSONNEL
    Joint Primary Aircraft Training System (JPATS): The planned JPATS 
acquisition profile meets military requirements; however, savings and 
decreased beddown times would be realized for each training based with 
a more efficient profile. Aircraft Procurement funds are in program 
element 84740F, New AEFC Aircraft. The current FY98 President's Budget 
FYDP profile is:

----------------------------------------------------------------------------------------------------------------
                       (TY$M)                           FY98      FY99      FY00      FY01      FY02      FY03
----------------------------------------------------------------------------------------------------------------
Aircraft Procurement, AF............................      65.4      92.5      92.4     123.0     181.7     256.3
Quantity............................................        18        12        18        34        43        43
----------------------------------------------------------------------------------------------------------------

    The increases required for a more efficient production rate are:

----------------------------------------------------------------------------------------------------------------
                       (TY$M)                           FY98      FY99      FY00      FY01      FY02      FY03
----------------------------------------------------------------------------------------------------------------
Aircraft Procurement, AF............................     +12.2     +27.0     +24.6      -0.5     +51.0     +69.5
Quantity............................................        +4       +10       +10      +/-0       +17       +17
----------------------------------------------------------------------------------------------------------------

    The accelerated profile will decrease JPATS unit cost, result in a 
program savings of $59.4 million decreased beddown time from 3 to 2 
years per base.
    Question. Identify each production program in the fiscal year 1998 
budget whose main rationale is to sustain a minimal industrial base.
    Answer. The Air Force has not budgeted any FY 1998 funds for 
programs whose main rationale would be to sustain a minimal industrial 
base.
    Question. Please indicate in total and for the top 20 largest 
weapon systems both the peacetime operating requirement (separately) 
for spare parts funded either as initial spares in procurement accounts 
or as consumable spares in DBOF, and the percentage of requirement met 
through the fiscal year 1998 budgeted level of funding. Project how 
this would change by the end of the FYDP.
    Answer. Beginning in FY 1998, replenishment spares are funded in 
O&M. The table below identifies what percent of known initial spares 
requirements by weapon system for the top twenty weapon systems is 
funded in the FY 1998 procurement accounts and what percent will be 
funded by the end of the FYDP.

------------------------------------------------------------------------
                                                              Percent of
                                                 Percent of  requirement
    Ranking and weapon system          FY98     requirement   funded by
                                                 funded in    the end of
                                                    FY98       the FYDP
------------------------------------------------------------------------
1 C-17 Aircraft..................       89.652            7           96
2 B-2 Squadrons..................       67.924           18           91
3 JOINT STARS....................       35.139            7           90
4 F-15E Squadrons................       22.870           28          100
5 Manned Reconnaissance System...       17.781            5           72
6 KC-135S........................       10.470           30          100
7 B-1B Squadrons.................        9.938            5           39
8 F-16 Squadrons.................        8.692            3           53
9 F-15 A/B/C/D Squadrons.........        7.231            6           92
10 Airborne Warning & Control            7.117            6           74
 System..........................
11 C-130 Airlift Squadrons.......        3.690            2           58
12 F-117A Squadrons..............        2.404           15          100
13 A-10 Squadrons................        1.560           19          100
14 C-141 Airlift Squadrons.......        1.193           16          100
14 B-52 Squadrons................         .837            6           65
16 Advance Communication System..         .823           29          100
17 Tactical Cryptologic Units             .782           22          100
 (ANG)...........................
18 Depot Maintenance (NON-IF)....         .559           10          100
19 MILSTAR Satellite Comm System          .513           19          100
 (SPACE).........................
20 Logistics Operations (NON-             .428            5          100
 DBOF)...........................
 Other Requirements..............         .287  ...........  ...........
 
Total Initial Spares: 289.89.
------------------------------------------------------------------------

    Question. Please indicate any potential FMS sales that are being 
discussed that could influence production unit prices once consummated, 
not including those whose impact is already factored into the 
production unit prices portrayed to Congress in fiscal year 1998 
budget.
    Answer. There are two potential system sales that are currently 
being discussed that could impact the FY98 budget.
    Discussions are ongoing with the United Arab Emirates and Norway 
for F-16 Fighter Aircraft purchases. If consummated soon these sales 
would have an impact on the FY98 budget. How much of an impact can not 
be determined at this time, as the impact would be dependent on the 
size of the buy.
    We are aware of direct commercial sales negotiations between 
McDonell Douglas and the United Kingdom for the lease or purchase of C-
17 Cargo Aircraft. This sale could result in savings to the US in the 
FY98 budget due to the company's increased business base. Exact dollar 
figures have yet to be finalized.
    Question. Please indicate what policy your service uses for major 
R&D and production programs, such as a ``budget to contract target 
cost'' or ``budget to ceiling contract costs'' or ``budget to most 
likely cost'' and identify which of your major programs in the fiscal 
year 1998 budget deviate from this policy and the attendant rationale.
    Answer. It is the practice of the Air Force to ``budget to most 
likely cost''. Responsibility for determining funding levels is left to 
the individual program manager, subject to review in the programming 
and budgeting cycles. While indeed there may be some programs with 
budgets equating to target or ceiling cost, the Air Force has 
determined that this is indeed the most likely cost for the budget.
    Question. Please indicate what policy your service uses to provide 
a budget within R&D and production programs for unknown allowances and/
or economic change orders, and identify any programs in the fiscal year 
1998 budget deviate from this policy and the attendant rationale.
    Answer. Determination of the amount of reserve budgeted for in 
modernization programs is based on the judgment of the individual 
program managers. These estimates are based upon the technical 
complexity and schedule risk associated with each program. These 
estimates are then reviewed during the programming and budgeting 
process for reasonableness.
    Question. Please identify any R&D or production program which has a 
contract for which all or a portion is budgeted in fiscal year 1998 for 
a contract award fee larger than $10 million. Provide the amount 
budgeted for the award fee, the basis on which the amount was 
calculated (e.g. 100% fee base don the contract), and the historical 
performance of the contractor in terms of percentage of award fee 
awarded during prior award fee periods under the same contract.
    Answer. F-22: $88,293,426 award fee for LMAS, 0006 Contract; 
$10,288,291 award fee for Pratt & Whitney, 0007 Contract.
    For both contracts the basis of the award fee amount is the 
estimated contract cost for that particular fiscal year. If the 
contractor meets all of the requirements during a given award fee 
period, the contractor will receive 100% of that period's award fee 
pool. Beginning with period 9 (1 Apr-30 Sep 95), any unearned portion 
of the award fee pool is available for rollover to incentivize high 
priority topics. Specific criteria are established for these topics. If 
the contractor meets the criteria, he will be awarded 100% of the 
rollover. Below are the historical performance of the contractors in 
terms of percentage of award fee earned during the prior award fee 
periods.

------------------------------------------------------------------------
                                    Percent of   Percent of
                                       LMAS         P&W      Fiscal year
------------------------------------------------------------------------
Period 1.........................           93           97         1991
Period 2.........................           91           96         1992
Period 3.........................           84           97         1992
Period 4.........................           91           89         1993
Period 5.........................           87           82         1993
Period 6.........................           88           81         1994
Period 7.........................           82           85         1994
Period 8.........................           84           80         1995
Period 9.........................           83           85         1995
Period 10........................           83           79         1996
Period 11........................           79           81         1996
------------------------------------------------------------------------

                       JOINT STRIKE FIGHTER (JSF)
    The budget for the Joint Strike Fighter Program includes $24.2 
million in FY 1998 for award fee under the Concept Demonstration 
Program contract with Pratt and Whitney. The available award fee amount 
for each period of the contract was determined as a percentage of the 
total available award fee, based on the amount and importance of work 
to be performed in each period. The key events for the FY 1998 award 
fee determinations are first engine to test and first lift system and 
nozzle to test. This is a new contract and no award fee payments have 
been made to date.
                             AIRBORNE LASER
     ABL's award fee pool in FY98 is $10,960,136.
     Award fee basis is 12% of the cost line items on contract 
for that period.
     No historical award fee performance on the contract.
     First PDRR award fee period ends 31 March 97.
                                  B-1B
    No single B-1B Conventional Mission Upgrade Program (CMUP) contract 
has more than $10 million for award fee in FY98. The total budgeted 
award fee pool in FY98 for all B-1B CMUP contracts (100% of fee based 
on actual contract or best estimate) is approximately $16.5 million (3 
different contracts for 4 programs). The percentage range previously 
awarded under these various CMUP contracts was 94% to 100%.
                                 TITAN
    Titan Space Launch Vehicles has two such contracts. The launch 
operations contract, F0471-95-C-0012, has an award fee of $12.5 million 
budgeted for FY98. The award fee is based on contract cost and up to 
100% of the $12.5 million may be awarded. For the past few years, the 
contractor has received between 95 and 100% of the award fee. The 
production contract, F0471-95-C-0001, has an award fee of $17.3 million 
budgeted for FY98. This is also based on contract cost and the award is 
also up to 100% of the $17.3 million. For the past few years, the 
contractor has earned between 95 and 100% of the award fee.
                                MILSTAR
    Milstar production contract (F04701-92-C-0049) for the BLOCK II 
satellites has an FY98 award fee of $62.9 million. The amount of the 
fee is based on contract cost. Up to 100% of the $62.9 million may be 
awarded. To date, Lockheed Martin Missiles and Space has been awarded 
94% of the award fee. There is a contract clause that enables the 
program office to roll forward unearned award fee from the previous 
contract period as additional incentives to the contractor.
                  SPACE BASED INFRARED SYSTEM (SBIRS)
    Space Based Infrared System (SBIRS) HIGH EMD Contract (F04701-95-C-
0017) has an FY98 award fee of $37 million. The amount is 100% fee 
based on contract cost. Due to recent award of contract (8 Nov 96), the 
first award fee period has not completed and no fee yet awarded. There 
is a contract clause that enables the program office to roll forward 
certain unused portions of the award fee pool to the next award fee 
period.
    Question. Please identify all R&D and production programs/projects 
for which Congress appropriated funds in fiscal year 1997 which since 
the Appropriations Act was enacted have been either terminated or 
significantly down-scoped. For each, indicate the status of the fiscal 
year 1997 and any earlier active fiscal year funds where funds have 
been diverted to another purpose.
    Answer. Congress appropriated $81.3 million in FY97 funds for 
advance procurement of F-22 Pre-Production Vehicles (PPVs). The Air 
Force has since terminated this project.
    The Air Force intends to use FY97 F-22 Aircraft Procurement Advance 
Procurement funding, which was appropriated for Pre-Production 
Verification (PPV) aircraft, for Out-of-Production Parts (OPP). The 
Defense Acquisition Board (DAB) approved an F-22 program restructure, 
thereby requiring a change in use of the FY97 funds. The Air Force is 
forwarding notification letters to the Congressional Defense Committees 
that will explain our purposed use of these funds.
    As documented in the FY96 President's Budget (PB), the original use 
for the FY97 Aircraft Procurement Advance Procurement funding was to 
support long lead funding requirements for PPV aircraft, with a lot buy 
to occur in FY98. The FY97 President's Budget submission moved all PPV 
funding for Aircraft Procurement to the RDT&E appropriation. The Air 
Force's interpretation of the FY97 Appropriation Conference position 
was that the Aircraft Procurement line ($81.3 million) was for PPV long 
lead buy usage. The DAB approved the F-22 program restructure which 
eliminated the PPV aircraft requirement and used for long lead funds 
for OPP.
    The use of FY97 Aircraft Procurement Advance Procurement funds for 
OPP will support the cost of partial redesign and the purchase of 
parts. Both of these efforts support production Losts 1-5. Funds to 
begin the redesign effort are required by May 97 to support forecasted 
contract award in June 97. In order to complete the redesign effort, 
additional funding has been budgeted on an incremental basis in Advance 
Procurement funding starting in FY98 through FY02. Loss of FY97 OPP 
funding forces a one year slip in production resulting in cost 
increases due to inflation, overhead, and breaks in production.
    Question. Identify all ACTD funding in the RDT&E, Air Force 
appropriation account in each fiscal year 1997 through the FYDP. 
Indicate total cost of each listed. ACTD and whether other service 
appropriations are contributing funds for it.
    Answer. The Air Force is using RDT&E funds in two active ACTDs, 
Combat Identification and Navigation Warfare. Funding is as follows, in 
thousands of dollars:
                         COMBAT IDENTIFICATION

----------------------------------------------------------------------------------------------------------------
                                                     FY96     FY97     FY98     FY99     FY00     FY01    Total
----------------------------------------------------------------------------------------------------------------
Air Force........................................    3,600    2,992        0        0        0        0    6,592
Army.............................................    6,824    6,929        0        0        0        0   13,753
OSD..............................................   17,459   15,268    4,000    4,000        0        0   40,727
                                                  --------------------------------------------------------------
      Total......................................   27,883   25,189    4,000    4,000        0        0   61,072
----------------------------------------------------------------------------------------------------------------

                           NAVIGATION WARFARE
    (Note: Totals include FY95 funds, not shown.)

----------------------------------------------------------------------------------------------------------------
                                                     FY96     FY97     FY98     FY99     FY00     FY01    Total
----------------------------------------------------------------------------------------------------------------
Air Force........................................   10,450   18,902    7,263      939    1,300        0   42,029
OSD..............................................    6,669    4,500    3,900      300        0        0   15,369
                                                  --------------------------------------------------------------
      Total......................................   17,119   23,402   11,163    1,239    1,300        0   57,398
----------------------------------------------------------------------------------------------------------------

    [Clerk's note.--End of questions submitted by Mr. Young.]
                                         Wednesday, April 16, 1997.

                   BALLISTIC MISSILE DEFENSE PROGRAM

                                WITNESS

LIEUTENANT GENERAL LESTER L. LYLES, UNITED STATES AIR FORCE, DIRECTOR, 
    BALLISTIC MISSILE DEFENSE ORGANIZATION

                              Introduction

    Mr. Young. The Committee will come to order.
    General, let me explain to you that some of our 
subcommittee members are marking up their portions of the 
supplemental, so our attendance might not be too good this 
afternoon. Also I wanted to tell you that I had a really great, 
exciting opening statement to make, but I am going to wait and 
talk to you about that later, because I want to recognize 
Chairman Livingston for any statement that he would like to 
make and questions that he would like to ask before he moves on 
to some of the markups.
    If that is okay with you, General, we will turn it over to 
Chairman Livingston.
    [The statement of Mr. Young follows:]

    Today, the Committee will conduct a hearing on the Department of 
Defense's programs in the area of Ballistic Missile Defense. Our 
witness is Lieutenant General Lester L. Lyles, the Director of the 
Ballistic Missile Defense Organization (BMDO). We welcome you on your 
first visit to the Committee General Lyles, and look forward to your 
testimony.
    This Committee has paid close attention to our nation's Ballistic 
Missile Defense programs. In part, this is because we remember the 
single SCUD attack which took the lives of 28 Americans during Desert 
Storm. Yet our concern is not focused on the past, it is focused on the 
future protection of our troops and our citizens.
    The proliferation of ballistic missiles has increased dramatically. 
The number of nuclear states has more than doubled over the last 20 
years. In addition to these 13 nuclear states, there are about 30 non-
NATO countries who collectively possess thousands of theater ballistic 
missiles. About 16 developing nations have chemical weapons programs 
and 11 others have biological weapons research programs.
    In light of this threat, and out of a desire to protect our troops 
and our citizens, this Committee added $800 million to the 1997 budget 
request for missile defense. We hoped that the same emphasis on missile 
defense would be reflected in this year's budget. Unfortunately, the 
President's Budget for 1998 is much less than we expected. The budget 
request for Ballistic Missile Defense is $2.9 billion, almost $700 
million below the 1997 appropriation of $3.6 billion.
    Although the President's budget plan is discouraging, there is some 
good news to report. There have been several successful flight tests 
over the last several months--in large part due to the additional 
resources provided by Congress to BMDO over the past two years.
    In January, the Navy Lower Tier system intercepted a Lance target 
missile and is now proceeding to the Engineering and Manufacturing 
Development phase of the acquisition process.
    In March, a SCUD missile was shot down by an upgraded guidance 
enhanced Patriot missile.
    And, on March 11, the Arrow missile had a partial failure but still 
destroyed its target, with a body-to-body kill.
    In addition, programs that were lacking direction a year or so ago 
now have been given new focus. The Navy Theater Wide program has been 
designated as a ``core'' theater missile defense program by the 
Undersecretary of Defense for Acquisition and Technology. And, the 
National Missile Defense (NMD) program has been designated as a 
``Deployment Readiness'' program.
    Unfortunately, there have also been some failures. Most notably, on 
March 6, the Theater High Altitude Area Defense (THAAD) missile failed 
to intercept its target. This was a difficult setback--particularly 
since this was THAAD's fourth consecutive failure.
    While there are certainly technical reasons for this failure, the 
Administration's erratic policy and budget approach to ballistic 
missile defense has certainly not helped in the management or execution 
of this program.
    General Lyles, this Committee would like to work with you to bring 
some stability into ballistic missile defense programs. A rational 
strategy and stable funding are critical factors for the proper 
management and execution of these programs. I know you will want to 
address these issues in your testimony and so I will not go into 
further detail at this time.

    Mr. Young. Mr. Livingston.
    Mr. Livingston. Thank you very much, Mr. Chairman.
    Rather than preempt your statement, let me simply ask 
unanimous consent, which I hope to get, which would put my 
exchange with General Lyles after your opening statement.
    Mr. Young. We can do that.

                           Helsinki Agreement

    Mr. Livingston. All right. General, we are glad to have you 
here. I appreciated your comments off the record just as we 
were standing there chatting, but I thought it was important to 
put a couple of comments of my own on the record.
    As you know, the administration has just worked out an 
agreement with the Russians, and I think three former states of 
the old Soviet Union, to put some degree of limits on our 
ability to intercept missiles from abroad. At the same time, 
the Russians, signatories to that agreement, we read, are 
selling, actively selling, some of their missile technology to 
the Iranians, who are not signatories to that agreement.
    It strikes me as a little strange why we are, on the one 
hand, negotiating to slow down our defenses and limit our 
ability to intercept incoming missiles, when the cosignatories 
or coparticipants to that agreement are selling highly 
technical capabilities to people who will not, even if they 
were signatories, abide by it, and certainly will not so long 
as they are not signatories.
    So I am very, very concerned about the wisdom of all of 
this, especially in light of the most recent revelations in the 
newspapers. But I accept your earlier assurances that currently 
the negotiations and agreements with the Russians would not 
limit our ability to deploy Theater High Altitude Area 
Defense--THAAD or Navy Upper Tier or some of the other systems 
that are on the books as being developed--unfortunately, not 
deployed, but developed.
    I am gratified by that, and I certainly would hope that, 
likewise, those agreements wouldn't preclude us in the future 
from adopting space-based systems.
    But I guess my one big question that I would like you to 
address on the record is specifically why we are slowing down 
our defenses, agreeing with the Russians to slow down our 
defenses, when in fact adversaries who are not parties to this 
agreement may develop faster systems, faster offensive weapons, 
which will take faster defenses, and because of this, we would 
have to go to the Russians and those other countries to get 
permission to upgrade our defenses before we could deal with 
them. Why is that?
    General Lyles. Congressman Livingston, I can't comment 
exactly on what stimulated some of those discussions and the 
rationale for all the words that are there. I can assure you, 
however, that the agreement that was struck at Helsinki in no 
way dumbs down, slows down or affects our current theater 
missile defense systems. Nor does it affect any system that we 
currently have planned in the theater missile defense arena.
    In fact, the demarcation limits specifically impact the 
types of targets that we can test against, targets that 
potentially could replicate an strategic intercontinental 
ballistic missile, or ICBM--I am sure that is the primary 
concern of the Russians--to 5 kilometers per second, 3,500 
nautical mile range. Those are essentially the limits in terms 
of the types of targets that we could test against with our 
current Theater Missile Defense or TMD systems.
    The part that impacts speed for our particular intercepts 
as referred to in the language of the Helsinki agreement is 
that we currently have no plans for systems that have a speed 
greater than the numbers that are quoted in the Helsinki 
agreement. Our interpretation, the interpretation of our policy 
people is, since the words say ``planned for,'' if we saw a 
need to actually develop something that has a higher velocity, 
yes, under the agreement we would have to notify the Russians. 
But I don't think that would in any way constrain us if we 
thought the threat required that we have a system with certain 
capabilities.
    The words were carefully construed to ensure that for those 
systems that maybe require higher velocities, that they would 
be put in a planned-for stage, and not forbidden stage. We are 
not forbidden from having systems with certain speeds.
    Mr. Livingston. Just for the sake of argument, suppose the 
Iranians or Chinese or North Koreans or Libyans or somebody 
else were to develop two types of missiles, say, missile A and 
missile B, and missile A could be easily intercepted by a 
countermeasure traveling 5,000 kilometers per second or slower, 
but missile B took a countermeasure traveling at least 6,000 
kilometers per second.
    Why would we logically, under any circumstances, wish to 
limit the speed of our ability to defend against such a weapon?
    General Lyles. Congressman, I think, again, the rationale 
was to ensure that we had some confidence-building measures 
relative to dealing with the Russians, to assure them that our 
theater systems, theater missile defense systems--I remind you, 
we are not talking about national missile defense systems, but 
theater--would not have the capability to be used to counter 
their strategic ICBMs.
    If we saw, however, a threat out there that had the speed, 
say, of a strategic ICBM, it was much, much higher and we 
required something with higher speeds for our interceptor, I am 
sure, again, the way the words are worded, that we can go ahead 
and develop that. We would have to notify the Russians, though, 
according to the Helsinki agreement. But the words do not 
require us to actually stop it. It doesn't say you cannot do 
that.
    Mr. Livingston. I can only judge from the press reports, 
but the press reports indicate to me that we have to gain their 
consent because we have mutually agreed with them not to 
develop these systems; and it would seem, if we want to develop 
faster systems, that we have to gain their consent.
    Now, we have agreed the Chinese are selling to the 
Iranians, the Russians are selling to the Iranians, the 
Iranians are not signatories to this thing. Presumably the 
Russians are not making a distinction between whether they are 
a theater or national defense system or offensive weapons. They 
are just selling missile technology. I don't see why we should 
make that distinction.
    Frankly, this entire set of issues is not only mind-
boggling to me, but I think to 98 percent of the American 
people. We have made a distinction without a difference. We 
have proclaimed to be for arms control without any gain to the 
American people, and if anything, I think we have jeopardized 
the American people.
    Suppose our intelligence is not up to snuff, and one day we 
find out there is not only a threat, but that a potential 
attack is imminent within a week. Are we going to say to our 
striped trousers folks to go out and negotiate an agreement 
with the Russians so we can defend ourselves against getting 
New York blown up?
    General Lyles. I am obviously not the right one to answer 
that question, but my personal view is, given a threat of that 
particular nature, I am sure we will do what is right to 
protect our troops and our resources analysis, et cetera, and 
not go back and beg for forgiveness, if you will, in a scenario 
like that.
    Mr. Livingston. General, you are answering me, as well you 
should. You are an outstanding, not only public servant, but a 
representative of the armed forces; and I am sure the Air Force 
is proud of you, and you can't criticize current policy. But 
the current policy, as negotiated between this administration 
and the Russians, doesn't make sense when you compare it to the 
potential threat from the Iranians, the Libyans, the Chinese, 
the North Koreans, or any other asinine group out of there that 
doesn't give a whit about what we have signed our names to.
    Moreover, we are sitting here discussing whether or not we 
should develop systems in the distant future, and there is not 
one single word in any of this discussion about deployment of 
antimissile systems. I think that we ought to stop dithering 
about developing and start deploying, and I mean start 
deploying as quickly as we possibly can. Because the people 
that wish to eliminate hundreds or thousands or perhaps 
millions of our people in one fell swoop aren't going to sit 
around and worry about our agreement with the Russians, and 
they are not going to sit around and worry about whether or not 
we are developing an antimissile system.
    If they know we don't have an antimissile system, that is 
the time they are going to want to strike.
    General Lyles. Yes, sir.
    Mr. Livingston. Thank you very much. Thank you, sir.
    Mr. Young. Mr. Chairman, thank you very much. I know you 
have an extremely busy schedule today, with all of the 
subcommittee markups, so we appreciate your being here.
    Mr. Murtha, do you have any opening comments?
    Mr. Murtha. No.
    Mr. Young. General Lyles, you have the floor, sir. Your 
entire statement will be placed in the record and you can 
summarize any way you like.

                   Summary Statement of General Lyles

    General Lyles. Thank you, Mr. Chairman, I appreciate that.
    Mr. Chairman, members of the Committee, it really is a 
pleasure to be here to testify before you about a very 
important set of programs, our missile defense programs for the 
United States. I do have a formal statement that I will submit 
for the record, but if you don't mind, I would like to take 
just a couple of minutes to run through a very, very short 
statement and run through a few charts to illustrate exactly 
some the concerns of where we are today with our missile 
defense programs.
    I hope Congressman Livingston got a copy of the charts, 
because some of them are intended to illustrate some of his 
concerns about deploying and executing and getting programs out 
on the field to protect our resources.
    [Clerk's note.--The charts referred to by General Lyles are 
printed after his prepared statement. See page 468.]
    Mr. Chairman, when I was nominated to be the Director of 
the Ballistic Missile Defense Organization--BMDO, last year, 
last summer, I was charged by Dr. Kaminski and our Deputy 
Secretary of Defense, Dr. White, to bring my now 28 years of 
acquisition experience to all the issues that we are dealing 
with in the area of missile defense.
    There are two critical issues that they asked me to 
address. One is to ensure that our acquisition programs, all of 
our programs, are executable, that we are not just in an 
research, development and demonstration phase, but we are 
clearly trying to get systems out and capabilities out to the 
field; and also to ensure that our requisite technology 
programs, which have been the heart and soul of the old 
Strategic Defense Initiative Organization, SDIO, the early 
incarnation of BMDO, that those programs have an acquisition 
focus, that they are intended to help supplement and support 
both our current acquisition programs and even the future 
programs that we may have to take on in the near term.
    I consider this to be my personal charter, a charter for 
the Deputy Secretary of Defense, the Secretary of Defense, and 
obviously Dr. Kaminski. And the one keyword that I used with 
our people to illustrate exactly our key focus, it is the word 
``execution,'' to make sure we are doing things that have 
executable programs.
    My report to you today is along those lines, to show you 
where we are today, what we have accomplished, what some of our 
challenges are, and the things that we are trying to address in 
the very near future, and obviously, for the far term.
    I realize that this particular Committee has been very, 
very supportive of all of our missile defense programs, 
particularly our theater missile defense programs; and in that 
light, I am very pleased to report to you, Mr. Chairman and 
members, that we are aggressively moving on towards protecting 
our forward deployed forces, protecting our allies, protecting 
our assets, and improving our Theater Missile Defense--TMD 
systems and national systems to provide protection for the 
homeland in addition to our forward forces.
    I will give you a couple of examples of where we are today 
with some of the charts, but I also want to just illustrate we 
are complying, I think, with the National Missile Defense Act 
of 1991, 1993 and 1995 in trying to provide those capabilities 
as rapidly as possible.

                             Patriot System

    As an example, the Patriot system, the air and missile 
defense system we are fielding today, is much, much more 
capable than the system used during the Gulf War. We recently, 
as an example, completed fielding the first of three 
improvements that are part of the Patriot Advanced Capability 3 
or PAC-3 system. We are scheduled to field the final phase 
which consists of the full configuration PAC-3 in fiscal year 
1999, about a year and a half from now. This will include the 
very critical hit-to-kill capability that we think is 
absolutely necessary to be able to counter the threat out 
there, particularly the threat against weapons of mass 
destruction, whether they be nuclear, chemical or biological.
    The full-up system, which is very similar to the Extended 
Range Interceptor--ERINT, which this Committee has long 
championed from the technology development early on and the 
SDIO through the integration with the Patriot system, that full 
system will be tested and undergoing tests starting this 
summer.
    Mr. Chairman, I would like to call your attention and the 
attention of the members to the charts in front of you, if you 
will, and very quickly walk through those to illustrate exactly 
the kinds of things that we are accomplishing today.

                       The TMD family of Systems

    The first chart illustrates the total family of systems in 
the theater missile defense arena. There are a wide variety of 
weapons systems there, battle management command and control 
systems, sensor systems from space, ground-based systems. You 
see even the airborne laser program reflected there.
    Though this is not a BMDO program, it is managed and funded 
fully by the United States Air Force. It is part of our theater 
missile defense architecture, so we do consider it an integral 
part of our family of theater missile defense systems. It 
represents the tiered capabilities, the layered capabilities of 
defense that we feel that we have to have in order to protect 
our resources; and they all very, very complimentary in terms 
of the battlespace they are intended to protect, the assets 
they are intended to protect and how they would work together.
    They are also intended to be and will be interoperable, 
sharing information and also providing backup to each other.

                        TMD Capability of Growth

    If I can call your attention to the next chart, a key point 
that I think has been in the minds of the Congress for some 
time, since the Missile Defense Acts of 1991, and again 1993 
and 1995 and beyond, is to ensure that we are providing a 
robust set of capabilities for missile defense. What you see 
there, with the time lines at the bottom, are the kinds of 
improvements we have made since Desert Storm in our current 
missile defense posture, and the systems and capabilities that 
we are going to provide to increase that improvement so that we 
can really say we have an effective family of systems, a robust 
family of systems, to provide missile defense protection.
    You see up until today leading up to the top blue bar that 
says PAC-3, configuration 2, that is where we are as of today. 
Those capabilities are significantly greater than what we had 
in Desert Storm, as illustrated by the star to the far left-
hand side of the chart. We made changes in weapons systems and 
also made changes in some of our battle management command and 
control, and those are primarily shown in the blue bars here. 
We have made improvements, but we still have a long way to go.

                             Patriot System

    The next two charts give a better illustration relative to 
where we are today and where we will be very shortly with 
Patriot versus the Patriot system we had in Desert Storm. What 
you see illustrated on the first chart is the Patriot system 
performance versus a 500-kilometer theater ballistic missile 
threat, the kind of threat we saw during Desert Storm.
    The white space that you see, the white tear-shaped space 
you see on the left-hand side of the chart, is the capability 
in terms of battlespace, et cetera, that Patriot was able to 
provide for protection during Desert Storm.
    The green space is where we are today, significant 
improvement in terms of capability.
    The blue space is where we will be with the full-up PAC-3 
missile in the next year and a half or so.
    The second part of the chart to the right-hand side shows 
sort of a perspective of range capabilities. The numbers for 
the actual ranges are classified. I can provide those for the 
record. But the baseline is that we have essentially an 800 
percent increase in volume of protection with the Patriot 
system for 500-kilometer theater ballistic missile threats.

                       Patriot System Performance

    The next chart, if I can call your attention to that, shows 
the same Patriot system performance versus a 1,000-kilometer 
ballistic missile threat, a much longer threat than we saw 
during Desert Storm. You don't see a white space there 
representing what we had in Desert Storm, because we 
essentially had no capability with the Patriot for this sort of 
range of theater ballistic missile threat.
    The green is where we are today, and you see a tremendous 
improvement with PAC-3 when we get that hit-to-kill capability. 
That is where we are going with the PAC-3 system.

                              Willow Dune

    I would like to call your attention to an illustration of 
where we have dramatically shown what PAC-3 can do with the 
next chart. It is labeled Willow Dune. We have had over the 
last couple of months a series of tests that we code named 
Willow Dune. They were tests of the Patriot system against an 
actual SCUD. A couple of months ago, I could not have said that 
in an unclassified forum. The information is now unclassified.
    We tested the Patriot system in the Kwajalein and Pacific 
missile range against actual SCUDs. The type of SCUD is still 
classified, and where we got the SCUDs from is classified, and 
I will be very happy to provide that for the record or provide 
that outside of this particular forum.
    We tested in early February, and then again in early March, 
the Patriot system against a SCUD missile fired from some 360 
kilometers away. In the first test, in February, we used both a 
Guidance Enhanced Missile, GEM and a PAC-2 missile firing from 
a Patriot battery. We were very, very successful.
    We fired two missiles. The first one hit the target, hit 
the SCUD, and intercepted it perfectly. The second one was 
absolutely not necessary, but we had fired it anyway to 
demonstrate this salvo capability.
    We repeated the same test in March, in early March, again 
with another SCUD from our assets, again with a Patriot system. 
This time we used the Guidance Enhanced Missile, the GEM 
missile, fired from a Patriot battery. Once again, it was very, 
very successful.
    This test illustrated to us that with the threats that 
exist out there today, the SCUD missile threats and its various 
applications or variants that are in the hands of potential 
adversaries, that we can, even with the current Patriot 2 and 
the enhanced missile for the Patriot system, we can intercept 
it and have a very successful way to protect our resources.
    Also illustrated on that Willow Dune chart you see the list 
of assets at the very top. We not only tested the Patriot 
system against the SCUD, we had other sensors that were on 
board and being checked out to see how they worked in the 
interoperability sets, and a whole wide variety of various 
instruments that we had, both airborne and ground, to collect 
data, to make sure we fully understood exactly what a Patriot 
looks like when it is being fired as a threat system and 
exactly what kind of intercept we would accomplish.
    The tests were extremely successful. I would be happy to 
provide for you, or for any of the members or their staff, more 
details about both of the tests that we had.
    [The information follows:]

    In the first WILLOW DUNE test, the PATRIOT Fire unit 
acquired the Willow Dune target, and determined that a PAC-2 
missile could successfully engage and destroy the target. A GEM 
missile also was available and was launched immediately after 
the PAC-2 missile as part of the salvo firing doctrine against 
Theater Ballistic Missiles--TBMs and to additionally support 
the engagement if the PAC-2 did not successfully destroy the 
target.
    Data show the PAC-2 missile properly acquiring and fuzing 
its warhead at the intended intercept point against the target 
and that, after warhead detonati9on, the Willow Dune target was 
destroyed. The GEM missile following the PAC-2 missile could 
only identify target debris when it reached its intended 
intercept point. Additionally, ground sensors did not identify 
any ``large'' pieces of the target hitting the water under or 
near the intercept point. A THAAD radar tracking the engagement 
identified only target debris after the detonation of the PAC-2 
warhead.
    In the second WILLOW DUNE test, the target was engaged with 
a PATRIOT GEM missile. The missile had good Track Via Missile 
guidance and fuzed and detonated on the target (initial data 
data indicate detonation was at 5 meters or less from the 
target). The target telemetry package continued to provide data 
after detonation, however, the datastream did not continue from 
the previous Willow Dune engagement (this is indicative that 
more fragments were directed toward the target warhead, 
illustrating the differences between the GEM and PAC-2 
missiles).

                         NAVY AREA DEFENSE TEST

    General Lyles. If I can call your attention to the next 
chart, we not only have had successes with our Patriot system 
and the Army system and the Navy area program, we have also had 
successful intercepts very recently to demonstrate the 
capabilities there.
    The chart you are looking at is one that is very, very 
dramatic, particularly for those of us in the technology and 
acquisition realm. Much of what you see on the left-hand side 
of that chart is the last infrared image taken from the seeker 
of the Navy area system, the Navy area missile, just before it 
intercepted a Lance target. That particular target was a 
replicate of a SCUD; it was not an actual SCUD, but a replicate 
of a SCUD, and we had a very successful body-to-body intercept.
    Again, you can see the dramatic picture just from the 
seeker prior to the actual intercept itself. The right-hand 
side just shows the obvious explosion when the interception did 
take place. This test was on the 24th of January. It was a 
milestone test, and allowed us to proceed with the next phase 
of the Navy Area Defense Program.

                        SYSTEM INTEGRATION TEST

    The next chart illustrates another part of our 
responsibility within BMDO. It is not just to develop 
individual weapon systems, but to ensure that all of those 
systems are interoperable, that they can play together. We have 
been doing a series of what we call systems integration tests, 
really trying to check out and test the interoperability of all 
of the systems, all of the intercept systems, their radar 
systems, their battle management command and control, their 
sensor systems.
    We have done a series of tests involving the subsystems 
that you see listed in this chart to see how they play 
together, how we pass information from one system to another, 
and each one of them has also been very, very successful. We 
have done a series of those since last summer up until about 
the last month or so, and we will continue some of those tests 
starting this coming summer.
    I talked about the successes. I obviously can't go without 
talking about some of our failures. As you know, Mr. Chairman, 
we have not been very successful recently in our planned 
intercept test for our showcase high altitude program, the 
Theater High Altitude Area Defense Program, or THAAD.

                      THAAD SYSTEM ACCOMPLISHMENTS

    What you see illustrated on the next chart are really a 
compilation of all the tests we have done with the THAAD 
program. The last four tests were intended to be intercept 
tests. They were to show that we could really pull together all 
the different elements, all the capabilities of THAAD, and 
actually have a body-to-body intercept.
    It is a major, major milestone in our program, not just to 
demonstrate the capability, but also to allow us to proceed 
into the next phase of the program.
    We have not been successful in accomplishing that 
intercept. What we do illustrate on this chart, or try to 
illustrate to you, is that we have been successful in 
demonstrating a lot of the other things that are necessary to 
develop and provide a viable weapons system.
    I won't talk to all the details on that chart, but each one 
of our tests, including the ones where we did not have a 
successful intercept, provided us some success relative to 
developing an integrated total weapons system. But we will not 
try to fool ourselves. The key is to ensure that we do have a 
successful intercept, and we have yet to do that.
    I will be happy to address any of your questions later 
about where we are in regards to our THAAD program.
    I will mention to you that as a result of the most recent 
failure, I have chartered a very, very detailed scrub of the 
THAAD program. We are doing a review of the recent failures and 
what occurred. We are reviewing the design of the program. We 
are reviewing the margins associated with the program. We are 
reviewing the management on the part of the contractor and 
contractor team. We are looking at the requirements of the 
program. It is a complete end-to-end scrub of the entire THAAD 
program to ensure we know not only what happened, but where do 
we go next with this program and do we have confidence it is 
the kind of thing we need to invest our time, energy and money 
in.
    Mr. Chairman, I can tell you that my initial opinion is 
that I am still very, very confident that THAAD is going to be 
a successful program. Each one of the tests, anomalies we have 
had, the test failures we have had, have occurred during the 
end game. Every other aspect of the total weapons system, 
including the radar, the battle management command and control, 
work very, very, very well. We failed in the very last few 
seconds in the actual intercept.
    Something is happening there relative to design margins, 
and we are going to get to the bottom line to ensure we can fix 
it and provide an adequate capability.

                              TEST RESULTS

    If I could draw your attention to the next chart, we like 
to show this chart to illustrate some of the challenges we have 
relative particularly to THAAD and even for our future Navy 
Upper Tier program, and that is how difficult hit-to-kill is. 
As you know, that is essentially the kill mechanism, the 
mechanism we are planning for THAAD and some of our other 
systems in the future.
    What you see illustrated on this chart goes back and shows 
history of what we have done, and more importantly, what we 
have not done relative to hit-to-kill intercept tests, attempts 
and successes over the years. We go all the way back to 1982 
and some of the SDIO programs.
    What you see listed there, the charts or the parameters 
were zeros there, are plan intercepts where we missed a target. 
Those that are darkened in are the plan intercepts where we hit 
the target. Unfortunately, you can see a lot more open zeros 
than closed zeros.
    This a very, very challenging problem we are trying to 
address. We think we know how to do this in terms of 
technology; I have no doubt in that regard. We are doing some 
basic systems engineering, and engineering issues we are trying 
to grapple with to ensure we cannot only do this one time, but 
do it in a stressing environment and do it every time, to 
provide the kind of capability we need. That is the challenge 
we have ahead of us relevant particularly to the THAAD program.

                NATIONAL MISSILE DEFENSE SYSTEM ELEMENTS

    Mr. Chairman, I would like to move very quickly to our 
National Missile Defense Program. What you see illustrated on 
the next chart are the system elements, the key elements of the 
National Missile Defense System we are trying to provide.
    We are now up and running. We now have a formal joint 
program office established as of the 1st of April to work 
together with all of the various elements required, all the 
program offices, all the various systems, to provide an 
integrated capability for national missile defense.
    What you see listed on the chart are the various elements 
of a National Missile Defense System, and they comprise not 
only Army systems, but Air Force systems, BMDO systems. This is 
not just the purview of one service, it is the purview of a 
national perspective, and we are trying to manage and develop 
an integrated capability along those lines.

                        NMD SYSTEM ARCHITECTURE

    The next chart gives you just a picture of a notional 
systems architecture for a National Missile Defense System. 
This particular illustration is from a single-site National 
Missile Defense System.
    We are looking at the various alternatives to try to 
understand what capabilities do we really need. Is a single 
site going to be sufficient to provide us protection against 
our territories, or do we need to have multiple sites? We are 
examining all options that might be available to ensure we get 
not only the best capability, the most effective capability, 
but also the most affordable capability.

                        NMD DEPLOYMENT READINESS

    The next chart is one that is probably very familiar to 
you, Mr. Chairman and the other committee members. It is just a 
notional cartoon to illustrate our 3+3 Program. We are still 
aggressively pursuing our 3+3 strategy; that is, trying to 
rapidly develop as much as we possibly can a capability within 
the next 3 years for a National Missile Defense System to test 
in an integrated sense all of those different elements and, if 
that test is successful, review the threat to see what the 
threat looks like, and if a decision is made we need to deploy 
something, be able to deploy that in another 3 years. That is 
our 3+3 strategy.
    Mr. Chairman, as I have told you personally, and I would 
have told other members, and will always tell this to the 
Congress, I intend to be very, very honest with you. I will 
tell you, this is a very, very difficult task. It is very, very 
high risk relative to the schedule that we are trying to meet.
    Nevertheless, the urgency of this problem, the urgency of 
the issue of protecting our homeland, is such that we are 
aggressively pursuing this, and this is still the strategy we 
are trying to embark upon, our 3+3 strategy.

                        THE JOINT PROGRAM OFFICE

    The next chart goes back to a point I mentioned earlier, 
Mr. Chairman. As of the first of April, we stood up a formal 
joint program office for our National Missile Defense System.
    That joint program office is now managed by Army Brigadier 
General Joe Cosumano, who is sitting behind me over my right-
hand shoulder. He has now been chartered to bring together all 
the different elements to ensure we have an integrated 
capability and the right kind of talent to develop a National 
Missile Defense System.
    His program office is one we call sort of a federated 
approach, very similar to one of the acquisition streamlining 
initiatives we have taken from the Joint Strike Fighter 
Program.
    General Cosumano has a very small office here in the 
Washington area reporting to him, and he in turn reports to me. 
We will have no more than about 60 people in this program 
office here in the Washington area, and they will draw upon the 
expertise of the talents where the various elements are to 
actually manage and help us develop the total system.
    We will take advantage of the expertise down at Huntsville, 
we will take advantage of the expertise in the space sensors 
out at the Air Force's space organization in Los Angeles, we 
will take advantage of the Ground-Based Battle Management 
Command and control capability up at Hanscom Air Force Base in 
Boston, and we will take advantage of our own national test 
facility out at Colorado Springs that I think you have visited 
last year.
    This is, I think, an appropriate centralized approach to 
managing the program but decentralized execution relative to 
the various elements and bringing in its right expertise.

                         FEDERATED ORGANIZATION

    The next chart of the United States shows you the various 
elements and where they are. We think this is the right way to 
manage this program, and we are now aggressively marching 
forward in that particular manner.

                          TECHNOLOGY PROGRAMS

    Mr. Chairman, to try to wrap up very quickly, let me just 
hit the last part of our responsibilities in BMDO. It is our 
very, very important technology programs. We have had great 
success over the years since the original SDIO program in 
developing unique and innovative technologies to help provide 
missile defense capabilities for the United States. I can tell 
you that we would not be where we are today with our various 
systems or success-systems were it not for the technology 
programs that went back all the way to the SDIO days.

                          CLEMENTINE SATELLITE

    We are still working aggressively on a technology program, 
looking at various components and also looking at advanced 
capabilities. As an illustration of one reason that I am very 
concerned to make sure that we never forget about our 
technology is your next chart which talks about the Clementine.
    All of you are very familiar with the announcement made 
last December about the discovery of the possibility of water 
on the moon. What most people, certainly most Americans, are 
not aware of was that the satellite that made that discovery 
was the Clementine 1 satellite, an SDIO-sponsored satellite. We 
had support obviously from NASA, from the National 
Reconnaissance Organization, and other agencies, but it was 
primarily an SDIO and BMDO innovative satellite technology 
program that allowed the mapping of the back side of the moon 
and made that discovery.
    My baseline concern in the technology realm is, if we don't 
keep up a robust technology program, we will not be able to 
brag about these kinds of successes 5 or 10 years from now and 
we will not be able to ensure we have the kind of capabilities 
to add to our missile defense systems that we will need for the 
future. So we try to make sure we still continue a very robust 
technology program.

                       Midcourse Space Experiment

    One illustration of how we are using technology and how it 
plays into our existing capabilities is on the next chart, the 
last chart in front of you in your package. It talks about the 
Midcourse Space Experiment. This is another BMDO experiment 
that was launched almost exactly a year ago, last April 1996. 
This satellite is intended to measure and provide information 
about sensing targets in space in the midcourse realm: What 
happens after they are passed their boost phase? We know we can 
detect the launch of a theater missile or even a satellite 
system, a space system, or an ICBM with the current systems we 
have in space. What we do not know for sure is, can we measure 
what happens after the boost phase, after the booster is cut 
off? This is vital information for our theater missile and 
national missile defense systems. We need to be able to 
identify, characterize, and discriminate what is an actual 
target and what is a decoy. The Midcourse Space Experiment--MSX 
is helping us to do that, and we have had great success since 
we made that launch last April.
    The picture on your left-hand side may look to some people 
like a photograph of little pin points. What you are actually 
seeing are from 2,000-plus kilometers away decoys and an actual 
Re-entry Vehicle--RV from a dedicated launch where we use the 
MSX to try to determine can we discriminate between the RV and 
decoys or surrogates that might be launched in an adversary's 
threat missile system. We were able to do that.
    Those little points you see, some of those are as small as 
a football, and we were able to not only detect them but to 
characterize them and to discriminate them with the Midcourse 
Space Experiment.
    The right-hand side of the photo in that particular chart 
shows a similar sort of concern, what happens if you are trying 
to detect an RV or decoy against a background of the earth. The 
earth limb, if you will, where you have a contrast between the 
warmer atmosphere and the cold background of space, we were 
able to show with our various test that we can, with the MSX 
system, discriminate and determine what are actual RV's and 
what are decoys.
    All of this information is now being provided to our 
various sensor systems, and particularly provided to our space 
and missile tracking system--SMTS to ensure that we have a 
robust capability.
    Those are the kind of technologies we want to continue over 
the next few years to ensure that we are protecting our ability 
to provide a robust missile defense system both in the theater 
realm and in the national realm.

                                Summary

    Mr. Chairman, I would like to close my statement there. I 
probably talked a little bit too much, but I wanted to give you 
some illustration of things that we have actually done and what 
some of our challenges are and where we are going.
    I would be happy to take any of your questions, but I 
wanted to be sure you were fully dedicated as you have asked us 
to be to all of our missile defense programs, and we really 
appreciate the strong support we have received from you and all 
the other Committee members personally in ensuring that we have 
been able to get to where we are today.
    Mr. Chairman, thank you very much.
    [The statement and unclassified charts of General Lyles 
follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                         Unfunded Requirements

    Mr. Young. General, thank you very much for an outstanding 
statement and presentation of where we are and where we are 
going. I would like to ask you just a couple of quick questions 
about the budget.
    This budget request is about $700 million less than the 
actual appropriations for fiscal year 1997. Are there any 
unfunded requirements in the Theater Missile Defense Program 
that are not included in the President's budget?
    General Lyles. I think the best way to answer that is sort 
of twofold: One, to explain the difference between the budget 
and what was appropriated. The numbers that are reflected in 
the budget, the fiscal year 1998 budget, are actually about 
$100 million higher than what we initially went in for last 
year for fiscal year 1997.
    As you know, thanks to you and the Congress, we got a 
significant plus-up in our fiscal year 1997 budget for missile 
defense systems. We ended up getting about a $855 million plus-
up across the board in all of our various areas, national 
theater missile defense and technologies.
    What we tried to do is to go back and ensure that, based on 
last year's original budget that we were able to address some 
of our shortfalls, and we did provide a 1998 budget that is 
about $100 million higher than last year's original input, 
though it is less, if you will, if you look at it in terms of 
the plus-ups we got for 1997.
    To answer the question about unfunded requirements, as I 
look at trying to provide executable programs and I look at the 
risks we have for all of our theater missile defense systems, 
and even for our National Missile Defense System, I would have 
to say yes, I am concerned that we have some unfunded 
requirements relative to things that could help reduce the 
risk. Additional test assets as an example, additional test 
capabilities in our infrastructure, things of that nature, 
areas where I consider we have some unfunded requirements that 
probably need to be addressed to help us to ensure that we can 
do the job and do it with as low a risk as possible.
    We have accepted the current risk, but, as an acquisition 
expert, I would always like to see a low-risk program as much 
as possible, and from that context I would have to say yes, 
there probably are some unfunded requirements that could help 
us to address the risk area.
    Mr. Young. You might think about those and provide some 
more specific examples for the record, if you don't mind.
    General Lyles. I would be very happy to do that, Mr. 
Chairman. We could do that very quickly.
    Mr. Young. Okay. We would like to take a look at some of 
the things you think should have been funded.
    [The information follows:]

    The Fiscal Year 1998 President's budget could be augmented with the 
following prioritized list. Funding the items on this list will 
minimize outyear tails and assist in solving immediate pressures. First 
priority goes to risk reduction programs for the Major Defense 
Acquisition Programs (MDAPs); second, joint interoperability risk 
reduction issues with MDAP enhancements, third, improvements to our 
Advance Technology base, and finally, procurement of weapon systems not 
funded by BMDO.
    Navy Area Defense (Lower Tier) ($44 million RDT&E)--for risk 
mitigation efforts associated with EMD testing that were not in the 
previous program baseline.
     ($35 million)--for upgrades to the Pacific Missile Range 
Facility (PMRF) to meet Congressionally mandated use of PMRF and 
Multiple Simultaneous Engagement (MSE) testing. Funding would avoid 
offsets from other ballistic missile defense activities.
     ($9 million)--for targets, target support and range 
support due to new requirement for UOES characterization testing.
    Joint Theater Missile Defense (JTMD) ($94 million RDT&E)
     ($50 million)--to ensure sufficient fiscal year 1998 
Family Of System (FoS) testing and activities for joint 
interoperability testing, system exerciser simulations, hardware-in-
the-loop, CINC exercises, and system integration tests (SITs). Although 
the MDAPs' activity level has been increased by plus ups, JTMD has not 
received an additional TOA for interoperability support in step with 
activity levels. Outyear funding for JTMD through fiscal year 2003 in 
the areas PMRF, FoS Strategic Targets (STARS) and MEADS will be 
addressed in the POM update.
     ($22 million)--Attack Operations. To make an investment in 
definition and development of joint attack operations: The required 
investment is comprised of four major activities: (1) perform field 
tests, exercises, and training that focus on Attack Operations, (2) 
develop a joint attack operations operational requirements document, 
(3) formulate an integrated investment strategy, and (4) define the 
payoff to other mission areas from investments/improved performance in 
Attack Operations.
     ($12 million)--Cruise Missile Defense. To execute new role 
as Integration Systems Architect for Theater Air and Missile Defense, 
incorporating analysis, modeling and simulation for Cruise Missile 
Defense.
     ($10 million)--Israeli Cooperative Projects--to foster 
system interoperability between Israeli Arrow system and US TMD 
systems.
    PATRIOT ($15 million RDT&E Defense Wide)--additional funding would 
support unanticipated range and hardware funding requirements needed 
during the ongoing Engineering and Manufacturing Development flight 
test program without changing the number of flight tests or reducing 
other risk mitigation activities.
    Navy Theater (Upper) (not to exceed $80 million RDT&E)--to increase 
risk reduction activities by increasing the number of pre-EMD flight 
tests and ship and missile system engineering to support early entry 
into EMD. Consistent with current program approach.
    PATRIOT PAC-3 (($14.7 million) Although Army procurement is not 
funded by BMDO, we are the BMD managers.
     ($10.5 million Weapons Procurement, Army) Additional 
missile procurement funding. Addition to funds would restore eight 
missiles to the production schedule, deferred to beyond the Future 
Years Defense Program in order to solve an immediate fiscal year 1998) 
$10.5 million RDT&E missile target underfunded requirement. Workaround 
in place does not impact the publicized 4th quarter fiscal year 1999 
First Unit Equipped (FUE), but does delay deployment of the second 
PATRIOT PAC-3 battalion.
     ($4.2 million Weapons Procurement, Army) Radar kit 
procurement funds. Additional funds would allow PATRIOT to restore one 
radar kit, deleted following receipt of undistributed cuts in fiscal 
year 1996, ensuring timely fielding of the second PATRIOT battalion.

                 Procurement of Missile Defense Systems

    Mr. Young. The President's budget proposes to shift 
procurement of missile defense systems to the services in 
fiscal year 1998. Do you have any concern about this from your 
vantage point at BMDO?
    General Lyles. Mr. Chairman, again, in all honesty, we did 
have some concerns. We understand the rationale for the 
decision made back last December by Dr. Perry and the leaders 
within the Pentagon. The decision primarily was in some 
respects to try to provide additional ownership on the part of 
the services relative to our missile defense systems and all 
the other things that are trying to be done within the 
Department of Defense.
    In some respects, to use a vernacular that Dr. Kaminski, my 
boss, likes to say, the services before him have had sort of a 
free lunch, if you will. They can concentrate their service 
budgets on planes, boats, trucks, et cetera, and not have to 
worry about missile defense because they knew that was under 
the purview of BMDO.
    The decision was made to provide procurement ownership to 
the services and in part to get their ownership and make some 
tough decisions in the out years relative to whether or not 
they need to provide money for missile defense systems or money 
for other priorities within the services. The concern that 
causes us obviously is, is there a chance that the services--as 
an example, the Army or the Air Force or the Navy--may they 
take some of the money that is planned for our missile defense 
system and use it to buy trucks or airplanes or boats? So we do 
have a concern that we have lost a little bit of control in 
that regard.
    I might mention, Mr. Chairman, that to help alleviate that 
situation a little bit, the Deputy Secretary of Defense, Dr. 
White, sent a memo out shortly after that decision was made to 
all the service chiefs and all the service secretaries to 
reinforce the role and responsibilities of BMDO and indeed my 
particular role as the acquisition executive for the missile 
defense systems.
    The bottom line of that memo was to tell them that our 
charter responsibility to provide integrated capability has not 
changed, and it also gave us the leeway to have at least a 
voice all the way up to the Secretary of Defense if it turns 
out that somebody does want to take some of our missile defense 
money and use it for other things. That is not quite the same 
as being totally in control, but it does provide us a little 
bit of an out and at least gives us a voice up through the 
Secretary of Defense if anybody does try to make a move of that 
nature.
    Mr. Young. You explained the position on that very well, 
but now what do we gain by having the services deal with this 
procurement as opposed to your office?
    General Lyles. Again, Mr. Chairman, the only thing that I 
think we really gain from that is a sense of ownership, if I 
can use that terminology on the part of the services, that they 
are going to have to make some tough choices. And, by the way, 
we are looking at some of those in the Quadrennial Defense 
Review right now. The services are agonizing over those, not 
just because of missile defense programs, but they have to make 
tough choices, sometimes between our vital need for missile 
defense capabilities and some of the other needs that they have 
within their service purview. So that sense of ownership is the 
primary gain, and in all honesty the primary rationale for 
making that decision.

                             Arrow Testing

    Mr. Young. General, this Committee has always been very 
excited about THAAD and supportive, but the news on that 
program isn't all that good right now. Tell us about ARROW. We 
understand that some of the ARROW testing is doing very well.
    General Lyles. Sir, the ARROW program, which, as you know, 
is a joint program that we are working jointly with the 
Israelis. The ARROW program recently has been very successful. 
They have had two intercept tests planned over the last 6 
months, one last August and one last month. Both of those 
intercept tests were very successful. There was a slight 
anomaly I might mention for the last test, intercept test.
    The warhead itself did not go off, but they had an actual 
body-to-body intercept, so they did manage to kill the specific 
target they were going after.
    This is a joint program. We are working it cooperatively 
with the Israelis. There is some sharing of technology relative 
to ARROW. There are some capabilities like the focal plane 
array that they use in the ARROW system, which is made of 
materials similar to the focal plane array we will be using in 
the THAAD. So we are gaining some information and knowledge 
about some of the things that we will need and plan to have 
within our own systems, missile defense systems. It is also 
intended, obviously, that this be an interoperable program, so 
whatever we do with the ARROW system, working with the 
Israelis, we intend for it to be interoperable with our Patriot 
system, eventually our THAAD system and our Navy systems. So we 
are very happy that that program has been very successful.
    But I am always very careful to point out that that system 
is unique to the Israeli requirements. It does not meet our 
requirements, so it is not something that we can look to and 
point to their success and say we should consider bringing it 
into our inventory. It does not meet our requirements at all.
    Mr. Young. General, thank you very much. I have some 
additional questions when I get a second chance. Now, I would 
like to recognize Mr. Murtha.

               Theater High Altitude Area Defense Testing

    Mr. Murtha. General, what is the problem with THAAD 
specifically?
    General Lyles. Congressman Murtha, the problems we have had 
on the intercepts have all been in the critical end game, as I 
like to define it. We have had, unfortunately, a different 
failure mechanism in each one of the four anomalies we have 
had. The system in terms of the total system, the radar, the 
battle management command and control, the rocket motor, all 
seem to work very well. But when we have gotten to the critical 
intercept, the ability to actually hit-to-kill the actual 
target, in each case we have had a different failure mechanism 
and it has been a different thing. We would repair or figure 
out what it was in one test, we fix that, and the next test it 
would be something else.
    From my experience, what that brings to mind is a question 
about systems engineering, a question about quality control on 
the part of the contractor. Those are the kind of things we are 
looking at very aggressively in this scrub we are doing.
    Mr. Murtha. That is the impression I got. This was a 
quality control, because there are things you didn't 
anticipate. The areas that you anticipate you may have a 
problem, you didn't have a problem.
    General Lyles. None whatsoever, Mr. Congressman.

                    National Missile Defense Program

    Mr. Murtha. So does that translate into being able to solve 
the national ballistic missile defense problem, for instance? I 
know you are early on, but four failures here, since this is 
the centerpiece of your system, does that translate at all into 
problems down the road in the bigger system?
    General Lyles. Congressman Murtha, it doesn't translate 
directly in terms of technical problems. What it does do, 
however, is make us very, very conscious and be very careful, 
as you know from all the experience you have had in DoD 
programs, to ensure we have the best acquisition strategy, the 
best test strategy, and a realistic schedule relative to our 
programs.
    Right now, the reason I stated about our National Missile 
Defense Program being very high risk, is because we structured 
it specifically because of the urgency of time in trying to do 
the 3+3 element. We structured it with a minimum of tests. We 
have structured it with a minimum of time. I think THAAD is a 
perfect example of the old Murphy factor, if you will, that we 
need to look very carefully as to how we have structured our 
National Missile Defense Program and provided the kind of 
assets and resources, including dollars, to provide back-up 
spares in case we have a failure, those kind of things, so that 
they don't provide a link-up to us.
    Mr. Murtha. Are you saying that 2003 is at best an estimate 
of when you can deploy the system?
    General Lyles. Right now, Congressman Murtha, I would say 
that is at best, yes. But once again, I am not hesitant in 
saying that it is very high risk in our ability to do that. 
That 2003 is based on absolutely everything being perfect, 
working everything perfectly, no failure, no THAAD-like 
anomalies.
    My experience tells me that is probably not realistic, but 
we laid it out that way because of the urgency.
    Mr. Murtha. In fact, we have never had a system where we 
went perfectly the whole way through I am familiar with. Maybe 
there have been some, but I am not familiar with them.
    General Lyles. None that I am familiar with, Congressman. 
We have seen a lot of different programs, obviously, including 
some of our black programs that have gone in a short time 
frame. They have had a lot of anomalies, too, usually not well 
known by people, but they have had anomalies.
    Mr. Murtha. We appreciate the problem you are taking on, 
because the district I represent lots more people in the Gulf 
War than any other district because of the SCUD missile and the 
fact that that missile happened to go through a slot that 
wasn't protected by the missiles. I know there has been a lot 
of controversy about it, but it looks like the PAC-3 and the 
ERINT are coming along, and THAAD, it sounds like they are 
controllable problems and we are going to get there in the end 
with that system.
    General Lyles. Congressman, I think that is a correct 
statement. I might just mention for you and the Chairman and 
the other committee members, we are within the next week or so 
going to get the out briefing back to me of the detailed 
analysis and scrub we have done on the THAAD program, looking 
at all the requirements, looking at the issues, and looking at 
where we go from here. I would be very, very happy to provide 
that information back to you and your staff after that is 
completed.
    Mr. Murtha. I appreciate it. Thank you very much.
    Mr. Young. Mr. Dicks.

                   Theater High Altitude Area Defense

    Mr. Dicks. General, I am sorry I missed part of your 
statement, but I, too, am concerned about the THAAD program. 
Obviously, it is a great disappointment to have this fourth 
consecutive failure. Can you tell us, maybe in a little more 
detail what you think the problem is?
    General Lyles. Congressman Dicks, for the most recent 
failure, what happened is what we call the divert in attitude 
control system, the sort of roll control, the vector control 
system for the missile, failed to operate properly. We got an 
initial signal, we think, from the guidance systems, from the 
computers, to turn on that roll control, turn on those 
thrusters on the system, but, for some reason, it failed to 
operate.
    Obviously, without roll control, without divert control, 
even though we got within the basket of the actual intercept, 
we actually have a photo that shows the target coming in and 
the intercept missile all within the same frame, there was no 
way we could divert to actually make the body-to-body 
intercept. That was the most recent failure, and that is what 
we are concentrating on there.
    As I mentioned with Congressman Murtha, there has been a 
different failure mechanism for each of the previous three 
failures.
    Mr. Dicks. That can be even more worrisome than if you had 
the same problem. At least you can fix one. It sounds as if you 
have some kind of a management problem here. We have had this 
on other weapons systems. I can remember one of the cruise 
missile problems, we continued to have, it was always something 
different. I think finally we had to cancel it. Now, do you 
believe in the technical viability of the current missile 
design?
    General Lyles. Congressman Dicks, I do believe in the 
technical viability of that design. However, I want to qualify 
and tell you that is one of the key questions I have asked this 
independent team to look at and scrub very, very thoroughly.
    Mr. Dicks. When is the independent team going to come back 
and give its report?
    General Lyles. They will be reporting back within the next 
week or so to me and I will in turn be reporting to Dr. 
Kaminski and eventually to the Secretary of Defense within the 
very near future.
    Mr. Dicks. Dr. Kaminski has suggested the THAAD program 
will probably require some sort of restructuring. What does he 
mean? Will the program be delayed further? What will be the 
impact on resources? Or are we going to have to wait for this 
independent group to get back before we can make a judgment?
    General Lyles. It is definite in detail, Congressman Dicks. 
We probably need to wait to see what the report is back to me 
relative to the total program. I think what Dr. Kaminski was 
referring to, and I wholeheartedly agree, we know just because 
of the anomalies and failures that we have had in the last four 
tests that we have not been able to meet our current 
milestones.
    We were hoping to have proceeded into the engineering, the 
manufacturing and design phase for the program, to have 
actually made the decision to go on contract for our UOES 
capability, our User Operational Evaluation Systems capability. 
We have not done that because a key milestone criteria, exit 
criteria to allow us to do that, was an actual intercept. So 
there has been a slip within the program.
    What I am waiting for in terms of the details from the 
review teams is what is the nature of the problem, what kind of 
fixes do we have to do, and how does that translate to more 
schedule concerns, if necessary.

                         Airborne Laser Program

    Mr. Dicks. Can you tell me what you see as the primary role 
of the airborne laser ABL system?
    General Lyles. Yes, sir. The airborne laser system, as I 
showed in one of my earlier charts, is an integral part of our 
family of systems with theater missile defense. It provides 
what I consider to be a very, very key air joint that we 
absolutely must have in our capabilities, and that is to boost 
phase intercept, to be able to intercept and kill theater 
missile system while they are in the critical boost phase. This 
adds several benefits.
    One is that it destroys the target. Two it has a deterrence 
element to it, particularly if you consider the possibility 
that some of those threats may have weapons of mass destruction 
in the warheads, chemical or biological or, God forbid, nuclear 
warheads. The fact that we, if we have this capability and we 
hold that threat over an adversary and he knows there is a high 
probability that his systems could get shot down and fall down 
in his territory, there is an element of deterrence there that 
we think the boost phase intercept system can provide us. ABL 
right now is our primary boost phase intercept program.
    Mr. Dicks. What can you tell the committee about the status 
and progress of the ABL program?
    General Lyles. Sir, the ABL program proceeded as of last 
November into its first phase. It is a program definition 
phase, an early concept definition phase. As you are well 
aware, the Air Force down-selected to a single contractor team, 
to manage this particular effort. It involves Boeing, TRW, and 
several other contractors who are working together to provide 
the capability. I have great confidence that the program in 
this new revolutionary technology is going to be very, very 
successful. They are still in the early phase in that program 
and leading up to some initial tests of the laser system 
itself, design tests of the laser systems, and some surrogate 
intercept tests they would do on the ground about this time 
next year.
    As far as everything I have seen in my latest review, the 
program is on track and seems to be proceeding as successfully 
as the Air Force and the contractors would hope it to.

                   THEATER HIGH ALTITUDE AREA DEFENSE

    Mr. Dicks. Mr. Chairman, just a little indulgence. On going 
back to THAAD now, is the contractor giving you the best effort 
here to try to deal with this problem? Are you getting good 
management attention on this?
    General Lyles. Congressman Dicks, I can assure you we are.
    Notwithstanding my earlier concern about quality control, I 
can tell you that I have great confidence in Lockheed Martin 
and their efforts to do the job. Norm Augustine, their CEO, and 
I and his other people in the senior office have been not only 
corresponding but talking very, very aggressively together and 
working together to ensure that they understand our concerns 
about their management attention and the right team to do the 
job and looking at it with all the best talent they can muster 
literally in the United States, not just Lockheed's talent, but 
anybody that is necessary to address the issues associated with 
THAAD.
    I know I have the attention of Mr. Augustine. I know I have 
the attention of the senior management within Lockheed Martin 
headquarters here in Bethesda. I feel also we have the 
attention of the people who are managing the effort in their 
Sunnyvale plant out in California. I visited them to ensure 
they understand our concerns and personally to look to ensure 
they are putting the right attention to that.
    Mr. Dicks. All right. One final thing. How about the cost 
on this program? Is the cost staying within the bounds of what 
you had anticipated or have there been escalations in the cost 
of this program?
    General Lyles. Congressman, there have been some 
escalations, and we had a recent--what we call an over-target 
baseline for the program, to increase the baseline--program 
baseline--above what was originally approved or last approved--
within the last year.
    Currently, however, we think we can do all of this and 
manage these things within the current budget we have for 
THAAD. It is above the baseline we established for the program 
director and the program office; but we think that, right now, 
we can operate currently within the current budget that we have 
for the THAAD program.
    Mr. Dicks. Is there any technical alternative? Is there any 
other program that can do the high altitude piece of theater 
missile defense?
    General Lyles. No, sir, there is not, not to do that 
particular part of the mission.
    We, obviously, have two upper-tier programs. THAAD is one 
for our ground systems, if you will. The Navy Upper Tier 
program, which is far less mature, further along relative to 
THAAD and anything else we have, the Navy Upper Tier will 
provide us an additional Upper Tier program. Navy Theater Wide 
is another name we call that. That program does not meet all 
the requirements that we have for THAAD. It is a complimentary 
program and is not intended to be a substitute for the THAAD 
program.
    Mr. Dicks. All I can say is when we cancel these things, 
you have to start over, and it costs billions and billions of 
dollars. My instinct is it is always better to try to fix a 
system if you can and keep the program going.
    General Lyles. Congressman Dicks, I can assure you I agree 
with that wholeheartedly; and I am sure we can address the 
question.
    Mr. Young. Mr. Visclosky.

                            NAVY LOWER TIER

    Mr. Visclosky. Thank you, Mr. Chairman. Thank you, General.
    General, I would like to talk to you about the Navy Lower 
Tier program. My understanding is that the Navy has designated 
from your testimony the USS Lake Erie and the USS Port Royal as 
the cruisers to support the system, and that would be in the 
year 2002. Do you think the Navy is fully committed to this 
system and having it installed on those ships in the year 2002?
    General Lyles. Congressman Visclosky, I think they are 
absolutely committed to it; and I reaffirmed that in recent 
months with the Chief of Naval Operations (CNO), with the 
Secretary of the Navy, in addition to the program office and my 
own visits to actual operational units of Navy systems down at 
Norfolk. They are fully committed to the program.
    Mr. Visclosky. My understanding is in this year's budget 
the Navy has not asked for any money for these two ships in 
preparation for the installation of this system. When will we 
see those monies in the Navy's request?
    General Lyles. I have to take that for the record. I am not 
sure when they actually need the dollars for that, but I will 
provide that information for the record, Congressman.
    [The information follows:]

    Office of the Secretary of Defense--OSD Program Budget 
Decision of December 1996 transferred BMDO TMD procurement 
funds (SM2 Block IVA and AEGIS) to the Navy, specifically to 
the Weapons Procurement, Navy (WPN) Standard Missile SM-2 
(12FE) account. Recognizing a misalignment of funds, the Navy 
set aside, within the PB98 WPN, Standard Missile SM-2 (12FE) 
account, funds necessary to conduct the AEGIS TBMD 
modifications. The Navy will realign these funds to Other 
Procurement, Navy (OPN) during Off-Year POM to modify and equip 
AEGIS ships for the TMD mission.

    Mr. Visclosky. If the ships are not operational, what 
impact would that have on the system? What would that do to our 
cost?
    General Lyles. As I understand it, those two specific ships 
have been designated to have the initial capability for the 
Navy Area system. As I know, the Navy is committed to ensuring 
that that capability is there. They are working to ensure the 
ships are prepared by that time period----
    Mr. Visclosky. By the year 2002.
    General Lyles. We are obviously working to ensure the 
missile systems and the battle management command and control 
are there also to support the integrated weapons system that we 
need.
    Mr. Visclosky. I am concerned about both parts. I am 
particularly concerned because, again, my understanding of the 
budget this year is there is no money in the Navy's budget to 
begin any modifications of equipment of these ships, that there 
is a coincidence of both being ready in the same year. If you 
could comment on that for the record, I would appreciate that.
    General Lyles. I would do that, Congressman. It was my 
understanding one of the primary reasons there were no dollars 
this year is because they didn't need to have those dollars 
this year. I will go back and verify that.
    Mr. Visclosky. That may very well be the case.
    [The information follows:]

    The two User Operational Evaluation System (UOES) AEGIS 
cruisers, USS Lake Erie and USS Port Royal, will be configured 
to support the UOES beginning in fiscal year 1998 with the 
installation of the UOES computer program. At sea testing of 
the UOES will commence in fiscal year 2000 as the first UOES 
SM-2 Block IVA missiles are delivered. Equipment to support the 
UOES installation aboard these two cruisers was procured with 
BMDO procurement funds in fiscal years 1996 and 1997. This 
procurement supports a fiscal year 1998 fielding of the AEGIS 
TBMD UOES computer program. The Navy Area program is currently 
scheduled to achieve First Unit Equipped (FUE) in fiscal year 
2002.

                             ARROW FUNDING

    Mr. Visclosky. On the ARROW program, it is my understanding 
the administration recently announced that they would provide 
additional funding for the program. Do you know what that 
amount of money is?
    General Lyles. Yes, sir. We, as a result of a meeting a 
couple of weeks ago with Minister of Defense Mordechai and the 
Secretary of Defense, Secretary Cohen, an agreement was made we 
would look to see ways we could help them with the ARROW system 
and help the Israelis, who would like to provide additional 
capabilities for their forces, additional ARROW capabilities 
for their forces.
    We have an agreement, however, that we are not responsible 
for nor are we going to procure additional ARROW systems for 
them, ARROW missiles. Our responsibility is to help them 
develop the system and specifically to ensure we have an 
interoperable capability.
    We have--in this recent agreement, we have reached an 
accord where we think that we can provide an additional $48 
million over the next four years and use that money to offset 
some of the interoperability needs of the ARROW program and 
allow the Israelis to take some of their development money and 
align it to their procurement needs for their additional 
systems.
    So what we are going to use that money for is to support 
what we are chartered to do--to help do, and that is work the 
issue of interoperability and development. We are not using the 
money to buy systems for them. That would violate our agreement 
with the Israelis. It is $48 million over the next four years.
    Mr. Visclosky. So we are in it for the development 
knowledge and not the procurement?
    General Lyles. Yes, sir.
    Mr. Visclosky. The range, as far as procurement, was 
anywhere from $2 to 10 billion, as I understand it. Is there a 
narrower figure or range now? For the ARROW system?
    General Lyles. I have to provide that for the record in 
terms of where we are today.
    The only reason I am hesitating on that is because of the 
current desire on the part of the Israeli defense system to 
procure an additional battery, additional missiles, over and 
above, beyond what we were originally working towards even a 
few months ago. So that number has changed a little bit, and I 
need to verify that, and I will provide that for the record.
    [The information follows:]

    The cost estimate of Arrow at program inception in 1994 of 
approximately $1.2 billion remains valid today. Phase I (Arrow 
I) of the program cost $158 million, Phase II (Arrow II) costs 
$330 million, and Phase III (Arrow Deployability Program) costs 
$556 million. These costs do not include $42 million in 
infrastructure costs and $252 million for Arrow Weapons System 
components (Radar, Launcher, Fire Control) both of which were 
funded entirely by the Israelis.

    Mr. Visclosky. We are not obligated for any of the 
production costs?
    General Lyles. That is not our responsibility, to worry 
about the production costs.
    Mr. Visclosky. If this program was in your budget, would 
you give it more money?
    General Lyles. In terms of our agreement, I have sort of 
answered that question in part by our R&D area. In terms of 
working research and development, working interoperability, 
this additional $48 million, I and my people in my organization 
agreed that was a fair sum to consider adding to the ARROW 
program. Anything beyond that--anything beyond that $48 million 
or anything that even smacks of production is not our 
responsibility, and we would not fund that at all.
    Mr. Visclosky. General, thank you very much.
    Thank you, Mr. Chairman.

               MEDIUM EXTENDED AIR DEFENSE SYSTEM (MEADS)

    Mr. Young. Thank you, Mr. Visclosky.
    General, I would like to ask you about MEADS. This started 
out as a U.S. program and because of the expense we went into a 
multinational, basically a NATO program. Now France has dropped 
out, which I expect will increase our share of the cost. I 
would like for you to tell us why France dropped out and also 
why we need to do MEADS at all?
    General Lyles. Congressman, as I understand it, the French 
dropped out primarily because of budget considerations of their 
own, their own internal needs. We have restructured the program 
between us and our two allies, Germany and Italy, the two 
cooperative partners, in terms of their and our share of the 
program, both the dollars and potential work share for the 
future.
    MEADS is a vital program, just like the original Corps Sam 
that you alluded to, because of the specific requirement to 
provide maneuver force protection for our troops and our 
assets. We do not have that in the sense that we really need it 
with today's Patriot system or even the THAAD system. They do 
not have the maneuver capability that we really need.
    They also provide defense against multiple and simultaneous 
attacks of both short- and medium-range ballistic missiles, 
cruise missiles and air breathing threats. So there is a wide 
compendium of capability that we will get with the MEAD system 
we don't have today, particularly in the aggregate of all those 
potential threats. We don't have those today with THAAD and 
with the Patriot system. Maneuver force and cruise missile 
defense, air breathing defense, multiple engagement defense 
capability is a primary requirement for MEADS.
    Mr. Young. The budget request for 1998 is $48 million. 
Where will that take us?
    General Lyles. That $48 million, plus I think an additional 
$9 million in fiscal year 1999, are essentially going to take 
us through the program definition phase for MEADS. It will 
allow us to, in working with our partners, working with the two 
international contractor teams that have been established to 
define the concepts, the valid concepts for a MEAD system, to 
try to down-select, if you will, to the appropriate concept for 
the design for the MEAD system, and that is as far as it will 
go.
    The obvious question is, what do we do from there and how 
do we proceed on? I think probably the best way to answer that 
is to tell you that this is a very, very tough decision that is 
currently being addressed in the Quadrennial Defense Review. 
Even as late as last night, that issue was being discussed 
within QDR; and sometime within the next week or two we are 
going to present options to the Secretary of Defense and make a 
decision from there what is going to happen with the MEAD 
program.

                    QUADRENNIAL DEFENSE REVIEW (QDR)

    Mr. Young. The Secretary of Defense has been complaining 
that the QDR has not been quite as aggressively approached as 
he would like it to be. Are we getting near the end of the QDR 
process?
    General Lyles. As I understand it, Congressman Young, the 
Secretary has mandated and he is going to report to Congress on 
time; and I think you can see that with the scurry of activity 
that is happening within the building and all the QDR meetings 
that are taking place.
    The ones I have been involved in recently, particularly as 
late as yesterday at the senior steering group level with the 
deputy secretary and the vice chiefs of the various services 
and the vice chairmen of the Joint Chiefs of Staff, there are 
some very, very tough issues and alternatives and very, very 
tough decisions that are being laid out. And everything I saw 
showed it is being done very aggressively, but there are no 
easy answers there as to how we are going to address some of 
our needs.

                           HELSINKI AGREEMENT

    Mr. Young. General, Mr. Livingston at the beginning of our 
session this afternoon asked you about the Helsinki agreement. 
You and I had discussed this previously, and I wanted to have 
you answer for the record your role in reaching the actual 
agreements and the wording in the Helsinki agreement. Because 
we have come upon a few instances where the actual user, the 
commander that was involved in a particular issue, was not 
consulted when certain decisions were made.
    Were you consulted and were you part of the decision making 
as to the Helsinki agreement?
    General Lyles. Congressman, it would be probably unfair to 
say we are part of the decision making; but we definitely were 
part of the consultation process. Let me explain exactly what 
took place.
    Literally over the last year, even before I came on board 
and certainly as I have seen it since the end of August, the 
activities that have taken place, all the previous--the 
preliminary discussions with the Russians prior to the Helsinki 
agreement for the most part had been done through the Standing 
Consultive Committee and some other bodies, primarily in 
Geneva. And for each one of those sessions we did have a 
technical representative from BMDO who was part of the 
consultation body and part of the advisory body to the United 
States representatives at that particular forum.
    Each time there was a meeting, a senior level meeting 
involving senior leadership from the Pentagon, be they Office 
of the Secretary of Defense, OSD, civilians or military people 
from the joint staff, each time prior to one of those meetings 
I was consulted, my senior staff and I were consulted, and our 
issues, our concerns were provided to those who were 
representing the United States. And our views--clearly our 
views and the views as we understood it from the warfighters, 
from the CINCs were clearly presented to them so that they 
could proceed with caution in all of the discussions.
    I admit I consider my view to be sort of a minority one 
relative to the bigger view that was provided to each one of 
those forums, and that is the view of the Chairman of the Joint 
Chiefs of Staff, General Shalikashvili, in short. Prior to each 
one of those meetings, one key mandate was there, and that was 
we do nothing to impact the ability to protect our forces for 
the future.
    So from the position of consultation, we were an integral 
part of the activities, both prior to the meetings, as people 
prepared for them here, and even at the meetings with our 
technical representatives there. It would be unfair to say we 
were part of the decision-making process; but I feel very, very 
comfortable that we did have a say-so as far as consultation.
    Mr. Young. Well, let's jump over the decision part and go 
to the end product. Do you feel that the end product reflected 
to a large extent or a small extent the views of your 
technicians and your consultants that were involved or 
consulted?
    General Lyles. For the most part, Mr. Chairman, I think 
that was the case.
    Obviously, we are still looking at questions relative to 
future systems, particularly the words in the agreement that 
talk about theater missile defense by other physical properties 
other than OPP, as they refer to it, space-based primarily, to 
ensure that what we think that means--and when I say we, not 
just BMDO but our representatives for the United States and the 
Russians are exactly the same thing.
    But as far as the other issues, the demarcation limits, the 
limits on the types of speed and range for the targets, our 
concerns were aired properly there and our issues were 
represented relative to the final statement.

                          ACQUISITION PROCESS

    Mr. Young. General, thank you very much.
    Now the easiest question that I have for you. We have 
talked with you about acquisition reform, and you have a very 
strong record in acquisition reform. Tell us some things that 
you think ought to be done or at least considered in the area 
of reforming the acquisition process.
    General Lyles. Mr. Chairman, as we mentioned just briefly 
yesterday, we are trying to do as much as we can to embrace 
acquisition reform in all of our programs. I think as I look at 
it back in my experience with other programs, one of the key 
things we want to ensure that we do is to, as much as possible, 
give free rein to our program directors to make decisions 
without being encumbered with lots of layers of somebody 
checking or double-checking what he is trying to do.
    A key way of trying to address that is to ensure that we 
work as integrated teams. So integrated product teams, IPTs as 
we refer to it in the vernacular, is the way we are trying to 
manage all of our programs.
    What we like to do is bring all of the stakeholders 
together and help them to help us make decisions and 
recommendations for our programs so we don't have somebody 
second-guessing or, worse, still coming in at the last minute 
and disagreeing with a decision in terms of how we acquire a 
program, our strategy for a program, our contract strategy or 
any decision that we might make.
    General Cosumano behind me, General Dan Montgomery over on 
my left behind me, are also working as part of their activities 
in both the national missile arena and the theater missile 
arena to ensure we use Integrated Product Teams to manage each 
one of our efforts. That is a major, major breakthrough I think 
in terms of the way we manage programs; and it really provides 
streamlining in terms of decision making and coming to the 
right conclusion as to what we want to do.
    The other thing I think we are trying to ensure we do is to 
minimize the paperwork in the bureaucracy associated with each 
one of our programs. We are trying to manage each one of our 
efforts very, very aggressively to use electronic means for 
communicating information, to use the minimum amount of 
documentation.
    You may be familiar with the term we call the Systems 
Acquisition Management Plan, SAMP, a document only about 2 or 3 
inches thick, to define what it is we are trying to do with our 
program as opposed to the reams and reams and literally table 
full of documentation that our program officers have had to 
provide in the past to define our programs. We are using that 
mechanism to streamline not only in time but in dollars what it 
is we are trying to do, and that is another thing that we are 
embracing totally.
    I might mention for our national missile defense program 
one key area of acquisition reform that I think is really sort 
of a breakthrough is one we have used successfully in other 
programs, and that is to go as much as we possibly can to an 
electronic means of communication. It is a paperless 
environment as much as we can possibly embrace it.
    The request for the proposal that we have for bringing in a 
prime contractor for NMD was sent out electronically to 
industry. All the updates to that request for proposal were 
done electronically with industry; and industry, in turn, 
provided us their proposals that we are currently evaluating 
through electronic means. There are no big documents, no big 
mailings of paper that they had to submit to us. All of this 
was done electronically.
    We are also doing the evaluation of the proposal in an 
electronic mechanism, and we will eventually make a 
determination and decision on that program through electronic 
means so we can give quick feedback to industry as to what we 
are trying to do.
    There are lots of other things like that, Mr. Chairman, 
that we are trying to do.
    Perhaps to better answer your question, what I would like 
to offer to you is the opportunity to come back to talk to you 
or any one of the Committee Members and tell you specifically 
how acquisition reform is being applied to each one of our 
programs and then, more importantly, what I think the payoff is 
going to be for each one of those examples.
    Mr. Young. Well, General, thank you very much for that 
offer. We will take you up on that, because we are extremely 
concerned and interested in acquisition reform and getting more 
for the dollar as the dollar continues to shrink and the budget 
requests seem to get smaller and smaller.
    Thank you very much, General.
    Mr. Murtha.

                           DEMARCATION LIMITS

    Mr. Murtha. Let me ask you, is the demarcation agreement 
between tactical and strategic weapons in the Helsinki Accord 
under development in any of the six TMD systems currently under 
way?
    General Lyles. Congressman, none of the six systems we 
currently have under way are impacted by that. They all fit 
very well within the Helsinki agreement.
    Mr. Murtha. Does it hinder in any way your ability to 
develop theater systems to protect our troops?
    General Lyles. Currently, no, sir. It does not hinder our 
ability to do that.
    Mr. Murtha. Thank you.
    Mr. Young. Mr. Dicks.
    Mr. Dicks. Was it not a fact, as I recall--and I can speak 
directly on this. Wasn't there a bill that Congress passed, the 
defense authorization bill in fiscal year 1995, that codified 
the 5 kilometers a second or 3,500-kilometer range?
    General Lyles. I think that was the case, Congressman 
Dicks.
    Mr. Dicks. So all the administration basically did was 
agree to something the Congress had already enacted into law?
    General Lyles. Well, that is one of the key reasons why we 
are not currently impacted with our current programs. I am not 
exactly sure what was in the law for the 1995 act relative to 
the demarcation limits, but we have been talking about the 5 
kilometer per second speed of a target and 3,500-nautical-mile 
range for some time, and we felt very, very comfortable with 
that agreement would not impact any of our current programs.
    Mr. Dicks. Is it true that nothing was limited in terms of 
space-based systems that isn't already part of the ABM 
agreement?
    General Lyles. Congressman Dicks, I think that is the one 
area that we have a little bit of a concern about. The 
statement relative to space-based theater missile defense 
systems or directed energy systems is one that could impact--
and we are trying to verify this--could impact our current 
space-based laser program.
    We think the current interpretation of the Helsinki 
agreement, that is, we can still do a space-based laser program 
as long as it is couched in the area of research and SBL. And 
we are not trying to deploy a limited capability. We think our 
current space-based laser program can still proceed.
    However, I am in the process of defining exactly what it is 
we need to do in space-based laser, run that by Secretary 
Cohen, get his concurrence on that, so we can make sure we 
aren't doing anything that violates the agreement.
    Mr. Dicks. Would the airborne laser have a similar problem?
    General Lyles. No, sir. One of the key things--going back 
to answer an earlier question from the Chairman, one of the key 
things that we were very careful about relative to the 
discussions at Helsinki was to ensure that nothing was in the 
language that would impact the airborne laser.
    There were some discussions, to be honest with you, of some 
words that could have impacted ABL. They were taken off the 
table thanks to the people who listened to our concerns, and 
airborne laser is not impacted by the Helsinki agreement.
    Mr. Dicks. So you are saying--and do you think it is 
compliant with the ABM agreement?
    General Lyles. I did not say that. I mentioned the Helsinki 
agreement. We still have to go through the formal process. I 
say we--I mean the Air Force, working with us at BMDO, have to 
go through the formal process of the compliance review group 
assessment of ABL, when it is ready to go through that. We 
still have to do that to get formal compliance certification. 
But nothing happened relative to the Helsinki agreements that 
would impact the current ABL program.
    Mr. Dicks. And nothing happened there on national missile 
defense either?
    General Lyles. No, sir. They specifically were looking at 
theater missile systems, so nothing happened relative to NMD 
programs.
    Mr. Dicks. Thank you, Mr. Chairman.
    Mr. Young. Mr. Visclosky.
    Mr. Visclosky. No further questions, thank you.

                   COOPERATIVE ENGAGEMENT CAPABILITY

    Mr. Young. General, let me ask you just a few more 
questions on the Navy Lower Tier. We are being asked to approve 
a multiyear procurement for the DDG 51s. Most of us are 
concerned, I think all of us are concerned, with the fact that 
this budget does not provide funding for any missile defense, 
theater missile defense on those ships. Cooperative engagement 
capability, or CEC, which has been a big item with this 
committee, is not going to be on any of those ships.
    Given that it takes three to five years in construction 
time to build a ship, the earliest that the Navy could field 
theater ballistic missile defense is 2005. I am wondering why 
BMDO--why did you state that Navy Lower Tier will be deployed 
in 2002? There seems to be a difference of opinion on the dates 
here by three years.
    General Lyles. Congressman Young, Mr. Chairman, we and the 
Navy are still dedicated to providing that capability by the 
year 2002. I would like to take for the record and provide some 
specific answers as to why the Navy doesn't reflect that kind 
of money for CEC and the ship improvement in their current 
multiyear.
    [The information follows:]

    The Navy Area Theater Ballistic Missile Defense (TBMD) 
program will add TBMD capability to the AEGIS computer program 
under development by the Navy. This Navy-developed computer 
program, AEGIS Baseline 6 Phase I, includes Cooperative 
Engagement Capability (CEC). The TBMD Tactical computer program 
(AEGIS Baseline 6 Phase 1T) is scheduled for delivery in Fiscal 
Year 2000 and will be retrofitted to previously built AEGIS CGs 
and DDGs and will be forward fitted to DDGs as they are being 
built.
    Because the Department decision to transfer all procurement 
funds to the Services starting in Fiscal Year 1998 was made 
relatively late in the budget submission process, all Navy TBMD 
procurement funds, including AEGIS TMD upgrade funds, were 
placed in the Standard Missile procurement line (Project 12FE, 
Flight Hardware--SM AEGIS improvement, totaling over $360 
million between Fiscal Year 1998 and Fiscal Year 2003). During 
this Summer's budget cycle, the procurement funds will be 
realigned from Standard Missile to the appropriate AEGIS TMD 
Weapon system procurement line, as specified in the Cost 
Analysis Requirements Description (CARD). The CARD identifies 
DDG AEGIS Weapon System acquisitions beginning in Fiscal Year 
2000 (for installation if Fiscal Year 2003), and AEGIS cruiser 
TMD retrofit schedules beginning in Fiscal Year 1998 (for 
installation in Fiscal Year 2000).

    General Lyles. As far as I know, as I answered Congressman 
Visclosky, the Navy is fully dedicated to not only providing 
the Navy Lower Tier and Navy Area Defense capabilities but also 
getting CEC in as many of their ships as possible. What that 
tells me is, at least for this next fiscal year, they didn't 
think that the money was necessary, but I will go back and 
verify that and find out exactly how this is being handled.
    Mr. Young. I would appreciate that.
    We have been asking this question of a lot of witnesses. 
Does it make sense to build the ships without the ability to 
defend themselves or be part of the theater missile defense 
program? So we would appreciate your answer.
    I want to thank you very much for the dynamic way you have 
responded to our questions.
    Mr. Murtha.
    Mr. Murtha. Isn't CEC absolutely essential to the 
deployment of these ship self-defense systems?
    General Lyles. I wouldn't say it is absolutely essential. 
It does provide you an enhanced capability, because you can net 
information from one ship to another. You can provide advanced 
sensor information. You can provide fire control information.
    It is not absolutely essential, the way you stated it. The 
ships can be autonomous, but you get a greatly enhanced 
capability. You get a greatly force multiplier capability with 
something like CEC, and that is why the Navy is very much 
interested in it, and we are very interested in assuring we 
have CEC-like capability for our ground systems and eventually 
for any air systems like ABL, connectivity for that.

                           SHIP SELF DEFENSE

    Mr. Murtha. As the Chairman pointed out, we have had a 
terrible problem with the Navy. For instance, five or six years 
ago, we put money into--at the suggestion of one of the staff, 
because the fleet was saying we don't have good self-defense 
for individual ships. So we put money in. They resisted it, 
reprogrammed it. Finally, they said, it is now a priority. Then 
they don't put the money in again.
    I can't understand with the incidents we have had with low-
flying cruise missiles that the Navy is having such a problem 
getting this through their head or we have had such a problem 
convincing them this is something that needs to be done. I know 
once they get it developed they will take full credit and say 
they developed this whole system and this is all our idea and 
we were way ahead of everybody else, as they have done in many 
other systems that this Committee has suggested to them.
    I wish you would take a look at that and let us know what 
you think of their spending pattern.
    General Lyles. Congressman Murtha and Mr. Chairman, I am a 
little bit embarrassed, because I thought for sure that that 
capability was something that the Navy was fully embracing. You 
and Congressman Visclosky have raised something I was not aware 
of, and I feel so bound to make sure that we get an answer. I 
would like to bring Admiral Rod Rempt, who is the Navy Theater 
Missile Defense Program Executive Officer, with me and come 
back literally in the next week or two and give you an answer 
to that.
    Mr. Murtha. Well, if the Navy comptroller is still there 
when we get done with the bill, then you might bring the 
comptroller up also.
    General Lyles. I will ask him to join me, yes, sir.
    Mr. Young. Incidentally, we have asked the Secretary of 
Defense, the Secretary of the Navy and the Chiefs on that same 
issue, so if you can bring the comptroller, that might help. 
Maybe he will get us an answer.
    General Lyles. Yes, sir. I will do that.
    Mr. Young. Mr. Dicks.
    Mr. Dicks. No further questions.
    Mr. Visclosky. One follow-up on the Chairman's remarks on 
the three to five discrepancy. The USS Lake Erie and USS Port 
Royal are, I assume, existing ships.
    General Lyles. Yes, sir.
    Mr. Visclosky. That may be part of the differential. I do 
think it would be important for you to follow-up with the 
Committee.
    General Lyles. I just got an update from my deputy, Admiral 
West behind me. It mentions the initial capability is upgrades 
to current ships and initially those two specific cruisers.
    I think, again, that is the rationale as to why they didn't 
feel that a lot of money needed to go into that particular 
effort. These are upgrades. I failed to mention that earlier. 
It is not like we are building ships from scratch in order to 
provide this capability.
    Mr. Visclosky. I would still have a concern.
    General Lyles. Yes, sir, I agree. I am very anxious to get 
the answer and very anxious to bring it back to you.
    Mr. Young. General, thank you very much for a really 
outstanding hearing. We appreciate the way you have responded 
to our questions. We look forward to working with you on the 
issues we agreed to follow up on.
    If there is nothing further, the Committee will stand 
adjourned.
    General Lyles. Thank you, Mr. Chairman.
    [Clerk's note.--Questions submitted by Mr. Skeen and the 
answers thereto follow:]

                           Over Land Testing

    Question. General Lyles, we've had several discussions about the 
THAAD missile testing program today, and I appreciate your comments on 
the future of this important program.
    One of my major concerns is that the program to date has justified 
the need for over-land missile testing. We've had four failures of the 
THAAD to date, but because the tests were conducted over land, we've 
been able to find the missile after each test, do an autopsy, and make 
a conclusive finding as to the reasons for each test failure, and 
provide this information to Congress, the Department of Defense and the 
program managers.
    Would you comment on the need for continued over-land testing of 
BMDO missile programs and your experiences at the White Sands Missile 
Range?
    Answer. As noted in your question, our experience with THAAD has 
benefited from our ability to recover test hardware in support of post-
flight failure investigation. THAAD will continue its Program 
Definition and Risk Reduction (PD&RR) flight testing at WSMR; 
currently, 6 flight tests remain. The choice of where to conduct a 
system's test program, however, is directly related to its stage of 
development, level of design maturity, and the specific test 
objectives. In the case of THAAD, the goal of PD&RR is to resolve key 
system integration and technology issues, which will allow the program 
to then move into the Engineering and Manufacturing Development (EMD) 
phase. While WSMR has proven adequate for THAAD to work out these 
technical issues during PD&RR, our flight test scenarios have been 
constrained by WSMR's boundaries. During EMD, the more mature system 
design will require target trajectories more representative of the full 
range of threats the system will face when fielded. This is true for 
not only for THAAD, but for our other missile defense systems that must 
engage the longer range targets. Overland ranges limit our ability to 
engage long range targets--we simply lack protected real estate of 
sufficient are to safely launch these targets, drop their boosters, 
fire interceptors to engage them, and contain the debris within 
restricted boundaries.

                        Space Based Laser (SBL)

    Question. Would you please update us on the status of the Space 
Based Laser Program and your plans for the future of this program?
    Answer. The Space Based Laser (SBL) technology program has 
demonstrated key laser system components, including the laser, the 
large lightweight optics, beam control, tracking and pointing, and 
structural isolation. These components have shown performance close to 
what is needed for a demonstration/ validation flight experiment. With 
the recent alpha Lamp Integration high-power test, we have increased 
our confidence that these components will work together in the presence 
of megawatt-class laser radiation.
    The approved SBL program, which is funded at $30 million per year 
in fiscal year 98 and the Future Years Defense Program, is still a 
technology development program.
    Question. Is the Air Force going to become a partner in this 
program?
    Answer. Because of increased Congressional interest, and Air Force 
interest in this program, I am considering transferring the SBL 
Readiness Demonstrator (SBLRD) program execution to the Air Force while 
maintaining overall Directed Energy Program management and funding 
authority here in the Ballistic Missile Defense Organization.
    Question. We've been hearing a lot lately about a Spaced Based 
Laser demonstrator. Would you please tell the Committee your plans for 
a demonstrator?
    Answer. The SBL Technology Readiness Demonstrator, currently in 
concept design, would test in space the components required for an 
operational missile defense platform but at reduced scale. Successful 
completion of this readiness demonstration would establish the 
feasibility of this approach to defending against hostile ballistic 
missiles during their boosting phase.
    I recently appointed an Independent Review Team, chaired by retired 
General Larry Welch, to review the SBL technology readiness to support 
a research and development proof-of-concept flight and to recommend a 
program among several options presented to his team. In their report, 
they observed that the technology is mature enough to support an SBL 
sub-scale flight experiment with medium risk by 2005. This would be an 
important step in demonstrating the feasibility of Space-Based Lasers 
as an option for future defense against ballistic missiles.
    The next step is to investigate and document the cost, technical 
feasibility, and treaty compliance of completing an integrated ground 
demonstration and a flight demonstration, and present program options 
for prioritization in the fiscal year 00 Program Objectives Memorandum.

    [Clerk's note. End of questions submitted by Mr. Skeen. 
Questions submitted by Mr. Young and the answers thereto 
follow:]

                    Fiscal Year 1998 Budget Request

    Question. The Administration's 1998 budget request is $2.9 million. 
This is almost $700 million less than the 1997 appropriation of $3.6 
billion. The budget also proposes to fund all BMD procurement within 
Service accounts, not under the Ballistic Missile Defense Organization 
(BMDO). General Lyles, the 1998 budget request is significantly less 
than the 1997 appropriation. Does the budget contain a sufficient level 
of funding to continue to develop and deploy the core Theater Ballistic 
Missile Defense programs?
    Answer. a. Yes--the fiscal year 1998 budget for Ballistic Missile 
Defense does contain a sufficient level of funding to continue to 
develop and deploy the core Theater Ballistic Missile Defense programs.

                    FY97 AND FY98 PLUS-UP COMPARISON
------------------------------------------------------------------------
                                   FY97 in    FY97     FY98 in   FY98 in
                                   FY97 PB    Appn     FY97 PB   FY98 PB
------------------------------------------------------------------------
BMDO managed programs:
    PROCUREMENT
    THAAD System................       0.0       0.0       0.0    \1\0.0
    HAWK........................      19.4      19.4       0.0    \1\0.0
    TMD-BMC3....................      19.3      19.3      20.2   \1\20.1
    PAC3........................     215.4     215.4     361.4  \1\349.1
    Navy Area Wide..............       9.2       9.2      15.5   \1\15.4
                                 ---------------------------------------
        Total Procurement.......     263.2     263.2     397.1     384.6
RDT&E:
    Support Tech................     226.3     366.3     244.1     249.5
    THAAD System................     481.8     621.8     481.5     556.1
    Navy Theater Wide...........      58.2     304.2      96.2     194.9
    CORPS SAM/MEADS.............      56.2      30.0      48.1      48.0
    BPI-DEM/VAL.................       0.0      24.3       0.0      12.9
    NMD.........................     508.4     833.4     511.5     504.1
    Joint TMD...................     520.1     525.5     557.0     542.6
    PAC3-EMD....................     381.5     381.5     195.3     206.1
    Navy Area Wide..............     301.6     301.6     268.5     267.8
                                 ---------------------------------------
        Total RDT&E.............   2,534.2   3,388.7   2,402.2   2,582.0
MILCON:
    NMD.........................         0         0       0.0       0.5
    Joint TMD...................       1.4       1.4       2.0       2.0
    THAAD System................         0         0       4.6       4.6
                                 ---------------------------------------
        Total MILCON............       1.4       1.4       6.6       7.1
            Total BMDO Program..   2,798.8   3,651.8   2,805.9   2,973.7
------------------------------------------------------------------------
\1\Procurement Funding has been transferred to the services.
These figures are displayed here for information only.

    Question. Do you have any unfunded requirements in theater missile 
defense?
    Answer. The fiscal year 1998 President's budget could be augmented 
with the following prioritized list. Funding the items on this list 
will minimized outyear tails and assist in solving immediate pressures. 
First priority goes to risk reduction programs for the Major Defense 
Acquisition Programs (MDAPs); second, joint interoperability risk 
reduction issues with MDAP enhancements, third improvements to our 
Advance Technology base, and finally, procurement of weapon systems not 
funded by BMDO.
    Navy Area Defense (Lower Tier) ($44 million RDT&E)--for risk 
mitigation efforts associated with EMD testing that were not in the 
previous program baseline.
     ($35 million)--for upgrades to the Pacific Missile Range 
Facility (PMRF) to meet Congressionally mandated use of PMRF and 
Multiple Simultaneous Engagement (MSE) testing. Funding would avoid 
offsets from other ballistic missile defense activities.
     ($9 million)--for targets, target support and range 
support due to new equipment for UOES characterization testing.
    Joint Theater Missile Defense (JTMD) ($92 million RDT&E)
     ($50 million)--to ensure sufficient fiscal year 1998 
Family Of Systems (FoS) testing and activities for joint 
interoperability testing, system exerciser simulations, hardware-in-
the-loop, CINC exercises, and system integration tests (SITs). MDAPs 
have been accelerated, but JTMD has not received any additional TOA for 
interoperability support in step with program schedules. Outyear 
funding for JTMD through fiscal year 03 in the areas of PMRF, FoS 
Strategic Targets (STARS) and MEADS will be addressed in the POM 
update.
     ($22 million)--to make an investment in definition and 
development of joint attack operations. The required investment is 
comprised of four major activities: (1) perform field tests, exercises, 
and training that focus on Attack Operations, (2) develop a joint 
attack operations operational requirements document, (3) formulate an 
integrated investment strategy, and (4) define the payoff to other 
mission areas from investments/improved performance in Attack 
Operations.
     ($10 million)--JTAMDO. accelerate system engineering and 
modeling and simulation and complete the Technical Requirements 
Document.
     ($10 million)--Israeli Cooperative Projects--to foster 
system interoperability between Israeli Arrow system and US TMD 
systems.
    PATRIOT ($15 million RDT&E Defense-Wide)--additional funding would 
support unanticipated range and hardware funding requirements needed 
during the ongoing Engineering and Manufacturing Development flight 
test program without changing the number of flight tests or reducing 
other risk mitigation activities.
    Navy Theater (Upper) (not to exceed $70 million RDT&E)--to increase 
risk reduction activities by increasing the number of pre-EMD flight 
tests and ship and missile system engineering to support early entry 
into EMD. Consistent with current program approach.
    Question. Is the funding in the budget sufficient to continue to 
develop and deploy the National Missile Defense (NMD) program?
    Answer. No. As part of the acquisition review process, the 
Department has revised its estimates of the costs for the current 3 
plus 3 program. We now estimate that another $2.3 billion will be 
required across the Fiscal Year 1998 through 2003 Future Years Defense 
Program (FYDP) to maintain the currently defined program and schedule. 
The Department established during the Quadrennial Defense Review that 
the program cannot meet the 3 plus 3 schedule with currently programmed 
funds.
    The Department felt the funding programmed for the 3 plus 3 NMD 
program was adequate at the time the Fiscal Year 1998 President's 
Budget was prepared and submitted to Congress. But during the past year 
NMD program maturity was increasing as a result of DoD--and 
Congressional--focus, review, and definition. Before accurate or even 
reasonable cost estimates can be defined for the NMD system, we must 
define what ``it'' is.
    Early last year the Department designated the NMD program a major 
defense acquisition program. While the NMD technologies continue to 
mature, the NMD program itself is still composed of multiple concepts 
common to early acquisition programs. Thus, the requirements, designs 
and resulting cost estimates to date have been, of necessity, coarse. 
All of these estimates will be refined as the program proceeds through 
the acquisition process.
    During the definition period, the warfighting community prepares 
and submits mission needs statements and capstone operational 
requirements documents. In August 1996, the Joint Requirements 
Oversight Council (JROC) approved a National Missile Defense Capstone 
Requirements Document (CRD) specifying the preliminary operational 
requirements that the NMD system would need to meet. On March 10, 1997, 
the JROC validated the Key Performance Parameters of Joint Operational 
Requirements Document (ORD).
    The NMD program has undergone a formal review process, called the 
Systems Requirements Review (SRR). This process began last August and 
concluded on April 4, 1997. This greatly increased our understanding of 
the NMD system's requirements, as well as its projected cost, schedule 
and performance. This activity ensures we inject realism and rigor into 
both the planning and execution of the NMD program. When the SRR 
concluded--in the middle of the QDR process--the final result was a set 
of NMD System and Element requirements and a baseline architecture that 
would meet all the NMD Capstone Requirements Document objectives, 
namely protecting all 50 states against a small number of 
unsophisticated ballistic missile threats.
     The NMD development program is at an early stage of program 
maturity. This has led to a situation in which our previous cost 
estimates were based on rough order of magnitude costs, grounded in 
parametrics, lab tests, and simulations. The Department's cost 
estimating process was further complicated by delays in forming the NMD 
Joint Program Office--which limited the number of people who could help 
manage these issues--and in the awarding of the Lead System Integrator 
contract.
    The recent completion of the Systems Requirements Review will lead 
to increasing system definition and stability in cost estimates. Our 
systems engineering and cost analyses provide us a better understanding 
of the RDT&E funding required to develop an NMD system on a highly 
compressed schedule.
    Question. Do you have any unfunded requirements in National Missile 
Defense?
    Answer. Based on the NMD life-cycle cost estimate supporting the 
QDR process, the NMD program will require an additional $474 million in 
fiscal year 98 RDT&E funds to execute the 3 plus 3 schedule and 
program. These additional resources would be roughly spent on:
     Program shortfalls ($100 million). Delays and hardware 
(additional target) associated with Integrated Flight Test 1 failure; 
delays in transferring the THAAD dem/val radar to the GBR-P; BMC3 
development as a result of contract negotiations; EKV communications 
development as a result of contractor estimates; and radar 
discrimination algorithms.
     Previously deferred program content ($85 million). EKV 
telemetry unit development; EKV hardness and lethality testing; and 
Forward-based X-band Radar and UWER development under the LSI 
contractor.
     Cost Risk Reduction ($74 million). Additional funding to 
all elements (in line with established cost estimates) to allow for 
development/test unknowns without sacrificing program content.
     Schedule risk reduction ($110 million). Accelerate 
procurement of and add hardware (such as targets and boosters) to 
mitigate test delays or failures (most items are lead-time away and 
still unavailable until fiscal year 99 timeframe); accelerate Hardware-
in-the-loop model and hardware procurements; and improve test launch 
capabilities.
     Technical risk reduction ($105 million). Increase Systems 
Engineering to include development of high fidelity system simulator 
for performance verification; continued EKV competition through first 
intercept flights; long-lead procurement of hardware for added test 
flights beginning in fiscal year 00; and explore alternative 
technologies, such as radar transit/receive modules, to maintain 
program flexibility and to reduce procurement costs.
    Question. The budget proposes to shift procurement of missile 
defense systems to the Services in 1998. Do you have any concerns about 
this? Will you continue to have adequate management control over these 
systems once the funds have been transferred?
    Answer. In February memorandum to Department's senior leadership, 
Deputy Secretary of Defense White affirmed BMDO's role as central 
planner, manager, and integrator for the BMD mission, and in 
particular, the role of the Director of BMDO as the BMD Acquisition 
Executive (BMDAE). As such, the Director will continue to serve on the 
Defense Resources Board (DRB) when BMD programs and issues are 
discussed and, thereby, will be able to influence the allocation of 
funds to programs and DoD components. As the BMDAE, the Director will 
have the opportunity to concur or non-concur with Service funding 
proposals that impact BMD programs. Third, the DoD Comptroller will 
provide BMDO the opportunity to review any transfer proposed by a 
Service. Should BMDO and the Service be unable to reach an agreement, 
the issue will be evaluated to the DRB level where the Director will 
work with the Service and the Department's senior leadership to ensure 
BMD programs are appropriately funded.
    However, despite these three venues for managing BMD procurement 
funding, there remain significant challenges to doing so.
    First, BMDO will not be able to affect BMD procurement funding 
directly. New procedures for BMDO to influence BMD procurement funding 
levels, on a program-by-program basis will have to be established. 
These could prove to be cumbersome and less efficient.
    Second, it is inevitable that the Military Services will attempt to 
budget for BMD programs in the context of total Service requirements. 
To the extent that BMD programs are not a Service's top priority, there 
could be attempts to move BMD funding into other accounts, or to offer 
BMD funding as a bill payer when Congress or the Department issues non-
specific reductions to the DoD budget.
    Third, each service will tend to favor its own BMD programs over 
those of the other Services, and to resist a BMDO plan which, while 
optimizing performance and/or response to the total threat, favors one 
particular Service's system at the expense of another Service's system.
    Fourth, in the past, BMDO has tended to produce system cost 
estimates that substantially exceeded cost estimates generated by the 
Services for the same system. While in full control of the funds, BMDO 
has typically budgeted at the higher number to minimize risk. Should 
the Services continue to produce lower cost estimates and insist on 
budgeting at those lower levels, the risk of not meeting schedules or 
having to reduce system performance could increase substantially.

     Navy Area Theater Ballistic Missile Defense (Navy Lower Tier)

    Question. The Navy Area Theater Ballistic Missile Defense (Navy 
Lower Tier) system detects, tracks, and engages short and medium range 
theater ballistic missiles. In January, the Navy Lower Tier 
successfully intercepted a Lance missile at White Sands Missile Range. 
Subsequent to that test the program entered into the Engineering 
Manufacturing and Design (EMD) phase of acquisition. The budget request 
for 1998 is about $268 million.
    General Lyles, last year when this Committee met, the Navy Lower 
Tier program had some delays and setbacks. However, we understand that 
a recent flight test was successful and that a Lance missile was 
intercepted. Will you please tell the Committee about that test? What 
were the objectives of that test?
    Answer. The Standard Missile Block IVA (SM-2 Blk IVA) Developmental 
Test Round (DTR-1A) intercept was accomplished on January 24, 1997. The 
objectives of the test were to intercept a TBM-like target utilizing 
infrared (IR) guidance, to demonstrate dome cover removal and dome 
cooling, to demonstrate IR acquisition, track, handover, and guidance, 
to demonstrate IR aero-optical performance, and to place a warhead 
fragment on target. We successfully demonstrated these test objectives 
and Dr. Kaminiski approved the program's proceeding to EMD.
    Question. Did the Navy Lower Tier system meet all the objectives of 
that test?
    Answer. Yes, all test objectives were met.
    Question. The Congress directed that a User Operational Evaluation 
System (UOES) be deployed by 1997 and provided full funding for Navy 
Lower Tier to ensure the earliest possible deployment of that system. 
The President's Budget projects a UOES capability by 2000. Please 
explain why the Navy requires an additional three years to deploy this 
system. Are there technical problems? Are there resource problems?
    Answer. There were programmatic and technical issues that have 
delayed the UOES and deployment dates. Those issues have now been 
resolved and the program has left the ``Preliminary Design and Risk 
Reduction'' phase and entered the Engineering and Manufacturing 
Development (EMD) phase.
    Prior to the Navy Area TBMD program entering EMD, a 1994 OSD 
Acquisition Decision Memorandum required the Navy to obtain OSD 
concurrence on an acquisition strategy and for the program to conduct 
specific Risk Reduction Flight Demonstration (RRFD) activities, 
including demonstration of Infra-Red (IR) seeker performance. Delays in 
this process included the following:
     Approval of the acquisition strategy involved getting 
permission from the Department of Justice to combine two competing 
contractors (Raytheon and Hughes) into a single company that could then 
leverage the best of competing design concepts. Delays in obtaining 
required approvals, and then accomplishing this unique strategy, 
contributed to approximately a six month schedule slip.
     Problems integrating an IR seeker into the missile's 
existing Radio Frequency guidance section, and then adequately testing 
it prior to flight, took almost a full year longer than originally 
planned.
     The first Environmental Test Flight failed when the 
missile booster malfunctioned. Although the booster was not a new 
design, to confirm the reason for the failure and prepare another 
missile for that specific test required approximately 5 additional 
months.
     Finally, the first intercept test flight was a ``no-test'' 
when the interceptor could not be launched due to problems confirming 
target telemetry at the test site. The interceptor had to be 
refurbished after this no-test to replace batteries.
    Following the successful intercept on January 24, 1997, a Defense 
Acquisition Board Readiness Meeting was conducted on February 19, and 
permission to enter EMD was granted on February 22. On March 14 the 
Navy completed Critical Design Review (CDR) of the UOES computer 
program. The first AEGIS cruiser is scheduled to receive the TBMD UOES 
computer upgrade in Fiscal year 1998 and the UOES missiles are 
scheduled to begin delivery in Fiscal year 1999. UOES at-sea testing is 
now scheduled for Fiscal Year 2000.
    Question. In the absence of a Phase II agreement, will compliance 
determinations still remain a ``national responsibility''? In other 
words, will it still be up to the U.S. to decide whether or not a TBM 
system is compliant?
    Answer. Yes, if the negotiators in Geneva fail to reach a Part II 
agreement, the United States will continue to make its own compliance 
determinations regarding TMD systems.
    Question. If we are capable of deciding what is compliant or not on 
our own now, what is the need for the demarcation agreement? What do we 
gain by signing this agreement? Doesn't the agreement just tie our 
hands in terms of future TBMD systems?
    Answer. The demarcation agreement has two parts. Part I says that 
TMD systems with interceptor missiles having velocities of 3 km/sec or 
less are compliant with the ABM Treaty, provided they are not tested 
against ballistic target missiles with velocities greater than 5 km/sec 
or ranges greater than 3,500 km. Thus, as long as these parameters are 
not exceeded, lower-velocity TMD systems--Patriot, THAAD, and Navy 
Area--will no longer require time-consuming national compliance 
determinations, even when the configurations of these systems change. 
Although Part II will still require national compliance determinations 
for higher-velocity TMD systems, such compliance determinations will 
less likely be challenged by the Russian Government so long as the U.S. 
adheres to the target limitations of the Part II agreement. Both 
agreements continue to evolve the cooperative, non-threatening, 
strategic relationship between the U.S. and Russia. Regarding the 
impact of the Helsinski Agreement on future TMD systems, it does not 
affect any aspect of TMD systems that are currently planned for future 
deployment.

    Question. How many ships and how many missiles will be used in the 
UOES system?
    Answer. UOES is comprised of two AEGIS cruisers and thirty-five 
missiles.
    Question. The President's Budget also projects that the First Unit 
Equipped (FUE) for Navy Lower Tier will be 2002. Are your fairly 
confident with this projected date?
    Answer. Yes.
    Question. All told, how many ships will be equipped with Navy Lower 
Tier?
    Answer. Seventy-nine (79) ships (22 cruisers and 57 destroyers) 
will be equipped with the Navy Area TBMD system.
    Question. Do you have any unfunded requirements?
    Answer. The fiscal year 1998 President's budget could be augmented 
with the following prioritized list. Funding the items on this list 
will minimize outyear tails and assist in solving immediate pressures. 
First priority goes to risk reduction programs for the Major Defense 
Acquisition Programs (MDAPs); second, joint interoperability risk 
reduction issues with MDAP enhancements, third, improvements to our 
Advance Technology base, and finally, procurement of weapon systems not 
funded by BMDO.
     ($44 million RDT&E)--for risk mitigation efforts 
associated with EMD testing that were not in the previous program 
baseline.
     $35 million)--for upgrades to the Pacific Missile Range 
Facility (PMRF) to meet Congressionally mandated use of PMRF and 
Multiple Simultaneous Engagement (MSE) testing. Funding would avoid 
offsets from other ballistic missile defense activities.
     ($9 million)--for targets, target support and range 
support due to new requirement for UOES characterization testing.
    Question. The Navy Lower Tier system on AEGIS ships is comprised 
of: a modified Theater Ballistic Missile Defense (TBMD) capable Navy 
Standard Missile and an improved SPY-1 radar. The Navy's new DDG--51 
shipbuilding plan drops funds for theater ballistic missile defense 
from all new DDG-51 ships funded through the year 2001. BMDO plans to 
deploy Navy Lower Tier by 2002.
    Given the 3 to 5 year construction time to build a ship, the 
earliest that the Navy could field theater ballistic missile defense is 
2005. Why does BMDO state that Navy Lower Tier will be deployed in 
2002? Who is wrong, BMDO or the Navy?
    Answer. The Navy has not stated Navy Lower Tier will be deployed in 
2005. They do not have new construction ships with TBMD upgrades funded 
until 2001. However, the Navy Area TBMD First Unit Equipped (FUE) will 
be an already commissioned AEGIS cruiser that will be upgraded to 
accommodate TBMD. This upgrade consists of installing adjunct processor 
software and firmware modifications (a TBMD ship set) to the ship's 
combat systems during a planned maintenance availability period. These 
TBMD upgrades will begin in late 1998. The Navy has over $300 million 
budgeted for TBMD upgrades between 1998 and 2003. The first TBMD 
missiles (SM-2 BLK IVA) will be available for TBMD retrofitted ships in 
fiscal year 2002. This will allow deployment of the Navy Area TBMD 
``Navy Lower Tier'' in 2002. After 2001, TBMD ship sets will be 
installed on the DDG-51 class (AEGIS) destroyers as they are being 
constructed while retrofit of AEGIS cruisers (22 total) and all 
previously commissioned DDG-51 class destroyers continues.
    Question. Do you believe that the Navy is fully on board with the 
Navy Lower Tier program?
    Answer. Yes.
    Question. Does the Navy agree with the First Unit Equipped date of 
2002?
    Answer. The Department's position for the Navy Area program FUE is 
2002.
    Question. If the Navy is fully committed to the Navy Lower Tier 
system, is there a reason why funds were not included in the budget to 
modify planned AEGIS ships to accommodate theater ballistic missile 
defense systems?
    Answer. The Department's fiscal year 1998 President's Budget submit 
included the transfer of BMDO TMD procurement funds (missile and AEGIS) 
to the Navy, specifically to the Weapons Procurement Navy (WPN), 
Standard Missile SM-2 (12E) account. The Navy set aside funds within 
the FY 1998 President's Budget, WPN Standard Missile SM-2 (12E) 
account, necessary to conduct the AEGIS TMD modifications. The navy 
will realign these funds to Other Procurement, Navy (OPN) to modify and 
equip AEGIS ships for the TMD mission.
    Question. What would the impact be to theater ballistic missile 
defense systems if the Navy does not modify these ships as they are 
built?
    Answer. The Navy is fully committed to fielding theater ballistic 
missile defense systems across the AEGIS fleet. Indeed, every effort is 
being made by both the BMDO and the Navy to accelerate the fielding of 
these systems and provide the nation with this critical defensive 
capability.
    Question. Is there potential for added cost and delay in the 
deployment of the sea-based theater ballistic missile defense systems?
    Answer. Barring any unforeseen problems, the Navy Area TBMD program 
is assessed as being low to medium risk for both cost and schedule.

                  Patriot Advanced Capability (PAC-3)

    Question. The Patriot Advanced Capability (PAC-3) missile defense 
system is comprised of four basic elements: a radar, an engagement 
control station, a launching station and interceptors. PAC-3 will 
engage and destroy short and medium range theater ballistic missile and 
cruise missiles within the atmosphere. Development is being done in 
stages: configuration 1 upgrades the guidance system; configuration 2 
enhances the radar; configuration 3 includes the PAC-3 hit-to-kill 
missile (formerly known as Extended Range Interceptor, ERINT). The 
budget request for 1998 is $556.1 million ($206.1 million in R&D, $350 
million in Service procurement.). The PAC-3 missile defense system is 
being developed incrementally. General Lyles, will you please explain 
the differences between the various development stages and 
configurations?
    Answer. Based on the lessons learned from Operations Desert Shield 
and Desert Storm, the Army initiated a new development program that 
improved the PATRIOT systems' performance. This new development program 
planned to extend the PATRIOT units' battlespace while enhancing 
lethality of the system against TBMs. The first improvements were near-
term upgrades fielded in 1992-1993 to the PAC-2 system that: (1) 
provided for rapid, accurate fire unit emplacement through the use of 
the Global Positioning System and a North Finding Seeker; (2) improved 
the defended area of the fire unit by remoting missile launchers up to 
12 km from the ground radar set; and (3) provided ground radar 
enhancements that improved TBM detection and increase system 
survivability.
    More substantial improvements to the PAC-2/QRP system were 
initiated under the Army's new PATRIOT Advanced Capability-3 (PAC-3) 
program. To more rapidly field improvements and modifications to the 
PATRIOT system as they were developed, the PAC-3 program was separated 
into three separate configurations.
    Configuration 1 modifications include: the Guidance Enhanced 
Missile (GEM), a new pulse Doppler process for the ground radar, and 
new processing and data storage upgrades to the Expanded Weapons 
Control Computer (EWCC). The new EWCC provides four times the 
throughput of the current WCC and eight times the memory. This 
expansion in memory is critical to allow PATRIOT the ability to 
continue to grow in its performance capabilities with advanced software 
techniques since the current WCC cannot support any substantial 
increase in lines of software code. The new pulse Doppler processor 
improves the ground radar dwell time for the pulse Doppler waveforms 
and well as improving the performance of the radar against targets in 
clutter. The GEM missile provides improved system effectiveness and 
lethality against high speed TBMs and reduced radar cross section (RCS) 
air breathing targets (ABTs). All of these modifications have completed 
development and were fielded starting in 1995, with the last of the 10 
PATRIOT Battalions modified in spring 1997.
    Configuration 2 modifications included: (1) communications upgrades 
through the use of the JTIDS terminals at the Battalion level for 
interfacing on the Joint arena net; (2) ground radar enhancements that 
improves detection of lower cross section targets at a greater 
distance; (3) an improved defensive capability against Anti Radiation 
Missiles; (4) provides for the first phase of Classification, 
Discrimination, and Identification (CDI), an upgrade which correlates 
target tracks received from external sources to a fire units tracks 
generated by the ground radar; and (5) PDB-4 software, which maximizes 
the capability of all previous hardware improvements and additionally 
has TBM message capability. These upgrades have completed operational 
testing and the first tactical unit was fielded with these improvements 
in December 1996. Two of the ten PATRIOT Battalions have received these 
modifications, with the remaining receiving the modifications through 
1998.
    Configuration 3 modifications include: (1) the new PAC-3 hit-to-
kill missile which provides improved lethality against TBMs: (2) 
improved defended area of the fire unit by remoting missile launchers 
up to 30 kms from the ground radar set; (3) CDI Phase III modifications 
to improve identification and classification and discrimination of 
TBMs; (4) adding several improvements to the ground radar that 
significantly increases its detection range while at the same time 
increases its reliability; (5) communications upgrade that provides 
JTIDS terminals at the Fire Unit level; and (6) adding PDB-5 software 
upgrades which will maximize the capabilities of the previous 
improvements to the PATRIOT system. These upgrades are currently in 
either engineering and manufacturing development or production and will 
be fielded as a complete system in 4th Quarter, fiscal year 1999.
    Question. The Army recently conducted two tests of the PAC-3 
configuration. What were the results of those tests? Did the system 
meet all of the objectives of the tests?
    Answer. The PATRIOT program recently conducted extensive testing 
and two missile firings at Kwajalein Missile Range. The PATRIOT program 
participated in a tri-fold event which included Willow Dune, TMD 
Critical Measurements Program (TCMP) and System Integration Test (SIT)-
97.
    During the Willow Dune engagement, the objectives for the PATRIOT 
Missile System were to search, detect, track, engage, guide to and fuze 
on the target. A tactical PATRIOT Fire Unit with Configuration 2 
modifications was used during this exercise. The tactical PATRIOT Fire 
Unit met or exceeded its test objects and engaged and intercepted the 
SCUD targets with both a PAC-2 and GEM missile.
    During the TCMP exercise (non-engagement), the objectives for the 
exercise were to characterize the capabilities of both the 
Configuration 2 and Configuration 3 ground radars against a medium 
range target. During the TCMP exercise, both radars demonstrated the 
ability to detect and track medium range targets.
    During SIT-97, the PATRIOT Configuration 2 modified Fire Unit test 
objectives were to demonstrate current interoperability capability, 
although full interoperability is not expected or achieved until the 
units receive Configuration 3 modifications. However, the Configuration 
2 modified Fire Unit did demonstrate a limited interoperability 
capability.
    Question. How will the PAC-3 Configuration 3 system benefit from 
these tests? What lessons have we learned?
    Answer. The direct benefit of such testing clearly demonstrates 
that the PATRIOT missile system can counter the current TBM threat. 
Furthermore, these tests enable the PATRIOT program to collect and 
analyze the performance data from actual threat targets and thus 
utilize that data during the development of the Configuration 3 
modifications.
    Additionally, the testing demonstrated that the PAC-2 and GEM 
missiles can successfully intercept a Scud target, and that the GEM 
missile can provide more fragments to the target warhead. The testing 
also demonstrated that the Configuration 2 ground radar provides a 
significant improvement over the PATRIOT ground radar used in Operation 
Desert Storm, and that the Configuration 2 ground radar. Finally, we 
demonstrated that the Configuration 3 CDI III Wide Range Resolution 
waveforms can provided warhead debris discrimination based on length, 
radar cross section (RCS) and drag measurements.
    Question. The Army has fielded that PAC-3 configuration 1 and has 
begun to field configuration 2. When will the PAC-3 missile be tested?
    Answer. Initial missile integration and Hardware-in-the-Loop 
testing has begun on the PAC-3 missile at the contractors facility. The 
first Controlled Test Flight of the PAC-3 missile is scheduled for late 
Summer 1997 at White Sands Missile Range, NM.
    Question. How many flight tests will be conducted with the PAC-3 
(ERINT) missile before the a decision to procure is made?
    Answer. Three flights tests will be conducted before a Low Rate 
Initial Production (LRIP) procurement decision is made. The first two 
flight tests are controlled test flights and the third is a guided test 
flight. The difference between the two are the first two missions are 
not intended to intercept targets while the third mission is designate 
as an intercept mission.
    Question. When will the PAC-3 configuration-3 be fielded?
    Answer. Configuration 3 is scheduled to be fielded in the 4th 
quarter of fiscal year 99. This configuration is the last in the series 
of three incremental improvements to the PARTIOT Missile Defense 
program.
    Question. What will the advantages of the PAC-3 configuration 3 be 
compared with the current PATRIOT System?
    Answer. The most significant advantage of the PAC-3 Configuration 3 
modifications is the combined effects of improvements to the ground 
systems coupled with the new hit-to-kill PAC-3 missile. The 
Configuration 3 system can detect a target at a greater range, better 
identify target type and will have a greater missile inventory. 
Furthermore, the PAC-3 missile has a significantly capability against 
more stressing threats, such as chemical submunition warheads.
    Additionally, the Configuration 3 system will have an eight fold 
increase in defended area and a 100% increase in lethality against 
stressing threats, over the Configuration 2 system. The Configuration 2 
system has an 8 fold increase in defended area coverage and a 50% 
increase in lethality, over the Desert Storm PATRIOT system.
    Question. What is the total acquisition cost of the PAC-3?
    Answer. The PATRIOT program then year (TY$) cost for the PAC-3 
program (Configuration 1 through Configuration 3) is $2.9 billion in 
development and $4.3 billion in procurement. The total acquisition cost 
is $7.2 billion.
    Question. Do you have any unfunded requirements?
    Answer. The fiscal year 1998 President's budget could be augmented 
with the following prioritized list. Funding the items on this list 
will minimize outyear tails and assist in solving immediate pressures. 
First priority goes to risk reduction programs for the Major Defense 
Acquisition Programs (MDAPs); second, joint interoperability risk 
reduction issues with MDAP enhancements, third, improvements to our 
Advance Technology base, and finally, procurement of weapon systems not 
funded by BMDO.
     ($15 million RDT&E Defense Wide)--additional funding would 
support unanticipated range and hardware funding requirements needed 
during the ongoing Engineering and Manufacturing Development flight 
test program without changing the number of flight tests or reducing 
other risk mitigation activities.
    Question. The budget includes $350 million in Army procurement for 
the PAC-3. What will be procured with these funds?
    Answer. Fiscal year 1998 is the first year of low rate initial 
production for the new PAC-3 hit-to-kill missile. Approximately $115 
million of the $350 million requested in fiscal year 1998 is 
specifically tied to procurement of these 52 missiles. The balance of 
the funding is for ground support equipment and the accompanying 
engineering support for Configuration 3 radar improvements, 
classification, discrimination and identification upgrades, and 
improvements to the remote launch capability. Other ground improvements 
include the enhanced launcher electronics system, allowing the existing 
PATRIOT launcher to fire either pre-RAC-3 missiles or the new PAC-3 
missile.
    Question. Do you have any concerns about being able to manage the 
BMD programs if the Services, in this case the Army, manage their own 
procurement funds?
    Answer. Subsequent to the notification of the transition of 
procurement funds to the Services in fiscal year 98, the Deputy 
Secretary of Defense sent a Memorandum to the Services validating the 
Acquisition Executive role of BMDO and mission to oversee the 
coordination and submission of all Ballistic Missile Defense efforts. 
The implementation of this memorandum is still underway. I remain 
confident that the Services will continue to support critical Ballistic 
Missile Defense programs.
    Question. What assurance do you have that funds programmed in other 
Service accounts for ballistic missile defense will be spent for these 
purposes and not programmed for other Service priority?
    Answer. The implementation of the Deputy Secretary of Defense 
Memorandum, dated February 12, 1997, will provide a test case on the 
Service's continued support to ballistic missile defense. To date, I 
have not observed any attempt by the Services to downplay the need or 
priority of ballistic missile defense programs. In fact, the Army is 
working hard to resolve an internal problem tied to PATRIOT 
interoperability via the Joint Tactical Information Distribution System 
to ensure success of the program. However, a true measure of the effect 
of the transition of procurement funds to the Services will become 
clear during the Summer and Fall review cycles of the Fiscal Year 1999 
President's Budget development.

               Theater High Altitude Area Defense (THAAD)

    Question. The Theater High Altitude Area Defense (THAAD) missile 
defense system provides protection against short and long range theater 
ballistic missiles by intercepting them both in and out of the 
atmosphere (endo and exoatmosphere). THAAD consists of four components: 
truck mounted launchers, interceptors, a radar, and battle management 
command, control and communications (BM/C3I) systems. The THAAD program 
is in its fourth year of demonstration and validation. To date, seven 
flight tests have been conducted. The first three were to test the 
propulsion, controls and the seeker. The fourth and following flight 
tests were to intercept a target. Each of the four interception tests 
failed. The budget request for 1998 is $560.7 million. General Lyles, 
the THAAD missile system has experienced a series of failures. The most 
recent failure was extremely disappointing because it was the fourth 
consecutive failure. What exactly happened? What components worked and 
what did not work?
    Answer. The THAAD missile program conducted its seventh flight test 
at White Sands Missile Range, New Mexico on March 6, 1997. This most 
recent failure was caused by anomalous behavior of the Divert and 
Attitude Control System (DACS). The DACS receives guidance and 
navigation control commands from the missile's in-flight computer and 
provides the divert and attitude control required to guide the THAAD 
kinetic kill vehicle toward intercept of its target. The DACS has 
performed nominally on all six prior flight tests. Although THAAD did 
not achieve an intercept, the radar, launcher, the battle management/
command, control, and communications all performed nominally. 
Corrective actions based on results of the flight test failure analysis 
are underway.
    Question. What do you intend to do to ensure that the next test 
will be a success? When is that test scheduled? Will there be a delay? 
How long of a delay?
    Answer. The date for the next THAAD flight test is still to be 
determined. As a result of this most recent failure, I chartered two 
independent review teams. One of those teams evaluated the design of 
the THAAD missile to determine if there are sufficient design margins 
to ensure reliability on future flight tests. The second team performed 
an evaluation of the total program concept and requirements to 
determine the developmental risk involved in executing the program. The 
teams' findings validated the THAAD concept of a hit-to-kill, endo/
exoatmospheric interceptor. Additionally, it was determined that the 
current THAAD design is capable of performing the intended mission. 
Numerous recommendations were made to rectify subsystem reliability, 
test, and quality assurance shortfalls. Recommended changes are being 
assessed by BMDO and the Army for implementation. The most immediate 
impact will be a delay in conducting the next flight test, previously 
planned for July 97, to allow implementation of the recommendations and 
corrective actions.
    Question. Last year the President's Budget proposed to severely cut 
the funds for the THAAD program and to delay its deployment to 2006. 
General O'Neill testified that the THAAD program could be deployed 
sooner if the proper resources were committed. He also said that the 
delay was due solely to budget cuts not technical problems. It was on 
that basis that this Committee decided to restore $140 million to the 
program. General Lyles, do you believe General O'Neill was mistaken? 
Does this program have serious technical problems?
    Answer. I do not believe Lt Gen O'Neill was mistaken. The problems 
that THAAD has encountered during flight testing have primarily been 
problems with subsystem reliability, verification, and quality control. 
This assertion was confirmed by the two independent review teams. In 
December, the Department of Defense added $722 million in Future Years 
Defense Program to accelerate the program to achieve a First Unit 
Equipped (FUE) in fiscal year 04. Although BMDO and the Army continue 
to assess the details of the impact of the flight test program on the 
FUE schedule, the Quadrennial Defense review (QDR) has restructured 
THAAD in light of the test difficulties and the Independent Review Team 
findings for an FUE of fiscal year 06.
    Question. Do you believe the THAAD program has been too aggressive 
in terms of schedule and resources? Did the Administration's decision 
last year to cut the program back and our subsequent reversal of that 
decision have an effect on the program?
    Answer. It is generally understood, that the threat from the 
theater ballistic missiles has warranted an aggressive schedule for the 
THAAD program. The decision to remove funding from the program in 1996 
effectively delayed the program from an fiscal year 02 to fiscal year 
06. The Department's decision to add funding back to the program has 
accelerated the program by 17 months to achieve an FUE in late fiscal 
year 04. However, the recent flight test setback and implementation of 
the review teams' recommendations will delay the FUE. The Quadrennial 
Defense Review (QDR) has subsequently restructured THAAD--in light of 
the test difficulties and the Independent Review Team findings--for an 
FUE of fiscal year 06. However, my staff is aggressively looking at the 
schedules and options available to meet the FUE as soon as 
programmatically possible.
    Question. How would a stable funding profile help the management of 
the program?
    Answer. Stable funding is critical to the successful execution of 
any program. The technical complexity associated with the THAAD 
development makes a stable funding profile all that more critical. 
Stable funding allows the project manager to optimize the development 
and test schedule and lay out the contractual efforts accordingly. 
Funding instability, specifically reductions, are particularly 
detrimental to a successful acquisition program.
    Question. Should the Congress continue to aggressively fund this 
program? Or should we reevaluate this program given its recent 
technical problems?
    Answer. The THAAD program is adequately funded to execute the 
program the BMDO and the Army are developing. It would be premature for 
me to suggest that the program be aggressively funded until I've had an 
opportunity to review, and the Department to approve, the 
aforementioned program options.
    Question. Do you believe in the technical viability of the current 
missile design?
    Answer. The technical viability of the missile is a concern which 
generated my desire to have an independent team look at the missile 
design. The team's findings validated the THAAD concept of a hit-to-
kill, endo/exoatmospheric interceptor. In spite of the failed 
intercepts, it was determined that the THAAD design is capable of 
performing the intended mission. The problems have been with the 
program subsystem reliability and verification, and in quality 
assurance.
    Question. Dr. Kaminski suggested that the THAAD program will 
probably require some sort of ``restructuring.'' What does he mean? 
Will the program be delayed further? What will the impact on resources 
be?
    Answer. Any restructure of the program would seek to lower the 
cost, schedule, and performance risk in executing the program. 
Additionally, a restructure would reestablish a THAAD program with 
achievable milestones, acceptable developmental risk, and within 
available resources when balanced against the TBM threat. The QDR, in 
fact, has done exactly that--restructure the program, with an FUE date 
of 2006.
    Question. Will the review include a look at other potential 
contractors? Have you made a mistake in putting all your eggs in one 
basket?
    Answer. The independent review teams I chartered are focusing their 
efforts on the program and its prime contractor. Seeking an alternate 
contractor for development of the THAAD system is an option, but not 
one we are currently pursuing. Seeking an alternate contractor to 
perform the remaining development on the program would be costly and 
likely delay completion of the program by several years. However, we 
are considering duel sourcing certain high risk subsystems and 
components. With respect to a single source acquisition strategy for 
THADD, I do not think we have erred. The urgency for the earliest 
possible development of an upper tier system drove the decision to 
limit the program to a single contractor.
    Question. Is the contractor applying enough rigor to reviewing its 
THAAD program?
    Answer. I am concerned about the contractor's performance with the 
THAAD development. I have expressed this concern to them on a number of 
occasions and believe that they are making an earnest effort to put the 
program back on a successful track. We, clearly, have the attention of 
the senior management at Lockheed Martin to make THAAD a successful 
program.
    Question. Given the urgent requirement for an upper tier missile 
defense system and the problems that THAAD is now experiencing do you 
think we should seek alternative systems?
    Answer. The THAAD design has been developed and improved for more 
than 5 years. The test program is performing its role of uncovering 
areas where changes must be made to ensure that the risks have been 
addressed and can be mitigated. This most recent flight test, while not 
successful in getting its primary intercept objective, was the first 
time that the entire THAAD system was used and demonstrates the 
progress that the program continues to make. I am convinced that the 
reliability and quality assurance problems can be overcome and that the 
system will work as intended.
    Question. What does the recent failure do to the current schedule? 
Will the User Operational Evaluation System (UOES) be deployed in 1999?
    Answer. THAAD is, and has been, developed on an event based 
schedule. Flight test failures have been investigated and design 
changes made consistent with a program in the Demonstration/Validation 
(prototype) stage of development. The UOES, minus the missiles, has 
already been successfully integrated into system level testing. 
Software increments will continue to be added for increasing 
capability. The UOES missiles will not be brought until at least one 
successful intercept has been made. Right now those UOES missile 
deliveries will begin in 1999, and be completed in 2000.
    Question. Is the Army planning to commit funds early for the 40 
UOES missiles? Has the Army reconsidered its position?
    Answer. The Army position is that THAAD is a vitally needed 
defensive capability. It is that urgency of need that calls for a 
balance between comprehensive testing and the production of 40 UOES 
missiles. An intercept of a representative target along with the 
extensive ground testing done and planned provides us the minimum 
confidence that the missile design is well understood and modeled, and 
that the ground testing is sufficiently rigid.
    Question. The General Accounting Office (GAO) recently issued a 
report criticizing the Army for planning to base a procurement decision 
for the 40 UOES missiles upon a single test. It seems that with the 
failure of flight 7, GAO's specific criticism is now moot. However, do 
you think that GAO's overall concerns about concurrency are valid?
    Answer. The Army position is that THAAD is a vitally needed 
defensive capability. It is that urgency of need that calls for a 
balance between comprehensive testing and the production of 40 UOES 
missiles. An intercept of a representative target along with the 
extensive ground testing done and planned provides us the minimum 
confidence that the missile design is well understood and modeled, and 
that the ground testing is sufficiently rigid.
    Question. What are you doing to assure that the Army's procurement 
plans are sound and executable?
    Answer. BMDO is reviewing the production schedules and costs to 
ensure that based on our lessons learned to date, and the changes 
planned, that the hardware and software can be delivered and that cost 
controls are in place. I review these plans regularly to make sure that 
we understand and control the process and provide assistance to the 
program where needed.
    Question. How can you enforce management decisions if the Army 
controls the procurement funds for THAAD in the future?
    Answer. Despite the transfer of BMDO procurement funds to the 
Services, several mechanisms exist which will allow BMDO to work with 
the Services and manage the funds. In a February 1997 memorandum to the 
Department's senior leadership, Deputy Secretary of Defense White 
affirmed BMDO's role as central planner, manager, and integrator for 
the BMD mission, and in particular, the role of the Director of BMDO as 
the BMD Acquisition Executive (BMDAE). As such, I will continue to 
serve on the Defense Resources Board (DRB) when BMD programs and issues 
are discussed and, thereby, will be able to influence the allocation of 
funds to programs and DoD components. Second, as the BMDAE, I will have 
the opportunity to concur or non-concur with Service funding proposals 
that impact BMD programs. Third, the DoD Comptroller will provide BMDO 
the opportunity to review any transfer proposed by a Service. Should 
BMDO and the Service be unable to reach an agreement, the issue will be 
elevated to the DRB level where I will work with the Service and the 
Department's senior leadership to ensure BMD programs are appropriately 
funded.
    Question. What is the exit criteria for Demonstration and 
Validation?
    Answer. The primary exit criteria for THAAD to proceed to 
Engineering and Manufacturing (EMD) is three body-to-body intercepts of 
threat representative targets within an accepted aim point.
    Question. When will the next THAAD flight take place?
    Answer. At this time, I am assessing the recommendations received 
from my review panels, the Air and Missile Defense Program Executive 
Officer, and the THAAD Project Manager. I plan to implement some 
changes, as necessary, to maximize our changes of success of the next 
intercept attempt. The next flight will not take place until I am 
satisfied that we have done all that is reasonable and prudent to 
ensure its success.
    Question. What is your present estimate as to how soon this system 
will be able to be fully deployed? Is 2004 still a reasonable date?
    Answer. While BMDO and the Army continue to assess the details of 
the impact of the flight test program on the FUE schedule, the QDR has 
restructured THAAD in light of the test difficulties and the 
Independent Review Team findings for an FUE of fiscal year 2006. 
Certainly, we need to get a couple of flight test intercepts to give us 
real confidence in when a First Unit Equipped date can be met.

     Navy Theater Wide Ballastic Missile Defense (Navy Upper Tier)

    Question. The Navy Theater-Wide program will intercept ballistic 
missiles in their ascent, apogee and descent phases. As with the Lower 
Tier system, Navy Upper Tier will use the extant capabilities of the 
Aegis weapon system. A Standard Missile with a kinetic (hit-to-kill) 
vehicle will provide exoatmospheric intercept capability. The budget 
request for 1998 is $194.9 million. Is this finding at a level 
sufficient to deploy Navy Theater Wide? Is the program a deployment 
program?
    Answer. Navy Theater Wide is currently transitioning from a 
technology program to a Major Defense Acquisition Program which will 
focus on developing and eventually deploying a viable, effective 
system. Our current program for Navy Theater Wide is consistent with 
the direction of last year's Ballistic Missile Defense Program Review. 
This program consists of three parallel efforts. The first of these is 
a kinetic warhead technology assessment. In parallel with the 
technology review, we are proceeding to a system level intercept, 
called the NTW Flight Demonstration program (FDP) or AEGIS LEAP 
Intercept (ALI). The third portion of our Navy Theater Wide program is 
risk reduction activities. These activities will examine the critical 
risk areas for NTW engineering and develop solutions that will allow 
BMDO and the Navy, at the appropriate time, to make a more informed 
decisions to enter the Engineering and Manufacturing Development phase.
    The Department has neither approved an acquisition strategy nor 
validated an operational requirement for Navy Theater Wide. 
Additionally, the program office has not prepared a program manager's 
life cycle cost estimate for the program nor has the Cost Analysis 
Improvement Group performed an Independent Cost Estimate. Until these 
actions are complete the Department can determine neither what the Navy 
Theater Wide program entails nor the required resources, including 
funding, required for deployment. Currently, we expect to have these 
actions complete for the fiscal year 1998 Defense Acquisition Board 
review of Navy Theater Wide. However, the program is fully funded 
through the completion of the Flight Demonstration program / AEGIS LEAP 
Intercept (FDP/ALI).
    Question. The Navy Theater Wide system has been through five major 
reviews which have all reaffirmed the requirement for a Navy Theater 
Wide system. In addition, the CINCs repeatedly testify that theater 
missile defense is their number one priority. Why is it then, that the 
Administration has not requested the necessary funds to deploy the Navy 
Theater Wide System?
    Answer. Funding is only one portion of program execution. prudent 
execution for this program (or any program) requires completing the 
program one phase at a time and not commencing a large number of 
parallel activities. This means retiring risk in an orderly, logical 
sequence, fully defining the program requirement based on warfighter 
needs, which ensures that public funds are not placed at risk to 
procure a system until the system is proven to meet a valid 
requirement.
    In the case of NTW, the next steps to retire risk are:
         completing the Flight Demonstration Program/AEGIS LEAP 
        Intercept (FDP/ALI) to demonstrate that the LEAP vehicle can 
        achieve an exo-atmospheric intercept,
         validating the warfighters requirement for a Navy 
        upper-tier system, and,
         confirming that LEAP is the proper solution for the 
        Navy upper-tier mission.
    Until the intercept is achieved and the Department of Defense 
confirms the material solution, there is significant risk in proceeding 
to engineer a tactical system based on LEAP.
    The Navy Theater Wide program is fully funded through the 
completion of the FDP/ALI. Additional funds may allow for additional 
risk reduction in specific areas. However, additional funds will allow 
only marginal acceleration in the initial intercept, currently 
anticipated in the second quarter of fiscal year 2000.
    Question. How much more would be required to fund a program that 
would actually deploy Navy Theater Wide?
    Answer. The Department has neither approved an acquisition strategy 
nor validated an operational requirement for Navy Theater Wide. 
Additionally, the program office has not prepared a program manager's 
life cycle cost estimate for the program nor has the Cost Analysis 
Improvement Group performed an Independent Cost Estimate. Until these 
actions are complete the Department can determine neither what the Navy 
Theater Wide program entails nor the required resources, including 
funding, required for deployment. Currently, we expect to have these 
actions complete for the fiscal year 1998 Defense Acquisition Board 
review of Navy Theater Wide. However, the program is fully funded 
through the completion of the Flight Demonstration Program/AEGIS LEAP 
Intercept (FDP/ALI).
    Question. What is the total acquisition cost of Navy Theater Wide?
    Answer. The Department has neither approved an acquisition strategy 
nor validated an operational requirement for Navy Theater Wide. 
Additionally, the program office has not prepared a program manager's 
life cycle cost estimate for the program nor has the Cost Analysis 
Improvement Group performed an Independent Cost Estimate. Until these 
actions are complete the Department can determine neither what the Navy 
Theater Wide program entails nor the required resources, including 
funding, required for deployment. Currently, we expect to have these 
actions complete for the fiscal year 1998 Defense Acquisition Board 
review of Navy Theater Wide.
    Question. The total acquisition cost for THAAD is expected to be 
approximately $13 billion. (The newspapers have said between $16 and 
$17 billion.) The Medium Extended Air Defense System (MEADS) is 
expected to cost the U.S. $11 billion or more--even with our allies 
sharing the cost. The Airborne Laser will also cost $11 billion. The 
total acquisition cost for Navy Upper Tier is estimated to be about $7 
billion. General Lyles, given its substantial capabilities doesn't the 
Navy Upper Tier seem to be a ``better deal'' compared to these other 
systems?
    Answer. The relative costs of TMD systems is an important factor to 
consider when making decisions regarding whether a system should be 
built. However, it is not the only factor, and more importantly not the 
most critical. The most critical factor is the ability to intercept 
missiles and provide an effective multilayered missile defense. The 
importance of a multilayered and multiservice missile defense system is 
the benefit of combining each individual system's capabilities, 
increasing the complete defense against any theater ballistic missile. 
There is no one single ``best'' form of active defense for stopping 
missiles armed with weapons of mass destruction. For example, PAC-3 and 
Navy Area Defense are terminal defense systems which have a multi-
mission capability against both ballistic and cruise missiles. MEADS is 
designed to be highly mobile and remain at the forward edge of the 
battle field providing protection against very short range TBM systems 
in addition to aircraft and cruise missiles. However, MEADS, PAC-3 and 
Navy Area are relatively short ranged, and less effective against long 
range missiles with high closing velocities. The THAAD and Navy Theater 
Wide systems greatly expand the warfighter's engagement battlespace, 
allow multiple shot opportunities and significantly increase our 
capability to defeat faster and longer range ballistic missiles. The 
Airborne Laser will offer further expansion of the battlespace, more 
shot opportunities, added capability against longer ranged missiles, 
and the prospect of causing collateral damage from intercept debris to 
occur over the aggressor's own territory. Boost Phase Intercept (BPI) 
has a high potential payoff as a BMD mission capability, but concepts 
to perform high performane BPI against TMD and NMD threats are 
generally less mature and therefore somewhat higher risk than terminal 
defense systems.
    The BMDO has adopted a prudent acquisition and development strategy 
that balances warfighter needs, system capabilities, and technological 
maturity against the threat. Adjustments to the strategy can be made if 
warranted by circumstances. BMDO's strategy is to develop an integrated 
and interoperable TMD Family of Systems (FoS) architecture. The 
elements of which can be tailored by the warfighting CINC for the 
specific conditions and threats which will be faced.
    Question. General Lyles, why has the Administration repeatedly 
decided to hold back on Navy Upper Tier in favor of other more risky 
and more expensive systems like the Airborne Laser?
    Answer. Although Airborne Laser is a member of the ``family of 
systems'' it is not a BMDO program. It is an Air Force Major Defense 
Acquisition Program (MDAP) and resources are allocated based on its 
designation (MDAP) and priority in the Air Force. Navy Theater Wide 
(NTW), a program for which BMDO is the resource sponsor, is designated 
as a ``core program'' and was declared a pre-MDAP in October 1996. 
Although NTW is not yet an MDAP, BMDO and the Navy have tentatively 
scheduled a Defense Acquisition Board (DAB) review for NTW in February, 
1998.

                          Airborne Laser (ABL)

    Question. The Airborne Laser is not technically part of the 
Ballistic Missile Defense Organization (BMDO) program. It is being 
funded within the Air Force's budget. Last year, the Air Force 
requested funds to integrate a high power chemical laser into a 747 
aircraft with the mission to destroy theater ballistic missiles in the 
boost phase. The program will develop, procure, and operate 7 aircraft 
an approximate cost of $11 billion. The budget request for 1998 is 
$157.9 million. General Lyles, your office is charged with the 
responsibility for setting priorities for Ballistic Missile Defense. 
Support for a moment that additional funding was available was 
available to your office and that the Air Force had not funded the 
Airborne Laser program. What would be your highest priority for use of 
the additional funds: to reduce risk on your current programs, to 
develop the Airborne Laser program, or to fund some other program?
    Answer. There is a definite need for a boost phase intercept 
capability in the architecture which could be filled by the Airborne 
Laser. Current priorities for the BMDO program provide for allocating 
additional funding: first priority for MDAP risk reduction efforts; 
second priority to joint interoperability risk reduction issues with 
MDAP enhancements, and finally improvements to Advanced Technology 
programs. Depending on the quantity of funds provided, BMDO would 
seriously consider maintaining the Airborne Laser Program (ABL) at a 
modest level to ensure contractor team stability and continued level of 
efforts pending our ability to fit a more substantial program in our 
top line. BMDO funding could not provide for a more aggressive ABL 
program until PAC-3, Navy Area, THAAD and Navy Theater Wide are well 
into the production phase.
    Question. The Administration recently decided to amend the ABM 
Treaty by agreeing to demarcation limitations. The Joint Statement also 
indicated that development and deployment of the Space-Based Laser was 
off the table. Are the Russians also concerned about the ABL? Is the 
ABL Treaty compliant?
    Answer. The Air Force's ABL is designed to be a theater missile 
defense system. When deployed, the system should not pose a realistic 
threat to the strategies nuclear forces of Russia (or any other 
successors to the ABM Treaty). The Air Force is pursuing the ABL in a 
manner fully consistent with all provisions of the 1972 ABM Treaty. The 
Russians have not offered any substantive comment on the Airborne Laser 
to date. During the Helsinki Summit, the Presidents developed an 
approach to concluding an agreement to higher velocity theater missile 
defense system which would not limit the Airborne Laser.
    Question. A recent study was done by the office of net assessment 
that suggested that there are operational limitations to the ABL. What 
are those limitations? How well did the ABL do in comparison to the 
Space-Based Laser? How will did the ABL do in comparison to other 
missile defense systems?
    Answer. The objective of these studies is to develop innovative 
concepts of operations for Space-Based Laser and to expose the ware 
game ``players'' to the challenges of integrating the various systems 
into the Joint Theater Ballistic Missile Defense Architecture systems. 
In the scenario that was analyzed, severe operational constraints were 
placed on the ABL which limited its effectiveness. The scenario was 
against a peer competitor with sophisticated anti-aircraft weapons. The 
``players'' preferred to establish air superiority before directly 
targeting the peer competitor or forward basing the ABL. In post-game 
analysis, however, it was concluded that this may have been too 
conservative an employment of the ABL.
    Question. What is the maximum range of the Airborne Laser?
    Answer. The Airborne Laser's (ABL) maximum range is dependent upon 
several factors including atmospheric conditions (e.g., optical 
turbulence, cloud height), location of the target relative to the 
aircraft, and type of missile (hardness and boost time). Thus a single 
maximum range value cannot be provided; however, the current estimated 
ranges for various types of missiles under nominal conditions are as 
follows. ------.
    Question. In circumstances where the ABL cannot reach a target due 
to the laser's range limitations, overflight would be necessary. Has 
the Air Force given ample consideration to this limiting factor? How 
would ABL work with other BMD systems?
    Answer. The ABL will be a highly flexible standoff weapon system. 
The theater commander will have the ability to place the ABL Combat Air 
Patrols (CAP) where he deems most effective (including locations over 
enemy territory) based on current intelligence, theater threats, level 
of air superiority, coverage requirements and optimal deterrence/
engagement potential. ABL will share AWACS and JSTARS escort. In 
addition, a defense suite will protect against surface-to-air and air-
to-air threats.
    The ABL will work with the remaining Ballistic Missile Defense 
systems using the Joint Tactical Information Distribution System (Link 
16) as an integrated member of the TMD architecture. Through this 
network, the ABL will provide early missile, track, launch and impact 
point predictions and kill assessments.
    Question. Can ABL perform its mission in all weather?
    Answer. Yes. The ABL is being designed to operate ``above'' the 
weather (notionally 40,000 ft.). Even with complete cloud cover, the 
ABL can detect, track and destroy theater missiles.
    Question. What are the fuel requirements for ABL? How many shots 
can the laser shoot with the allotted fuel aboard? What if a potential 
adversary were to fire more than 30 missiles? Wouldn't that defeat the 
ABL?
    Answer. ------. The number of TBMs which can be killed typically 
varies between 20 and 40 depending on the specific engagement geometry, 
target type, and atmospheric conditions.
    ABL will detect all 30 missile launches, prioritize and engage as 
many missiles as possible following the specific mission's rules-of-
engagement (e.g., the ABL may be directed to engage all missiles 
launched from certain regions due to their high probability of carrying 
weapons of mass destruction). In addition, track data will be passed to 
the joint missile defense architecture via Link 16 enhancing the 
overall architecture's effectiveness.
    No. Typically, there will be two ABLs on Combat Air Patrol (CAP) 
with overlapping coverage and the ability to deconflict engagements. In 
salvo launches, the ABL is not designed to defeat all missiles; rather 
it is designed to thin the threat, provide warning and tracking data, 
and to significantly enhance the effectiveness of the other missile 
defense systems.
    Question. What has been done to solve the problem of beam 
attenuation? Are you confident that you will be able to counteract the 
effects of the atmosphere and turbulence on the ABL?
    Answer. Atmospheric attenuation has a negligible effect on ABL's 
performance. The atmosphere at ABL's operational altitudes (nominally 
40,000 ft) is so thin that 90 percent or more of the weapon laser 
energy is transmitted.
    Therefore, we are highly confident ABL will meet the JROC-validated 
range requirements. To achieve these requirements, ABL will employ 
active and passive tilt jitter correction and atmospheric compensation 
subsystems to overcome the negative effects of the atmosphere and 
turbulence. Critical components and algorithms have been proven in a 
number of airborne, brass board, and field tests. The data from all 
tests conducted to date match detailed ABL simulation results and 
indicate ABL will exceed its range requirements.
    Question. The chemical laser must be reduced to meet certain size 
requirements of the aircraft. How does the Air Force plan to do this?
    Answer. The laser module design meets all performance, size and 
weight goals for the Program Definition and Risk Reduction (PDRR) 
system. A prototype laser module recently passed its Critical Design 
Review and is now being manufactured using proven lightweighting 
techniques such as composites, titanium and milled-out structural 
components.

                          Arrow Missile System

    Question. The ARROW is a U.S./Israeli cooperative program to track 
and destroy theater ballistic missiles. The Committee seriously 
considered terminating the ARROW program in 1995 because of extremely 
poor technical performance and the substantial level of past and future 
U.S. financial commitments for the program. The Administration has 
acted to shore up the program and last year signed a Memorandum of 
Understanding (MOU) which limited future U.S. funding to approximately 
$35 million a year from 1997 to 2001 ($175 million). The Administration 
has recently announced plans to commit additional funds to the program. 
General Lyles, you are aware that this committee has in the past had 
concerns regarding the performance and cost of the ARROW missile 
system. Will you please give us an update? How is the ARROW doing in 
its flight test?
    Answer. The ARROW missile is doing quite well. Of two intercept 
tests (August 20, 1996 and March 11, 1997), the missile has scored two 
direct hits, destroying the target.
    Question. the Administration has recently announced that it will 
provide additional funding for the Israeli ARROW program. What exactly 
has the Administration agreed to provide? How much funding? For what 
period of time?
    Answer. The Secretary of Defense has agreed to provide $48 million 
over a 4 year period beginning in FY 1998.
    Question. Is the Israeli government still committed to production 
of this system?
    Answer. The Israeli government has identified the Arrow program as 
its highest national priority and is fully committed to the program.
    Question. When we last discussed this issue, the total acquisition 
cost estimates for ARROW varied and ranged anywhere from $2 to $10 
billion. What is the latest, most accurate cost estimate?
    Answer. The cost estimate of Arrow at program inception in 1994 of 
approximately $1.2 billion remains valid today. Phase I (Arrow I) of 
the program cost $158 million, Phase II (Arrow II) costs $330 million 
and Phase III (Arrow Deployability Program) costs $556 million. These 
costs do not include $42 million in infrastructure costs and $252 
million for Arrow Weapon System components (Radar, Launcher, Fire 
Control) both of which were funded entirely by the Israelis.
    Question. Has the U.S. committed to fund any amount of that 
production? Does the Administration intend to do so?
    Answer. A portion of the $48 million the United States has agreed 
to provide the Israelis will be used to accelerate the production of 
the User Operational Evaluation System (UOES).
    Question. Why should the U.S. continue to fund this program? Have 
we learned anything about our missile defense system based on our 
cooperation with the Israelis? What about the seeker?
    Answer. The U.S. has, and continues to, receive technical data, 
risk reduction, and lessons learned from the Arrow missile development 
efforts which are used in development of U.S. ballistic missile defense 
efforts. With respect to the seeker, the focal plan array in the Arrow 
is the same as that used in the THAAD. Moreover, we look to ensure 
interoperability between U.S. and Israel's missile defense to systems.
    Question. Would you find this program in your budget if you were 
given no additional funds to do so?
    Answer. No. We could not because we have no operational requirement 
for the Arrow missile. Arrow is not a mobile, transportable TMD system 
such as our warfighters require. Instead, it meets Israeli military 
requirements.
    Question. Where is the ARROW on your priority list?
    Answer. While low on the list in fulfilling DoD operational 
requirements, the technical benefits of Arrow development efforts are 
very useful and place it at a higher relative priority. In addition, 
the development and deployment of air missile defense capability by a 
key friend is a high priority.

               Medium Extended Air Defense System (MEADS)

    Question. MEADS is a mobile missile defense system that would 
protect maneuvering forces from short range ballistic missiles. The 
program was initially an Army program (Corps SAM) but was made an 
international cooperative program in order to defray the cost of 
developing the system. Originally, the U.S. agreed to provide 50% of 
the cost and work. Germany was to provide 20%, France was to provide 
20% and Italy was to provide 10%. However, France dropped out of the 
program last year leaving U.S. with 60% of the cost and work share. The 
budget request for 1998 is $48 million. DoD officials concluded during 
the Bottom-up Review, that the unilateral Army program, Corps SAM, was 
not affordable. However, shortly thereafter, the program was 
reestablished as MEADS, a multilateral program. Do you believe the 
multi-lateral MEADS program is affordable?
    Answer. MEADS funding has been constrained by affordability 
considerations and DoD examined this issue closely during the 
Quadrennial Defense Review (QDR). The QDR agreed to continue the MEADS 
program but only provided $35 million additional funding in fiscal year 
99, bringing the total fiscal year 99 funding to $45 million. DoD is 
proceeding with negotiations for the design and development phase of 
the program.
    Question. What is the current agreement between the U.S. and its 
partners on this program? What is the current cost share?
    Answer. The current cost share/work share agreement for the Project 
Definition-Validation (PD-V) phase is the U.S. 60%, Germany 25% and 
Italy 15%.
    Question. The total cost of MEADS is expected to be about $11 
billion for the U.S. How does this compare with the total acquisition 
costs of other theater ballistic missile defense systems?
    Answer. In perspective, the cost of MEADS is comparable to other 
air and missile defense programs. In conjunction with on-going PAC-3 
upgrades (ground equipment modifications and a new missile) and past 
Army procurement efforts, the Department is spending $7.2 billion 
(fiscal year 97) to acquire and field ten PAC-3 battalions. The two 
THAAD battalions are anticipated to cost $10.6 billion (fiscal year 
97). The expected U.S. cost to acquire and field six MEADS battalions 
is approximately $11.0 billion (fiscal year 97).
    Question. According to BMDO, the total acquisition costs of THAAD, 
PAC-3, Navy Lower Tier, HAWK, MEADS and Navy Upper Tier could be about 
$43 billion. General Lyles, do you believe that we can afford MEADS?
    Answer. I have conducted an independent review of the MEADS program 
to address affordability. We have examined with the Army several 
methods to rephase and restructure the program to continue to support 
the warfighter and our international partners while addressing 
modernization. The results of that study were fed into the Quadrennial 
Review (QDR). The QDR agreed to continue the MEADS program but only 
provided $35 million additional funding in fiscal year 99, bringing the 
total fiscal year 99 funding to $45 million. DoD is proceeding with 
negotiations for the design and development phase of the program.
    Question. Has MEADS been reviewed in the Quadrennial Review? What 
has been the outcome of those discussions?
    Answer. MEADS has been reviewed by the QDR. The QDR agreed to 
continue the MEADS program but only provided $35 million additional 
funding in fiscal year 99, bringing the total fiscal year 99 funding to 
$45 million. DoD is proceeding with negotiations for the design and 
development phase of the program.

                        National Missile Defense

    Question. The National Missile Defense (NMD) system will provide 
protection against long range ballistic missile threats using ``hit-to-
kill'' technology. The Administration's ``three plus three'' deployment 
readiness plan would allow for the deployment of a minimal NMD 
capability in 2003 if the threat warrants. This plan is ABM Treaty 
compliant. The budget request for 1998 is $504 million, $324.7 million 
less than the 1997 appropriation. General Lyles, if you were required 
to deploy a NMD system by the year 2003 would be 1998 budget request be 
sufficient?
    Answer. No. Based on the NMD life-cycle cost estimate supporting 
the QDR process, the NMD program will require an additional $2.3 
billion over the Future Year Defense Program, starting with $474 
million in fiscal year 98 RDT&E funds to execute the 3 plus 3 schedule 
and program. These additional resources would be roughly spent on:
     Program shortfalls ($100 million). Delays and hardware 
(additional target) associated with Integrated Flight Test 1 failure; 
delays in transferring the THAAD dem/val radar to the GBR-P; BMC3 
development as a result of contract negotiations; EKV communications 
development as a result of contractor estimates; and radar 
discrimination algorithms.
     Previously deferred program content ($85 million). EKV 
telemetry unit development; EKV hardness and lethality testing; and 
Forward-based X-band Radar and UWER development under the LSI 
contractor.
     Cost Risk Reduction ($74 million). Additional funding to 
all elements (in line with established cost estimates) to allow for 
development/test unknowns without sacrificing program content.
     Schedule risk reduction ($110 million). Accelerate 
procurement of and add hardware (such as targets and boosters) to 
mitigate test delays or failures (most items are lead-time away and 
still unavailable until fiscal year 99 timeframe); accelerate Hardware-
in-the-loop model and hardware procurements; and improve test launch 
capabilities.
     Technical risk reduction ($105 million). Increase Systems 
Engineering to include development of high fidelity system simulator 
for performance verification; continued EKV competition through first 
intercept flights; long-lead procurement of hardware for added test 
flights beginning in fiscal year 00; and explore alternative 
technologies. e.g., radar transmit/receive modules, to maintain program 
flexibility and to reduce procurement costs.
    Question. Do you have any budget shortfall?
    Answer. Yes. Due to our flight test failure in January, we have at 
least a $60 million shortfall in fiscal year 98. Based on the NMD life-
cycle cost estimate supporting the QDR process, the NMD program will 
require an additonal $2.3 billion over the Future Year Defense Program 
starting with $474 million in fiscal year 98 RDT&E funds to execute the 
3 plus 3 schedule and program. These additional resources would be 
roughly spent on:
     Program shortfalls ($100 million). Delays and hardware 
(additional target) associated with Integrated Flight Test 1 failure; 
delays in transferring the THAAD dem/val radar to the GBR-P; BMC3 
development as a result of contract negotiations; EKV communications 
development as a result of contractor estimates; and radar 
discrimination algorithms.
     Previously deferred program content ($85 million). EKV 
telemetry unit development; EKV hardness and lethality testing; and 
Forward-based X-band Radar and UWER development under the LSI 
contractor.
     Cost Risk Reduction ($74 million). Additional funding to 
all elements (in line with established cost estimates) to allow for 
development/test unknowns without sacrificing program content.
     Schedule risk reduction ($110 million). Accelerate 
procurement of and add hardware (such as targets and boosters) to 
mitigate test delays or failures (most items are lead-time away and 
still unavailable until fiscal year 99 timeframe); accelerate Hardware-
in-the-loop model and hardware procurements; and improve test launch 
capabilities.
    Technical risk reduction ($105 million). Increase Systems 
Engineering to include development of high fidelity system simulator 
for performance verification; contained EKV competition through first 
intercept flights; long-lead procurement of hardware for added test 
flights beginning in fiscal year 00; and explore alternative 
technologies, such as radar transmit/receive modules, to maintain 
program flexibility and to reduce procurement costs.
    Question. General Lyles, the NMD program has recently had a few 
delays not the least of which was a delay which we agreed in conference 
last year affecting the establishment of the Joint Program Office. I 
understand that this had more of severe impact than we expected at the 
time. Will you please explain the status of the Joint Program Office?
    Answer. We officially stood up the JPO on 1 April with Brigadier 
General Joe Cosumano in the lead. We're now finalizing organizational 
relationships between BMDO and the Services and staffing up to do the 
NMD mission. This has delayed our execution of the NMD program.
    Question. What is the importance of having a Lead System 
Integrator? What is the benefit to the government of having a 
contractor versus a Service manage this program?
    Answer. The JPO, which consists of BMDO and Service organizations, 
is managing the program. The Lead System Integrator serves only as a 
prime contractor for the end NMD product and assumes much of the risk 
associated with developing this complex system. The government 
historically has not excelled as a system integrator.
    Question. What has been done lately to get the program moving? What 
can we do to ensure no further delay in the program?
    Answer. We have officially stood up our JPO and are staffing up to 
do the NMD mission. We're also ready to award Lead System Integrator 
concept development studies to move us forward and help make decisions 
on various architecture solutions. Your support of these endeavors, in 
particular support for a Lead System Integrator, and stable program 
resources will ensure we move steadily forward.
    Question. In January, a planned test of the Exoatmospheric Kill 
Vehicle (EKV) failed. In your statement you suggest that the problem 
has been traced to a ``human procedural error and corrective procedures 
have been implemented.'' General Lyles, can you explain exactly what 
happened?
     Answer. During the countdown for the booster used to launch the 
EKV sensor payload, external power was disconnected but internal power 
did not come on. Investigation showed the booster's ground support 
equipment power supply had been improperly configured for 1.5 ampres 
instead of 15 amperes. Nine months before the test, a test engineer 
correctly set the power supply and a quality engineer verified the 
setting. However, the test engineer erroneously used the power supply's 
``multiply by one-tenth'' range selector switch, reducing the current 
to 1.5 amperes. Neither the test engineer nor the quality engineer was 
aware of the wrong setting, and subsequent testing did not check for 
correct current. As a result, the power supply delivered insufficient 
current to start the booster's internal batteries and the booster 
failed to launch.
    Question. What corrective procedures have been implemented?
    Answer. A team of Army, Air Force, and Lockheed-Martin (booster 
contractor) personnel reviewed the Payload Launch Vehicle (PLV) program 
and investigated the launch failure. The team reviewed 121 internal PLV 
procedures and found 30 which required change before the next flight 
text. The most significant changes would make laboratory testing 
exactly match flight hardware testing. To address the cause of the 
failure, the power supply circuit was modified to verify the minimum 
current for battery activation. Also, critical PLV system checks were 
added to the countdown prior to target launch to avoid wasting future 
targets.
    Question. What are the cost and schedule impacts of this failed 
test?
    Answer. We have to replace the target vehicle that was launched 
from Vandenberg AFB and continue to fund our competing Exoatmospheric 
Kill Vehicle contractors longer than planned. This will cost us about 
$60 million in fiscal year 98. We will repeat the test in July with the 
target intended for our second test. The second contractor will be 
unable to fly until January 1998, about an eight month slip in 
schedule.
    Question. How much additional funding would be required to make up 
for the loss associated with the payload launch vehicle?
    Answer. The payload launch vehicle is the booster used with the 
EKV. We did not lose this but we did expend a target vehicle which 
consists of the Multi-Service Launch System booster and target suite. 
The target vehicle will cost us about $20 million. Another $40 million 
is associated with the resulting delays to the test program.
    Question. As you have pointed out, this schedule has a high level 
of risk because you do not have backup test hardware. What would be 
required to reduce risk?
    Answer. With the funding Congress provided last year, we moved to 
procure additional test hardware to mitigate schedule delays. However, 
the long lead time to acquire these assets does not make them readily 
available and we continue to incur delays such as recent experienced 
with our first sensor flight test. Continuing to procure additional 
test assets, ground hardware and spares will mitigate schedule risks ad 
we move forward.
    Question. The NMD program was designated as a Major Defense 
Acquisition Program (MDAP). What are the benefits of this designation? 
Does this designation give the program more focus? Is it an indicator 
of the seriousness of a potential threat?
    Answer. The MDAP designation is warranted by the amount of the 
investment involved and commitment the Department has to the NMD 
program. It portrays a seriousness to development efforts that ensures 
a more thorough involvement by the user, OSD, and the Services that 
aids in fleshing out and addressing all issues. The designation causes 
a focus on meeting user requirements which is based on projected 
threats.

                     Anti-Ballistic Missile Treaty

    Question. At the Helsinki summit in March, President Clinton and 
President Yeltsin reaffirmed their commitment to the ABM treaty. They 
agreed not to deploy Theater Ballistic Missile (TBM) systems that pose 
a threat to the strategic nuclear force of the other side or to test 
TBM systems against strategic targets. General Lyles, which BMD systems 
have been judged to be ABM Treaty Compliant?
    Answer. The following BMDO sponsored systems currently under 
development have been certified treaty compliant as currently 
configured: PATRIOT, THAAD, Navy Area, and Navy Theater Wide. As these 
systems continue to develop and acquire greater capabilities, DoD's 
Compliance Review Group (CRG) will continue to review them for 
compliance.
    Question. What about Airborne Laser? Has the Treaty Compliance 
Review group assessed that system? Will you submit that?
    Answer. The Air Force has not yet determined when the ABL should be 
formally submitted to the CRG for review. When the ABL is sufficiently 
developed for a treaty compliance determination, I expect the Air Force 
will approach the CRG in accordance with DoD Directive 2060.1--
Implementation of, and Compliance with Arms Control Agreements.
    Question. How does the Joint Statement affect our current core 
programs?
    Answer. The Joint Statement will have no effect on our current core 
programs. Upon entry into force, Part I of the so-called demarcation 
agreement reached at the last meeting of the Standing Consultative 
Commission will remove PATRIOT, THAAD, and Navy Area-Wide from coverage 
by the ABM Treaty. The Part II agreement being finalized in Geneva 
pursuant to the agreed Joint Statement will not affect the U.S. 
Government's ability to make unilateral ABM Treaty compliance 
determinations in the future for the Navy Theater-Wide system.
    Question. In responding to questions for the record last year, BMDO 
indicated that the only system that would be a problem under the 
demarcation agreement would be the Navy Upper Tier program. However, 
there have been statements in the press which suggest that 
administration officials now do not believe Navy Upper Tier will be a 
problem. Why is this so?
    Answer. Prior to the March 1997 Helsinki Agreement, the U.S. and 
Russia had only reached agreement that TMD systems with interceptor 
missiles having velocities of 3 km/sec or less are compliant with the 
ABM Treaty, provided they are not tested against ballistic target 
missiles with velocities greater than 5 km/sec or ranges greater than 
3,500 km. The Helsinki Agreement provides the elements for a Part II of 
the demarcation agreement covering TMD systems with higher interceptor 
velocities such as Navy Theater Wide. Pursuant to that agreement, the 
U.S. will still be required to make national compliance determinations. 
However, that agreement establishes restrictions on the testing of 
higher velocity interceptors that won't impact the Navy Theater Wide 
development and test program, thus reducing the potential issues to be 
addressed in future U.S. Navy Theater Wide compliance determinations.
    Question. Are you deliberately limitation or ``dumbing down'' the 
capability of our TBM systems to squeeze into the tight framework of 
this agreement? Are the designs of our TBM systems being determined by 
the threat, by the requirements, or by the arms control negotiators?
    Answer. DoD is not ``dumbing down'' its TMD systems. TMD systems 
are designed to meet military operationally requirements established by 
the Joint Staff and those requirements are determined by the military 
threat.
    Question. General Ron Fogelman, Air Force Chief of Staff, recently 
was quoted saying. ``All the chiefs have great concerns about this 
[agreement], . . . I would hate to see us negotiate away any kind of 
advantage we might have in space-based sensors, or in the airborne 
laser or anything like that.'' General Lyles, do you have any concerns 
about the development of future ballistic missile defense technologies 
under this agreement?
    Answer. The Helsinki Joint Statement does not address the two 
issues previously raised by General Fogelman, nor does it address 
components or technologies that are necessary for our foreseeable TMD 
systems.
    Question. Does this agreement limit the advanced technology 
program?
    Answer. No it does not. Research activities up to the point of 
field testing a prototype system are not prohibited by the Helsinki 
joint statement.
    Question. The agreement specifically prohibits the development, 
test or deployment of space-based interceptor missiles or ``. . . 
components based on other physical principles.'' General Lyles, this 
agreement seems to require that the Space-Based Laser program be shut 
down. What is your understanding as to how this agreement affects SBL? 
Do you have plans to close down the program?
    Answer. No, we do not plan to close down the SBL program. The 
Helsinki agreement does not affect our plans for that program because 
our research plans for SBL fall short of any development, testing, and 
deployment that could violate either the proposed Part II agreement or 
the ABM Treaty.
    Question. Are there provisions for opening up discussions with the 
Russians should higher velocity systems and future capabilities be 
required due to a future threat?
    Answer. Yes, there are such provisions in the ABM Treaty. Any party 
to the ABM Treaty can raise questions or concerns through the Standing 
Consultative Committee (SCC), which was created for that very purpose.
    Question. Last year, the demarcation discussions included a Phase I 
(for lower velocity systems) and a Phase II (for higher velocity 
systems, e.g. Navy Upper Tier). Have the Russians agreed to discuss 
higher velocity systems?
    Answer. Yes, the Russians have agreed to discuss higher velocity 
systems. The Russians are participants in the ongoing Phase II 
negotiations, the purpose of which is to discuss such systems.

    [Clerk's note.--End of questions submited by Mr. Young.]
                                          Wednesday, June 11, 1997.

                FUTURE BOMBERS/DEEP ATTACK CAPABILITIES

                               WITNESSES

JOHN J. HAMRE, UNDER SECRETARY OF DEFENSE, COMPTROLLER GENERAL EUGENE 
    HABIGER, USAF, COMMANDER IN CHIEF, UNITED STATES STRATEGIC COMMAND
GENERAL RICHARD E. HAWLEY, USAF, COMMANDER, AIR COMBAT COMMAND
LIEUTENANT GENERAL DAVID McCLOUD, USAF, DIRECTOR FOR FORCE STRUCTURE, 
    RESOURCES AND ASSESSMENT

                              Introduction

    Mr. Young. The Committee will come to order. Gentlemen, 
please be seated.
    This hearing is closed. I would say to everyone we are 
cleared to the top secret level today. If we should get to the 
point there is any compartmentalized or special access 
information that you would like to present or that we would 
like to ask about, then we would clear the room for those not 
cleared at that level.
    This morning we are going to be discussing one of several 
major issues that face the Committee this year, and that is the 
Nation's overall deep attack and strike capabilities and 
specifically the future direction of the U.S. bomber program.
    This is a critical period for our Nation's air power, and 
the decisions we make this year will have a lasting impact on 
our ability to field an appropriately balanced mix of forces 
for the next century.
    So we take this very seriously, and that is the reason that 
we invited you specifically to be here, because you have a 
major, major role in this whole effort, and you are, as far as 
we can tell, the best witnesses we could have to help us make 
our decisions as to what we will do this year, because what we 
do this year, I think, is going to affect where we are 20 years 
from now, to be honest with you.
    We have as witnesses the Honorable John Hamre, well known 
to the Committee, Under Secretary of Defense/Comptroller; 
General Eugene Habiger, Commander in Chief, United States 
Strategic Command; General Richard Hawley, Commander, Air 
Combat Command; and Lieutenant General David McCloud, director 
for force structure, resources and assessment.
    Many of the members of this Committee have been here from 
the inception of the B-2 program when it was developed in the 
black world. As we all know, initially the Department planned 
on procuring 132 B-2s. Then the threat changed, and the 
Department thought it needed 75 B-2s. Then that number changed 
to 20. Last year it became 21 through a manipulation of some of 
the funding.
    The question we face today is, do we need more B-2 bombers? 
Can we afford to buy more B-2 bombers? These questions can't be 
addressed in a vacuum. Instead, they must be addressed in the 
context of all the other force structure and modernization 
needs facing the U.S. military.
    The B-2 provides our CINCs with a powerful tool, the 
ability to accurately deliver large payloads at long ranges 
against heavily defended targets. Under current plans and with 
funds provided in prior years, the Air Force will have 21 
operational aircraft, enough to outfit two squadrons.
    This year we have been asked by several members to consider 
beginning the process of buying an additional 9 B-2s, bringing 
the total force to 30 aircraft, enough to outfit three 
squadrons. So today we are here, in part, to assess the need 
and cost of such an expanded B-2 bomber force.
    During the course of the hearing, there are several 
questions that need to be addressed: What are the missions we 
expect to assign B-2s in the future? What are the missions we 
expect to assign B-2s in the future? Are more B-2s required to 
adequately conduct these missions? Are there alternative means 
of accomplishing these missions? What is the cost of an 
expanded B-2 program? What might we have to give up to fund an 
expanded B-2 program, and are the trade-offs worthwhile?
    Another element of this equation is the B-1 program. The 
committee has supported the B-1 and the mods that have been 
made to it. It is an impressive platform, but we are often 
asked by our colleagues, if the B-1 is such a great aircraft, 
why don't we ever use it? We would like to hear how you respond 
to questions like those and how the B-1 fits into the overall 
heavy bomber force mix.
    Finally, the issue does not just involve bombers. If we go 
to war, there are many other assets to consider, such as 
carriers and their air wings, tactical fighters and fighter 
bombers, as well as a variety of smart and dumb munitions.
    As I mentioned earlier, this year may well be critical, 
because we are also being asked to make an important decision 
on the next generation of tactical aircraft, the F-22, the F/A-
18E/F, and the Joint Strike Fighter.
    All of these programs, as well as the B-2, were reviewed in 
the context of the recently completed Quadrennial Defense 
Review. The QDR concluded we should not go ahead with 
additional B-2 production, but it also recommends cutting back 
on the F-22 and the F/A-18E/F. As Secretary Cohen has pointed 
out, the QDR is just a proposal and it is largely up to the 
Congress to decide what elements of the QDR are turned into 
reality.
    So these are very important issues, and this committee 
takes them extremely seriously. We want to explore them 
thoroughly.
    Because of the time constraints we all face, we will have 
to adhere to the 5-minute rule, with each of our members having 
5 minutes of questioning in the first round, and we will have 
as many rounds as we possibly can in the time available. I also 
urge each witness to be as brief as possible with the answers 
so we can delve into more and more issues.
    Again, I thank you all for coming. I apologize for the 
length of my opening statement, but as chairman of this 
Committee, I have to be responsible for what I recommend not 
only today, for fiscal year 1998, but for fiscal year 1999, and 
the balance of the payments in 2000, 2010 and 2020.
    We have some very serious decisions to make, and we 
appreciate your being here to help us with those decisions.
    Dr. Hamre. you are recognized, sir.

                     Summary Statement of Mr. Hamre

    Mr. Hamre. Mr. Chairman, thank you very much, and thanks to 
all of the members for letting us come up to this hearing. I 
personally am very pleased to be here this morning.
    When Mr. Dicks came in, he said, ``I have got nothing to 
say about you, Hamre,'' and I said, ``Well, that is the highest 
compliment a comptroller ever gets.'' I am not kidding when I 
say the patron saint of all comptrollers is Judas Iscariot. 
This is high praise indeed.
    Mr. Young. We are going to give Mr. Dicks a chance to 
respond to that later on.
    Mr. Hamre. We really are glad to be here.
    I must say on a very personal level, these last 5 days have 
been pretty tough in Washington for those of us in the 
Department, and all of us personally lost working with a very 
good friend, with what happened to Joe Ralston. And when I see 
this cacophony going on outside, this Committee is holding a 
serious hearing about one of the most important subjects we are 
facing, and I thank you for it. This is exactly what 
congressional oversight is about, and so I personally am very 
grateful.
    I am grateful for, again, this Committee bringing back the 
Congress to the fundamental, what is it about? I think I really 
do applaud you for doing that.
    When I was coming in the door, I got hit by one of the 
press types that are out there on a stakeout, you know, and 
again there are those that would like to characterize this 
hearing in a very cheap way, that this is just about narrow 
interests and parochial interests, and that is absolutely not 
the case. This is about a very important thing for the future, 
what is the best way we are going to protect this country. This 
is not about narrow interests at all.
    So we are glad that we can be here. We appreciate very much 
having a change to be invited to come and address, because I 
think everybody in this room is dedicated to exactly the same 
thing, how do we get a stronger defense in the long run?
    Here I think this Committee, unlike probably everybody else 
in Washington, this Committee is the only Committee--well, your 
counterpart Committees--are the only people that have the same 
job that the Secretary of Defense has, and that is, you have 
got to bring together an integrated defense program, not just, 
am I for this little project or that little project, but you, 
like the Secretary, have to put together a composite program 
and say this is what we need to defend the country in the 
future.
    The Secretary has a little bit harder job in the sense that 
he has to build that over a 5-year period, but, frankly, you do 
too. The decisions that you are going to be making in this 
Committee really are going to dictate the composition of our 
program over the next 5 years, and we know you understand that, 
and that is very much the frame of reference that we come today 
to this hearing with.

                            BOMBER QUESTIONS

    I think that there are five questions, not to be 
presumptuous, but I think there are five questions that you are 
going to be, in your minds, asking about us today. Maybe they 
aren't the questions you ask, but it is in the back of your 
minds.
    You are going to first say, did we honestly look at the B-2 
during the QDR, or was it just a sham? Did we just do a make-
work job to come to a preconceived conclusion that we already 
had, or did we really look at it fairly? I think that is the 
first question in your mind.
    Second, I think if we did look at the B-2, did we look at 
it properly? Did we evaluate it in the right context? Did we 
use the right tools? Or did we not use the right tools and 
therefore didn't give a fair evaluation to the B-2? I think 
that is probably the second question.
    I think the third question in your minds is, why cannot we 
afford the B-2? I mean, even when it gets to its full run, it 
is $1.5 billion a year, and that is only about a half of 1 
percent of the DOD budget. Why in the world can't we afford 
that? Why did you guys decide you couldn't afford that? I think 
that is a very important and fair question.
    I think a fourth question in your minds may be, was this 
just a political deal? Was this just something that Secretary 
Cohen had in his mind and he wanted to shove it down 
everybody's throats? And is there dissention in the Department 
over this, or is this a decision that we all came to reach 
together? And you need to look at that.
    Finally, I think probably the most important question is, 
can we defend America with only 21 B-2s? Would it be a better 
program if we had to change other things and give them up in 
order to have more B-2s? Would that be a better defense 
program?
    I think those are the questions really that shape what is 
on your minds. Maybe they are not the questions you will ask 
us, but I know that is the backdrop, and I hope that in this 
hearing today that we can go through all of that. We ought to 
absolutely ask those questions in that way, and hopefully we 
can answer them.
    But ultimately you are going to reach a conclusion. All of 
you have the responsibility to decide in your own minds on 
behalf not only of your constituents but the entire Congress 
what is the best defense program for the future.
    We honestly feel we have brought it to you, but I have 
never seen a defense program we ever delivered that was not 
improved by Congress, and I fully expect this to go through a 
rough tumble, and that is what this hearing is about, and the 
fact you would invite us here, I think, again, is a testament 
to how important this issue is and how important this committee 
considers these decisions. So we thank you for being here.
    Back in 1883, Mark Twain and Rudyard Kipling were on the 
stage together, and Mark Twain said, ``Well, between Rudyard 
Kipling and I, we know everything in the world. He knows 
everything that is important, and I know the rest.'' And that 
is really the way I am today.
    I don't know anything of importance about the B-2, but I am 
joined by three people who do, and I am very delighted that 
they are here as the real experts at this hearing, and then I 
would like to answer at the very end, any resource questions 
that you might want to ask me.
    Thank you.
    Mr. Young. General Habiger, are you going to be next?

                  Summary Statement of General Habiger

    General Habiger. Yes, sir. I look forward to the 
opportunity to express my views today.
    I would like to point out, I have spent most of my adult 
life as a bomber crew member, commander, squadron and wing 
level. I have over 3,000 hours in the airplane, 75 combat 
missions in bombers as a colonel. I was involved in the start-
up beginning of the B-2 program while assigned to Air Force 
plans and policies back in the early eighties and now, as 
Commander in Chief of Strategic Command, I am intimately 
involved with all three legs of the triad, to include the 
bombers, and I look forward to expressing my observations, 
views, and professional judgments today.
    Thank you.
    Mr. Young. General Hawley.

                  Summary Statement of General Hawley

    General Hawley. Like my colleagues here, Mr. Chairman, 
members of the Committee, I am delighted to be here to talk 
about an important issue.
    As I think most of you know, I am a force provider to a 
number of CINCs, to include General Habiger on my right. I 
provide the bomber leg of the nuclear forces. Of course, we 
provide fighter assets, bombers, C41SR capabilities, and search 
and rescue capabilities to all of the warfighting CINCs.
    Our forces are very heavily tasked today. Perhaps the most 
difficult issue that we deal with in air combat command on a 
day-to-day basis is our operational tempo, because the tasking 
levels of our forces are very high.
    Therefore, as we go through this discussion on the B-2, I 
think one issue we need to keep at the forefront is the need 
for a balanced set of capabilities in our national defense 
establishment, because that is what my customers, the 
warfighting CINCs, ask me to deliver, is a balanced set of 
forces that can cover the whole spectrum of responsibilities 
that we have given them to deal with our national security 
interests around the world. Today I think we do that. We have a 
pretty good balance in the force, and we need to make sure we 
maintain it.
    Thank you.
    [The statement of General Hawley follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Young. General McCloud.

                  Summary Statement of General McCloud

    General McCloud. Sir, if you think it is appropriate, I 
would like to read a very short statement, about 3 to 3\1/2\ 
minutes long.
    As director of force structure, resources, and director for 
the past year, I have cochaired one of the most comprehensive 
studies of our Nation's deep attack capabilities ever 
undertaken. The Deep Attack Weapons Mix Study, or DAWMS has 
been an extraordinary, unprecedented effort, conducted by top 
experts from OSD, the Joint Staff, services, and the CINC 
staffs. Hundreds of operators and analysts dedicated hundreds 
of thousands of hours to develop insights on weapons and 
operational concepts that will enable us to win conflicts 
decisively with minimum loss of life.
    This effort draws from joint doctrine, analysis, military 
judgment, and is founded in our National Military Strategy. We 
strove to provide a balanced force, capable of executing our 
strategy in the face of an uncertain, ambiguous world.
    DAWNS employed a campaign level model called TACWAR and an 
optimization model called WORRM. I don't like the acronym, I 
didn't name it, but we used it for the primary analysis. These 
models were available and familiar to all participants. We 
understood their strengths; we understood their weaknesses.
    To overcome their shortfalls, we initiated nine parallel 
studies to ensure that DAWMS' effort was bounded and all issues 
considered. As individual issues arose, if we could agree, 
changes were made; if we could not, we ran sensitivities to 
encompass the extremes and articulate the impact.
    If you will refer to your tabletop slide that I have put on 
all of your desks, it is a little bit complex, you will see the 
scope of the nine supporting studies and many organizations 
that participated in them. We can return to this topic later, 
if you wish.
    [Chart follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    
    Mr. Young. General McCloud.

                  Summary Statement of General McCloud

    General McCloud. We have completed more than 1,500 
sensitivities to ensure we have captured each issue. Instead of 
pointed solutions, DAWMS, The Deep Attack Weapons Mix Study, 
has given us a range of valuable insights. We applied military 
judgment at every step of the way.
    Another key to the study's success was the openness to all 
participating parties. We had nothing to hide, no preordained 
outcomes.
    As we did in the QDR, DAWMS sought to balance the needs and 
risks of today with the ambiguities of tomorrow. The key was to 
understand how force changes impact our overall capability to 
support our National Military Strategy. In part 1, we 
determined an optimized mix of deep attack weapons the CINCs 
will need to cover a broad range of conditions. While the 
programmed weapons budget is sufficient, modest adjustments to 
the mix of next-generation munitions will ensure our forces 
retain their superior engagement capability.
    For example, investing in additional precision standoff 
munitions and smart antiarmor submunitions will increase force 
survivability and lethality. We also determined that our 
intelligence, surveillance, and reconnaissance architecture 
will increasingly provide the leverage needed to maintain our 
advantage over future enemies.
    Insights gained during the first part of DAWMS established 
the foundation for our follow-on trade-off analysis in part 2.
    In DAWMS part 2, we assessed a broad range of bomber, land, 
and sea-based TACAIR force options across a variety of two 
major theater war scenarios. We ran excursions that restricted 
force access during the halt phase of a major theater war. To 
further investigate the issues, DAWMS explored a wide range of 
factors, including stealth capabilities, CINC goals, strategic 
airlift availability, and potential budget changes.
    The procurement and infrastructure costs of the force 
options we assessed were based on a 20-year weapons system life 
cycle. Over a 20-year period, savings from retiring forces are 
used to fund a cost equivalent number of B-2s. Our estimates 
include about $2 billion in modifications to maximize the 
conventional capabilities of existing and additional B-2s.
    Our force comparison focused on four main areas: 
Warfighting capability, risk caused by changes to the force 
mix, savings and costs, and support of the National Military 
Strategy.
    Based on extensive analysis, we determined additional B-2s 
can deploy quickly and improve our capability to halt an 
adversary's advance during the opening stages of a major 
theater war, especially when access is limited or warning times 
are reduced. However, this advantage diminishes after the first 
weeks of combat as the full weight of U.S. air power arrives 
and enemy air defenses are suppressed.
    To maximize savings, we assume the trade-off force 
structure retires immediately. Since it requires several years 
for the first B-2 delivery and 10 to 14 years for the final 
aircraft to become operational, the end result is a capability 
gap of a decade or more. Additionally, the savings generated by 
retiring current forces only partially offset the up-front B-2 
procurement costs, requiring additional unprogrammed funding 
for a decade or more before annual savings exceeds costs.
    Finally, we determined that reducing current force 
structure to pay for B-2s will have a negative impact on other 
mission areas. For example, assuming we do not change our 
current level of global commitments, retiring fighter wings or 
carriers increases personnel and operational tempos, increasing 
presence gaps in the Mediterranean Sea and Indian Ocean, and 
further stresses the forces that remain engaged globally.
    Mr. Chairman, based on this comprehensive analysis, we have 
concluded that while there are advantages to procuring 
additional B-2s, they do not provide a sufficient range of 
capabilities to shape and respond to the full spectrum of 
national military strategy.
    I would like to conclude by saying the insights we have 
gained from DAWMS will pay substantial dividends in the future. 
The study has been a means for all participants to increase 
their knowledge of existing and emerging capabilities. DAWMS 
has been, and remains, a catalyst for increased competition 
between deep attack capabilities we will filed. While the 
process is sometimes painful, this competition is good for the 
warfighter and the American taxpayer.
    Finally, the comprehensive efforts like DAWMS and the 
insights they provide will ensure we fight the next war, and 
not the last one.
    I thank you, and would be glad to take your questions.
    [The statement of General McCloud follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Young. General, thank you very much.
    I assume that all of you have seen the DAWMS and explored 
it fairly thoroughly. Is that a safe assumption?

                             DAWMS Analysis

    General Hawley. In my case, I have seen a briefing on the 
DAWMS study but have not had an opportunity to review the study 
or the background or analysis that went into it.
    Mr. Young. That is basically my exposure to the DAWMS. I 
haven't digested every page of it. I have had the overview.
    Does anyone disagree with the analysis that came out of the 
DAWMS?
    General McCloud. Lots of people disagree with it, sir.
    Mr. Young. I am talking about any of the four of you.
    General Habiger. No, sir.

                         B-2 Strategic mission

    Mr. Young. Now, were there any scenarios involving 
strategic use of the B-2 or strategic use of any of the other 
aircraft? I understood you did a lot of various scenarios while 
going through the DAWMS.
    General McCloud. Sir, we did not go into the nuclear role 
of the bombers. We covered various options on the tactical 
side.
    Mr. Young. Could we go into that at this level, just 
briefly? I spent a lot of time with Admiral Jones in your shop, 
and he gave us a number of BB-2s that he thought would required 
for your strategic mission. I think the number he said was 14 
would be the number that----
    General Habiger. 16, sir.
    Mr. Young. 16.
    General Habiger. Yes, sir. Would you like me to elaborate 
on that?
    Mr. Young. Please.
    General Habiger. The way we apply weapons in the single 
integrated operational plan is a matter of looking at the 
target base that we have and looking at a targets base in the 
year 2002-2003 ------ it is articulated in the national 
security decision directive--that would be targeted to deter 
the Russians.
    If we look at the forces available today and the forces 
available under a START II agreement, we have a balance of 
bombers, intercontinental ballistic missiles, and sea launch 
ballistic missiles coming off our Ohio class Trident submarine. 
The B-2 is part of the bomber triad leg, along with the B-52s 
and the cruise missiles that would be carried by the B-52s.
    Today, sir, with the B-1 also in our nuclear war plan, the 
end of this fiscal year, the B-1 becomes completely a 
conventional carrier, it will no longer be part of our war 
planning, although I will tell you, though we are looking at 
out in the out years, and perhaps, will use the B-1 in a 
conventional role to support our single integrated operational 
plan. The utility there is that the B-1 will no longer be 
counted under the arms control agreements of START II and 
beyond ------.
    Mr. Young. General, in order to have 16 B-2s available for 
your mission, how many B-2s do we have to have in the 
inventory?
    General Habiger. Sir, my force provider, General Hawley on 
my left, will give you perhaps a little longer answer. I go 
into the system with a requirement for 16 B-2s to do my job. 
then as a force provider, he will then look at what is required 
to give me those 16.
    So, sir?
    General Hawley. As you know, Mr. Chairman, when we 
structure an aircraft fleet, we include aircraft for a number 
of purposes, our PMAI, Primary Mission Aircraft Inventory, 
which in this case is 16, and then we need some backup aircraft 
inventory to support other needs.
    Sometimes in a large fleet we will break those additional 
aircraft into categories to include BAI, Back-up Aircraft 
Inventory, depot support, tests and training. So we will have 
five airplanes when we take delivery of the 21st airplane, and 
we will use that to satisfy all those requirements.
     This unit, of course, only has experienced pilots, so all 
pilots come to this program with experience, and we train them 
in the unit using those 16 primary assigned aircraft. So we 
don't have any tests or training.
    There will be continued tests, of course, and we will use 
both the operational airplanes and those designated as BAI. You 
can't tell the difference on a day-to-day basis, by the way. 
And we will just use out of that inventory airplanes that we 
need to go do continuing follow-on tests for the system. They 
will also serve our needs for attrition reserve.
    As we look at all of those requirements, that is why we 
structured the program as we did. Twenty-one, as you know, 
wasn't our number. We got issued 21 airplanes, and we 
concluded, out of 21, we could support an operational fleet of 
16, and that is what we will plan and equip for.
    Mr. Young. You raised an excellent point that makes me very 
curious, but my 5 minutes has expired. I want to come back to 
that point. I am going to adhere to the 5-minute rule so 
everybody else won't think I am sneaking up on their time.
    Mr. Dicks, 5 minutes.

                     DEEP ATTACK WEAPONS MIX STUDY

    Mr. Dicks. Mr. Chairman, first of all, I want to welcome 
all the witnesses here today. I believe that what the Deep 
Attack Weapons Mix Study shows, is that we can stop an enemy in 
the halt phase with the B-2. The problem is, we don't have 
enough B-2s. The studies that have been done by Rand, and by 
General Jasper Welch, all conclude that 21 B-2s is not 
adequate.
    I think the analysis done in the Deep Attack Weapons Mix 
Study demonstrates that if you have a lockout situation, if you 
can't get TACAIR in, you can't get those aircraft carriers in, 
and this study again puts the carriers in the play right away. 
They have two carriers, I think, in the Persian Gulf within 150 
miles of the assault, again, so that they can make a TACAIR 
look good. But if you don't have that and the enemy invades, 
like Saddam did, you can't stop him unless you have an adequate 
bomber force that can come in from outside. That is what this 
study shows.
    It also shows that bombers in the halt phase can play an 
enormously effective role. With stealth bombers, you can come 
in and stop the enemy before he gets to his target. And if you 
can continue to use them and then make usable the B-1s, the B-
52s, TACAIR, et cetera, it is a force enabler.
    Now, every one of the Joint Chiefs, I asked them at a 
hearing a week ago, do they think these models that we used are 
fair and accurate? They said no. They all said that these 
models are no good, that they should be replaced, that there 
are force-on-force models that simply do not look at the 
effectiveness of the forces that we have today. So I think it 
is flawed.
    On the integrity question that Mr. Hamre raised here 
initially, I asked the President of the United States to give 
us a fair, objective study. I don't think we got it.
    I want to read to you just a couple things from a person 
who is intimately involved in this. Let me just tell you what 
he says right up front. ``Outcome has been predetermined. No 
more B-2s. PA&E officials stated study conclusions before 
analysis conducted. OSD has been party to irresponsible 
modeling and subjective support inputs.'' And basically they 
say that the Tactical Warfare war model and WORRM simply do not 
give you a fair look at the effectiveness of these weapons.
    This deeply bothers me, because the President of the United 
States, the Commander in Chief, promised us a fair, objective 
study, and by using these models, I am afraid that study was 
inherently flawed. All of the Joint Chiefs, each one of them, 
said we ought to have new models, a new way to do this in the 
future, so we can effectively look at all these weapons.
    Now, what I am concerned about here, frankly, is the 
question of balance. How can you say we have a balanced tour 
when we are going to spend $350 billion on TACAIR and not spend 
a nickel on bombers? That is no balance. That is just going 
with the existing programs that the services want. It is rice 
bowl protection at its worst, and it is a failure on the part 
of this administration to make hard priority decisions on this 
issue. It is just, we are going to do it our way, and the hell 
with everybody else. And I think it is terrible, I think it is 
irresponsible, and here is why I think it is so outrageous.
    It is because the halt phase is the most important phase. 
If you can stop the enemy before he achieves his objectives and 
destroy him in the field, then you don't have to spend $70 
billion going over there and fighting the war, $10 billion to 
deploy your forces, $60 billion to fight the war with us and 
our allies. If you can stop him before he gets there, because 
you have got an adequate bomber force, then you can save 
American lives and save American dollars.
    And that is why I am so upset, again. And I must tell you, 
I am deeply, deeply disappointed in the Department for, one, I 
think failing to do a good study, and, two, failing to make the 
hard priority decisions. And the idea, it is the position of 
this administration that we are never going to build another 
bomber----

                               HALT PHASE

    Mr. Lewis. If the gentleman will yield, I hope the panel 
will ask the question about the halt phase. That is a very, 
very fundamental question here. I think you were asking that 
question.
    Mr. Young. The gentleman's time has expired.
    Mr. Dicks. The Minority wasn't given an opportunity to make 
an opening statement, and I made the opening statement for the 
Minority.
    Mr. McDade. Mr. Chairman, I would like to yield some time, 
if I may, of my time to the panel, to answer, because I think 
the dialogue is excellent. I think we should hear it.
    Mr. Young. Mr. McDade, you are recognized for 5 minutes. 
You may yield your time any way you like.
    Mr. McDade. Go ahead, John.
    Mr. Hamre. I would just like to start by framing a brief 
response and then turn it over to my colleagues.
    First of all, I think the DAWMS study showed exactly what 
Mr. Dicks said, that there is no question that the B-2 is very 
important to the halt phase, and it clearly demonstrates that. 
That is one of the reasons why we consider it such an important 
asset.
    The DAWMS study went beyond it to say would we get more 
benefit if we had more of them, and if we were to do that, what 
would we give up and how much would be lose in doing that? I 
think that becomes this analytic issue, where we will have some 
dispute.
    Now, Mr. Dicks----

                               FORCE MIX

    Mr. McDade. He asked you a very specific question about 
TACAIR and bombers. He gave you numbers. Respond to that. Are 
you claiming you have a balanced program?
    Mr. Hamre. Sir, first of all, we did in this analysis--and 
Dave McCloud led it--I think they did 1,500 runs on the best 
models we have. Are they perfect? Heck, no. Should they be 
better? Yes, absolutely.
    Mr. McDade. You gentleman are responsible for the resource 
allocation, and the gentleman from Washington asked you, what 
was the number, $350 billion?
    Mr. Dicks. That is about what it was. Maybe with the cuts 
in the F-22, it is going to be less. But there is zero in 
bombers, I hope some in weapons. We have to weaponize the 
bombers. We are buying no additional bombers. There is no 
bomber program for the future. We are investing all in TACAIR.
    Mr. McDade. Let me reclaim my time so I can ask a question.
    You all agree that the number $350 billion is the number in 
the ball park for TACAIR?
    Mr. Hamre. It is down to about $290 billion now because of 
changes we made in the QDR.
    Mr. McDade. What would you describe the bomber?
    Mr. Hamre. The investment for the bombers is for upgrades 
for the existing fleets.
    Mr. McDade. $290, $300 billion in TACAIR?
    Mr. Hamre. Yes.
    Mr. Dicks. And zero for bombers.
    General Hawley. You have to look at the balance over a 
period of time. If you look at investments in other systems and 
bombers in the eighties and nineties, you will find the 
predominance of our investment has gone into bombers and 
airlift within the Air Force. That is when we equipped the 
bomber force. We bought the B-1, we bought the B-2. We invested 
large sums in modernizing those and bringing them from the 
nuclear era into an era where they can provide the robust 
capabilities we need from the bomber force.
    Beginning around the turn of the century, we will begin 
reinvesting in the fighter force. That is why there appears to 
be an imbalance, if you just take one slice of time. I think 
you have to look at this over the decades that it takes to 
build and shape a force.
    Mr. McDade. That is a look back. We are trying to look 
forward. The purpose the hearing is to say, what are we 
supposed to do tomorrow?
    And while looking back, General, I agree and appreciate 
what you said, because I was here when all those programs came 
through. But what the gentleman from Washington is saying is, 
we look forward and see a ramp-up in TACAIR and a flat or 
perhaps ramp down, whatever.
    General Hawley. It might be interesting to correlate that 
ramp-up with the age of the weapons system in the inventory and 
being replaced.
    Mr. McDade. You define the comparison any way you want. I 
don't want to go back and hear about what we did 20 years ago. 
I wanted to talk about what we are going to do in the next 10 
years.
    Would you describe it that way? What is the allocation of 
recourses that makes you comfortable that we are spending the 
right amount of money on the bombers compared to TACAIR for the 
next 10 years out?
    General Hawley. I think studies like DAWMS highlight that 
this produces a balanced force structure. Certainly as I try to 
do my job in supporting the needs of the CINCs, responding to 
their requests for support, this looks like a balanced force 
structure to me.
    If we said we want less fighter force in order to support a 
larger bomber force, I would have to say no to the CINCs for 
their request today. I am not in a position today where I have 
to say no to the CINCs on any bomber issues. So I think from 
the CINCs' perspective, at least as I see their demand for 
forces, we have a balanced force that satisfies those 
requirements today, and this program will sustain that balance.
    Mr. McDade. Does anybody disagree with that?
    Mr. Hamre. May I add, sir, that I think Mr. Dicks is right, 
that bombers, long-range bombers, are enormously helpful in 
that halt phase, as are all aviation assets, frankly. But there 
are other things that tactical aircraft do that bombers cannot 
do. It was a much richer mix of requirements that the generals 
are facing and why it leads them to their conclusion.
    Mr. Young. The gentleman's time has expired.
    The gentleman from California now has 5 minutes, and he may 
use it to continue this discussion.

                    CHALLENGES TO THE UNITED STATES

    Mr. Lewis. General Hawley, when you talked about our not 
spending money on the fighter force and we are building up the 
bomber force, during that very time we were moving forward with 
the F-15 and the F-117, so I wonder about that. Clearly, there 
were expenditures there. And Norm is saying there is zero in 
terms of bomber focus looking forward.
    I might remind you that the building did not want to go 
forward with the numbers of F-117s that eventually we procurred 
to. It was Senator Nunn who drug you all, kicking and screaming 
down the halls, and following our experience in the Gulf with 
the F-117, the halls couldn't be happier about the numbers of 
aircraft.
    It is of great concern to me that we try to use that sort 
of background perspective as we look forward.
    The halt phase is critical, in my mind's eye. If you think 
it is critical, what kinds of wars are we likely to fight in 
the coming two decades, and is that halt phase likely to be 
required in a very short time of notice? And, if so, then it is 
fundamental.
    So tell me, what are we going to face? What is the real 
challenge from? If you can't answer that, why are we here?
    General Hawley. We have some scenarios in DAWMS that would 
be enlightening.
    General McCloud. DAWMS did look at various options in major 
theater wars in northeast Asia and southwest Asia. We did 
excursions to try to address the issues that Congressman Dicks 
alluded to. We did lock out various forces from a theater to 
see the role that the bomber would play and how it would play 
best. We locked out naval tactical air. We locked out Air Force 
tactical air. We locked out the combination of the two at 
various levels from 10 percent all the way up to 90 percent. So 
we got a good feel for where the bombers played.
    He is absolutely right, the bomber plays heavily in the 
early halt phase, and it is a critical phase to play. It comes 
with the stealth precision.
    Mr. Lewis. I know you have all kinds of scenarios. But in 
terms of the real challenge to us in the next 2 decades, what 
is likely in terms of our needs? We are not going to have the 
wonderful notice that we got in the Middle East last time. A 
lot of people observed all that, I can tell you.
    So assuming that the first 2 weeks are not automatically 
available to move troops, et cetera, et cetera, how important? 
What priority is this? Should we shift the priority, assuming 
that?
    General McCloud. Sir. I think it gets back to balance. We 
have to be prepared for that; we have to be prepared for the 
options of short warning. We don't think that will happen, but 
if it does, we ought to be prepared for it. The bombers play a 
central role in that.
    Mr. Dicks. Will the gentleman yield?
    Mr. Lewis. Just a moment. Let me just kind of interrupt you 
myself. There is little question within the building as you 
talk about a ``balanced force,'' if you move in the direction 
of saying we need more B-2 stealth assets, that has an impact.
    The National Training Center for the Army is in my 
district. I know how they get excited about discussion like 
that. We are talking about peace maybe in our time or not 
having peace in our time. What is the priority and what is the 
likely reality of serious confrontation ahead of us?
    Let me add to that, General Hawley, 2 years ago we had a 
panel like this. About that time, I was red hot for the B-2 at 
that point, and I began backing off. The panel sat there and 
said we don't need any more B-2s. The only guy who said we 
needed more was sitting in your chair, General Loh, the force 
provider. He said we need more. Why did he say it and the rest 
didn't then?
    General Hawley. I think General Loh and I would probably 
look at this through very similar eyes.
    Mr. Lewis. I beg your pardon?
    General Hawley. General Loh and I would look at this issue 
through similar eyes, because we face the identical problem.
    Mr. Lewis. Let me back you off one more time. Yesterday I 
was having a discussion with another colleague of mine on 
another Committee. The subject was F-18E/F or C/D. The 
discussion was, if we back off of the E/F, it will save us $18 
billion and that will get us to the Joint Strike Fighter 
faster.
    Friends, we are in this together. We need advice and 
counsel that reflects your best judgments, not balanced force 
to keep one portion of the force happy. I am concerned we are 
getting a lot of that.
    Mr. Young. The gentleman's time has expired for this turn.
    Why don't you go ahead and somebody respond to the issue 
Mr. Lewis raised.
    General. Hawley. I will try. I think the analysis and 
studies we keep doing over and over keep yielding a similar 
result.
    You referred to General Loh's support for the B-2. Believe 
me, I support the B-2. I think the B-2 is a marvelous weapons 
system that fills a very important role within the ACC force 
structure we provide to our fighting CINCs. The issue is not, 
would I like more B-2. I would love to have more B-2s. I would 
love to have a bomber force that is all B-2s. But I don't have 
enough budget authority to buy a bomber force of all B-2s.
    Therefore, we have developed a mix that includes 21 B-2s, 
95 B-1s, 71 B-52s in the out years that will satisfy our 
overall requirement within the constraints that we face in 
terms of our obligation authority for the budget. We think that 
is the right balance.
    Congressman Dicks pointed out this is a great enabler. It 
is an enabler. That is how we will use it. It will be used to 
leverage all of the other capabilities that we bring to the 
fight. it will allow our B-1s to get in and do that heavy 
lifting that the B-1 is so good at.
    Mr. Chairman, you commented on the B-1 in your opening 
statement. ------. And that capability will be leveraged by the 
B-2, which will be able to go in and take out command and 
control structures and take down defenses and open the door for 
that heavy lifter, the B-1.
    Meanwhile, the B-52, which will initially do standoff work 
with its CALCM capabilities and its HAVE NAP, then it will get 
in. After we have taken down those defenses, using the B-2 and 
our other high end weapons systems, it will be able to get in 
and do that heavy bombardment mission which will be so crucial 
in the halt phase.
    But we will also need air superiority and need to provide 
that over the battlefield, because non of these weapons 
systems, to include the B-2, can be used with impunity in a 
high threat environment. So we have got to be able to control 
that airspace. We will need to be able to deliver sustained 
firepower against a whole array of targets. That is what the 
fighter force will do as it comes in and is able to generate 
those high sortie rates of two to three sorties per day per 
airplane, be able to attack that broad array of targets that we 
really can't get out of the bombers.
    So this balance that we have created within the fiscal 
constraints that we have been given, frankly, is about right, 
and it will produce a modern bomber force, it will by 2010 or 
2015 produce a modern fighter force.
    We have already begun to modernize the airlift force so we 
will have the mobility assets that we need with the C-17 and 
with our sealift capabilities to get these people to the fight 
in a prompt and timely way and we will be able to get our job 
done. While we are doing those opening days, we will be able to 
launch bombers from the States and deliver that long-range 
combat firepower to the theater. But that comes at great cost. 
------. This is tough work, we do, and it requires a balanced 
and a flexible force that can satisfy a broad array of 
contingency requirements.
    As we have gone through and used tools like those imperfect 
models that the DAWMS study used and that have been sued in 
other ways, but they do provide insight, though they are not 
perfect and you can't just take the results on a spreadsheet 
after analysis like that and say, there is my force structure, 
you have to apply judgment to it.
    That is, I think, what you pay us to do, is to bring our 
judgment to the table and the judgment of people like Dr. Hamre 
who have been involved in this business for a long time, as 
well as your own judgment. And out of that, collectively, we 
produce a force for this country. I think the one that has been 
proposed is a balanced force that will do a pretty good job of 
satisfying our national security requirement.
    Am I a bomber advocate? You bet I am. I am not a fighter 
general, I am an airpower general, and my job is to deliver 
combat airpower for our warfighting CINCs. I am supposed to 
make sure that that force is well trained, well equipped, well 
organized, and capable of responding to those needs on short 
notice, and that is what they can do today.
    And they do it because over the years, together, between 
various administrations and this Congress, we have delivered a 
very capable set of airpower forces for the country. They are 
ready to go to war today and fight effectively, and the B-2 
will be a tremendous addition to that. It is now committed to 
the SIOP. It is now available to the CINCs. I made that 
available on the first of January. ------. A tremendous 
capability. And we will be able to use that as an enabler to 
help leverage all of our other investments.
    Mr. Dicks. I just want to point out, we had to provide that 
GATS/GAM over Air Force objections.
    Mr. Young. Thank you for that excellent response.
    Mr. Skeen, you are recognized for 5 minutes.

                           B-2 and Halt Phase

    Mr. Skeen. Thank you, Mr. Chairman. I will not use all of 
my time.
    I was very interested and engaged with the treatise that 
General Charles Horner came out with a few days ago in which he 
analyzed our experiences in that Desert Storm operation and 
what we didn't learn, and I was very impressed, with having 
known him well. I think the crucial point that he made was the 
time limit for the halt phase, and his summary was that the 
only kind of response we had that would be adequate would be 
the use of B-2s.
    I know we need the DAWMS study. The critical thing is, how 
much time do we have for the next go abound in these situations 
to respond? ------ which becomes more and more tackier day by 
day. When you are talking about that. ------. You folks have 
done a great job, and I know you do your job well or you 
wouldn't be where you are today, but there is a lot to be said 
for the allocation to the kinds of Air Force resources. So put 
us down as second-base umpires. We are not the greatest, but we 
are concerned. We appreciate the dialogue that you have given 
us today.
    Thank you.
    Mr. Young. Mr. Hobson.

                        Cost of Bomber Aircraft

    Mr. Hobson. Thank you, Mr. Chairman.
    I have some concerns about how we pay for things, since I 
sit on the Budget Committee as well as this Committee. I also 
have some district concerns because we do a lot of stuff at 
Wright-Patterson in may district. And I remember General Loh 
when General Loh was at Wright-Patterson, and he inherited 
that.
    What bothers me is this configuration that we have got 
ourselves into. You have the B-1 that we are going to spend all 
the money on. I am worried not about the next 10 years alone, I 
am worried further out, because you aren't going to have B-52s 
around. Well, you have them longer than I think we all thought 
we would have them. That is going to go by the board.
    You have the Navy that doesn't have any stealthy aircraft 
now, that I know of. And excuse me, Duke, for talking about the 
Navy. you have a lot of assets there that have a certain need 
for a lot of money.
    We have got all these airplanes, all these fighter 
airplanes we are building, I understand we want to have it all, 
but I am worried. I don't have quite the passion that Mr. Dicks 
has, but have four grandchildren that I am worried about out in 
the future of this threat and of not having the capability to 
stop that early threat.
    I want to figure out how we can pay. If I had my druthers, 
I would like to see us reconfigure circumstances and 
reconfigure so we have that ability to stop that initial threat 
better long-term. I think you can do it today. I think you 
probably have got the capability that you can do that today. 
but I am worried when you don't have some of this stuff out 
there. And I want to ask, can't we reconfigure so we can pay to 
keep this line open and to keep this technology moving forward?
    The other question, sir, I would ask is, was he right? We 
always get blamed for forcing people to buy things. Was he 
right? If it did work in buying that system, over the objection 
of the Air Force, why are we being forced to second-guess the 
Air Force in how we pay for this stuff?
    General Hawley. It is true the Air Force was not on board 
buying GATS/GAM and it was issued to us. the reason was because 
the air Force, I think, viewed it as an interim capability and 
our judgment was that we would prefer to take a risk for a few 
years not having that precision capability, given that JDAM was 
going to be delivered this year, and we were willing to do 
without that capability for the 2 years that the GAM gives use 
a B-2 precision capability.
    There was a difference in judgment, and the wisdom of the 
Congress said we think we need it sooner. So we took it, we 
have implemented it, we have it on the airplane today, and we 
have committed it to the warfighting CINCs. So we honor that 
judgment. It is now available to the CINCs. As I said, I made 
it available to the CINCs on the first of January.
    Mr. Hobson. Where is----
    General Hawley. Joint Direct Attack Munition is essentially 
the same weapon as the GAM. It will be procured in much larger 
quantities and be much cheaper, and therefore GAM will be 
phased out beginning this year as we begin to take delivery of 
block 30s which begin this summer, and those will be delivering 
JDAMs, while the block 20 deliver GAMS. So we will have a 
period of time where we will have a unique capability that we 
wouldn't have had it the Congress hadn't directed us to buy the 
GAM.
    The difference in opinion really lies in the area of risk. 
Our assessment was, I think, that we should tolerate the risk 
and save the money, and the Congress' judgment ran counter to 
that, so we incorporated it, trained our crews to it, and 
demonstrated it very effectively.

                             B-52 Aircraft

    Mr. Hobson. Answer my other question, sir. How do we long-
term reconfigure when we don't have the B-52? You are going to 
have B-1s that people don't really fly very much to do things 
with when we have had past engagements, which may or may not be 
there. What do you have? You have 21 B-2s. That is all you have 
in the future to cover the world out. You don't have anything, 
as far as I know, on the drawing board to replace the B-2s.
    General Hawley. Okay, I think I can answer that. Number 
one, the B-52 will be around a long time. I am not sure that 
there is a retirement date for the B-52. It is a very well 
constructed airplane and will fly for a long time, and we have 
no projections to retire it. So it will be a significant part 
of our bomber force structure for the next 3 decades.

                      BOMBER WEAPONS CAPABILITIES

    The B-1, although it has not been employed in combat to 
date, that is because it didn't have conventional capabilities 
that were valued by the CINCs. Now it has that capability to 
deliver sensor fused munitions. We just delivered that 
capability this year. It will soon have the capability to 
deliver JDAMs, just like the B-2 did last October.
    So it will have that capability, and in fact for most 
munitions in that new family of near precision capable 
munitions, the B-1 will carry significantly more than any of 
our other bombers. I call it our heavy lifter. That is because 
it has the largest payload of any of our bombers. Once you can 
enable its access to the theater with systems like the B-2, 
then the B-1 what can really bring firepower to bear. I could 
give you some examples.
    The B-1 will deliver 24 JDAMs, the B-2 delivers 16, and the 
B-52 12; the B-1 delivers 12 JSOWs, the B-2 will deliver 16, 
and the B-52 will deliver 12. The B-1 will deliver 24 JASSMs, 
the B-2 16, and the B-52 12.
    So this family of weapons systems gives us a very effective 
balance between that high-end system that can open the door, 
the high-speed penetrator that can deal with medium threats, 
the B-1, and then the standoff weapon system, the B-52, that 
can eventually be rolled into the fight.
    Mr. Hobson. Don't you have to have a whole lot of other 
weapons out there to protect the B-1 and the B-52 that you 
don't have to have with the B-2?
    General Hawley. Our tactics for employing these weapons, we 
would employ the B-2 against that family of targets that are 
heavily defended and that the B-1 can't get access to.
    There is another whole class of targets that are less well 
defended that the B-1 can deal with. So we will use the B-1 to 
deal with those, and then other targets once the systems like 
the B-2 have taken down the defenses.
    Then the B-52 is a standoff weapon initially, and we will 
use it from outside the threat envelope and launch standoff 
munitions. Once the defenses are beat down, then it will be 
able to go in.
    So this is an array of threats and an array of targets both 
geographically and in the dimension of threats and over time, 
because over time, the complex of the threat will change as we 
defeat some of those systems and take down both of the command 
and control structure that supports them and the weapon 
systems.
    Mr. Hobson. I will ask a last question, and that is, when 
Secretary Perry was here, I thought he gave us a much shorter 
date on the B-52 than you are giving us.
    Mr. Young. Mr. Hefner.

                         REMARKS OF MR. HEFNER

    Mr. Hefner. Thank you, Mr. Chairman.
    I feel inadequate, I don't feel the passion that I have 
heard here, but there are some things that bother me. I 
remember many years ago we sat in this room and we were told we 
can have the B-1 and we can also have the B-2, and going ahead 
with the B-1, it will not delay the production of the B-2; we 
don't have to skimp on either one of them; we can have them 
both; we can have a full contingent of everything.
    We were sold on that concept, and we did the B-1s, and I 
have been to some places, and the B-1, to my knowledge, has not 
taken part in any significant programs that we have had in the 
Persian Gulf or anywhere else.
    If I understand you right, you said, the B-1 is going to be 
downgraded to where it won't be counted in the agreements we 
make with the Russians?
    General Hawley. Right.
    Mr. Hefner. So we spent billions of dollars to fix the 
thing, and now we have downgraded it where it won't be counted.
    Talk about the long-range plans. One of the things that has 
always bothered me is, I don't have any manufacturing 
facilities in my district, per se, but it is a lot more sexy to 
talk about ships and planes and things like that. But we have 
got a real problem as far as quality of life for our men and 
women that are manning these systems. We have got a shortfall 
that goes 50 years out into the future.
    It seems the argument changes every few years. I remember 
back in the beginning, if you weren't for the B-1, you weren't 
for God and country and apple pie. That was the thing, the B-1: 
We have to have the B-1, and don't give away the canal. That 
was on everybody's political mind.
    I just wanted to make one other point--somebody, Norm, 
talked about the halt phase, and that is very important. I 
understand that. But I don't foresee that we would have a real 
threat in the future that would have to deal with the halt 
phase.
    But just say we did. The overall plan that you have put 
into effect, I feel sure, dealt with the halt phase, but you 
have got to have some other stuff to back up after you first 
initiate the halt phase. If you go too far the other way, would 
that take away some of the effectiveness of the overall 
operation?
    Does that make any sense?
    General Hawley. I think that is my argument for balance, 
sir. We do need that balance, so you can deal with the halt 
phase, and then you can have a sustained capability to engage a 
determined foe after that.
    As to the B-1, I quibble with the word ``downgrade.'' We 
rerolled it.
    Mr. Hefner. I was oversimplifying it.
    General Hawley. In fact, we have significantly upgraded the 
capabilities of the B-1 in the conventional area in order to 
give the CINCs that tool they need during the halt phase to put 
a lot of firepower on target quickly, which it will do along 
with the B-2 and B-52. So I would quibble with that a little 
bit. And it has been in the fight. It is just that it was 
unseen.
    During the Gulf War, we took a number of B-52s off alert 
and the nuclear commitment in order to make them available to 
do conventional work in the theater, and we put the B-1 on 
alert to back them up. At that time, that is what it was best 
at, the nuclear mission. So it freed up other forces.
    Mr. Hefner. It never flew any missions.
    General Hawley. It didn't fly any missions.
    Mr. Hefner. I guess I am not knowledgeable enough about the 
strategic planning for future wars, but one of my big concerns, 
having been on Military Construction for all these years, my 
big focus has been on quality of life for our guys that man 
these sophisticated weapons. and I guess people get tired of 
hearing it, but to me, it is a little bit ridiculous when we 
talk about the most sophisticated weapons that man could 
conceive and you have still got guys living in conditions that 
they have to walk across an unpaved parking lot to take a 
shower and living in facilities that were, some of them, around 
in World War II.
    To me, that is just about as critical as all the other 
stuff. If you don't have retention and you don't have morale, 
then it is not going to make that much difference; people are 
not going to be that committed.
    I don't have an argument with your--I don't know about your 
models or what you have used or what-have-you. Norm is our 
expert here. But I am concerned that we should know where we 
are going, because our money is so limited, it is about dollars 
any more, and we have got to make sure that we spend them in a 
prudent manner in my view.
    Mr. Hamre. May I just very briefly say I think it is very 
important you bring that up. This is not a decision about 
spending $300,000 in fiscal year 1998. This is really about, 
are we prepared to enter into a $20 billion commitment over the 
next 15 years, and what is it that you have to give up if you 
want to go into that, because we feel our top line is 
constrained.
    We just have gone through the budget negotiations that 
clearly indicate we have a constrained top line. Therein lies 
that very painful choice. There isn't a person sitting in this 
room that doesn't want exactly the same thing. In the next 
conflict, we want our people walking off the airplane carrying 
a flag, and not carried off an airplane under a flag. Everybody 
wants that. But that means we have to go through that very 
painful process of looking at all of the things that the 
Department needs and deciding what is an appropriate balance.
    This was a hard decision. It didn't come easy. We would 
much rather have more B-2s, much rather have barracks. We still 
have guys living in deplorable conditions in Korea, and it is a 
shame, it is a real shame. That is all of the things that we 
had to struggle with. That is why we didn't come to this with 
any joy. This was a hard decision.
    Mr. Hefner. I am glad you mentioned Korea.
    Just one second. General Ladd, who was at Fort Bragg and 
Korea, came before this Committee and begged and pleaded, and 
we gave $40 million to upgrade the living conditions in Korea. 
That was atrocious, expecting these people to be on the front 
lines. And we can talk about all the sophisticated weapons, but 
there is a human element out there. They are counting on us to 
look after them.
    I yield back the balance of my time.
    Mr. Young. Mr. Bonilla.

                       QUADRENNIAL DEFENSE REVIEW

    Mr. Bonilla. Thank you, Mr. Chairman.
    I would just like to start out by concurring with your 
opening statement, Dr. Hamre. I am proud this Committee is 
dealing with a serious issue here rather than some of the 
things reported on the evening news each night. I am convinced 
that a lot of that initiative results from people who are, 
frankly, regularly trying to make a mockery of the military, 
and I find it disgusting. I am delighted that this Committee 
has chosen to discuss this very important issue.
    It also ties into what I believe philosophically overall. 
There are a lot of other agencies in Washington who, quite 
frankly, waste and squander billions of dollars. No one is out 
there asking for a comparable QDR for the Commerce Department 
or the Energy Department or for the bureaucracy of the 
Education Department. I wonder why we don't have a call out 
there for comparable QDRs on some of these agencies.
    It seems like the agendas that the Dan Rathers of the world 
each night have are to constantly hammer the Defense Department 
and constantly hammer one other area, and that is the 
Agriculture Department. But no one will go in and do comparable 
reporting on HUD or Energy or Commerce or some of these others. 
So that bothers me, frankly, not just as a Member of Congress, 
but as a citizen of this country.
    Unfortunatley, we are faced with having to make decisions 
within the Defense Department as to what we are going to pay 
for in the future.
    The chairman asked a good question in his opening statement 
that I would like to have elaborated on, if I could, and Dr. 
Hamre almost started to answer this a minute ago. But what 
might we have to give up to fund an expanded B-2 program, and 
are the trade-offs worthwhile? What are we talking specifically 
about--I am talking about a hypothetical reality that we may 
face here.
    Are we talking about eliminating, cutting back on, another 
aircraft like the F-22 or the joint strike fighter, or is there 
something else with a comparable pricetag that we could look at 
if we choose not to go with the recommendations of the QDR?
    Mr. Hamre. May I just make a very general comment, and then 
I would ask Dave McCloud to speak to what we did in the 
analysis that led to the recommendation in the QDR.
    The easiest money in town is other people's money. It is 
always easy to say I would like somebody else, the Air Force 
would love to have two fewer Army divisions so they could have 
more F-22s, or the Army would love to get rid of TACAIR so they 
could have more divisions.
    We all ride our hobby horse around a little bit, but you 
have to get off it and sit down and say how does it all land 
because I have to pay for what is important for me. And when it 
goes beyond the resources I can take care of myself, I have to 
come in front of everybody else and make a good case for it. 
You are absolutely in no different situation that was the 
Secretary when he had to look at all of this.
    Could we find room in the budget for the B-2? Of course we 
could. The problem is giving things up for it. And all those 
other shortfalls we have got, and we have got them all over the 
place. We really did look at alternatives. Let me ask Dave to 
talk about it, because the most important thing, as I say, is 
you have to look at the opportunity costs. That is what led to 
us.
    David, General McCloud, if you would speak to that.
    General McCloud. We looked at major force structure as we 
went through the study, and we started out with, if you take 
fighter wing equivalents, roughly 1,800 airplanes for example, 
we looked at one, we looked at two, we looked at four. We 
looked at carriers: Take out a carrier and its associated air 
wing, take out two carriers and its associated air wing. We 
looked at B-1s: Take out all of the B-1s, and that is an apples 
to apples trade, so you could get an understanding.
    In each case what we did, as I say, if we take out that 
force structure today to pay for additional B-2s, what 
happened? The general trend continued through all of those 
looks. One was, as you take it out, as you free up monies to 
pay for the B-2, you lose that capability. Each of those assets 
I talked about--wings, carriers, bombers--has different 
characteristics and capabilities, but when you take it out, you 
lose that for a period of time. In general, that was a decade 
or more.
    So if you retired all the B-1s tomorrow, freed up the money 
to pay for additional B-2s, by the time you get the B-2s on 
line to take up that capability gap, it will have been roughly 
10 to 14 years, depending on which of the comparisons you are 
talking about.
    Mr. Dicks. Will the gentleman yield to me out of my own 
time, out of my next round of time?
    Mr. Young. The gentleman's time has expired.
    Mr. Bonilla. I have no time.
    Mr. Dicks. Could I just ask one question on this point?
    Mr. Young. Go ahead. We will deduct it from your next 
allocation.

                           PAYING FOR THE B-2

    Mr. Dicks. This will be very brief.
    That isn't how I see this. What you would say is, maybe we 
won't buy something out there; instead, we will buy this. Why 
couldn't you do it that way? Why do you have to say instead of 
taking something out of the force structure right now, that you 
already got--and F-16s would be the top of my list, by the way, 
if you wanted to look at something that didn't have a 
significant rule in the Gulf War--why not just say we are not 
going to buy something that is nonstealthy that can't penetrate 
and we are going to buy something that is stealthy and will 
work? Why didn't you do it that way?
    Mr. Hamre. I think it really is a cash flow problem, sir. 
We have got to pay for $1.5 billion every year for the next 8 
years in order to buy the B-2, and I can't simply use future 
weapons systems not in the budget now to pay for that. I have 
to pay for it right now. The only way to pay for it right now 
is with force structure, frankly.
    Mr. Dicks. We are talking about $1.5 billion over 6 years. 
It isn't like a lot of money, John. That isn't how you do it, 
John. You take it out of lower priority stuff and make room for 
it.
    Mr. Young. I would have to say we are barely touching the 
surface of a lot of issues members are going to get to. We have 
to stick to the 5-minute rule.
    Mr. Dicks. Take that out of my time. This is a crucial 
point, and I wanted to get to it.
    Mr. Young. Mr. Nethercutt.
    Mr. Nethercutt. Mr. Chairman, I came late. I know Mr. 
Cunningham and Mr. Istook were ahead of me. Let me come back 
after they finish.
    Mr. Young. That is fine with me.
    Mr. Istook.

                           B-2 Delivery Dates

    Mr. Istook. Thank you, Mr. Chairman.
    I wanted to ask really about two particular points. One 
relates to this trade-off issue that you are discussing, and 
that was in your testimony, General McCloud. If you could 
quantify for us the current plan to finish off the purchase of 
the B-2s, what are the delivery dates and operational dates, 
because you thought it was a crucial factor. How long would it 
be before additional bombers were delivered or operational? I 
would like to have that information fleshed out.
    Also I realize that sometimes that is a variable, but I 
realize it is not as variable when you are building bombers as 
when you are building fighters.
    The second point to which I would like to get a response: 
We are talking about the capabilities of 16 operational B-2s 
out of 21 total, but I haven't heard anything mentioned about 
what happens when a system has that few aircraft. If you lose 
one bomber, that is 6 percent of your operational capability.
    I haven't heard how that was accounted for in your study. 
When you place assets at risk, even though this particular one 
is designed for risk, I don't know if the word is defend 
itself, but how do you make it less susceptible to being lost? 
Nevertheless, I haven't heard anything that factors in what 
happens when you have such a small number when you have any 
losses whatsoever. Doesn't that really expand a lot of your 
risk and therefore diminish a lot of the potential capability 
that you are going to have?
    I would like to hear those two things accounted for on the 
delivery and operational dates and potential losses.
    General McCloud. In the delivery and operational dates, 
basically let me take an example. I think that will help 
outline it.
    If we retired all the B-1s tomorrow and we started freeing 
up the money to pay for additional B-2 production, those monies 
freed up immediately would mean the first airplane delivery 
would be roughly 2003.
    Mr. Istook. First additional airplane.
    General McCloud. The first additional bomber, 2003.
    Could Northrop do a different profile? They probably could. 
We believed this was a reasonable profile to do. So part of 
that, the up front cost there is associated with essentially 
putting the production line back together, gearing up, getting 
the work force in place, starting that process. It takes time 
to build these very complex airplanes.
    Mr. Istook. Of the 21, when is the last delivery date on 
the current profile?
    General McCloud. What I was describing for you was B-1s 
versus B-2s. In this case, the worth of the B-1 frees up enough 
money to buy 16 B-2s. One fighter wing equivalent frees up 
enough money to buy a certain number of B-2s. We have 21 B-2s 
in place today.
    Mr. Istook. 21 have not been delivered?
    General McCloud. Correct.
    Mr. Istook. When is the last delivery date?
    General Hawley. As you know, they are going through an 
upgrade program. In the year 2000, we will have all the 
airplanes.
    Mr. Istook. And as far as the issue I raised about what 
happens when you lose even a single one, much less if you have 
multiple losses?
    General Hawley. That is essentially what the five BAI 
airplanes will have to cover. I am not the expert here, but I 
have a note passed to me that says ------ DAWMS, during the 
halt phase, ------. If we fought a major conflict and used this 
conflict, and if the models are right--and I am not here to 
defend models, but they are the best we have got ------ you 
would have two left to support your tests and your depot 
program and so on and so forth.
    Typically in most of our force structure, we program 10 
percent addition for BAI, so you would still have 10 percent 
left at the end of that campaign.
    Mr. Istook. That is modeling one major engagement ------.
    If, for example, you had a scenario where there are two 
engagements----
    General Hawley. That was two, sir.
    Mr. Istook. That had two engagements, different parts of 
the globe, using the B-2 for halt in both of those?
    General Hawley. Right.
    Mr. Istook. ------?
    General Hawley. ------.
    Mr. Istook. Thank you.
    Mr. Young. Mr. Sabo.

                          B-2 MAINTAINABILITY

    Mr. Sabo. Thank you, Mr. Chairman.
    Welcome. I have a question that doesn't relate to the 
question of whether we should have more or not, but I am very 
serious about General Hawley's testimony on the operations of 
the B-2 which says in effect, if I understand it right, that 
they can only be used once a week? So it true that the 
maintenance after a flight requires so much time, so they are 
only used once a week?
    General Hawley. Yes, sir. The way we are operating the 
airplane today is, we will fly two or three times a day for 
training, and then we stand it down for as long as necessary. 
As it turns out, necessary is about six days to make sure that 
we sustain the stealthy characteristics of the airplane to the 
levels that are required to support our commitments of General 
Habiger.
    Mr. Sabo. The turnaround is seven days. What is it for a B-
52 or B-1?
    General Hawley. We don't have that problem with the 
nonstealthy airplanes. This is a function of the materials used 
to deliver the stealthy characteristics of the airplane. Many 
of those have significant cure times. We have some material on 
the B-2 that must cure for up to three days. If a blemish 
occurs, and they occur on every flight, what we try to do is go 
in and try to restore the finish, if you will, of the airplane 
to like new conditions so that it retains the fullest measure 
of stealth that we can deliver to the CINC in the event that he 
should need it.
    General Habiger. If I could add, my requirement for the 
nuclear was plan is to have ------.
    That is what General Hawley referring to. In order to get 
------, he has to go through this maintenance program on the 
composites in the wing and that sort of thing.
    Mr. Sabo. What is the time required for the F-117?
    General Hawley. The F-117 has similar materials. It is a 
much smaller airplane, of course, and it has a different nature 
of material. We use a lot of what we call putty on the F-117s. 
When it comes back from a flight, a crew chief can actually 
repair the F-117 using this putty and get it back in the air 
pretty quickly, so we don't have the same kind of standdown 
requirement. But it is a whole different generation of 
material.
    One of the things we are trying to do with the B-2 is 
upgrade those materials, and in fact we are migrating much of 
the materials technology out of the F-22 program and the joint 
strike fighter program in order to gradually upgrade the 
materials so we can reduce this need for long standdowns after 
flight.
    Mr. Sabo. What is the projected turnaround on the F-22 
versus our current fighters?
    General Hawley. The requirement for the F-22 is to be able 
to sustain on the order of a 3.0 sortie rate per day. It is not 
supposed to degrade in this day. That is why it is nice to 
migrate those materials into the B-2 program so over time we 
can upgrade the surface finish on the airplane to be more 
durable.
    Mr. Sabo. Is the material on the F-117 better than the B-2?
    General Hawley. Different. I think you are talking 
different generations of stealth technology. The F-117, of 
course, was essentially our first stealthy airplane, so in fact 
there are five different kinds of 117s. If you really went out 
and looked at them, you would find five different sets of 
materials on that fleet of barely 40 airplanes.
    So you have got--as that technology matured, we changed the 
surfaces on the F-117. The B-2 was delivered with a next 
generation technology, and then, of course, as we have invested 
in further stealth technologies in both our technology 
programs, the F-22 and JSF, we will further improve the 
technologies.
    Another thing we use is a tester. One of the difficulties 
we have is, it is hard to tell whether a blemish is, in fact, a 
serious problem for the airplane. You may have after a flight 
20 blemishes.
    If I were to use an analogy, any of us who fly airplanes, 
we look at what we call the 781, the airplane forms, before we 
fly. On the back page of the 781 is a list of discrepancies on 
the airplane. They have little red dashes next to them which 
indicate it is okay to fly with them.
    Our problem today is, when we send a crew chief out to look 
at the B-2 after it lands, he really doesn't have any way, he 
or she, to tell whether a blemish is a red dash, which you can 
fly with, or a red X, which is grounding and has to be 
repaired.
    So our policy, in order to make sure that we have the most 
stealthy aircraft that we can provide to the warfighter, is to 
fix them all and fix them all immediately after flight. So that 
is what has generated this kind of fly one, maintain six.

                            F-117 Production

    Mr. Sabo. When was the last F-117 produced?
    General Hawley. I would have to get back to you with that 
answer. It was in the early eighties.
    Mr. Sabo. That was before most of the B-2s were built.
    General Hawley. Correct. The B-2 was in development.
    Mr. Sabo. If the material for the F-117 was better, why 
wasn't that used in the B-2?
    General Hawyley. It is not that it is better, it is 
different. It is an earlier generation, and it is designed 
against a slightly different problem. The B-2 was developed, of 
course, as a nuclear bomber, and it was designed to have a more 
balanced signature reduction than the 117. The 117 was 
primarily designed ------. The B-2 is designed to have a more 
balanced signature ------. So it requires a different set of 
materials, different kinds of technology in order to produce 
it.
     Mr. Young. The gentlemen's time has expired.
     Mr. Cunningham.

                       Quadrennial Defense Review

    Mr. Cunningham. Thank you, Mr. Chairman. You have stated 
that the DAWMS is based on balance, but yet it is disputed as 
not effective. If I was a lawyer, I think I would tear apart 
your argument.
    I looked at the QDR. The QDR was based not on what is the 
real need and the real shortfall in dollars, but was based on 
fiscal constraints, what bang can we get for the dollars that 
we have. I think that is wrong.
    I also know that the QDR is nothing like what went to the 
White House. I know the board members and I talked to them 
individually, and we are going to have hearings on that to show 
the disparity of the preconceived analysis that came out of 
QDR.
    I would take a look and say what is the real problem? First 
of all, why are we in this constraint? Why do we have to phase 
in the difficult decisions that you are making right now?
    First of all, the White House has had a propensity to cut 
defense. Second, BRAC, including the proposed additional BRAC 
rounds cost lots of money upfront. Third, ``defense 
conversion'' is the cry of the left and the way to take DOD 
dollars. Peacekeeping, I even read in the wire service that the 
Southern Command is going to go down and protect endangered 
species in South America.
    Then we take a look at the contingencies in the OPTEMPO and 
the equipment use. And then, last of all, those that want to 
decrease the defense spending have always said we are going to 
do it in the out years, just like the President. We are going 
to do it in the out years. Trust me, we will build it up in the 
out years. But they know good and well there is no way in the 
out years you are going to be able to afford the things that 
you need because of the deficit that you created. And that is 
what the QDR does. It takes and causes the military to cut out 
of its own bone marrow to make up the deficiencies of defense 
spending in the past. And that is upsetting.
    You say it yourself, the fiscal constraints we have, we 
have to operate under. But why do we have those fiscal 
constraints? I think that is the important thing that we are 
not really attacking. What do we do when we have two babies and 
we can only feed one? We kill one baby. That is not very good, 
in my opinion.
    The QDR, you know that Captain O'Grady wasn't even ACM-
trained when he got shot down because you didn't have the 
assets to train him? You take a look at your adversary program, 
it is deficient across the board. You said readiness. These 
kind of things that we need to take a look at and say what is 
the threat and what do we need and identify the dollars versus 
this is what we have got. This is a direction that is totally 
wrong in my opinion.
     When most of us served in the military, we always assumed 
the enemy had more than we thought he did, and that way we 
didn't get caught with our pants down. Now, we are saying that 
the Cold War is over, we are not going to need these assets.
    Well, what if we do? ------. Why? How about the three 
Typhoon-class nuclear submarines that they just dropped and the 
three deep submersibles going down to the bottom of the 
Atlantic using welded and molded titanium? How about the SU-27, 
35 and 37 that is going to be at the Paris Air Show that 
doesn't even give parity to our F-15 and F-14 with the A-10 and 
the advancements we can't even talk about here?
    I mean, we are saying what if. In the meantime, who is 
going to pay for it? You talk about retention, because we can't 
take care of the kids back home. It is not just the airlines 
that are hiring that causes retention problems. You may say 
before a hearing it is okay.
    I go out into the street like you do, and you know who is 
against this study and you know who is against the QDR? The 
flag officers retired, not under the tentacles of the White 
House. They are laughing. They say they cannot believe these 
studies and what they are doing to the national security 
forces. Instead of doing it the other way. I mean, we are 
talking Air Force, we are talking Navy, I talked to ANA, I 
talked to Marine Corps folks, and I guarantee you, General 
Krulak, when he made statements like that in the hearings, I 
was walking out, he had phone calls with OSD and the White 
House before he got out of the building for saying what was 
really needed. So did Admiral Boorda when he was alive.
    I think that is the real concern in these things, we are 
not meeting the threat. We are not talking about what do we 
really need. Rather, we are talking here are the dollars we 
have available. Live with it I think we need to identify what 
are the dollar shortfalls so that we can have the B-2 like the 
Air Force wanted it in the first place, and the B-1, instead of 
getting our kids killed, which is, in my opinion, happening. We 
are not going to have them come back with flags. They are going 
to come back in body bags.
    Mr. Young. The gentleman's time has expired.

                           Budget Shortfalls

    Mr. Hamre. May I make one point. Sir, I missed probably 
half of the last sessions on the QDR because I was spending my 
time up here trying to get a budget negotiation to support the 
President's budget level, and, indeed, we were modestly 
successful, but we failed in the year 2003 budget numbers. I am 
short $6 billion with the budget agreement that was negotiated. 
I would love to have more money. There isn't anybody that 
doesn't feel we couldn't give you a stronger Defense Department 
if we had more money. And the criticism that you lodge, we all 
feel very intently. We are now going to have a defense program 
that will consume 2.9 percent of our GNP. I think that is 
pretty cheap insurance. But I don't think, because we were 
wrestling with it ourselves, there isn't support for more money 
up here on the hill.
    In fact, we have a problem. We spent late into the night 
trying to avoid another $6 billion cut to our budget, and, 
thankfully, all of you were with us, and we won that by only 
two votes.
    Mr. Cunningham. I agree. All I am asking is the White House 
and you and my blue-belly friends here--I say that with 
respect, they know that--but would identify that it is the 
dollar shortfall, not that we have to cut out of bone marrow. 
That is not the issue going out before us.
     Mr. Young. Let me make one brief announcement. Our guests 
have agreed that they could come back at 1 o'clock for a one-
hour continuation of this very interesting hearing, so from 
1:00 to 2:00 we will continue. We will continue now until 
12:00. Most of you indicated you could be back at 1 o'clock. 
The other Members that have already left, we are polling them. 
So that will be our plan, so go now until 12:00, and then be 
back here at 1:00 for another concentrated hour on this issue.
    I would like to yield to Mr. Visclosky for his 5 minutes.

                          B-2 Maintainability

    Mr. Visclosky. Thank you, Mr. Chairman.
    General Hawley, if I could get back to Mr. Sabo's line of 
questioning, I understand the concept that there are different 
stealth materials involved, and that some are better than 
others and that there are different purposes.
    What I am having a hard time understanding is if you have a 
sophisticated aircraft such as the B-2 and it is used three 
times, that potentially it is then on the ground for 6 days.
    General Hawley. We adopted that profile because the 
airplane is not as durable as it was supposed to be when 
delivered. Frankly, our requirement was for an airplane that we 
could fly, turn and fly again, and we did not get that kind of 
durability on the airplanes as they are currently delivered. --
----.
    So we fly the airplane multiple times for training in one 
day. Every time the airplane flies, defects occur. We have bird 
strikes, at low altitude we have a lot of turbulence. The 
turbulence has tape backs. Believe it or not, there is tape on 
the surface of this airplane. Other defects occur. So after it 
recovers from all that training activity, some of which is 
tough, and do landings which are tough on the airplane, all of 
the training requirements for the pilots, then it has some 
defects.
    One of our shortcomings with the B-2 and with the F-117 
today is that we don't have a tool that I can give to my crew 
chiefs so they can assess the importance of those defects. So 
they really have to assume that every defect must be repaired 
in order to assure the signature of the airplane for the 
mission. So we go repair them all. And it takes us about 6 
days.
    It doesn't take 6 days of steady work. They go repair a 
piece of the airplane and it requires the application of new 
tape or new sealant or whatever, and then it has to cure for 
some period of time. In some cases, it takes as much as 72 
hours, like a new windshield in a car. You take your car down 
and get a windshield put in, it takes some time, because it has 
to cure, the sealant around the windshield. These fixtures have 
to cure for, in some cases, up to 3 days in order to complete 
the fix. And it has to stay in a climate-controlled hangar 
during that period of time.
    So on average, it is taking us about 6 days to get the 
signature of the airplane fully restored after we fly it about 
three times in one day.
    Mr. Dicks. Would my colleague yield for a brief question?
    Mr. Visclosky. No. On the fighter you said you had five 
other variants of the stealth material. We have 21 B-2s. Are 
there variations, and if there are on the B-2, have they 
improved? Then my follow-up question, and I will then yield to 
the gentleman. We are talking about potentially purchasing more 
of these aircraft. I do find it amazing that you would have 
them parked that long. If we are going to invest in additional 
aircraft----
    General Hawley. There are two kinds of B-2s on the flight 
line. We have block 20. The block 30 is the fully upgraded 
airplane that has the final configuration to include the most 
stealthy configuration of the fleet. And that is what we will 
be converting all of the B-2s to, so by the year 2000, when 
they have all either been delivered as block 30's or 
retrofitted to the block 30 configuration, they will all look 
alike.
    Mr. Visclosky. Will maintenance be simplified? Will the 
period of time be shortened?
    General Hawley. We are making progress every day as we 
improve the materials, migrate technology from other weapons 
programs onto this airplane. So I think it will be better. But 
we have to invest some money in that, and that is kind of what 
we have to work on within the Air Force, is identifying those 
upgrades and trying to improve that durability of the 
signature. We don't have a fix today for that. We still have to 
invent it.
    Mr. Visclosky. I yield.

                           F-117 IN GULF WAR

    Mr. Dicks. In the Gulf War, the F-117 in the first two 
weeks of the war, with two percent of the assets, took out 
something like 38 percent of the targets, and not one was shot 
down. So it appears to me whatever little defects they had, it 
certainly didn't slow down General Horner's utilization of this 
aircraft during the Gulf War.
    General Hawley. That is true.
    Mr. Dicks. So, I mean, in wartime you are going to use this 
airplane, you are going to go out there and stop the enemy with 
it. If you have a flaw or defect, you might lose a couple 
airplanes. In fact, I think it makes a major argument for 
making sure you buy additional B-2s so you can get a fix on 
this thing so you have a more survivable airplane.
    Thank you.
    General McCloud. Can I comment on that very briefly? The F-
117 in the early days literally had radar-absorbant coatings 
that were glued on to the airplane, top of the wings, bottom of 
the wings. In those early days of flying the machine, which we 
did at the Tonopah test range in the desert, it was not unusual 
to come back from a mission and have a 4-foot section peeled 
off the bottom of your airplane. We went from there, invested 
some money with the contractor, Lockheed, and they developed 
through the auto industry a robotic spraying technique to put 
the same type of materials on, but through very precision 
spraying.
    That dramatically changed the equation in stealth 
technology. Those types of advancements are being made all the 
time. That is why we have high confidence that an airplane like 
the F-22, when you sit it on the ramp outside at Langley Air 
Force Base, will last and be very durable. But it has taken 15 
years to get to this stage.
    Mr. Visclosky. Thank you very much.

                          STEALTH CAPABILITIES

    Mr. Istook. Mr. Chairman, one point that hasn't been 
mentioned that I would like to make certain of from General 
Hawley. When you are talking about this layover period of time 
for the plane, you are only talking about assuring the stealth 
capabilities. This doesn't affect airworthiness?
    General Hawley. That is correct. The time is strictly 
required to maintain the signature characteristics of the 
airplane. It is done to make sure that for its nuclear mission 
it is ready, and the nuclear mission is the most demanding, 
because it has not other support. It is going to go in alone. 
It is going to go into a potentially very heavily defended 
environment, and we want to make sure that we provide the air 
crew with the most survivable airplane that we can. So we are 
taking these measures in order to do that. It has nothing to do 
with airworthiness, with the avionics on the airplane. They are 
all very good. In fact, I reviewed the status of this airplane 
twice a wee, and our supply stats have been getting better at a 
dramatic rate. It flies well. It is a good airplane.
    Mr. Young. Mr. Cunningham for 10 seconds.
    Mr. Cunningham. I support the B-2, but I don't want to 
fight on false assumptions. If we had not had air superiority, 
air dominance in Desert Storm, we would have lost 117's. That 
is why the balance is needed over the target, because I can 
shoot down F-15s with A-4 Skyhawks by putting a picket out 
there, with no radar. It is important to have a balance in air 
superiority.

                         B-2 ACQUISITION COSTS

    Mr. Young. Mr. Cunningham makes an excellent point. I want 
to change the subject just a little in the last few minutes 
remaining.
    The proposal to buy nine additional B-2s, 1, 2, 3 and then 
3, the fly-away cost estimated by the contractor is $9.3 
billion over the life of the program. The DAWMS estimate is 
$20.8 billion for the same program, but DAWMS includes some 
military construction for the forward operating locations, 
upgrades of $1.7 billion, O&S and indirect costs of $4.7 
billion, coming to a total of $20.8 billion. That is more than 
twice as much as the contractor is estimating.
    John, where do we really stand on the actual cost of this 
and the requirements that go along with the procurement of the 
additional nine airplanes?
    [Chart follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    
    Mr. Hamre. Yes, sir. We prepared a little handout to try to 
give a crosswalk that would explain the relationship between 
these. As you see, there are three items that were not in the 
contractor's estimate, but you wouldn't criticize them for it. 
It wouldn't be their responsibility to do that. For example, 
the military construction, the upgrades, which we really 
probably want to do with the existing fleet anyway, and the O&S 
and indirect support costs. So you wouldn't criticize Northrop 
for not having those costs.
    Mr. Dicks. This is a 20-year ownership package, not just 
flying the airplane.
    Mr. Hamre. The real difference is it is a $9.3 billion 
investment program compared to our estimate, which is $13.8 
billion. Both of them are large amounts of money, and both of 
them are spent over the next 4 to 5 years. This is an enormous 
near-term cost commitment that we would have to finance inside 
our top line that has been frozen through the budget 
negotiations. So it is going to displace $13.8 billion worth of 
program content. That is why it became a very difficult thing 
for us in the QDR.
    Mr. Young. I wanted to get this information on the record, 
because there was this great difference. What you are saying is 
that the $9.3 billion would be the fly away cost of the 
airplane.
    Mr. Hamre. Just the airplane. Our estimate is it is $12.4 
billion. We think there are some----
    Mr. Young. Your estimate is $12.4 billion, right. You show 
$1.4 billion for support----
    Mr. Hamre. Support, gear, things of that nature.
    Mr. Young. The point is that the nine aircraft aren't 
really usable unless you have the additional----
    Mr. Hamre. That is right.
    Mr. Young. The upgrades, the MILCON, the indirect costs, et 
cetera.
    Mr. Hamre. The head-to-head comparison is $9.3 or $13.8 
billion, but it still represents a $20 billion commitment that 
we would be making here.
    Mr. Young. For the record, let's quickly indicate the 
amount of money that the nine additional aircraft would cost in 
the fiscal year 1998 appropriations. How much would have to be 
appropriated?
    Mr. Hamre. My understanding is it is approximately $300, 
$350 million, something like that, which is to get it started.
    Mr. Young. What would be the fiscal year 1999 requirement?
    Mr. Hamre. I think that is like $1.1 billion. I don't have 
that number right in front of me or in my mind. I think it is 
like $1.1 billion. Then it goes to $1.5 billion per year.
    Mr. Dicks. That is right.
    Mr. Hamre. That is the contractor's number.
    Mr. Young. I am looking at a paper that says $1.8 billion.
    Mr. Hamre. Maybe it is $1.8 billion.
    Mr. Young. And $1.8 billion in 2000, $1.7 billion in 2001, 
$1.9 billion in 2002.
    Mr. Hamre. Those are probably right.
    Mr. Young. These are the contractor's figures.
    Mr. Hamre. Then we would have some extra costs probably on 
top of that, sir.
    Mr. Dicks. Do you have another copy of those, Mr. Chairman?
    Mr. Hamre. We would be glad to go over and validate any of 
this. But I think, sir, you are raising a very important point. 
The decision to add $300 million this year, $350 million this 
year, simply presumes we are going to add the $1.6 billion next 
year, and we are not. We don't have the money for it.
    Mr. Young. Let's assume that the contractor's numbers are 
accurate, the $1.8 billion for next year. How much would you 
have to add to that for support, spare parts, MRSP, production 
costs, upgrades, indirect costs, et cetera?
    Mr. Hamre. I will get you an answer for the record. My 
suspicion is that will lag a couple of years. You don't need to 
have the support gear, because it is a shorter production 
cycle, so you probably don't need that much more immediately in 
fiscal year 1999.
    Mr. Young. When will you estimate that you would need that?
    Mr. Hamre. Permit me to come back to you. We will get you a 
very prompt response. I will do that promptly.
    Mr. Young. I expect that you all have noticed that this 
Committee is full of supporters of the B-2. I think that 
General Hawley spoke to it very effectively, that he would like 
to have a lot more that he could provide to the CINCs when they 
call on him for bombers. But we also have the problem of--
suppose we can afford the down payment this year--are we 
responsible if we make the down payment this year, but can't 
afford the payments in the out years? That is what we have to 
wrestle with.
    Mr. Hamre. Sir, we wrestle with that, too. If you were to 
put in the $300 million, we just don't have the money to do the 
follow-through. We would confront this very same problem next 
year and it would be much larger, because we just don't have 
the resources.

                            B-2 Capabilities

    Mr. Dicks. Mr. Chairman, I would like to make just a couple 
comments on this point. First of all, you know, as General 
Horner says, and I believe this, you must look at the value. 
Mr. Hamre is very good at giving us numbers, but you have got 
to look at what you are buying and what you get for it compared 
to all the other things you are buying and what you get for it. 
I would argue that you get a lot more with the B-2 and the 
smart conventional weapons than with any other conventional 
system.
    As we go to START II or START III, as you downgrade your 
strategic forces, you have fewer strategic forces. A bomber 
that can go both ways, that can be used in the nuclear role and 
used in the conventional role, I believe, becomes much more 
valuable.
    The third point, the industrial base is there and alive 
now. If we don't do this now, then the industrial base goes 
away and we have to spend $25 billion to get back to where we 
are producing a new bomber. So if you are ever going to do 
this, this is the time to do it, because you have the line 
open, it will be least expensive now, than if you start 15 
years from now or 10 years from now.
    Again, the idea that this is the last bomber we are ever 
going to build, I must tell you makes my stomach turn. The fact 
that this administration, as Secretary White said, this is the 
last bomber we are going to build, I can't believe this is the 
policy of this administration. Again, I look forward to the 
afternoon session.
    Mr. Young. I appreciate very much the fact you are willing 
to come back at 1 o'clock. I wish we could just continue on, 
but a number of Members have commitments right now. We will 
concentrate the balance of the hearing from 1:00 to 2:00.
    John, you wanted to say something and I cut you off.
    Mr. Hamre. I was just going to say I am a budget geek. I 
don't pretend that I can speak to military value. That is, I 
look to see those people who have spent their careers in the 
military, and there is not dissent among the senior people in 
the Department. Every chief and every CINC has said they agree 
with this recommendation. It isn't just a finance weeny that 
decided this.

                           PAYING FOR THE B-2

    Mr. Young. I wanted to ask any one of you who would like to 
respond, if we were to move ahead with the B-2 program, I know 
that in the DAWNS you have exercised various options on how to 
pay for it. Could one of you give us an example of maybe three 
or four of the top options for paying for the B-2 program?
    Mr. Hamre. Why don't I begin, and then I would welcome 
anyone else to join in. I think this is a very hard question to 
answer, because it gets to the core of how we build budgets in 
the Department. It is rarely a case where you put in one thing 
and you take out one thing. It tends to be in the mix. But, 
unfortunately, as we are building things up, everybody that 
comes to the table comes with shortfalls.
    I look at the shortfalls, frankly, that are in our 1998 
budget request. We didn't get into our 1998 budget request. 
Frankly, I think we have written several letters to you. We 
were short on our medical program this year. We were short by 
$550 million, I think, growing to $650 million on our flying 
hours for the flight force for the Navy and Air Force, things 
that will affect readiness if we can't get additional funds in 
1998. We have gone through a number of discussions and I have 
with Mr. Dicks about some special intelligence capabilities, 
enormously important programs.
    Mr. Young. I don't think you satisfied him on that 
conversation.
    Mr. Hamre. He is not satisfied on that. I have broken his 
heart on that one, too. So there are a number of things that 
really come to the table with just this year. We probably have 
$1 billion of things that we need you to help us with this 
year, and things that we want in the Department. Then, of 
course, there are things that others want intensely for us up 
here on the Hill. We have got destroyers that people think we 
need fairly badly, and we have got just a whole range of things 
that people are anxious for us to have.
    My experience has been there isn't anybody up here that is 
asking us to support something they want that we genuinely 
don't need. It is a question of priorities, how high a priority 
it is. So coming to answer the question that you have posed, 
Mr. Chairman, which is what would we give up or what two or 
three things would we consider?
    First of all, the actual truth is we wouldn't do it even if 
you put in some money this year, because we don't have things 
that we would take out to take out next year, so we would be 
coming back to you again a year from now, but in this case a 
year from now it is not a $300 million problem, it is going to 
be a $1.8 billion problem. And unlike this year, where you have 
$2.8 billion or $3 billion to add, next year we are going to be 
submitting a budget resolution number, and you now have to 
displace $1.8 billion worth of program next year to make room 
for this.
    You will be confronting next year exactly the condition 
that the Secretary found himself in this year, where he was 
saying I have to knock things out.
    When you sit down with the chiefs, when you sit down with 
the CINCs, everybody is coming to the table with things they 
really need, and it is really a balancing process. There is no 
algorithm or no computer program we have that says on the 
margin, how would you want to spend another $1 billion or how 
would you like to spend $1 billion less if you had to cut it 
out.
    As I said, there is a tendency for everyone to look to 
somebody else's service to offer the money. The Navy would love 
to have the Army be smaller and use the money for aircraft 
carriers, and the Air Force would love to take fewer carrier 
battler groups or something. When you get down to it, the true 
requirements in our business is what are you prepared to pay 
for; what do you think is so important for warfighting you are 
prepared to pay for it?
    This is where the trade-offs then become in aviation, and 
in TACAIR, and with the terrible dilemma that the Air Force and 
the Navy and these CINCs have when they are looking at, as I 
say, I have to worry about a broad spectrum of things, not just 
the halt phase, although the halt phase is very important. I 
have to worry about all kinds of things. So it really has to go 
into that process.
    That is what led us to say we don't have the 300 million 
this year, we don't have the $1.8 billion next year, we don't 
have the $20 billion over the next 5 years for this. We do very 
much want to keep the B-1 fleet we have, and to upgrade it, and 
that becomes our first priority.
    Mr. Young. Dr. Hamre, thank you very much.
    Would any of the generals like to respond to that?
    General Habiger. Mr. Chairman, just to make one comment, 
sir. In addition to the issues that Dr. Hamre just discussed, 
in an arms control environment, I would have to give up 
something for those nine additional airplanes, because they 
would count against the force structure I have got today. I 
have got a good balance today between bombers, missiles, and 
submarines. So there is another price to pay in terms of giving 
something up, and I, at this particular point, wouldn't 
particularly want to give up anything in that regard.
    Mr. Young. Mr. Dicks.

                               Halt Phase

    Mr. Dicks. Well, Mr. Chairman, on this issue, this is a 
very important issue, and I can say, sitting on this Committee 
for 19 years, that I have watched this Committee every single 
year go through that budget that many comptrollers have 
submitted up here, and we cut money out of that budget. Every 
single year we find items that for one reason or another are 
low priority items and in a $250 billion budget, you can find 
$1.5 billion if you want to.
    I could go through that R&D section of the budget and I 
could get you $1.5 billion without any sweat.
    In fact, you and I have had a conversation where I said to 
you what about cutting 5 percent across. Do it. And maybe we 
could do it that way. An that is, as far as I am concerned, the 
way to do this.
    It gets back to judgment and military value. General 
McCloud, your notion that we are going to have warning troubles 
me, we have never had a war in which we had warning. We had two 
days of actionable warning at the time of the Gulf. In World 
War II, surprise attack, zero actionable warning time. Very 
little in Korea. I mean, it is in that situation when thousands 
and thousand of American lives are at stake.
    John, frankly, the halt phase is the most important phase 
when it comes to losing lives and whether we are going to be 
able to stop a war quickly and bring it to a quick end and save 
the taxpayers' money and lives.
    So having capability in the halt phase, in my judgment, is 
crucially important. And one of the things we haven't talked 
about, in the National Performance Review, it was very critical 
of this, I said however, U.S. forces' long-term access to 
foward bases, to include air bases, ports and logistical 
facilities, can't be assumed.
    You can't assume we are going to have carriers and be able 
to fly TACIAR in the theater. Access may be granted or denied 
for any number of political or military reasons. Moreover, U.S. 
forces may find themselves called upon to project power in 
areas where no substantial base structure exists. Perhaps more 
important, with the proliferation of cruise and ballistic 
missile technology, weapons of mass destruction and access to 
space, the capability to hold at risk large soft targets, i.e. 
carriers, at great range, will likely accrue to even regional 
rogue states.
    The QDR, in our in view, accorded insufficient attention to 
our ability to project power under these circumstances. And 
that is where the bombers come to play. And your own studies 
show dramatically that you don't have enough bombers now if you 
are locked out. If you can't get carriers into place and you 
can't TACAIR there, then you have got nothing to rely on but 
the bombers. Isn't that correct, General McCloud?
    General McCloud. The study does show basically what you 
said. If you were locked out and we ran problems with access, 
we locked out the TACIAR, it shows that the bombers are very 
effective in that halt phase.

                             STUDY FINDINGS

    Mr. Dicks. It also shows have an insufficient bomber force 
in every scenario, insufficient stealth bombers in every 
scenario, isn't that correct?
    Generall McCloud. It said the overall bomber force we could 
get there is adequate.
    Mr. Dicks. The new you can use initially, the enablers, the 
B-2s. In each of the scenarios, it says you need additional 
bombers in every situation, or you can lose. If you don't have 
then, you can lose the war, isn't that correct?
    General McCloud. What is says is that you need adequate 
force in 2014 to take on that halt phase, and if you have the 
extreme scenarios----
    Mr. Dicks. Look at the scenarios we faced, World War II, 
Korea and Desert Storm. We don't even get one that is easy like 
you guys draw up on the board over there, 14 of preparation 
time, under the kaminski study. Tell me when we got one like 
that?
    General McCloud. We ran excursions to make sure we 
bracketed the problem. We did exactly what you said. That was 
the purpose of the study, to look at the options----
    Mr. Dicks. Didn't do it in the first bomber study, by the 
way.
    General McCloud. We did it in this one.
    Mr. Dicks. It showed you in every situation, you need 
additional bombers.
    Mr. Hamre. It also said we need additional aircraft 
carriers in the QDR and additional divisions. We are accepting 
risk in every warfighting area.
    Mr. Dicks. In this case, we have something that you know 
will work, that gives you the potential to come from outside 
the theater, that stops this lock-out potential. It trumps the 
enemy's ability to use chemical and biological weapons on the 
airfields and lock you out. It trumps that. And that is why I 
see this tremendous value in having enough of it, and you can 
still use it.
    General Horner said he used the F-117's throughout the 
entire war. It wasn't just at the front. You guys down play 
this, but if you cant get TACAIR into Korea, and General Estes 
worries about when he was the Air Force General over there an 
told me about it, if you can't get that Air Force in there 
because you are getting locked out, then our kids are going to 
die. We are going to take more losses because of that.

                           Aircraft Carriers

    With all due respect to the aircraft carriers, and I have 
great respect for aircraft carriers, from Bremerton, 
Washington, those planes can't do what the B-2 can do, because 
they can't penetrate initially. The have to go in packages. And 
the numbers you used, by the way, in this study, completely 
overstate what the carriers can do or did do in the Gulf War. 
You have them at 100 sorties a day, at some number like that, 
when only 17 was achieved in the Gulf War.
    They didn't perform very effectively, and you still don't 
have a stealthy airplane coming off of there. So you have made 
the comparisons even more favorable to nonstealthy airplanes 
than, in fact is realistic, according to the people who have 
looked at this study and know something about it and say that 
you have had all kinds of assumptions in there about carriers 
that are positive and not substantiated by the facts.
    General McCloud. Let me respond to that briefly. In the 
Gulf War, the carriers were launching somewhere between 50 and 
60 sorties per day, of which about half of those were strike 
sorties. The Nimitz off the cost of Washington just recently 
ran 3-day exercise where they were launching between 170 and 
180 sorties per day. The difference is that in those surge 
rates, with airplanes that can generate more sorties, the newer 
airplanes, in the year 2014, we think that is a reasonable 
thing to do.
    The question becomes what percentage of those go to strike, 
what percentage of those go to air defense. As you evolve the 
AEGIS class cruisers and destroyers and they become a principal 
supporting force for the carriers, that air defense load is 
going to be picked up by the long-range shooters, the surface-
to-air missiles. We don't have that capability today.
    We will have it in that time period. So it will be a lower 
demand for the air defense aircraft in that time period than we 
see today. So a much bigger potion of the 170 sorties per day 
can go to strike.
    So all I am saying is what we put in the study, we 
bracketed, we raise it up and down, but that 170 per day or 174 
average that we used is reasonable----
    Mr. Dicks. But you don't do much for self-defense. You have 
to defend these things against Cruise Missiles and other 
threats that are being built up. There are a whole series of 
other things that affect the carrier's ability to operate, that 
were not taken into account, I am told.
    Mr. McCloud. Sir, that was taken into account.
    Mr. Dicks. By some of your colleagues.
    General McCloud. It was done by parametrically looking at 
the problem and saying a portion of that force would be used 
for the other missions that the Navy has to do to maintain a 
balance. So we think we bracketed that problem. You can 
disagree with the results, but we think we gave that a fair 
sake.
    Mr. Dicks. But you will admit that the attack rates, the 
sorties rates for attack purposes, are dramatically higher in 
the studies than they were during the Gulf War.
    General McCloud. Absolutely correct.
    Mr. Dicks. See, what bothers me here is you are still not 
going to have a stealthy plane until you get the joint strike 
fighter, and I am worried about that in terms of whether you in 
actuality can do this. You have to have a number of carriers 
operating together in order to do this, at least that was the 
experience during the Gulf War.
    Thank you, Mr. Chairman.
    Mr. Young. Mr. Lewis. We are going to have to vote. We will 
carry your time over until after the vote.

                            BUDGET ESTIMATES

    Mr. Lewis. We could have a series of votes which could blow 
this whole meeting. In that meantime, I want you all to know in 
spite of our enthusiasm, Norm and I and the Chairman and others 
are very appreciative of the work you are doing and it is very, 
very important work. I sometimes scratch my head, though, for I 
have difficulty understanding how numbers come out of the 
building.
    I note with interest that we got a chart yesterday, last 
night, that showed this difference in cost between the 
contractor and the DoD, and yet you have been working closely 
with Northrop for a couple of years. So I am wondering about 
that.
    I am reminded of the fact that when I first got an analysis 
of the air facility just off Fort Irwin, the Army gave me a 
figure for developing it and so on. It was $30 million. The 
next time they weren't sure they want it, the figure as $200 
million. I see that happening a lot and it is of great concern 
to me. When we went through the supplemental process, $4.8 
billion, it has to be offset within the Department, $2.8 
billion of that was specific, and then go find another $2 
billion somewhere.
    Having said that, I think we in our Committees have got to 
be looking well into the 21st Century, 2025. You look beyond 
the problems of terrorism and otherwise that we must deal with. 
The challenges lie with China and the developing world, very, 
very real questions of war and peace and freedom. It seems to 
me the decisions we are making now are going to dramatically 
impact that. And that is why I suddenly find myself going back 
in the direction of stealth and the selection of the assets 
that are critical to our ability to be successful in that new 
environment.
    So, a couple of questions. I would first like to know where 
you are about developing and recommending a policy that would 
move us towards this kind of feasibility of acquisition and the 
trade-off beinging cutting back the number of personnel. There 
is not any question the driving cost behind all of this 
involves personnel, and that load over time.
    I have got the National Training Center for the Army in my 
district, the Marine Corps has Twenty-Nine Palms in my 
district. I am concerned about the foot soldier. But, one way 
or another we have to make sure we don't kill them before they 
have a chance to fight.
    Where is your recommendation regarding that aspect? Should 
we be moving in the direction of shifting dollars away from 
personnel, perhaps strengthening the Army Reserve, of a quality 
and nature we see in the Air Force Reserve and cutting back? Do 
you have a recommendation? General, I am asking you.
    General Hawley. I don't participate in that.
    Mr. Lewis. Shall we close the door and go off the record?
    General Hawley. I will tell you in ACC our personnel are 
stretched very thinly. So within my purview, the command I 
oversee, I would be hard-pressed to say we could give up any 
people in order to accommodate more force structure. It takes 
people to run force structure. Ten percent of my own budget 
goes to support the B-2.
    Mr. Lewis. I am being very specific about the Army.
    Mr. Hamre. May I speak to this?
    General Hawley. Maybe somebody with a broader look than I 
have.
    Mr. Hamre. General Hawley has been in previous assignments 
where he has these kind of broader responsibilities. He is not 
in one now. He is perfectly capable to offer his own view, and 
he should if you want him to.
    The QDR that we are recommending already has us cutting out 
200,000 people. We would be cutting out 80,000 civilians. We 
will be cutting out 60,000 active duty personnel and 60,000 
Reservists, already.
    Mr. Lewis. No. Let me read a paragraph from something else 
that says the same thing in a different way. If colonels ran 
the Pentagon, the QDR might recommend the U.S. military shelf 
the 2-war strategy, cut three Navy aircraft carriers, three 
Army divisions, and six Air Force fighter wings, and use the 
savings to invest heavily and radical new systems.
    There are different views here. We have got to be looking 
towards that view.
    Mr. Hamre. Sir, we actually looked at that. That was one of 
the paths that we explored in looking at the QDR. We didn't go 
that route for a couple of reasons. One is that certainly is a 
long-term view. That is a view to say I don't perceive that we 
have a near peer threat my time in the next 15 years, and we 
ought to be thinking out 15 years to be ready for that.
    What it discounts in our mind is being ready to take on 
real world challenges that could occur in the next 5 years. 
Three times in the last 4 years, the Secretary of Defense has 
two nearly simultaneous emergencies. Just a year ago, at the 
very time we were sending the fleet to the Formosan Straits, we 
were sending a reinforced brigade to Kuwait.
    Deciding now you are not going to do that means that we, as 
a Department, have to choose which of the--if we have two 
contingencies, which are we prepared to abandon?

                          VIABILITY OF STEALTH

    Mr. Lewis. John, I understand that. ------. There is 
another question that I don't know the answer to that concerns 
me a lot as we go down this pathway, which is can you tell me 
what your best information is relative to the lifetime of the 
value of stealth? When are we going to get to the point where 
stealth isn't stealth? Have you done that sort of analysis?
    General Hawley. I will take that one. Yes, we have. We have 
Read Teamed Stealth, and the answer keeps coming back that we 
have a very durable capability in stealth. There are no systems 
on the horizon that can neutralize the advantage that we have 
gained through the development of stealth technology, and our 
lead in stealth technology exceeds that in most other areas of 
technology. We have a huge lead in this area over the rest of 
the world, which is one reason we are so anxious to protect it.
    Mr. Lewis. Mr. Chairman, I think we need to learn a lot 
about that subject.
    Mr. Young. You still have 2 minutes left in your time 
allotment. Why don't we catch two votes, it will take us maybe 
3 minutes, and we will be back.
    Mr. Dicks. Could I ask a couple of questions? You go ahead. 
I will wait for you.
    Mr. Young. Wait for us. You have a second vote coming right 
away.
    Mr. Dicks. I would like to proceed.
    Mr. Young. Go right ahead.
    Mr. Dicks. Let's go back to the subject, now that I know 
what the answers are going to be. That is why I was on the 
phone.
    Mr. Young. Rephrase your question.

                          B-2 MAINTAINABILITY

    Mr. Dicks. These were not asked on the record. Now we are 
going to fulfill the record here.
    That is one thing I learned in law school, don't ask 
questions you don't know the answers for. Even I screw that up.
    Let's go back to the question of the materials, General 
Hawley. In terms of usability, if we were in a wartime 
situation, based on what you know now, we would still use the 
B-2. We don't know anything now that any of these blemishes 
degrade the signature to such a point that you would feel 
uncomfortable in using it, isn't that correct?
    General Hawley. All of the evidence we have to date 
indicates the kind of blemishes you usually experience as a 
result of a flight, do not significantly degrade the signature 
capability of the aircraft.
    Mr. Dicks. You tested that?
    General Hawley. We have tested that. We have taken 
airplanes across the range that have been degraded as a result 
of flights and the signature has not been significantly 
degraded.
    Mr. Dicks. As I understand it, we don't know anything yet 
that tells us that we have got all these problems solved for 
the F-22 either. So it is still an issue for the F-22, as well, 
I think?
    General Hawley. It is certainly to be proven in the F-22. 
The SPO and the contractor say they are going to deliver a very 
durable airplane.
    Mr. Dicks. Is there anything we could do to fix or improve 
the B-2 with the planes that are still being built to try to 
take lessons learned from what we supposedly are learning in 
the F-22 and incorporate it in improving the B-2?
    General Hawley. In fact, we are doing that. We recently 
changed out one material, a tape as it happens, that required a 
72-hour cure time. We brought material in from the F-22 program 
that requires a 3-hour cure time. So we got rid of 69 hours of 
cure time on the fixtures to which that material is applied.
    Mr. Dicks. So if, in fact, the Congress, in its wisdom, 
decides to go forward, we could incorporate these improvements 
and have a better plane and maybe retrofit the older ones in 
order to get as much durability and to take advantage of 
lessons learned, if we did go ahead with additional B-2s, is 
that not correct?
    General Hawley. In fact, I think that accounts for part of 
the difference in the cost estimate between Northrop's estimate 
and the government's estimate is to incorporate those kinds of 
enhancements.
    Mr. Dicks. You would recommend that?
    General Hawley. I certainly would. And some others as well.

                             B-2 PRODUCTION

    Mr. Dicks. Again, nobody would dispute if we are going to 
buy additional bombers, buying them when the line is open would 
be the best decision for the taxpayers. Rather than coming back 
and doing a 25 to $40 billion until R&D before we could get 
into production of additional airplanes. If you wee going to 
buy them, isn't the time to buy them now while the line is 
open?
    General Hawley. Yes, sir.
    Mr. Hamre. Although there is still a fair amount of 
nonrecurring that has to be spent in order to get it up and 
running again, because a fair amount of the subcontractor 
structure is gone away.
    Mr. Dicks. John, you would have to agree, 15 years from 
now, if you said we have to build another stealth bomber, we 
are going to have to spend at least, I would say, the last 
program was $22 billion, I would say you would have to do at 
least 30.
    Mr. Hamre. Sir, the premise of your argument is right, it 
is better to do it earlier while you still have some of the 
capability than to do it later when you have none of the 
capability. I think it is important to note though one of the 
reasons there is a price differential is we think there are a 
fair amount of started up costs not captured in the Northrop 
program.
    Mr. Dicks. Is it true it is the Air Force plan to destroy 
the tools for the B-2?
    Mr. Hamre. No, sir. I believe we are using some of the 
tools for its ongoing maintenance of the maintenance at depot.
    Mr. Dicks. I would love for you to check on that, because I 
think you are going to find it is in your plan. I plan on 
stopping that if I can get the committee to agree with me. I 
think they would be foolish, to get rid of the tooling for the 
B-2. I understand currently that is your plan, to do away with 
it. That doesn't make any sense to me at all. I hope we can 
work together on that.
    Mr. Young. If the gentleman would yield, what would be the 
cost to close down the B-2 line?
    Mr. Hamre. Sir, the cost is already embedded in our 
program. I will find out what it is we are spending to shut 
down the line, to orderly close out the dismantlement of tools, 
if we are dismantling tools, the shipping of tools to the depot 
for ongoing support where you do have a need for them. I will 
find that out. That is already included in our budget.
    Mr. Young. Then also, John, if you don't mind, find out 
what it would cost to start up again if for some reason a 
decision was made to start the B-2 program again. And for 
anyone that thinks that sounds a little strange, we did exactly 
that on the B-1.
    Mr. Hamre. And, sir, we did that with the C-5s, and we 
thought that would be cheap to start up the C-5 line again, and 
it didn't turn out to be as cheap. We basically built tooling 
again. We will check and find out.

                         B-2 STRATEGIC MISSION

    Mr. Young. ------?
    General Habiger. I would characterize my forces that I 
would employ, if deterrence were to fail, into three 
categories, three kinds of bullets, if you will. I have got 
ICBM bullets which are very prompt, not very survivable. I have 
the submarine bullets which are rapid reacting, but not nearly 
as reactive as ICBM's, but much more survivable and accurate, 
and I have bomber bullets that are, whether cruise missiles or 
B-2 kind of delivered weapons, that get to the targets in a 
relatively slow manner, are relatively accurate, and I can 
recall them and use the resources again. ------.
    I look in the overall equation, and it provides the target 
coverage I need, whether it is today, 5 years from now, or 10 
years from now, and, again, as I look out 10 years from now, I 
don't know what the arms control environment is going to be, 
but ------ will do the job. ------.

                           B-2 MODIFICATIONS

    Mr. Young. General Hawley, do you agree with the DAWMS 
study that the B-2 requires another $2 billion of investment in 
modifications that are currently not programmed in order for it 
to participate fully in the halt phase of a conventional 
conflict?
    General Hawley. I don't think I would agree that it needs 
that much modification in order to participated fully I would 
agree that on our list of mods that we would like to do to the 
airplane, there are somewhere around $2 billion worth of mods 
we would like to do to the current fleet to make it more 
capable. But it can do a great job in halt phase just the way 
we are getting it.
    Mr. Young. So if you didn't spend the $2 billion, it would 
still be an effective force in the halt phase?
    General Hawley. B-2 is by far our most effective bomber, 
that is right.
    Mr. Young. Which would be a higher priority of investment, 
the $2 billion for the modifications or the procuring of 
additional B-2 aircraft?
    General Hawley. In my view, we would get a greater return 
on our investment by upgrading the current fleet than by adding 
to the current fleet.

                               B-2 BASING

    Mr. Young. Would there by any plan to forward base the B-2 
in any of the scenarios?
    General Hawley. That is our intent, is to be able to 
forward deploy the airplane and operate it on a forward deploy 
status. You really need to do that in order to get the number 
of sorties from the airplane you would like.
    Mr. Young. From what we have learned today, the B-2 
requires certain types of climate control hangars to protect 
it, to keep the temperatures, the moisture levels, et cetera, 
proper. Are those programmed in this year's budget, John?
    Mr. Hamre. Sir, the resources we have are programmed for 
the existing fleet of 21. I can't say that they are actually 
the 1998 budget. They are probably programmed through the 
period. We don't have, of course, anything budgeted for any 
extension beyond the current fleet.
    Mr. Dicks. If the gentleman would yield, I don't think you 
are planning on any forward deployment, money for forward 
deployed B-2s at this juncture.
    Mr. Hamre. Not right now.
    Mr. Dicks. There is nothing in the budget for that nor 
expected.
    Mr. Young. The GAO says that Air Force officials said it is 
unlikely that the aircraft's sensitivity to moisture and 
climates or its need for controlled environment to fix LO will 
ever be fully resolved, even with improved materials and repair 
processes. Therefore, some form of aircraft sheltering at a 
forward operating location will become a requirement in the 
future if B-2s are to be deployed.
    How does that fit in with what we are talking about?
    General McCloud. If I could take a cut at that very 
quickly, sir. In 2014, the focus of this study, we did, in 
fact, put in the bomber costs, the B-2 costs in this. My set-
aside to do just what you said, to forward base it, to have the 
right hangars in place to do that, so that we could closer, 
generate higher sortie rates, so that was included in that, But 
that is a long look out to 2014.
    Mr. Dicks. Just let me raise one other point.
    Mr. Young. We are down to 57 seconds left to vote. Take one 
other point, I would say about a minute. Then, I think we will 
cut off the hearing.

                        STRATEGIC NUCLEAR FORCES

    Mr. Dicks. The National Defense Panel says, strategic 
nuclear forces remain an essential element of our national 
security strategy. Our strategic forces have been scaled back 
significantly over the past decade. We believe that to move to 
START II force levels should proceed even if the Duma fails to 
act on START II this year. This is not the DOD issue.
    Now, what they are raising here is a very significant 
question. You didn't even look at nuclear weapons. With all due 
respect, General, 18 Tridents, and I have eight of them right 
near my district, didn't stop Saddam from coming south, nor did 
the MX missile, which I was the strongest supporter of in the 
United States Congress.
    Mr. Young. Saddam never saw a B-2. Once he sees that, he is 
really going to think twice.
    Mr. Dicks. That is the point. The point is those strategic 
weapons cannot be used, will not be used, unless the national 
security of the country is directly threatened. So a 
conventional bomber that has smart conventional weapons, that 
can be utilized if deterrence fails, I think is a much greater 
deterrent.
    So I think we should have looked at nuclear forces in this 
as well. I could put together a little package for Mr. Hamre of 
where we can save some money in reducing strategic nuclear 
forces that will never be used. Dr. Kissinger is completely 
correct, they are there only for deterrence, and if deterrence 
fails, we will not use them. And they weren't used against 
Saddam.
    So it is usability that seems to me to be at the highest 
order. If you have to make trade-offs, you could certainly make 
some reductions in nuclear weapons, as the National Defense 
Panel said they may well recommend, in order to finance a 
conventional weapon that can be used if deterrence fails. That 
was another major selling point for the B-2 that I don't think 
you have fully analyzed.
    Mr. Young. We are totally out of time now. The vote is on 
the floor. We will likely miss this vote if we don't hurry. 
Thank you very much for coming today. We really appreciate it. 
I think it has been the best hearing we have had all year, and 
certainly very, very instructive and informative for all of us. 
We do have some additional questions that we would like to 
submit to you in writing and ask if you would respond.
    As I think you all know, we will do the very best we can to 
provide you with the best tools we can for you to do your jobs. 
Again, thank you very much.
    The Committee is adjourned.
    [Clerk's note.--Questions submitted by Mr. Hefner and the 
answers thereto follow:]

                             B-52 Aircraft

    Question. Recognizing the significant combat capability of 
the B-2, have you considered other alternatives to enhance the 
existing bomber force? Specifically, are you looking at any 
improvements to the venerable B-52 that increase capability, 
extends service life and/or reduces long term operating costs?
    Answer. The Air Force continues to upgrade its long-range 
bomber force with conversion of the B-1 to a conventional role 
and Block 30 upgrades to the B-2 bombers. With respect to the 
B-52, modernization efforts are in the works to improve 
communications capabilities and weapons interface improvements 
that will allow utilizing future families of GPS-guided 
weapons. Modifications to sustain avionics systems include 
Electronic Countermeasures, Electro-optical Viewing System and 
GPS Tacan improvements. The Aircraft Structural Integrity 
Program (ASIP) has certified the B-52 aircraft airframe through 
the year 2040.

    [Clerk's note.--End of questions submitted by Mr. Hefner. 
Questions submitted by Mr. Young and the answers thereto 
follow:]

                B-2 Strategic Capabilities and Missions

    Question. DOD originally justified the requirement for the B-2 
solely in terms of its contribution to the strategic nuclear mission. 
Today we primarily focus on modifications that make the B-2 a more 
potent conventional bomber, although the aircraft nevertheless 
continues to be an important part of the strategic nuclear triad. Are 
the B-2s assigned to the nuclear mission at all times, or are they 
assigned other missions until a threat situation requires them to chop 
to you?
    Answer. B-2 aircraft are tasked to support both nuclear and 
conventional plans. Day-to-day operational control of B-2 aircraft is 
assigned to United States Atlantic Command. When a nuclear generation 
is directed by the National Command Authorities, operational control of 
the B-2 is transferred from United States Atlantic Command to United 
States Strategic Command.
    Question. What kinds of nuclear weapons are carried by the B-2 and 
how many of each can it carry?
    Answer. The B-2 can carry 16 B-61-7, 16 B-83 or ------ weapons.
    Question. What kinds of targets are best attacked with the B-2?
    Answer. The B-2 is uniquely capable of holding hard and deeply 
buried targets at risk as well as other high priority targets ------.
    Question. The B-52 is the only bomber that will carry nuclear 
tipped cruise missiles including the Air Launched Cruise Missile (ALCM) 
and the Advanced Cruise Missile (ACM). General Habiger, compare and 
contrast the capability of the B-2 with gravity nuclear weapons with a 
B-52 with stand-off weapons. Is having to fly over each target 
sequentially a limitation compared to launching multiple weapons at 
multiple targets quickly from stand-off ranges?
    Answer. The B-52 and B-2 each have a specific role to play in the 
bomber leg of the Triad. A penetrating bomber, the B-2 with gravity 
weapons is uniquely capable of holding at risk hard and deeply buried 
targets. ------. They can get the job done right, the first time.
    In contrast, the B-52 is essentially a truck. Its standoff 
capability allows the aircraft to stay out of harms way ------.
    Question. DOE is developing a glide variant of the B-61 bomb for 
use on the B-2. Do you have a requirement for such a weapon? If so, how 
has this requirement been documented?
    Answer. The glide bomb program is an in-house DOE effort to develop 
options to increase flexibility and survivability of stockpile bombs 
while advancing and sustaining their technology base. ------.

               B-2 Conventional Capabilities and Missions

    Question. Increasingly, the B-2 is being viewed as a major 
contributor to conventional missions. General Hawley, what types of 
weapons can the B-2 carry now and in the future?
    Answer. Our present Block 20 B-2 fleet has the USAF's only adverse 
weather, near-precision weapon using the GBU-36B, GPS-Aided Munition 
(GAM). The B-2 can also carry the Mk-84, and the B-61 and B-83 nuclear 
weapons. When the Block 30 B-2 is delivered this summer it will be 
capable of employing the Joint Direct Attack Munition (JDAM); Mk-84, 
Mk-82, and M-117 General Purpose Bombs; M-62 Sea Mines; Tactical 
Munition Dispensers (TMD) capable of dispensing (CBU-87, 89, or 97 
Cluster Bomb Units (CBU); and B61 and mod 7 and mod 11 and B-83 nuclear 
weapons. Additionally, we are integrating BLU-113, a 5000 pound deep 
penetrating weapon, with a GPS Aided Munition (GAM) tail kit. This 
weapon should be available in the spring of 1998. We plan to put the 
Joint Standoff Weapon (JSOW) and the Joint Air to Surface Standoff 
Missile (JASSM) on the B-2 with JSOW capability in mid 1999 and JASSM 
in mid 2003.
    Question. Please characterize the types of targets and threat 
situations in which you recommend using a B-2 rather than other weapons 
systems, including for example B-52 launched CALCM, ship launched 
Tomahawk, or tactical aircraft launched munitions?
    Answer. The B-2 provides a unique combination of stealth, long 
range, near precision strike, hard target kill capability, and large 
payload. Other systems have some of these characteristics, but none 
share them all. Selection of the B-2 rather than another weapon system 
would depend on the overall situation, mix of available forces, and 
target set. The B-2 is optimized for deep attack on hard targets in 
heavily defended enemy airspace with line or no support. The B-2 and 
cruise missiles can attack targets well behind enemy lines and are very 
difficult to defend against, but CALCM and ship launched Tomahawk 
weapons do not provide hard target kill capability and are 
significantly more expensive than the munitions used by the B-2. 
Additionally, the B-2 crew will be able to identify targets that may 
have moved while they are enroute. So the B-2 would be preferred 
against hard or imprecisely located targets, and cruise missiles would 
be used when defenses are too heavy for even the B-2 to penetrate. 
Other heavy bombers closely match the B-2 in range and payload, but the 
B-2 would be used when defenses are too heavy for the B-1 or B-52. 
Conventional tactical aircraft are capable of attacking targets in less 
heavily defended areas with precision weapons but are less survivable 
than the B-2 in the heavy threat environment. Tactical aircraft do not 
provide the range and large payload carried by the B-2 but generate 
higher sortie rates. Additionally, tactical aircraft other than the F-
117 and F-22 would not be able to service deep targets without 
considerable support and risk to that additional support.
    Question. What is the Air Force doing to remedy these apparent 
deficiencies?
    Answer. Each year we look at our current and future shortfalls in 
all mission areas and identify solutions to meet these shortfalls. 
DAWMS identified potential areas that we are looking at to upgrade the 
B-2 not only to enhance its effectiveness during the halt phase, but to 
ensure its effectiveness in all its mission areas and to ensure the it 
remains effective within our overall force structure. We will invest in 
B-2 enhancements when they provide the best overall combat capability 
improvement for the amount of money available. We pursue those 
solutions which most effectively solve our most pressing needs.
    Question. What do you see as limitations, if any, of the B-2 
aircraft relative to other forces?
    Answer. With the B-2 we have been able to wrap the characteristics 
of stealth, long range, large payload capacity, and the capability to 
deliver near precision munitions in all weather into a total package. 
However, this is the first time stealth has been applied to such a 
large airframe. With any relatively new technology, there are unique 
problems that have to be overcome. The primary limitation of the B-2 is 
the heavy Low Observable (LO) maintenance required for this aircraft's 
skin. Other conventional ``aluminum'' aircraft do not face this 
limitation. As noted in my testimony, the B-2 is currently limited to 
flying each aircraft one out of seven days. It was not until we began 
measuring the adequacy of our operational LO repair capability in mid 
1996 that we identified and understood the amount of work required to 
maintain an acceptable signature. At the same time, we identified 
procedures, training, facilities, manning, and materials as areas that 
if improved could help to alleviate some of our LO maintenance 
difficulties.
    Question. Please elaborate on the maintenance issues that are 
currently limiting B-2 operations to flying each aircraft one day out 
of seven.
    What is being done to improve them? At what cost?
    Answer. As stated before, we assessed the entire LO maintenance 
issue last year as we prepared the B-2 fleet for initial operational 
capability. We instituted several initiatives, to include contract LO 
technicians, direct procurement of LO materials from Northrop-Grumman, 
additive Air Force LO technicians, and the ``fly one, sit six'' 
philosophy, that have already improved the B-2 mission capable rate 
significantly. In addition, we identified facility shortages for LO 
maintenance and have a new facility and upgrades to current facilities 
programmed. Improved LO materials and processes are paramount for the 
B-2 and are therefore a high priority. The B-2 System Support Manager 
formed a dedicated team last September to pursue improved LO materials 
and processes. The team has produced several successes to date, 
including reducing the cure time for one of the most commonly used LO 
materials from 72 hours to just 3 hours. Many of the LO material 
advances funded in the F-22 program are now being transferred to the B-
2. We have also applied LO lessons learned on the B-2 to the F-22 and 
several LO initiatives have estimated completion dates between now and 
1999 and will be funded consistent with availability of sustaining 
engineering funds.
    Question. What are the benefits of a 3 squadron B-2 force compared 
to a 2 squadron force?
    Answer. Any plus up on B-2 force structure would be additive to the 
existing 2 squadrons allowing more aircraft per squadron and some cost 
and manpower efficiencies. More aircraft would provide greater 
flexibility and capability. However, ACC believes the current 
programmed force structure provides the best possible mix of bombers 
and fighters when considering the postulated future threat and 
projected budget constraints.

                     Deep Attack Weapons Mix Study

    Question. The DAWM study was a two year effort analyzing over 1500 
scenarios with 1 million variables each. Additional B-2s were compared 
to a host of alternative force structures. General McCloud, there have 
been a number of studies over the years involving the B-2. Can you 
summarize the results of these studies, their shortcomings, and how in 
your view the DAWM study has better addressed these short-comings?
    Answer. Our review of studies identified nine relatively recent 
force-level studies related to the B-2 to include; analysis authorized 
by Maj Gen (Ret) Jasper Welch, Brig Gen (Ret) Leon Goodson, RAND, the 
CORM, the Deep Attack issue team of the CORM, three studies sponsored 
by Northrup Grumman and the FY-95 Heavy Bomber Force Study.
    These studies resulted in a variety of conclusions. Three 
recommended buying more B-2s with general supporting rational. Four 
recommended buying more B-2s to improve our capability to stop an 
invading army in a short-warning scenario (all assume very few U.S. 
fighter assets are available in the critical early stages). The other 
two studies recognized the effectiveness of the B-2 but concluded that 
our current program was more cost effective.
    The DAWM study is the most up-to-date with respect to U.S. and 
Allied force structure. It includes modern rotary wing aircraft (RAH-66 
Comanche), Army Tactical Missile System (ATACMS) with Brilliant Anti-
Tank munition (BAT) and modern stealth assets (F-22, Joint Strike 
Fighter) in a two Major Theater War (MTW) scenario set in 2014. It is 
the first study to include a proper characterization of all future 
stealth assets and planned onboard electronic countermeasure upgrades 
to conventional aircraft. It is also the first study to adjust the 
weapons mix to fit alternative force configurations and include C4ISR 
as a major input to force effectiveness. It is one of only two studies 
to consider a robust mix of force tradeoffs and one of four studies to 
consider force acquisition and operations and support (O&S) costs (six 
of the earlier studies did not explicitly include costs in their 
analysis). Its comprehensive analysis of four scenarios; 2-Major 
Theater Wars, short-warning, Near Peer, and limited access is also a 
first. The data base contained extensive target, threat, and weapons 
effectiveness data and the tactics and concept of operations that were 
used in the scenarios were approved by all services. Finally, 
throughout every phase of the study, DAWMS had the active participation 
of OSD, the CINCs, JCS, and the four Services.
    Question. The DAWM Study shows that the B-2 is a valuable asset 
during the halt phase of a conflict, assuming that $2 billion is 
invested to better optimize the aircraft for this mission. General 
McCloud, if we fail to make these investments which are currently 
unfunded, what then is the capability of a B-2 in the halt phase?
    Answer. The Deep Attack Weapons Mix Study modeled both the funded 
Block 30-configured B-2 and an enhanced B-2. The latter included 
unfunded upgrades for improved maintenance, communications, cockpit 
controls and displays; the 1760 data bus interface and modified bomb 
racks to allow expanded weapons carriage; and a Moving Target 
Indicator/Moving Target Tracker for autonomous targeting of moving 
targets. Including flight testing, these upgrades cost $2 billion for 
the first 20 aircraft and $460 million for an additional 20 aircraft. 
Several sensitivities focused on the added value of a partial set of 
these upgrades, measured in terms of the B-2's contribution to the 
warfight.
    Improved maintainability is reflected in higher daily sortie rates. 
We modeled B-2 sortie rates both above and below the reference values 
to capture this improvement and other operational factors that affect 
sortie generation. In general, lower sortie rates reduce the 
contribution of the B-2, and basing has more of an impact on sortie 
rate than does the $220 million improved maintenance upgrade.
    The impact of improved communications and cockpit controls was not 
examined since this was beyond the fidelity of our models.
    ------. A Moving Target Indicator/Moving Target Tracker capability 
improves the accuracy of delivering these new weapons against maneuver 
targets.
    ------. However, neither of these weapons benefit from the planned 
weapons rack and targeting radar upgrades. Rather, the upgrades 
improved the B-2s ability to more accurately deliver the Wind Corrected 
Munitions Dispenser which is normally used for attacking maneuver 
targets and can be delivered by many other platforms. Given the 
priority and lack of alternatives for attacking heavily defended, 
hardened infrastructure targets in the Halt phase when the air defense 
threat is greatest, most B-2 sorties are used to deliver the Global 
Positioning System Aided Munition-Penetrator and the Joint Direct 
Attack Munitions against these targets, rather than attacking maneuver 
targets with the Wind Corrected Munitions Dispenser or small Joint 
Direct Attack Munitions. In summary, the impact of failing to invest 
the $2 billion to upgrade the B-2's weapon system will have minimal 
impact on the Halt Phase of the warfight.
    Question. Even after the Halt phase in a conflict, there will 
continue to be targets and circumstances in which long range stealth 
will be required. For example, going against targets in downtown 
Baghdad. General McCloud, to what extent did the Deep Attack Weapons 
Mix Study address these missions, and how did the B-2 perform relative 
to alternative force packages?
    Answer. There are three characteristics that describe ``missions to 
downtown Baghdad,'' they are; long distances to the target, the 
presence of heavy air defenses such as the SA-10C, and striking 
infrastructure targets such as buildings or bunkers. The Deep Attack 
Weapons Mix Study took a careful look at the requirement to perform 
this type of mission.
    In the baseline scenario for Iraq, with normal warning time, Allied 
forces destroy over ------ targets of all kinds across all phases. 
Within this target set there are about ------, infrastructure targets 
that were located 80-180 nautical miles from the Iraqi-Kuwait border 
and were protected by heavy air defenses. It's easiest to capture both 
the difficulty of these missions and the continued value of the B-2 
after the Halt phase if we address how these specific targets were 
attacked by phase. ------. This heavy reliance on long range standoff 
munitions and stealth platforms in the early days is similar to our 
strategy in Operation Desert Storm, where the initial attacks used 
stealth and long range standoff to cripple the Iraqui Integrated air 
defense system. ------. There is very little use of long range standoff 
during this phase since the strategic air defense threat is much lower. 
------. By the start of the Counter-offensive phase, air superiority is 
well established and the need for long range stealth or standoff 
diminishes greatly. In this phase, payload and flexibility are most 
important and become the greater factors in determining how the 
remaining targets are distributed amongst the strike assets. ------. We 
did not do a direct comparison of the deep strike alternatives for 
targets and circumstances requiring long range stealth. Rather, we 
examined force structure alternatives within the context of the entire 
target set in a two Major Theater War scenario. What we found is that, 
the B-7 has a major role to play in the ``mission to Baghdad'' subset 
of targets but, we also found that there are a variety of alternatives, 
including both stealth platforms and standoff weapons, that were used 
during the first 60 days of the war to attack heavily defended targets. 
This variance in the mixture over time demonstrates the inherent need 
for flexibility within our munitions inventories and platform 
capabilities.
    Question. Briefly discuss some of the noteworthy observations and 
conclusions resulting from the study with regard to the various 
precision guided munitions currently in the inventory and in the 
acquisition pipeline.
    Answer. The Deep Attack Weapons Mix Study determined that the 
current munitions programs, with modest adjustments, will provide the 
capability to defeat potential aggressors in the years ahead. The next 
generation of munitions will give our forces superior precision 
engagement capability against projected threats. The fielding of 
unitary and cluster bombs that can be delivered accurately from 
altitudes above the effective range of enemy anti-aircraft artillery 
and manportable surface-to-air missiles, standoff weapons that avoid 
dense concentrations of air defenses, and highly effective precision 
munitions will increase the survivability and lethality of our forces 
in future conflicts as called for in Joint Vision 2010.
    For the ``deep battle,'' the Wind-Corrected Munitions Dispenser 
carrying Combined Effects Bomblets or the ``brilliant'' Skeet anti-
armor submunitions, the Army tactical Missile System with Brilliant 
Anti-Armor Submunitions (ATACMS BAT/BAT Pre-Planned Product Improvement 
(P3I), the product improved version of the Sensor-Fused Weapon, and the 
Joint Stand-Off Weapon with a unitary warhead should be procured in 
accordance with existing plans. In addition, we recommend the Services 
review the acquisition objectives of the Joint Standoff Weapon (JSOW) 
variants carrying Combined Effects Bomblets (CEB) and Skeet for reduced 
procurement; the Joint Air-to-Surface Stand-off Missile (JASSM) for 
increased procurement; and the Joint Direct Attack Munition (JDAM) for 
appropriate variant mix. We also recommend continuing Hellfire II 
production as well as follow-on analysis to identify the appropriate 
mix of Hellfire II and Hellfire Longbow missiles. GBU-24/27 Laser 
Guided Bombs are required to destroy hard targets, therefore, current 
production should continue for a minimum of one year. Finally, GBU-28 
Laser Guided Bombs or other appropriate munitions for hard and deeply 
buried targets are required and we must continue to identify 
specialized weapons required for targeting WMD storage, production and 
launch sites.

                               B-2 Costs

    Questions. The nation has invested $45 billion already on the 21 
aircraft B-2 program. The discussion this year has mainly focused on 
expanding this force by 9 additional aircraft. What is the current 
status of the B-2 production base and what is/are the projected costs 
to reconstitute it to produce additional aircraft?
    Answer. The Air Force has no requirement for additional B-2s. For 
this reason, the Air Force has not requested a detailed cost estimate 
from the B-2 Program Office to determine the required funding to 
procure additional B-2 aircraft. Thus far, 19 of the 21 aircraft 
purchased have been delivered and delivery of the last production 
aircraft is expected in FY98. The last 2 production aircraft will be 
delivered as Block 30s. Upgrades to modify the first 19 aircraft to the 
Block 30 configuration began in 1995 and will continue into 2000.
    Although the Air Force has not developed a detailed cost estimate, 
the contractor has presented its own (unsolicited) figures for non-
recurring and recurring costs of $1.6B (FY 96 $s) for re-establishing 
the production line for 9 additional aircraft.
    Question. What is the Department's best estimate of the total 
weapon system cost for 9 additional aircraft in real (then-year) 
taxpayer dollars? For the record, please provide a breakdown of this 
estimate including recurring, nonrecurring, support, etc. by fiscal 
year.
    Answer. The Air Force has no requirement for additional B-2s. For 
this reason, the Air Force has not requested a detailed cost estimate 
from the B-2 Program Office to determine the required funding to 
procure additional B-2 aircraft. Thus far, 19 of the 21 aircraft 
purchased have been delivered and delivery of the last production 
aircraft is expected in FY98. The last 2 production aircraft will be 
delivered as Block 30s. Upgrades to modify the first 19 aircraft to the 
Block 30 configuration began in 1995 and will continue into 2000.
    Question. Do these costs include any of the conventional 
modifications assumed in DAWMS?
    Answer. Not applicable. Since the Air Force has not developed a 
detailed cost estimate, the costs of the conventional modifications 
assumed in DAWMS have not been addressed.
    Question. Are further facilities required at Whiteman Air Force 
Base to accommodate 9 more aircraft? What is the cost of these 
additional facilities?
    Answer. The Air Force has no government estimate since we have no 
requirement. We have never requested the Program Office prepare an 
estimate. Such a detailed estimate would require in excess of 120 days 
to prepare (150 days and several million dollars).
    Although additional B-2s would add to our combat capabilities, they 
are unaffordable in today's fiscal environment. The funds required to 
procure more would be better spent on higher priority initiatives.
    Question. What would be the yearly operation and support cost for 9 
additional B-2s?
    Answer. Because there is not a documented requirement for 
additional B-2s, the Air Force has not completed a budget level cost 
estimate, including operations and support cost, for additional B-2s. A 
budget level estimate would require several months to complete after 
Northrup was put on contract to help the Air Force complete the 
estimate.
    Question. Because of its stealth, the B-2 is less reliant on 
expensive stand-off weapons to ensure aircraft survivability. This 
means that a B-2 can drop inexpensive weapons whereas less stealthy 
forces must use more expensive stand-off weapons. What analysis has 
been conducted to determine the relative cost effectiveness of an 
expensive platform such as the B-2 that carries cheap weapons compared 
to a less expensive platform such as a tactical aircraft that carries 
more expensive standoff weapons?
    Answer. No recent analysis has specifically compared, in isolation, 
the value of B-2 with direct attack munitions verses non-stealth forces 
with standoff. However, all Air Force munitions modeling annually take 
these factors into account when munitions requirements are calculated.
    Several issues must be addressed in order to adequately answer this 
question: (1) While direct attack weapons normally are less expensive, 
standoff weapons cost (CALCM, JASSM, and JSOW) are essentially equal to 
or cheaper than some direct attack munitions (SFW): (2) ------. (3) 
Non-stealth platforms employ the vast majority of direct attack 
munitions throughout the conflict; (4) The limited number of B-2s (even 
with an increase to the B-2 inventory) and associated sortie generation 
capability, when compared to the large number of available tactical 
aircraft, limits the B-2s contribution to the war once stealth is not 
required (due to sortie generation rate capabilities, operational 
flexibility which multiple platforms provide the CINC, etc.). ------. 
Additional B-2s, at the expense of standoff munitions programs, 
severely limit the Air Force's ability to prosecute a conflict. The 
current B-2 inventory fills a vital niche in the Air Force combat 
arsenal and provides a synergistic enhancement of all our weapons 
delivery platforms.

                               B-1 Bomber

    Question. The Air Force is describing the B-1 as the ``backbone'' 
of the conventional bomber force. General Hawley, the B-1 has been 
plagued in the past by operational and supportability concerns. This 
Committee has taken the lead in trying to address these issues. In your 
view, have we turned the corner on the B-1 program, and can we expect 
to see this aircraft used more heavily in future conflicts.
    Answer. Absolutely. I'm comfortable we have been and are continuing 
to do the right things to ensure the B-1 plays a key role in fighting 
and winning our nation's next conflict. Operationally, in 1997 we added 
our latest technology cluster munitions to the B-1's arsenal, provided 
a much better capability to hold invading armies at risk. We still need 
to add precision weapons and enhanced defensive capabilities to 
increase the number of targets we can attack. In terms of 
supportability, we demonstrated we can achieve the ACC goal of 75% 
mission capable rate during the June-November 1994 operational 
readiness assessment, provided we receive adequate funding. This 
committee has supported our efforts to field continued growth in B-1 
warfighting capability. Still, we must remain vigilant against creating 
long-term support equipment shortages due to accelerated buy-back of 
reconstitution reserve, a vanishing vendor base, the expansion from 3 
main operating bases to 5, and the long team times (2 to 5 years) t 
deliver equipment already ordered. Given them, I believe we turned the 
corner and theater commanders will be satisfied with what the B-1 
brings to the fight.
    Question. There are several survivability upgrades unded for the B-
1. General Hawley, briefly describe these upgrades and indicate 
whether, in your view, they will make the B-1 a more survivable 
platform than the B-52?
    Answer. With the fielding of Block C in Oct 1997, we brought the B-
1 to the point where it has similar electronic countermeasures 
capabilities to the B-52. With the ALE-50/Towed Decoy upgrade in late 
98, and more significantly the fielding of the Defensive System Upgrade 
Program (DSUP) in early 2002, we greatly enhance the B-1's ability to 
penetrate and survive not only low to medium threat areas, but some 
high threat areas as well. The approved architecture for DSUP is an 
ALR-56M providing situational awareness and an integrated Defensive 
Electronic Countermeasures (IDECM) system, providing protection against 
a wide variety of radar threats. The primary jamming source is an off-
board towed decoy developed in conjunction with the Navy. The projected 
capability against all threat systems considered a threat to the B-1 is 
excellent. In short, DSUP gives the CINCs more flexibility on how and 
when to use the B-1 in a conflict. The B-52 remains a survivable 
platform under certain conditions, but will be mroe restrict than the 
B-1 in its employment once DSUP is oeprational. However, we anticipate 
each aircraft will be equally survivable in the roles and missions we 
expect to use them. The B-52 will primarily launch standoff weapons and 
only overfly selected medium to low threat areas. The B-1 will overfly 
targets within low, medium and some selected high threat environments 
using newly fielded standoff weapons like JSOW and JASSM, fighting its 
way into certain target areas, and making way for other aircraft to 
follow:
    Question. General McCloud, how would you characterize the 
performance of the B-1 in the wargame scenarios analyzed in the DAWM 
Study? Would you agree with the characterization of the aircraft as the 
backbone of the conventional bomber force?
    Answer. The Air Force characterization of the B-1 as the backbone 
of the conventional bomber force is based on the greater number of B-1s 
in the conventional bomber force, its larger payload and its higher 
speed. A comparison of the operational capabilities of the three Air 
Force bombers supports this claim. The performance of the B-1 in our 
Deep Attack Weapons Mix Study validates the importance of these 
capabilities to the conventional battle.
    The B-1 is the only bomber that will have a purely conventional 
role. ------. Thus, in sheer numbers alone, there are more B-1s in our 
conventional bomber force than any other type of bomber.
    Conventional bombers will be tasked to deliver a wide array of 
munitions to include: general purpose and cluster bombs, laser guided 
and precision standoff weapons, and naval mines. In the general purpose 
bomb category, the B-1 can carry more 500 lb bombs than any other 
bomber. For cluster bombs, the B-1's greater payload for Wind Corrected 
Munitions Dispensers and Combined Effects Bomblets offsets is payload 
disadvantage relative to the B-52 in less effective cluster munitions. 
The B-52 is the only bomber capable of delivering laser guided bombs. 
The B-2 is the only bomber capable of delivering the Global Positioning 
System Aided Munition-Penetrator. But, the B-1 can carry 30-50% more of 
the other advanced unitary weapons like the Joint Standoff Weapon, and 
the Joint Air-to-Surface Missile. It can also carry more naval mines 
and, with the exception of laser guided bombs, can carry more of the 
advanced conventional weapons than either of the other two bombers.
    While the B-2 will be used to penetrate the most sophisticated 
enemy defenses, the B-1 will be used to strike critical targets in the 
medium threat environment. Because of its superior speed and electronic 
countermeasures relative to the B-52 and its ability to fly nap-of-the-
earth, the B-1 can be integrated with composite strike packages of 
fighters and defense suppression aircraft. The Air Force currently has 
two B-1 squadrons deployed to Fairford England that are proving this 
capability as part of an Air Expeditionary Force.
    The Deep Attack Weapons Mix Study modeled the bomber force using 
the platform-specific characteristics outlined above. ------. Its 
ability to deliver Wind Corrected Munitions Dispensers and Joint Direct 
Attack Munition proved indispensable in attacking maneuver units and 
their logistics tail. These results are consistent with the Air Force's 
assessment of the B-1 as the backbone of the conventional bomber force.
    Question. It has come to the Committee's attention that expansion 
of the number of B-1 bases to five has led to shortages in support 
equipment. How are these shortages impacting the readiness of the B-1 
force, and what is the Air Force doing to address them?
    Answer. Expanding the B-1B to six operating locations, to include 
Edwards AFB, has stretched support equipment (SE) resources to their 
limits. B-1B fleetwide SE shortages result from a combination of 
factors to include accelerated standups, re-activations, buy-back 
schedules, under funded requirements and procurement lead times. 
Specifics impacts are:
    --Existing workarounds of borrowing SE from other units is 
disruptive to operational missions of the loaning units and receiving 
units.
    --Workarounds will become less effective as accelerated buy-back 
and force re-structuring efforts continue.
    --Problem is acute for Air National Guard units requiring SE 
capability for autonomous operations. Daily operations/Initial 
Operational Capability is jeopardized by SE shortages.
    --Accelerated unit standups/reactivations and historic funding 
constraints coupled with 3 year procurement lead times severely 
restrict our ability to support mission requirements.
    In summary, the Air Force is requesting funding to help alleviate 
the SE problem, along with putting together an IPT to come up with more 
solutions. Unit readiness has decreased, but can undertake most wartime 
missions for which it is designed. The lack of SE may cause isolated 
decreases in flexibility but will not increase vulnerability of the 
unit under most envisioned operational scenarios. The units will 
require little, if any, compensation for deficiencies in SE.

                    Costs Involved With B-2 Program

    Question. In the course of this hearing, I want to make sure we 
have a full understanding of the costs involved with the B-2 program. 
The contractor has provided an estimate of $9.3 billion for 9 aircraft, 
but this does not include many of the costs associated with fielding 
the aircraft including spares and support equipment. The DAWMS estimate 
for the 9 aircraft is $16 billion including military construction and 
various upgrades. Dr. Hamre, does the $16 billion estimate include the 
additional $2 billion identified in the DAWM Study to optimize the 
aircraft for the halt phase?
    Answer. Yes, the $16 billion estimate for 9 additional B-2 aircraft 
does include the $2 billion for all the aircraft improvements that the 
B-2 was configured with throughout the conduct of the Deep Attack 
Weapons Mix Study.
    Question. Does your estimate include the additional funds required 
to improve the LO maintenance problems recently identified on the 
aircraft?
    Answer. No, the $16 billion estimate does not include any costs 
associated with the recently identified LO maintenance problems.
    Question. Does the estimate include any shelters, or other major 
support requirements associated with forward deployments?
    Answer. Yes, the estimate for the 9 additional aircraft include 
estimates for the costs associated with; new hangar construction, 
maintenance docks, fuel storage tanks, munition facilities, and 
security.
    Question. Please elaborate on the $3 billion difference between the 
Northrop and DAWMS estimates for flyaway costs.
    Answer. The $3 billion difference between Northrop and DAWMS 
flyaway cost estimates is due to differences in the costs associated 
with; engineering change orders, sustaining engineering, liability, 
warranty, and learning curve. Northrop's estimate includes recurring 
flyaway, government furnished equipment, and non-recurring production 
line restart costs but does not include costs for initial support and 
spares, military facilities in Guam and Diego Garcia, and other minor 
elements of non-flyaway cost which were included in the DAWMS 
estimates. Additionally, Northrop assumes a rate of cost reduction 
(learning curve) that is greater than B-2 history warrants, they 
include a ``management challenge'' or reduction in the estimate not 
attached to specific measures that would be used to achieve the 
reduction, and finally, they assume the aircraft's configuration will 
remain the same through the production period and therefore omitted 
cost estimates for engineering change orders. The DAWMS estimates 
include a more conservative learning curve, did not allow for a 
``management challenge,'' and include costs for engineering change 
orders.
    Question. GAO recently identified an $89 million shortfall 
associated with bringing the last 2 B-2 aircraft to the full block 30 
configuration. General Hawley, how did this problem come about and what 
is being done to address it?
    Answer. During the fiscal year 1998 President's Budget process, the 
Air Force removed $212 million from the fiscal year 1999 B-2 RDT&E line 
to fund other more pressing needs. The Air Force is committed to the 
schedule and content of the B-2 baseline program and is working the 
funding issue in the fiscal year 1999 budget process.
    Question. I am concerned about the problems we've been reading 
about with regard to maintaining the aircraft's low observable 
characteristics and how there problems might impact our ability to 
deploy the aircraft. Given the need for extensive LO maintenance, can 
we reasonably operate the aircraft from forward locations now? What 
would be required to operate from forward deployed locations in the 
future?
    Answer. We cannot reasonably operate the B-2 from austere forward 
locations now. The durability of the LO materials used on the B-2 
require maintenance after every flight to repair blemishes that, if 
allowed to add up, would cause degradation of the B-2's radar cross 
section. These same materials require a temperature and humidity 
controlled environment to cure properly, and the cure times are 
lengthy. There is an aggressive effort focused on developing more 
durable low observable materials and improved repair processes. This 
effort has paid off in the short term, and we expect other successes in 
the next two years. However, operating the B-2 from a forward location 
would require an environmentally controlled enclosure or hangar until 
these low observable maintenance issues are resolved.
    Question. What are the missions we expect to assign B-2s in the 
future?
    Answer. During the early stages of the conflict, the B-2 will first 
attack critical elements of an adversaries Integrated Air Defense 
System (IADS). The elements include selected Early Warning (EW) Radar 
sites, Surface-to-Air Missile (SAM) facilities, Sector Operations 
Centers (SOC), and critical nodes of the communications system. The 
destruction of the critical elements of an adversaries IADS will allow 
non stealthy bomber and fighter aircraft to be employed in support of 
the combat commander's campaign plan. While attacking the critical 
nodes of the IADS, the Joint Force Air Component Commander (JFACC) will 
commit B-2s against deep, strategic targets. Strategic Interdiction 
targets include critical choke points--bridges and tunnels; 
transportation targets--rail lines, truck parks, marshaling yards, and 
supporting maintenance facilities; the power grid--power generation 
facilities, switching stations, and transmission lines; war supporting 
industrial facilities--military hardware production sites, munitions 
plants, and machine tool production facilities; petroleum facilities--
refineries, storage tanks, pumping stations, and pipe lines; enemy 
command centers; and enemy troop concentrations prior to making contact 
with US or allied forces. The JFAAC will also assign the B-2 to 
offensive counter air mission. The B-2s will attack aircraft, aircraft 
shelters, runways, maintenance facilities, munitions storage bunkers, 
and petroleum storage tanks using gravity and standoff weapons. The 
combat commander will also use the B-2 counter Weapons of Mass 
Destruction (WMD, attacking storage areas and missile launchers in pre-
identified locations. The B-2 can also swing to a second theater should 
another aggressor decide to take advantage of the commitment to the 
first theater.
    Question. Are more B-2s required to adequately conduct these 
missions?
    Answer. Force structure analysis conducted during several studies 
indicates that the current B-2 force structure, 21 aircraft, is 
adequate to meet campaign objectives included in two Major Theater Wars 
(MTW).
    Question. Are there alternative means of accomplishing these 
missions?
    Answer. Yes, the flexibility of air power allows the 
characteristics of different aircraft to be packaged in many different 
combinations to achieve campaign objectives. For example, non stealthy 
aircraft could attack heavily defended targets assigned to the B-2 
using standoff munitions or precision gravity weapons after the 
defenses were eliminated by Suppression of Enemy Air Defense (SEAD) 
assets. The objective of any campaign planner is to efficiently employ 
assigned aircraft to achieve operational objectives while holding 
attrition to acceptable levels.
    Question. What is the cost of an expanded B-2 program?
    Answer. The Air Force has no requirement for additional B-2s. For 
this reason, the Air Force has not requested a detailed cost estimate 
from the B-2 Program Office to determine the required funding to 
procure additional B-2 aircraft. Such an estimate would require in 
excess of 120 days (150 days) and several million dollars.
    Question. What might we have to give up to fund an expanded B-2 
program and are the tradeoffs worthwhile?
    Answer. The Air Force believes the B-2 to be an extraordinary 
bomber-especially valuable in deterring and defeating distant armed 
aggression. Unfortunately, funding for additional B-2s within the Air 
Force topline would unbalance the Air Force and deprive future Joint 
Future Commanders of other needed capabilities. The Air Force would not 
expect to fund additional B-2s at the expense of other Air Force 
programs.

    [Clerk's note.--End of questions submitted by Mr. Young.]


             DEPARTMENT OF DEFENSE APPROPRIATIONS FOR 1998

                              ----------                              

                                          Thursday, March 13, 1997.

                       ARMY ACQUISITION PROGRAMS

                               WITNESSES

GILBERT F. DECKER, ASSISTANT SECRETARY OF THE ARMY, RESEARCH, 
    DEVELOPMENT & ACQUISITION
LIEUTENANT GENERAL RONALD V. HITE, UNITED STATES ARMY, MILITARY DEPUTY 
    TO THE ASSISTANT SECRETARY OF THE ARMY, RESEARCH, DEVELOPMENT & 
    ACQUISITION
LIEUTENANT GENERAL OTTO J. GUENTHER, UNITED STATES ARMY, DIRECTOR FOR 
    INFORMATION SYSTEMS FOR COMMAND, CONTROL, COMMUNICATIONS, AND 
    COMPUTERS

                              Introduction

    Mr. Young. The Committee will come to order.
    This morning we had an excellent hearing with Secretary 
West and General Reimer, and this afternoon we will be 
conducting a hearing specifically on acquisition.
    We are very happy to welcome back Mr. Decker and Lieutenant 
General Hite and General Guenther. We are pleased to have all 
three of you at the table.
    I made a lengthy opening statement this morning. I am not 
going to repeat it. I am concerned that the budget is not 
adequate to maintain the tremendous amount of OPTEMPO that we 
are seeing, and so I will not repeat that for you.
    This afternoon's questioning will probably go to that same 
issue. Are we doing everything that we need to do to take care 
of our Army and make sure that we have adequate training, 
readiness capabilities and are we planning enough modernization 
so that ten years from now, twenty years from now, the Army is 
still what we want it to be?
    We are happy to welcome you here. We will hear your 
statements in just a minute.
    Let me ask Mr. Murtha if he has any opening comments.
    Mr. Murtha. No.
    Mr. Young. Okay.
    Mr. Decker, we will place all of your statements in their 
entirety in our record, and you feel free to summarize in any 
way you like, and when you have completed at your leisure, we 
will have some questions.
    [Chairman Young's prepared statement follows:]

                           Opening Statement

    This afternoon, the Committee will conduct a hearing on Army 
acquisition programs.
    We are pleased to welcome Mr. Gil Decker, the Assistant Secretary 
of the Army for Research, Development, and Acquisition. He is 
accompanied by Lieutenant General Ronald Hite, the Military Deputy to 
the Assistant Secretary of the Army for Research, Development and 
Acquisition.
    The Army's overall budget has been declining steadily over the last 
ten years and most of the reductions have been levied against 
modernization programs. The fiscal year 1998 budget continues this 
trend. The Army's fiscal year 1998 budget request for modernization 
programs is $2.9 billion less than last year; or a 15% cut. Most of the 
Army's aircraft, missile, vehicle, and ammunition accounts are below 
last year's level and rarely at levels that make economic or 
operational sense. Based on the fiscal year 1998 budget, for the 
immediate future our soldiers will be flying 40 year old cargo 
helicopters, driving 30 year old trucks, and using war reserve 
ammunition for training.
    We are concerned that this budget will not supply our soldiers with 
the right types and quantities of equipment. For example, the fiscal 
year 1998 budget proposes no funds for heavy tactical vehicles, even 
though the Army is short of its requirements by hundreds of vehicles 
and we are relying on trucks which have exceeded their original design 
life.
    Under this budget, the Army is procuring items at such low 
quantities and stretching out development for so long that it actually 
increases the cost, making it even more difficult to buy the equipment 
necessary to support Army missions. For example, the fiscal year 1998 
budget proposes procuring only 12 Improved Recovery Vehicles although 
the annual economic rate of production is 24 vehicles.
    Finally, by failing to put new equipment in the field, we are only 
increasing the long term costs of maintaining and operating old weapon 
systems. We see this in your helicopter programs, where the fiscal year 
1998 budget proposes terminating Black Hawk production after 1999, 
forcing the Army to maintain almost 600 old, Vietnam-era UH-1 
helicopters in the fleet.
    At the same time we see all these problems in Army procurement, we 
have noticed that the Army's 1998 request for research and development 
activities is higher than last year's request. We have to ask whether 
those R&D activities should come at the expense of producing equipment 
which is essential to meet your warfighting requirements today.
    During the past two years we have worked hard with the Army to 
provide funding increases that you asked us to provide, but it is clear 
from your fiscal year 1998 budget that many of these needs are, once 
again, being deferred. We want to work with you to identify and remedy 
the most pressing shortfalls, and to eliminate budget growth where it 
is not needed.
    Finally, we understand that this will be the last time Mr. Decker 
will testify before our Committee. Mr. Secretary, we will miss your 
candor and appreciate all of your efforts to ensure that our nation's 
soldiers are equipped with the best equipment available.

                    Summary Statement of Mr. Decker

    Mr. Decker. Thank you very much, Mr. Chairman.
    I promise you faithfully this will be brief. I am sure the 
questions and answers are where we will all learn from each 
other in the interchange.
    Toward the end, I do have a short 5-minute video of some of 
the clips of some of the recent successes in our systems that 
we field, and I would like to show you that. We will get to 
that at the end.
    I thank you very much for this opportunity and I thank you 
for your kind remarks.
    As I begin, I would like to express our very sincere 
appreciation for this committee's help and guidance and 
thoughts through the last few years in these tough times and 
for your very generous support of Army modernization in the 
last two years.
    We are trying our best to be careful stewards of the 
resources provided, but the successes and stability that we are 
having would not have been possible without that support.
    In addition to Generals Guenther and Hite, I also have here 
today Assistant Deputy Chief of Staff for Operations and Plans, 
Major General Ron Adams from Force Development, who is our 
partner in harmonizing requirements.
    I also have Brigadier General Bill Arbuckle, who is our 
Army Ammunition Officer, and if you have any specific questions 
in those arenas that come up, I would like to defer to them.
    I also have Dr. Fenner Milton, who is my Deputy Assistant 
Secretary in Science and Technology.
    As you pointed out, we have a detailed written statement, 
and I thank you for reading it into the record.
    America's Army is today, in my honest opinion, the world's 
premier land combat force. We are only the eighth largest Army 
in the world, but today, 13 March 1997, I think we are clearly 
the best.
    And the challenges are great. In terms of mission spectrum 
as opposed to mission mass, we are engaged in far more missions 
and deployments in more places than ever before and in more 
diverse kinds of operations. And if you look over the last 
several years, since the world became not bipolar but became 
far more diverse, the majority of these deployments have one 
thing in common: The bulk of the military participation are men 
and women soldiers on the ground. So it is clear that in 
today's world, America's Army is the force of choice. And as I 
pointed out, the statistics seem to bear this out.

                    FISCAL YEAR 1998 BUDGET REQUEST

    This year, meaning coming into the fiscal year 1998 budget 
year, we were faced with some very tough budget choices again 
in trying to balance readiness, end strength, quality-of-life 
programs and modernization. We have the lowest percentage, a 
little less than 15 percent, of the total Department of Defense 
Research and Development Acquisition Budget.
    In these times of declining resources and squeeze on 
resources, modernization in the Army has essentially become a 
``design to price'' endeavor. Within this constraint, I would 
like to believe that we are getting the biggest bang for the 
buck, but it is leaving some unfilled holes for the future.
    The fiscal year 1998 budget request funds our highest 
priority programs based on our best assessments between 
ourselves on the acquisition side and the other Army leadership 
on the war-fighting side, and we have attempted to make the 
most of these limited resources.
    We are continuing to fund at the same level as projected 
development of only two new--operating word is new--high payoff 
weapons systems and that is Comanche and Crusader. We are 
introducing in this budget a new, well-thought-out requirement 
for a future Scout and Cavalry vehicle. We have some systems 
already in procurement. I won't list them all.
    ATACMS-BAT, that is the Army Tactical Missile System with 
its brilliant anti-armor submunition package; JAVELIN, the 
light infantry antitank weapon, which is absolutely a wonderful 
weapon, and we are continuing to maintain procurement of 
tactical trucks.
    But our main strategy continues to be to extend the lives 
and to improve the performance of existing systems by 
technology insertion and upgrades. Examples of that are the 
ABRAMS M-1A2 tank upgrade; the Bradley M-3 fighting vehicle 
upgrade, the Apache D-Model helicopter upgrade; and a series of 
power projection Command/Control Communications Infrastructure 
programs at our Army installations, to be able to handle the 
critical exchange of data as forces deploy overseas to those 
locations.
    We have had to accept risks in our modernization program in 
the near-term to protect readiness and quality of life, which 
have been the avowed priorities during this period of drawdowns 
and reductions. And so, in fact, modernization in this sparse 
environment has been the bill payer.
    In this environment, in addition to the specific systems I 
have given examples of, and our modernization strategy, our 
overall focus is on information dominance. Supporting 
information dominance, such as the Army Enterprise Architecture 
and the Warfighter Information Network or WINS is critical. We 
evolved an Army technical architecture which enables us to be 
truly operable in the battlefield and without which we would 
not be able to do a digitized Army and create situational 
awareness.
    Investments in this architecture and in the warfighting 
information network will significantly enable the capacity and 
velocity of information distribution throughout the battlefield 
and throughout our forces.
    We have an Information Security program that recognizes 
that protecting this information is an important element of 
protecting our soldiers.

                     FORCE XXI AND ARMY-AFTER-NEXT

    So where are we headed? The Army set in motion a series of 
initiatives to arrive at the 21st Century with the requisite 
capabilities, including this information dominance, and we call 
this program Army XXI. And that will be the initial product of 
our current initiatives.
    Army XXI can be viewed as what is happening between now and 
the 2010/2015 time frame. It will use the digital technology to 
optimize the flow of information and create situational 
awareness at all levels on the battlefield.
    Beyond Army XXI, the intellectual energy of the Army and 
its planning is focused on what we call Army-after-next. As you 
can expect, when you are looking out 15 years in the future, 
you are looking through a cloudy crystal ball.
    But I believe the efforts of the Army and the intellectual 
energy and looking at scenarios and looking at requirements in 
the future is sufficient enough to really help us factor our 
science and technology investments so that the outcomes of 
those will be ready when we go the next round of modernization.
    We are looking for ways to be more efficient. We have 
reduced our infrastructure and we are continuing to make major 
reforms in the acquisition process.
    As I said, America's Army today is the eighth largest Army, 
and thank God it is the first best. It needs to remain that 
way.
    There are four elements that make the first-best Army: 
Quality people, quality training, quality leader development 
and quality technology and modernization. And if we fall short 
in the long-term in any one of those, we will slip from first 
place.
    You will recall last year, we demonstrated capabilities of 
tomorrow's soldiers. The individual soldier is once again 
assuming a dominant role in the warfighting capabilities with 
the diverse missions we have, and we are working hard on our 
Land Warrior program. We have to place great importance on 
enhancing the battlefield capabilities of the individual 
soldier. It is a top Army priority, and I am proud to say that 
the Soldier Modernization program is moving well.
    With that, sir, if I may, I would like to direct your 
attention to the video. I think you will find it interesting 
and informative, and then I will close my statement.
    The Committee proceeded to view the video.

                         MODERNIZATION PROGRAMS

    Mr. Decker. These are FMTV modern trucks, being procured 
and fielded as we speak. That is our heavy trucks, or heavy 
transport. These systems are being extremely well received by 
our soldiers.
    That is the High Mobility Multipurpose Wheeled Vehicle, 
HMMWV, in its many multifarious mission configurations; another 
version of the HMMWV. That is the up armored HMMWV, which we 
delivered several thousand to Bosnia. Our palletized load 
system. One person can load and unload that truck on the 
battlefield. Our Forward Air Defense Ground-Based system, which 
couples into the Avenger and the Bradley Linebacker, Air 
Defense Network; our Patriot system, including the Enhanced 
missile.
    I mentioned our soldier system. It is moving along very 
nicely. Our tactical Unmanned Aerial Vehicle, UAV program. That 
system is the Hunter you see flying, doing very, very well at 
the National Training Center.
    Our Theater High Altitude Area Defense, THAAD system, which 
we will talk about later. That is Comanche. I was down 
yesterday with Dr. Kaminski and watched it go for a series of 
its engineering test flights. It is on schedule and performing 
remarkably well at this stage of development. The Enhanced 
Position Locating Reporting system, which is also a part of our 
digital network on the battlefield.
    We finally have a Maneuver Control system, Mobile 
Subscriber Equipment, our Single Channel Ground and Airborne 
System SINCGARS radios. We have the ground station module for 
Joint Survelliance Target A Hack Radio System, JSTARS. And that 
is the TAMS, Tactical Missile System with the standard cluster 
munitions.
    This is the Brilliant Antitank Armor Submunition; the Sense 
and Destroy Armor 105 centimeter precision-guided munition; the 
ABRAMS M1A2 tank, which we sincerely believe is still the 
finest battle tank in the world.
    Our Apache Longbow, which the marketplace has proven it is 
the best heavy-attack helicopter in the world, and the Bradley 
fighting vehicle in its infantry configuration.
    Our new Command and Control vehicle that is being used by 
the Digitized Brigade at the National Training Center as we 
speak; Crusader, our new Advanced Field Artillery system. This 
is a schematic of that. It is under early development as we 
speak.
    Grizzly is a Breacher and a mine-plowing system to clear 
land mines. And that is the Javelin, a terrific antitank light 
infantry missile.
    Mr. Chairman, I know that is a little bit of PR, but it is 
illustrative that we have done a lot with what you have given 
us.
    I think these are wonderful weapons systems. And with that, 
I once again want to thank you for having us and that concludes 
my opening statement.
    [The statement of Mr. Decker follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Young. Mr. Secretary, how about General Hite, do you 
have any opening comments, or General Guenther?
    General Hite. No, sir.
    General Guenther. No, sir.
    Mr. Young. Thank you very much. We don't mind the PR, 
because we are very proud of this Army as well.
    Mr. Decker. Great.

                          Landwarrior Program

    Mr. Young. A lot of those systems that you showed us this 
committee had a lot to do with pressing ahead, and there are 
some others that you didn't put up there that fall into that 
category.
    Mr. Murtha.
    Mr. Murtha. Well, I noticed the music in the background and 
I just wonder, are you going to pipe this music into this new 
system you have got for this ground control guy?
    I mean, I can imagine, I know you guys are big on this, but 
a guy is out in the mud and somebody is sitting back in his 
tent, a one Star, and he is watching this guy on a television 
set and you have a little music because he doesn't want to get 
bored out there, and things are starting to go wrong, and he is 
telling him what to do, he has no senses because something is 
in his ear and he is watching something over a television set.
    Now, are we still spending money on that? I mean, are we 
taking away--when I came back from Vietnam, I could feel 
people, I could feel people for 6 months, and you know what I 
am talking about. You get out in the jungle, you feel them. We 
put this stuff on somebody, we are not going to feel it and 
somebody back there is going to give them orders that are not 
going to work.
    I just can't comprehend that we are not wasting a lot of 
money on something that is going to not work.
    Mr. Decker. That is a very interesting question, sir.
    Let me maybe give you a thought on that and then maybe get, 
in a simple way, a little bit technical.
    When a soldier unit, a real soldier unit, be it a light 
infantry unit or somebody with soldiers on the ground, or out 
on that kind of a mission and they will be bored more in 
today's world, it is a pretty messy environment, whether it is 
jungle, whether it is a lone patrol in the desert, whether it 
is bad weather, whatever. And you do develop a sixth sense, I 
would accept that, but the thing is, when you are in that 
obscuration-type environment, you need to see what is around 
you and so does your next higher echelon if they are not going 
to do something stupid, and one of the things we have 
discovered with the Army warfighting experiments down at Fort 
Polk, that is the National Training Center for light infantry-
type things as opposed to the desert, which is the heavy stuff.
    Mr. Murtha. Mr. Secretary, rather than have a long 
explanation, I have to come down and see this because I cannot 
conceive that this is going to be an advantage to the person 
that is out there in the field. So rather than have you go 
through a long explanation here, if you will invite me down, I 
will go down and take a look at it.
    Mr. Decker. You are invited. We will take that for the 
record, and let me just make a quick closure then.
    Mr. Murtha. Okay.
    Mr. Decker. When you go, ask the soldiers about owning the 
night--they now own the night--and ask them how they feel about 
this kind of equipment, that will be a lot better testimony 
than I can give.

                  Reserve Component Automation System

    Mr. Murtha. Now, RCAS is something that we started about 
ten years ago, which is the call-up system for Reserve and the 
Guard. We took it away from the Army because they did such a 
bad job and we gave it to the National Guard. Where is that 
program?
    Mr. Decker. I will give a very quick, less than one-minute 
summary, and I would like for General Guenther to comment. 
Today, that is one of the best-managed programs in the National 
Guard due to our excellent partnering with the Guard. So we 
have turned that program around.
    Mr. Murtha. So we can now call up people using that system?
    Mr. Decker. We can do that. Now, we have to get it 
proliferated to each of the States. One of our first major 
demos of that system was in Iowa, and it is beautiful and I 
invite you to go see it. So it is a matter of fielding schedule 
now, not a system that isn't working.
    Mr. Murtha. One other thing that we worry about is the 
ability to disrupt our logistics or administrative 
capabilities, such as a call-up. Do we have safeguards in that 
RCAS system so that they couldn't break into the computer and 
disrupt it, a country couldn't do that? So this is a safe, 
secure system?
    General Guenther. Yes, sir. If we have to send classified, 
we go off-line for that, and we use an encryption device. We 
assessed the RCAS as to how much classifed traffic you would 
pass, which is about two percent. In the RCAS system itself, we 
have security built in also to keep hackers out and all the 
antiviral protecton stuff already built into the system.
    If I might comment on the system itself and where we are, 
we are ahead of schedule on what we had projected to you. We 
have fielded 35 out of 49 Program Objective Memorandum, POM 
sites this year already. We expect to be on schedule all the 
way through fielding or even ahead of it.
    As you know, this system gets fully fielded out through 
'02, and if we keep going the way we are, we will complete the 
program ahead of schedule.
    Mr. Murtha. I believe that is the latest schedule, that is 
what you are ahead of.
    General Guenther. Sure. Sir, I would just say that the 
reason we are making such progress is because we have team work 
between the National Guard and the Reserves, and the Active 
component right now.
    Mr. Dicks. Well, Mr. Chairman, I want to compliment General 
Guenther on this, because a few years ago, maybe it wasn't that 
long ago but it seems like it, RCAS was in disastrous shape and 
the staff of the committee did a lot of good work on this 
issue, we sat down with General Guenther and he promised that 
the Army wouldn't take advantage of the National Guard. There 
was some concern about that.
    And I think that they did work together very cooperatively. 
And the contractor also, the present CEO of the company pledged 
that they would straighten out the problems, which were largely 
part of the company's fault. I think that is saying it 
accurately. But I think because Mr. Shrontz did commit to get 
this straightened out----
    General Guenther. Yes, sir.
    Mr. Dicks. That Boeing did finally get this thing rolling. 
As I understand it, it is moving in the right direction.

               High Mobility Multipurpose Wheeled Vehicle

    Mr. Murtha. I have got to ask one last question. My HMMWV 
seat, now when I went to Bosnia with the President, he was 
going to ride off in a HMMWV in my seat. I said, no Mr. 
President, I am riding off in that HMMWV seat, and I rode off 
and Senator Leahy took a picture of me riding off in the HMMWV. 
It is the only one I have ever seen. I mean, is there a HMMWV 
seat we can improve so the guy is comfortable in that right-
hand seat in a HMMWV?
    Mr. Decker. I have been assured that that newly designed 
seat is in procurement, at a reasonable rate, and it is 
getting--I don't know what the priorities of them are.
    Mr. Murtha. I will tell you if you are riding in the right-
hand seat, the priorities are pretty high. You have got every 
kind of seat I have ever seen out there.
    Mr. Decker. Okay. But I am told that that program is in 
good shape.
    General Hite. Sir, you ask me this question every year.
    Mr. Murtha. Right.
    General Hite. One of these years I am going to get it 
right.
    Mr. Young. And he is going to keep on asking, too.
    General Hite. Yes, sir. We started in 1991, all the HMMWVs 
coming off the line after that year have the new seats. We have 
also put the upgrade seat into the supply system so commanders 
of units can order that seat.
    Mr. Murtha. When you say ``improved,'' is this the bucket 
seat or is this the one that you showed me a couple of years 
ago? Which one is it?
    General Hite. It is the--we have had two versions of the 
improved one. One came in in 1991, was the first version, of 
course. The bucket seat is the one that is in the supply system 
now. You can order that.
    Mr. Murtha. Okay.
    Mr. Dicks. What was wrong with the old seat?
    Mr. Murtha. Well, I tell you, it was over a battery. It was 
like sitting on this. It just squashed down. It was bad enough 
before it got squashed down, but I mean it was absolutely 
uncomfortable, and this guy had to sit in this all the time 
going over not the smoothest roads in the world.
    General Hite. I think Mr. Murtha described it very good 
last year in terms of what you had to carry with you after you 
had ridden on that seat for a while.
    Mr. Murtha. Thank you.

                      Command and Control Vehicle

    Mr. Young. Mr. Secretary, you mentioned the Bradley 
Fighting Vehicle, and you had a couple of shots of it on the 
video, as well as the Command and Control Vehicle. And I 
recently had a chance to observe a Bradley exercise in the 
field demonstrating the system, but while I was there, in that 
command and control system, this sergeant was showing me this 
communications equipment and really bragging about how good it 
was and how he could really keep in command of the whole 
situation.
    He said the only problem was that in order to connect all 
of the communications gear together, it took harnesses about 
this long that you plugged in one to the other, and he said 
there was such a shortage of those harnesses that much of the 
time they couldn't use their communications gear.
    I wonder if you are aware of the fact that kind of a 
shortage exists?
    Now, that may only be at the training level, but if it is 
at the training level, there is a problem even if you have 
plenty at the combat level. What is the situation there, 
General?
    General Guenther. Yes, sir, I will take that one.
    As we have been building up for the National Training 
Center, NTC rotation--let me take that first and then take the 
question in general. As we have been building up for the NTC 
rotation, we did find that we were losing a lot of cables. So 
we set up what we call the Consolidated Technical Support 
Facility, CTSC, which is a capability to support units as they 
were training, a capability to bring extra cables in and 
support them totally.
    A lot of our cables in the force for those type of coaxial 
cables or other connectors that we have for the radios inside 
the Tactical Operations Center, we buy through the prison 
system. It is very well done by them, and we provide those.
    There is a basic load that they take, assessed by the 
command in an operating unit, and, sir, I am not aware of any 
cable problems right now, and they have been out at the NTC now 
for about three weeks. But we have a capability to support them 
that we built for the NTC also.

                     Individual Solidier Equipment

    Mr. Young. They also said they were really short on 
binoculars and compasses. Those seem like they are fairly 
important items for soldiers out fighting a battle. Is this 
something that is on your scope?
    General Guenther. Sir, was this at Fort Hood?
    Mr. Young. No, sir. This was at Fort Carson.
    Mr. Decker. We need to look into that, sir. I really--
wasn't aware of this at all. This is new input. I am surprised.
    Mr. Young. Well, I added it to my list of things that go on 
my big scroll, so we will discuss them with you more in detail 
when we get ready to go to markup. But, you know, these kind of 
shortages could cause problems in the conduct of the 
battlefield.
    Mr. Decker. You bet. Those bread-and-butter items are 
terribly important. We shouldn't let them get off the screen.

                            Crusader Program

    Mr. Young. Tell me something about where we are with the 
Crusader. I think it was either last year or the year before we 
tried to get you to accelerate the Crusader program a little. 
Is that something that has happened?
    Mr. Decker. I have a general view of that, but General Hite 
follows those two programs in some detail, so let me turn that 
one over to him.
    General Hite. The Crusader program is on track now in terms 
of cost and performance. We are a little bit behind schedule in 
that particular program, but otherwise it is doing very good. 
We took a decrement last year of $25 million. Ten of it was in 
the propellant line; fifteen was in the regular Crusader line. 
That is not the entire cost of the schedule slip. A lot of that 
can be blamed primarily on decision-making apparatus when we 
switched from liquid propellant to solid propellant, and I was 
part of that process.
    Mr. Young. Mr. Dicks.
    Mr. Dicks. Does ``decrement'' mean cut?
    General Hite. Yes.
    Mr. Dicks. I thought we were trying to increase that 
program.
    Mr. Young. I thought our purpose was to try to accelerate 
the Crusader program.
    Mr. Dicks. It says here in the questions that this cut is 
causing a 6-month delay.
    Mr. Young. Well, the general just indicated that.
    General Hite. Any time you take $25 million out of a 
program, it is going to have an impact.
    Mr. Young. We didn't take that $25 million out, did we?
    General Hite. Yes, sir, you did.
    Mr. Young. Let me find out why.
    That obviously was a casualty of the conference. We did not 
take the $25 million out in our Committee, but in conference.
    General Hite. When I say by ``you,'' in Congress.
    Mr. Decker. Not you specifically, sir.
    General Hite. So it served as a combination of the cut plus 
the fact that it took us some time to make a decision, a final 
decision, to switch from Liquid Propellant, LP to solid. When 
the program manager came to me, I was uneasy with making that 
decision without giving a lot more study. We probably studied 
it just a little too long, and it got us off schedule a little 
bit. But we are okay on the program now. The program is funded 
in 1998 where it should be, and we are moving forward with it.
    Mr. Young. Good.
    Mr. Dicks.

                      Comanche Helicopter Program

    Mr. Dicks. Could you tell me where we are on the Comanche 
program?
    Mr. Decker. Yes, sir. We are well into the flight test 
program of the first vehicle. As you recall, there will be two 
vehicles built in this phase. The second one is under 
construction as we speak.
    We have had about 34 flight hours on the first system. At 
the test facility in West Palm Beach, Florida--it is performing 
well. The program is using a very rigid scheduling and variance 
measuring--and cost variance measuring techniques. It is less 
than 1 percent variance from the baseline program. So relative 
to the planned program, it is right on target, and that is an 
absolutely accurate statement.
    Mr. Dicks. Well, last year we added $49 million. Was that 
necessary to keep it on track?
    Mr. Decker. It certainly keeps the future events on 
schedule. There are several things that needed to be put into 
the system that would have had to have been delayed until later 
in the program relative to making sure we have the low 
observable capability that is in the system that it needs.
    We did need to increase the flight testing a bit, and we 
needed to accelerate the mission equipment package, which is 
the reason for existence, that is the sophisticated electronic 
reconnaissance gear, in order to keep the second bird on 
schedule.
    And so those were on schedule, but the schedule was risky, 
and your addition last year significantly reduced the risk of 
keeping those on schedule.
    Mr. Dicks. Now, is the budget this year adequate, or do you 
need additional funds this year as well?
    Mr. Decker. The budget this year is adequate in relation to 
the program plan and schedule that we have laid out for the 
dollars that are available. But there will be a period of down 
time where we don't have enough funds to test but one vehicle, 
and we would like to fill that up with testing time because it 
will further reduce risk later in the schedule of the program 
when we start building the first six vehicles, and so we could 
use some extra money this year to fill that gap.
    Mr. Dicks. How much would that require?
    Mr. Decker. That is about $40 million.

               Theater High Altitude Area Defense System

    Mr. Dicks. Okay. Let me ask you, this committee has been 
very interested in Theater Missile Defense, and as I understand 
it now, we have had our--is it our fourth failure in a row on 
the THAAD program?
    Mr. Decker. No, sir. It is the third. The first flights of 
THAAD was to check out the efficacy and operation of the 
missile, and they weren't--it wasn't aimed at a target. So 
since we started firing for targets, we have had three failures 
in a row.
    Mr. Dicks. Well, what is the current status of the program?
    Mr. Decker. The status of the program is that we are on 
schedule in the sense of--well, actually we are about 4 months 
behind schedule in the sense of meeting the test--goals of 
test, and we have had these problems that have----
    Mr. Dicks. You mean you are meeting the goal of having the 
test, not that the tests are successful?
    Mr. Decker. Right. Let me explain the rest of that. So in 
terms of schedule, had we had successes, we would be in 
outstanding shape.
    Mr. Dicks. Didn't Dr. Kaminski say that this now is the 
program that is under some risk of going forward because of 
these failures?
    Mr. Decker. Well, I think until we fully understand the 
ensemble of the failures, which we have an outside team, 
outside of our program management, that is being chaired by 
General Lyles, Director, Ballistic Missile Defense 
Organization, personally, and we support this fully, going 
through a complete overview of the program in total to try to 
get at not only the specific technical cause of the failed 
hit--there were a lot of successful things that worked about 
the missile and the radar on this last one. So this is not a 
colossal disaster by any means, but we are scrubbing that down. 
But we are concerned there may be somewhere in the system of 
management some quality control issues that we haven't 
uncovered that we have got to find and screen out, and that 
would not be necessarily a technical design flaw, but something 
we have got to fix so we don't--all three of the failures we 
have had were due to different causes, and that is a problem.
    So we would expect in 2 or 3 months to have the--maybe 
sooner, to have the results of this scrub team and to give an 
assessment of the program.
    Mr. Dicks. Can you give us any idea of what kind of 
problems these are?
    Mr. Decker. Yes, sir. All of the problems relate to the end 
game. That is the last couple kilometers as you are closing in 
on the target. The tracking of the radar and the feeding of the 
control of the missile to get it into the bucket have gone 
superbly. There is a seeker, and the seeker images the target, 
and you can tell from the ground when it has imaged it, and it 
takes over control of the missile and its warhead. The seeker 
can determine where the missile is heading in relation to the 
target and generate a digital signal through a computer that 
fires small little motors that are called divert motors, and 
they are part of the attitude divert system, and that steers 
the missile in to hit. It is in that end system.
    The seekers are a very tricky technology. I will assure you 
in any, any missile, defender missile, the whole game is the 
seeker and the divert system at the end, and that is where we 
are having the trouble. We are getting close, but we haven't 
hit it yet.
    Mr. Dicks. Who builds the seeker?
    Mr. Decker. This--now, this gets a little more complicated. 
The seeker design for this missile is the platinum silicide 
PtSi. We used the best available technology at the time. Along 
the way, we are changing to a new technology; indium antimonide 
(InSb) seeker. We have continued to test the missile with the 
PtSi seeker until we get the new seeker in, the InSb, ready to 
use with confidence in future tests beginning with the next 
flight test number 8.
    Who is the builder of the double seeker we have now?
    General Hite. I forget the name.
    Mr. Decker. I am sorry. I will have to take that for the 
record. The new seeker will be made down in Corpus. They won 
that in a competitive contract.
    [The information follows:]

    The maker of the old and new seekers is Lockheed Martin 
Infra-Red Imaging Systems (LMIRIS), formerly Loral, located in 
Lexington, Massachusetts.

    Mr. Dicks. Now, we are talking about a later defense here; 
isn't that correct?
    Mr. Decker. Lockheed Martin Infra-Red Imaging Systems 
Corporation is doing the current seeker and the planned seeker 
which represents an advancement in technology. The InSb Focal 
Plane Array for the seeker is commercially available; and it 
has greater performance, costs less, and is easier to produce.
    [Clerk's note.--The witness did not discuss the performance 
characteristics of the InSb seeker in his original answer.]
    Mr. Dicks. Was the change made because of your concerns 
about this seeker working, or was it competitive or what?
    Mr. Decker. No. The change was made because the basic 
imaging material in the seeker we have now, which is platinum 
silicide, is not as sensitive and not as responsive to the 
signals, it is a thing that forms the image, as the new 
material known as indium antimonide. It is a better technology. 
It is more stable, more precise and more sensitive. So we made 
the decision for that reason, and it will be a better seeker.
    Also, the design, the platinum silicide, the seeker is 
really two halves, and I am not sure how it ended up that way. 
That was before my time. It may have had to do with the kind of 
materials. And it is really two seekers in one, and they image 
together, and they get coupled through the computer into the 
resultant image. And trying to keep that in synchronism--and 
one of the failures, one-half of the seeker entirely failed, 
and the software wasn't ready to accommodate that. So there 
were those kind of deficiencies in the present seeker, 
partially due to technology and design, that some time ago we 
decided to go to a new design and went out on competition and 
awarded that to Raytheon. And our plan----
    Mr. Dicks. So when is the first test with the new seeker?
    Mr. Decker. Well, I tell you when it was scheduled. We 
might delay until next year to make sure we don't have other 
problems in the missile review.
    When was the next flight schedule?
    General Hite. Flight number 8 is scheduled to have the next 
seeker in it, sir. We will probably shoot that seeker in that 
flight.
    Mr. Dicks. When is that going to be?
    General Hite. Depending on the results of this failure 
investigation we are doing, we are looking at the end of July 
or the first--the end of June or the first week of July for 
shot number 8, sir.
    Mr. Decker. That was the schedule that existed before we 
had the failure the other day. We will have to wait.
    Mr. Dicks. Well you all are very experienced individuals. 
Do you think the new seeker is going to solve the problem, or 
do you think there are other problems.
    Mr. Decker. I am concerned there are some other problems 
somewhere in that total front end assembly beyond just the 
seeker, and we have got to find that out. This is the first the 
absence----
    Mr. Dicks. This is starting to sound a lot like TSSAM.
    Mr. Decker. I don't know what TSSAM is.
    Mr. Dicks. Well, that was the missile we were going to fire 
off all of our airplanes.
    General Hite. The TSSAM, yes, sir.
    Mr. Decker. No, sir. If we can't get to the root of this to 
really understand it, we probably ought to stop.
    Mr. Dicks. All right. If you don't have it, though, what 
are you going to do? Theater Missile Defense is one of the 
great vulnerabilities we faced in the Gulf War. Any time you 
deploy forces, if the other side has got cruise missiles or 
Scud launchers, you have got to be able to defend these troops. 
How are you going to do it if you don't have this?
    Mr. Decker. Well, that is a good question, but in my 
opinion, if you step back and you look at the base of 
technology, engineering, management and experienced talent in 
the nation on these highly complicated technologies that make 
up these missiles, virtually every program we have, and there 
are four of them in major form, the Navy Lower Tier, the Navy 
Upper Tier, the PAC-3 upgrade and the THAAD, we have the entire 
talent base of the country tied up. So, I mean, I am not sure 
where to go if we can't get at the root of this. If I knew 
somebody else that was better, we would have them on board.
    Mr. Dicks. Well, I didn't necessarily mean that. What you 
are saying is there really isn't an alternative. You have got 
to get this right.
    Mr. Decker. You have got to get this damn thing fixed, but 
we don't want to do it and tell you that it is fixed until it 
is.
    Mr. Dicks. That is what we don't want you to do. But 
sometimes, you know, people over in the Defense Department 
cancel things prematurely and then----
    Mr. Decker. I wasn't hinting at that.
    Mr. Dicks. No, I know. But I am not saying that. I am just 
saying that my concern is we had to fix the Abrams tank. We had 
to fix the Apache helicopter. We had to fix the Bradley. We had 
to fix the F-17 airplane. Every one of these things go through 
problems.
    Mr. Decker. Yes, sir.
    Mr. Dicks. And sometimes because the press is bad and 
criticism from Capitol Hill, people say, well, we will just 
have to cancel the program. Well, if you have got to have it, 
you better make the extra effort to try and make it work. And I 
don't think we are at the point where you can really say that 
this thing can't be redeemed. I hope you guys can figure out 
the answer, because I think we desperately need it
    Mr. Decker. We do.
    Mr. Dicks. We need this capability. And if you don't have 
it, which is what I was asking you, what else would you do? If 
THAAD was cancelled, what would you do? Would you start a new 
program or what?
    Mr. Decker. I am not sure starting a new program--I mean, 
if there was another base of talent someplace in a company that 
wasn't in the ballgame, you might want to try a new team. We 
don't have that.
    Mr. Dicks. Yes.
    Mr. Decker. So we have got to get it fixed.

                      Patriot Advanced Capability

    Mr. Dicks. How are the other programs doing? How is PAC-3 
doing?
    Mr. Decker. Well, PAC-3 is moving well. I think it is in 
good shape.
    Mr. Dicks. But that is just the lower part.
    General Hite. Yes, sir.
    Mr. Decker. Yes. But it has yet to kill a missile. The Navy 
Lower Tier----
    Mr. Dicks. Has it been able to intercept a missile? I have 
seen one video of it we had here a couple of years ago.
    Mr. Decker. Yes, sir, it has. The new PAC-3, an upgrade 
missile, when is it first firing?
    General Hite. September.
    Mr. Decker. September is its first firing. It is on track.
    Mr. Dicks. And they can't expand that and go higher? If you 
could explain it to me, I don't know this as well. Mr. Wilson 
was our expert on this. He has left us.
    General Hite. Yes, sir.
    Sir, there is a possibility that you can do that, if you 
take that missile and do some things to it, that is within the 
realm of possibility.
    Mr. Dicks. It works?
    General Hite. It is something that we are looking at, but 
it would be a redesign of the missile because it is a much more 
stressing environment the higher it goes.
    Let me pick up on your point do we stop the program. What I 
would say is that this is--this program is in the 
demonstration/validation phase, and the purpose of that phase 
is to demonstrate and validate technology, find out what your 
problems are, and correct your problems before you go in to 
full-scale engineering.
    Mr. Dicks. Right.
    General Hite. When you have problems, you sort them out, 
and we are having some problems. The issue now is not the 
seeker. We are pretty comfortable with the new seeker that is 
coming on. We are pretty comfortable with that. All we were 
waiting on was the technology to get to the point where we felt 
confident to move that new seeker technology in the missile. We 
waited, and we are ready to do that.
    Our concern is, of the failures we have had, as Mr. Decker 
said, they are all different. That points us to a reliability 
or a quality assurance problem. Now, if you are having that 
kind of problem, you tighten up the management, find out what 
your processes are, are they the right processes, are they 
being conducted properly? Or you go and look for someone else 
to build a missile. If you look at each one of those firings, 
take away the fact that we didn't have an actual intercept, but 
look at the tremendous amount of things that have to happen to 
get that missile up in the air into the intercept box, all that 
equipment worked great; the radar, the BM/C2, the battle 
management devices. I mean, that is a big part of the program, 
the boosters. The problem is--might be in the reliability or 
quality assurance area, and that is what we are looking at. So 
which----
    Mr. Dicks. It sounds a lot like TSSAM. This was the same 
kind of problem we had with that.
    General Hite. Would you kill the program for that? I 
wouldn't kill the program for that. I would probably--if I 
can't get those problems fixed or those quality and reliability 
problems, if that is, in fact, what it is, I might look to a 
second source for this second missile portion.
    Mr. Dicks. Or you bring in a new program manager or try to 
get the manager's position.
    Is this Texas Instruments? Who is running this one?
    General Hite. Lockheed Martin.
    Mr. Decker. Lockheed Martin.
    Mr. Dicks. I have heard of them.
    Mr. Decker. Say again?
    Mr. Dicks. I have heard of them.
    Are they giving you management attention on this thing?
    Mr. Decker. Yes, sir.
    Mr. Dicks. Do they understand that they have got to get 
this thing fixed?
    General Hite. Yes, sir, they are now giving us management 
attention.
    Mr. Dicks. You say now?
    General Hite. My spin on it is I don't think we gave it the 
proper management attention early in the program.
    Mr. Dicks. Is the Army doing its part in terms of looking 
at its own program manager?
    General Hite. Yes, sir. We changed our program manager 
about 6 months ago. We have an extremely capable and bright 
individual running that program, one of the best we have.
    Mr. Dicks. How are the two Navy programs? Do you follow 
those as well?
    Mr. Decker. Well, certainly not in the detail of our two, 
but at the micro-level, the Lower Tier, which is the Navy 
analogy to Patriot, seems to be coming along quite well. Their 
Upper Tier, which is the echelon Spirit, is earlier in the 
entire stage in terms of even immaturity than THAAD. It just 
got out of sync. It started there. So it is too early to tell 
if they are going to have similar problems.
    Mr. Dicks. But we are talking about a layered defense; 
right?
    Mr. Decker. Yes, sir.
    Mr. Dicks. Is that what we are trying to do?
    Mr. Decker. Yes, sir.
    Mr. Dicks. It is area protection plus point protection?
    Mr. Decker. It is small area versus large area protection. 
Obviously, the Patriot is geared to defending a small area, 
with----
    Mr. Dicks. An airfield?
    Mr. Decker. Envelope and airfield or a small town or a 
corps headquarters, whatever, logistics installations, it is 
defending that area, but its range of the defense envelope, 
where the missiles can intrude and be in there, is fairly big. 
But if you go in to the--the physics, if you will, the shorter-
range ballistic missiles, the 3-to-500 kilometer have a 
different ballistic reentry coefficient and different speeds 
and you can defend them with the Patriot. When you get up to 
the 1,000-kilometer range missiles, you have got to get up 
higher and get them earlier, and that is why we went to the 
layered.
    Now, the good news is, for good, better or indifference, 
the best intelligence data we have is that the proliferation of 
the missiles today and over the next few years are the shorter-
range SCUD class. They are cheaper and they are easy to get. It 
will be awhile----
    Mr. Dicks. So PAC-3?
    Mr. Decker. PAC-3 will provide that initial okay at the 
lower tier, but when you get out to 7, 8, 9 years from now you 
will begin to see the advent of the 1,000-kilometer missiles.
    Mr. Dicks. I have stretched my time here, and I have to 
leave, but let me ask one thing.
    Are we getting any of these systems into the inventory? Are 
we getting any of the new PAC-3s?
    Mr. Decker. PAC-3s, the Patriot, with--the enhanced Patriot 
II missile is fielded, as we speak.
    Mr. Dicks. Right.
    Mr. Decker. It has got a limited capability against other 
missiles.
    Mr. Dicks. Right.
    Mr. Decker. And it is better than nothing. The new missile 
is scheduled to be fielded beginning in late 1999.
    Mr. Dicks. So we have got a year, a couple of years to go?
    Mr. Decker. A couple of years to go to get that missile 
out.
    Mr. Dicks. That is the PAC-3.
    Mr. Decker. That is the PAC-3, to get you up to the little 
larger envelope.
    Mr. Dicks. Thank you, Mr. Chairman.
    Mr. Decker. Thank you, Mr. Dicks.
    I would like to say one thing, I read a little philosophy a 
long time ago I saw in a fortune cookie. It said: ``The world 
is full of people who gave up just before they would have 
succeeded.'' We don't want to do that.
    Mr. Dicks. And I think that is a very important point. I 
mean, we were reviewing this morning with General Reimer, all 
these systems that were criticized in the press. They said they 
were terrible and then when we got to DESERT STORM/DESERT 
SHIELD and they worked and worked dramatically well. So by 
staying with it and fixing up the problems, we got the country 
systems with value.
    What I worry about is you will cancel this thing and then 
it is going to take you years to come back, and we have a big 
void here of not having protection for our soldiers.
    Mr. Decker. Thank you, sir.
    Mr. Dicks. Thank you.
    Mr. McDade. The gentleman from Ohio is recognized.

               Family of Heavy Tactical Wheeled Vehicles

    Mr. Hobson. Thank you, Mr. Chairman.
    I have three areas of questions I would like to ask, if I 
may.
    I have some problems with the way you all buy stuff, 
especially in the area of trucks, although I noticed you added 
funding for trucks. I didn't get to see the movie, but I want 
to add some things about heavy tactical vehicles. You know, you 
talk about the importance of them, Mr. Decker, but for the 
second year in a row, as I understand it, your budget proposed 
no funds to procure heavy tactical vehicles. I assume from that 
you have got enough of them, you don't need any more?
    And yet in 1999--let's see. In 1998 or 1999, I guess you 
are going to come back. I don't know how you are going to do 
that. Are you going to start all over again with somebody new?
    Mr. Decker. That is a tough one.
    Mr. Hobson. I don't like to ask easy ones.
    Mr. Decker. No, I know you don't and that is fair. You 
shouldn't ask easy ones. You should keep us on our toes.
    I think the best answer I can give you on that is we ended 
up late in the year with what looked like was going to be an 
enormous hit on top of our budget plan to that date. And in 
looking at the Army's piece of what that cut was going to be, 
the decision of the Army leaders was to say if that cut happens 
at that magnitude, we have got to stick with our readiness 
budget we submitted and stick with our quality-of-life related 
budgets, of which pay is certainly a big piece, and so the cut 
was all going to come out of the modernization program.
    Well, it turned out the cut wasn't quite as big as we 
thought, but we still had to do some things at the end. And 
when we got down to what the final bottom-line number was going 
to be for the Code Alarm and Research and Development 
Acquisition Account, we had to take a program out someplace. I 
mean, there was no way to salami-slice it, and I don't believe 
in salami-slicing.
    Mr. Hobson. Is that going to be cost-effective----
    Mr. Decker. No, sir.
    Mr. Hobson. To go cold-turkey and then come back?
    Mr. Decker. No, no. But it would have been less cost-
effective to kill some other program. And so we didn't fight 
the warfighter priorities too hard. We do that a lot on the 
basis of efficiencies, because from a warfighter priority view, 
we are in better shape with our units that we deploy first with 
the heavy trucks than we are with the others. And so we just 
said we will take a break for one year so we don't have to 
wreck these other programs.
    Now, I don't really know if we thought about the 
competitive strategy but, in reality, we always compete, but 
the maker that is currently making our heavy trucks is an 
excellent contractor. They deliver and stand behind their 
product. They have other business, and we didn't put them in 
jeopardy as a company and so they can restart. It will be 
efficient for a restart. So we put all of those thoughts 
together and said that is the program we will take out to fit 
this budget bogey.
    Mr. Hobson. You don't think they are going to be in 
jeopardy?
    Mr. Decker. I don't know the company is going to be in 
jeopardy. It is a good company and they have another base of 
business. If you put the company in jeopardy, I would be 
concerned, but I don't believe we have done that.
    Mr. Hobson. Let me go on and ask about some other vehicles.
    Mr. Decker. But it is an inefficient decision, you are 
absolutely right.

                   Family of Medium Tactical Vehicles

    Mr. Hobson. How many Medium Tactical Vehicles are sitting 
down in Texas rusting, that you haven't accepted or you won't 
accept?
    General Hite. Sir, I don't have the exact number that are 
sitting down there rusting. We have resolved that problem with 
the contractor and he has shipped those out several months ago. 
We are fielding now those trucks to both Fort Campbell and Fort 
Bragg.
    Mr. Hobson. The rusty ones?
    General Hite. Yes, sir. The ones that have been corrected. 
We put them in. We made--we asked the contractor to come up 
with a solution to that. The contractor did come up with a 
solution to that, gave us a 10-year warranty on the cab that 
was rusting and fixed those problems.
    The number that was down there, when we testified last 
year, was very high. It was like 1,700 or 1,800. That problem 
has been resolved now and we are shipping trucks every day we 
can out of Texas.

              High Mobility Multipurpose Wheeled Vehicles

    Mr. Hobson. Let me ask you another question. I want to 
switch subjects for a second. The HMMWV, is it a good vehicle? 
Does it work?
    General Hite. Which one, sir?
    Mr. Hobson. HMMWVs.
    Mr. Decker. Other than a qualitative answer, but yes, as 
far as I know, absolutely, it has got many variances and it has 
done yeomen's work on the battlefield.
    General Hite. I would add to that, I used to be the program 
executive officer to that vehicle many, many years ago, also 
tested it for about 5 or 6 or 8 years. It is a good vehicle, 
but it is a 1970s' technology vehicle. We are at the point now 
where we are starting to overload the vehicle. We are asking 
more of the vehicle than it was originally designed to do in 
terms of weight, power requirements. Also, the environmental 
problems with the vehicle, it does not meet all those.
    Mr. Hobson. The reason I asked that, and you anticipated 
where I was going because in 1999, as I understand it, you are 
going to come back and want to do a whole new vehicle. Based 
upon our experiences with new vehicles and how they are 
developed, having had some of this experience in my district--
--
    General Hite. Yes, sir. I was with you.
    Mr. Hobson. And Mr. Wilson who is not here had been through 
it at least once or twice before that.
    General Hite. Yes, sir.
    Mr. Hobson. I think Mr. Murtha and Mr. McDade went through 
it.
    Mr. Decker. Right.
    Mr. Hobson. I do not get really excited when we start 
talking about great technology advancements we are going to get 
with some of these new vehicles because as--I have got to tell 
you, is all I see are cost-overruns, unacceptable vehicles, as 
the experience we have had on the warranty problem on the FMTV, 
when we begin to do these new things.
    Now, one of the things that just happened yesterday, in one 
of the other services, which is somewhat encouraging to me, is 
that there was a $15 billion mistake, that some people got 
together with the contractor and worked it out, which maybe 
some people are beginning to get the message after a long, long 
time.
    General Hite. Yes, sir.
    Mr. Hobson. That business can't be the same as before, and 
we have got to write these contracts in the beginning, because 
the FMTV contract was more expensive to stop than it was to 
complete. And that kind of thing just, sir, can't continue on. 
We can't afford that kind of stuff.
    General Hite. Yes, sir.
    Mr. Hobson. So I am worried about 1999. I hope I am going 
to be here in 1999, and I don't want to go through this again 
and I don't think anybody else does. The problem is, there is 
always different program managers, everybody retires and moves 
on. We still tend to live with it. So I hope you don't plan on 
going through that with some radical design that isn't going to 
work in 1999.
    General Hite. Yes, sir.
    Mr. Hobson. I hope everybody gets the message on that.
    General Hite. Yes, sir.
    Sir, I understand the message, but I hope you also 
understand that these vehicles are getting old and we bought 
about 100,000 of them and some of them are 12, 13 years old 
now. We do have to upgrade the technology. If an upgraded HMMWV 
is an answer to a requirement, that will be, you know, part of 
the competition.
    Mr. Hobson. Well, I understand. But sometimes some of 
that--I have some problems with these advanced fighters. I kind 
of like some of the old stuff that works every day. Some of 
this stuff works every day. I hate to get into some stuff that 
doesn't work, we can't fix and when the warfighters have to use 
it, it isn't there.
    General Hite. Yes, sir.
    Mr. Hobson. But I understand, and we want to work with you. 
I think we proved that in the trucks, sir.
    General Hite. Sir, you have.
    Mr. Hobson. Last year, Congress provided more money for the 
trucks than the B-2. Now, nobody wrote about that, but you did. 
And this Committee is here to help you, but you have got to 
help us, too.
    General Hite. Sir, you gave us $242 million last year and 
we really appreciated that. That saved the life of the trucks.
    Mr. Hobson. Thank you, Mr. Chairman.
    Thank you, General.
    Mr. McDade. The gentleman from North Carolina.

               THEATER HIGH ALTITUDE AREA DEFENSE SEEKER

    Mr. Hefner. Thank you, Mr. Chairman.
    I would just follow up just a bit on the trucks. A few 
years ago we had one of the hearings here and we discovered in 
some of the proposals that they had, I don't remember the exact 
number, it was like $60 or $70 million to reinvent a truck. And 
we got to looking into it, and the only benefit we were going 
to get out of this reinventing the truck was it was going to 
get a little bit more speed over the road. It wasn't going to 
get any advantage when you take it out into the field and what 
have you. So now we have an upgrade of the HMMWV, I don't know 
how they are doing with the Army, but a lot of folks are 
getting fidgety about that, I know.
    To follow up on Mr. Dicks' question, how many successes 
would you have to have before you would be comfortable with 
Theater High Altitude Area Defense system, that you would 
really be confident that it would do the job? And the new 
seeker, what does it have that the old seeker doesn't?
    Mr. Decker. Let's see. Let me take the questions in reverse 
order. And I don't want to get into a lot of stuff that even I 
don't understand that well. But the new seeker uses a different 
material in the little elements that make up the sensors, the 
imager. It is like taking a picture and instead of film, you 
have this stuff that is sensitive to infrared radiation but it 
does form an image. The material in the new seeker is a much 
better material that is been proven out. It is more sensitive 
to dimmer, dimmer images, instead of bright images and those 
things. So it will perform better and it is very much more 
mature material.
    Also, the design of the other seeker, these two halves, was 
not a good way to go. I am not sure how that design was 
selected originally. It may have been a derivative of an 
earlier design.
    So we clearly believe that the new seeker is going to be 
more reliable and operate better in that environment.
    Mr. Hefner. But let me interrupt. But you don't know it 
that was the total problem?
    Mr. Decker. No. We selected the new seeker, before we had 
the first failure, on other factors. And so we felt all along 
that this new seeker, the new seeker design--material was going 
to be the right way to go. The old seeker was performing in its 
simulations and we said we should go ahead and test with it to 
prove out all the missile, and if it worked, we would hit, 
until we got to the new seeker. Well, as you know, we have had 
the three failures that failed to hit.
    Mr. Hefner. How bad did you miss?
    Mr. Decker. Do you know how far the missile was the other 
day?
    General Hite. I do not know about the other day.
    Mr. Decker. No. The first one, where the seeker failure 
wasn't a problem--we know that miss No. 2, it was a seeker 
failure, that was diagnosed carefully and we know why that 
seeker failed.
    I think it was maybe a half a kilometer.
    General Hite. Yes.
    Mr. Decker. Because you are getting in to pretty close 
velocities, and the last--the seeker failed and it couldn't 
order the divert motors to steer it in, but at those speeds 
that is fairly close. I mean, everything else on the system 
worked because, if you can get it up to about a 10-kilometer 
bucket, and the seeker and the divert motors work, you are 
going to hit it.
    Divert just means little steering rockets that steer it in. 
The seeker is telling it where to steer and it steers. That 
entire divert rocket, the complete rocket system failed. We 
don't know the cause of that failure yet.
    Mr. Hefner. How many successes would you have to have?
    Mr. Decker. Now, to get to your first question, I could 
probably go and do the statistical modeling to deal with our 
view--the statistical confidence levels, but my judgment says, 
well, certainly more than one, so at least two, probably three, 
to where you would feel like you really were there.
    Mr. Hefner. And three without a miss?
    Mr. Decker. Yes, three hits.
    Mr. Hefner. And you would feel comfortable----
    Mr. Decker. If you had two hits and a failure, you would be 
in a dilemma.
    Mr. Hefner. If you had two we were on to something?
    Mr. Decker. I would feel we were on to something. And if 
you had two in a row and a third failure, and it was an 
equipment failure rather than a design failure, I wouldn't feel 
that badly. It is kind of a judgment call there, but don't take 
that as gospel. I am giving you just a judgment view.

                            PATRIOT MISSILE

    Mr. Hefner. I understand.
    Was the Patriot which we kept alive around here for many, 
many years, and it became the hero in the Gulf----
    Mr. Decker. Right.
    Mr. Hefner. How really effective, when you did all of your 
analysis after the Persian Gulf was over, how effective was the 
Patriot?
    Mr. Decker. In the Persian Gulf?
    Mr. Hefner. Yes.
    Mr. Decker. In all honesty, Mr. Hefner, and I am not 
copping out, I have never gone and looked at whatever hard data 
exists. It did apparently hit one of the incoming Scuds on one 
occasion. But in terms of hard data, I am going to turn it over 
to General Adams. He may not know the answer, either.
    I don't know if we ever had any hard data that might be 
collected on a test run that says we know there were these many 
missiles coming in over a period of time, and we actually hit 
this many. It is a controversial subject. It clearly hit at 
least one in those engagements.
    Mr. Hefner. Okay. I have a couple of questions.
    General Adams. There was a study, Mr. Hefner, done 
immediately after the Gulf War because, as the Secretary 
indicated, there was quite a bit of controversy, and so we have 
some numbers. I don't recall exactly, but the documentation 
that was looked at at the time, indicated we had a 70 percent 
success rate.
    [Clerk's note.--General Adams testified during the hearing 
that ``we were 80 percent confident that we had an 80 percent 
hit.'']
    Mr. Hefner. You had an 80 percent hit on that one, we know, 
right?
    General Adams. Sir, we were 70 percent successful.
    Mr. Hefner. The reason I ask, the Patriot has a very 
interesting history around here. It goes back a long, long way, 
as you gentlemen know.
    I have a couple more questions here, and you can do this 
one for the record for me.
    Mr. Decker. I will answer it.

                              ABRAMS TANK

    Mr. Hefner. The M-1 tank, there have been press reports 
suggesting that the Army intends to indefinitely defer fielding 
M1A2 tanks to the Second Division in Korea in favor of 
providing a more modern tank to the experimental digitized 
division.
    What impact would this decision have on this Second 
Division? And you can do that for the record, if you wish.
    Mr. Decker. All right, sir.
    [The information follows:]

    The Army is considering a four to five year temporary diversion of 
120 M1A2 tanks to the experimental digitized division. This temporary 
diversion, if approved, will not affect Second Infantry Division 
fielding plans. What may impact the fielding of the M1A2 to Korea is an 
ongoing Army review of M1A2 requirements and affordability.

                           Starstreak Missile

    Mr. Hefner. I have another on the Starstreak, a lot of 
these systems I don't really know--I don't understand all the 
intricacies of these. Congress provided funding last year for 
phase 2, evaluation of the Starstreak missile on the Apache 
helicopter. When will these funds be obligated and when will 
phase 2 testing be completed?
    Mr. Decker. Just a moment. They have been released to the 
Army. They were on hold from OSD. We now have the money, so let 
me ask when they will be obligated.
    Do we have instructions as to that?
    [The information follows:]

    The fiscal year 1997 (FY97) were obligated in February 1997 to 
fully fund the Phase II contract. Phase II missile firings are 
scheduled for completion in October 1998, with the final report 
expected in November 1998.
    Background: Air-to-Air Starstreak (ATASK) is a two phase effort. 
Phase I was initiated in July 1995 to assess the technical feasibility 
of the air-to-air Starstreak missile through analysis of integration 
design, system effectiveness, and separation test results. Phase I 
testing was completed in October 1996 and concluded that the Starstreak 
missile could be fired safely from an AH-64A Apache helicopter, and it 
was safe to proceed to the next phase. An integrated cost analysis will 
be completed as part of Phase I, the results of which are due in April 
1997. The Phase II contract, awarded on 20 December 1996, is directed 
at the demonstration of the ATASK integration of hardware on an Apache 
helicopter, conducting airborne missile launches against aerial 
targets, and demonstrating full technical feasibility of the Starstreak 
missile as an Air-to-Air (ATA) self defense weapon for the Apache. 
ATASK was a congressional add in FY94-FY97 as follows: FY94 (Program 
Element (PE) 0203801A, $6 million) and FY95 (PE 0603003A, $3.0 million) 
for ground-to-air (GTA) and ATA evaluation of Starstreak respectively 
(Congress also added $8 million (PE) 0203801A) FY95 funds, which were 
eventually rescinded); FY96 (PE 0603003A, $4 million); and FY97 (PE 
0603003A, $15 million). Congress directed the Army to evaluate the air-
to-air missile capability of the Starstreak missile and the FY96 budget 
Joint Authorization Conferees specified the AH-64 Apache helicopter as 
the platform. Shorts Missile Systems Ltd. is the prime contractor and 
McDonnell Douglas Helicopter Systems and Lockheed Martin are major 
subcontractors.

    General Hite. Phase 2 is working now.
    Mr. Decker. It is underway, phase 2 is under way. Once we 
got the money from OSD, we were ready to go. And I believe--
Fenner, do you know when phase 2 is scheduled?
    General Adams. It began in February of 1997 and will 
conclude in November of 1998.
    Dr. Milton. I would like to answer that for the record. The 
funding has been released and the phase 2 schedule is under 
review.
    General Hite. December 1998 is when we are supposed to have 
all the analysis done.
    Mr. Decker. We are supposed to have everything done in the 
next year. The actual testing and modeling and all that will be 
done ahead of time.
    Mr. Hefner. Okay. I have a little three-parter here.
    Mr. Decker. We will make an official answer for the record 
and give you that.
    Mr. Hefner. Okay. Given the availability of funding, is the 
Army committed to conducting phase 3 side-by-side evaluation of 
the Starstreak and the Stinger missile?
    Mr. Decker. No, we are not----
    Mr. Hefner. And is further work required to launch a 
Stinger from Apache? If so, tell us--describe the additional 
work and associated costs.
    And finally, what is the projected cost of a phase 3 side-
by-side evaluation?
    Mr. Decker. The only answer I know for sure is, no, we 
aren't committed to phase 3, and I would appreciate it if we 
could take those other costs for the record. I just don't have 
them off the top of my head.
    [The information follows:]

    The following are estimated development costs for a Phase III side 
by side evaluation:

 
             Stinger                            Starstreak
 
Modification of the Stinger       Development of Starstreak launcher for
 Universal Launcher and its        an Apache Longbow aircraft;
 integration onto an Apache        integration of the Starstreak missile
 Longbow aircraft, and             with the fire control radar: $8.0
 modification of the existing      million
 Stinger Air-to-Air launcher to
 ensure MIL-STD-1760
 compatibility with the Stinger
 Universal Launcher: $11.6
 million
Launcher qualification $7.0       Launcher qualification $5.0 million
 million
      Total prior to Side-By-         Total prior to Side-By-Side
       Side Testing: $18.6             Testing: $13.0 million\1\
       million
 
     Phase III Starstreak/Stinger Side-By-Side Testing: $5.0 million
 
                       Grand Total: $36.6 million
 
\1\Does not include $22 million of Starstreak funding for Phases I and
  II.

    This side-by-side comparison testing includes targets, use of test 
range, and final evaluation report. The assumption is that the Army 
provides the Stinger Block I missiles and the United Kingdom provides 
the Starstreak missiles.
    Apart from the development costs associated with Starstreak Phases 
I and II, and not even entertaining the costs associated with funding 
Phase III, the Army is very concerned that the Starstreak rotorcraft 
integration costs in the production phase will prove unaffordable. The 
following cost drivers make the Starstreak missile retrofit more of an 
affordability issue than originally envisioned: the kits which provide 
for the integration of the missile's laser guidance system with the 
target acquisition designation system, and missile system integration 
with the fire control radar; the cost to retrofit the Longbow Apache 
fleet with Starstreak missile launchers; and the replacement of at 
least seven secondary structural components in order to withstand the 
missile's blast/over pressure effects. On the other hand, the 
production costs associated with rotorcraft integration to retrofit the 
Longbow Apache fleet with Stinger Block I or II missiles appears to be 
minimal: the unit production costs of $100,000 per aircraft (2 
launchers), and minor modifications to the aircraft's fire control 
radar. With Stinger, no change to the Apache's target acquisition 
designation system is needed.

    Mr. Hefner. Okay. We would appreciate that.
    Mr. Decker. We will give you that. To make sure I 
understand, you want to know--well, first, we are not 
committed, but if we did a phase 3, what would be the cost of 
bringing the Stinger or doing phase 3, really, which would be 
Stinger side-by-side with Starstreak from Apache.
    And then what was the other question?
    Mr. Hefner. What is the projected cost of the phase 3?
    Mr. Decker. Okay. That is one question. We will get you 
that.
    Mr. Hefner. And is further work required to launch a 
Stinger from Apache?
    Mr. Decker. We will get you the answer to that.
    Mr. Hefner. Okay. Since you used a cliche earlier about 
giving up just before you succeed----
    Mr. Decker. Just before you succeed.
    Mr. Hefner. There was a story I heard about the guy who 
invented a soft drink, and he called it 1-Up, and when he got 
to 6, he quit.
    Mr. Decker. I am going to use that in my next speech.
    Mr. Hefner. I thank you very much.
    I thank you, Mr. Chairman.
    Mr. Decker. Thank you, sir.
    [The information follows:]

    To launch Stinger from an Apache, modification of the existing 
Stinger Air-to-Air launcher would have to be made to ensure Military 
Standard-1760 compatibility, appropriate battery cooling to the 
hellfire launcher to accommodate Stinger, and associated launcher 
qualification work would need to be conducted as part of a development 
program. Total development costs are estimated to be $18.6 million. 
After development cost investments for launcher development/
qualification, the cost to retrofit the Longbow Apache fleet would 
entail unit production costs of $100,000 per aircraft (2 launchers), 
and minor modifications to the aircraft's fire control radar.

    Mr. McDade. The gentleman from Indiana.

                               AMMUNITION

    Mr. Visclosky. Thank you, Mr. Chairman.
    Secretary, General, thank you very much for coming today.
    I would like to talk to you about ammunition, if I could. 
My understanding is that the Army's annual consumption of 
training ammunition is about $900 million. My understanding of 
your budget request for FY 1998 is that for training, and war 
reserve, you have asked for about $694 million. As a result, 
you will have to use some of your war reserve.
    Is this of concern to you, and is there something we on the 
Committee should be concerned about?
    Mr. Decker. Sir, if I may, that is why I asked General 
Arbuckle, our ammunition officer for the whole Army, to come. 
He keeps track of this in great detail. There are so many 
different types of ammunition, I can't run them around in my 
head.
    General.
    General Arbuckle. Your figures are about right, sir, and 
yes, in fact, the Army has been over about the past 3 or 4 
years consciously going into war reserves to help offset the 
training requirements.
    Now, the reason we do this is twofold. One is 
affordability, but we also have to note that there is quite a 
bit of excess in our war reserve right now as a result of the 
Cold War drawdown. So we have assumed, I think, a prudent 
strategy, and we are firing some of that excess in training 
rather than having to demilitarize it.
    Is it of concern? Yes, but it is not a pressing issue that 
we have to address right now. In fact, as we look to the 
outyears, what we are going to be doing with our training 
ammunition is ceasing to dip into the war reserve for those 
things that we truly need for a war fight, but not the excess, 
instead of going to new procurement to support training. So 
this is going to come to an end over the next few years, about 
the next 3 years.
    Mr. Murtha. Would the gentleman yield?
    Mr. Visclosky. Absolutely.
    Mr. Murtha. I am not sure I understand. You say it is a 
concern. War reserves are set aside for a specific purpose, 
obviously. How serious is it? I mean, I think we need for the 
record an answer so we know exactly where we are, because we 
put ammunition in many times when you folks don't ask for it 
because we know--you have told us there is a problem, and then 
when you start using that up, that defeats the very purpose of 
what we are trying to accomplish.
    So I would appreciate it if you would answer this for the 
record so we know exactly where we are with the sustainability 
we need with war reserves.
    General Arbuckle. Okay. There is a couple of ways I will 
come at that, sir.
    Mr. Decker. We will give a detailed answer for the record.
    Mr. Murtha. Just give it to us for the record.
    General Arbuckle. Okay. We will do that, sir.
    Mr. Murtha. We need to get it right away. We don't need to 
wait until the transcripts come out. We need to see this as we 
go through our markup.
    General Arbuckle. Absolutely.
    Mr. Decker. We will get that information for the record.
    [The information follows:]

    The Army has sufficient assets (preferred plus suitable 
substitutes) to support the National Military Strategy. The following 
list of preferred munitions notes the ammunition item and the 
approximate asset posture against the Army's stockage objective at the 
end of the fiscal year 1998 funded delivery period.

        Item                            Percentage of Stockage Objective
120mm Tank, M829A2, APFSDS-T......................................    70
120mm Tank, M830A1, MPAT..........................................    90
120mm Tank, STAFF.................................................  \1\0
120mm Mortar, M934A1, HEMO........................................    20
120mm Mortar, M929A1, Smoke.......................................   100
120mm Mortar, M930, Illuminating..................................   100
120mm Mortar, M933, HEPD..........................................   100
155mm SADARM......................................................     5
155mm, M795, High Explosive.......................................    80
Wide Area Munition................................................     5
VOLCANO...........................................................    20
Selectable Lightweight Attack Munition............................    20
40mm, M430, High Explosive-Dual Purpose...........................   100
60mm Mortar, Illum, M721/M767.....................................    90
105mm Artillery, M915/916.........................................     5
105mm Artillery, M913.............................................   100
25mm, M919, APFSDS................................................    25
25mm, M792, HEI...................................................   100
155mm, Artillery, M549, HE RAP....................................   100
155mm, Artillery, DPICM, M483A1...................................   250
155mm, Artillery, DPICM, M864.....................................\2\100

                          AMMUNITION SHORTFALL

155mm, Artillery, M731, ADAM-L....................................   100
155mm, Artillery, M692, ADAM-S....................................   100
155mm, Artillery, M718A1, RAAM-L..................................   100
155mm, Artillery, M741A1, RAAM-S..................................    35
Mine Clearing Line Charge.........................................    65
2.75'' Rocket, MPSM...............................................    90
155mm, Propelling Charge..........................................\2\100
Fuze, Inductive Set Artillery.....................................\2\100

\1\No procurement planned for 120mm, Tank, STAFF.
\2\Replacements for these three preferred munitions are in the final 
stages of research and development.

    General Arbuckle. A key point here is, and we will put it 
in the record, the majority of the war reserve drawdown we are 
doing is, in fact, excess ammunition that we would not require 
for the war fight. Again, it is there from the Cold War, a 
large stockpile.
    Mr. Murtha. Okay.
    Mr. Decker. One general comment, a detail for the record. 
Part of the issue, when you get into war reserve, is what is 
called preferred munition versus the older generation. The 
older generation is good ammunition, but it is a big debate. If 
you are a CINC in the field, you want 100 percent preferred, 
and so if you want to build up to that, we are efficient today. 
We will explain all that.
    Mr. Murtha. We need to know that. We need to know exactly 
where we are.
    Mr. Decker. Okay. We will have that answer for the record.
    Mr. Visclosky. If I could follow up on the same theme, you 
had mentioned part of the equation is affordability. I guess it 
would be pretty hard to attach a percentage to that, but is 
that a small part of the reason for the drawdown? Is the 
majority of the reason because you want to get to 100,000 tons, 
as I understand it, by, 2004?
    General Arbuckle. Let me break down the ammunition budget 
into four pieces to answer that, and I think it will come into 
perspective that way.
    First is training ammunition. We talked about that briefly. 
And because training is connected directly to near term 
readiness, obviously we give that priority. So with available 
funds, we put that first on training ammunition. We keep it 
above 90 percent. That is the way it is in this budget request, 
and so that is okay.
    The next category is ``demil,'' which you just talked 
about, demilitarization. It is either obsolete or excess 
ammunition.
    Now, we plan to do about $100 million worth of that per 
year, and that program has been well supported by Congress and 
OSD, so we are in good shape in 1998 on that also.
    The third part of the ammunition budget is modernization, 
modern munitions, and the Army has been tracking 15 items we 
have identified in the modernization category.
    In this particular budget request, we are funding--
requesting funds for 5 of those 15.
    Mr. Visclosky. Is that of concern to you?
    General Arbuckle. Yes. In fact, that is in step with the 
rest of the Army approach to funding priorities, i.e., emphasis 
on training/readiness, but we pay the bill out of 
modernization. That is what is happening with munitions.
    Mr. Visclosky. And I think again, for the record, if you 
could detail the 5 of the 16 munitions that you are interested 
in modernization and where our shortfall is occurring, I would 
appreciate that.
    General Arbuckle. Absolutely.
    And the fourth category is production base. Now, the Army 
has ammunition plants where we actually produce ammunition. 
Part of the budget goes toward the equipment there, maintaining 
it, replacing it, the facilities, infrastructure, environmental 
concerns and so forth. That is marginally funded in the budget.
    Mr. Visclosky. Marginally, meaning underfunded?
    General Arbuckle. Yes.
    Mr. Visclosky. So your primary problems are not on demil or 
training, it is on the last two categories?
    General Arbuckle. Correct. Modern munitions and production 
base.

                  CHEMICAL MUNITIONS DEMILITARIZATION

    Mr. Visclosky. Time is short. I know we have a vote.
    Mr. Secretary, General, if you could comment just generally 
on the problems you are facing as far as chemical 
demilitarization.
    Mr. Decker. Chemical demilitarization?
    Mr. Visclosky. Right.
    Mr. Decker. The problems are public fear. Some of it is 
legitimate. I think--I understand it. That is an oversimplified 
answer. And part of that public fear is a mixed bag, sometimes 
intense anti-incineration feeling in the country. There is a 
generic anti-incineration feeling in the country to dispose of 
any kind of waste, the clean air concerns. There are extremes 
in that group that won't let you burn leaves in your backyard 
if they had their own way. Others are more thoughtful, but they 
would rather not have incineration.
    The only proven mature technology that is operating and has 
been demonstrated to be safe is the reverse assembly 
incineration techniques that we use at Tooele, Utah.
    But we do not have universal acceptance of that, even 
though we have hard scientific evidence. So the problem is 
working with the public, trying to convince them this is the 
best and the fastest way to go--we have been partially 
successful at that--and getting the permits.
    The permits come from the States, not from the Federals in 
this case. The Federal law has not seen fit--this is not a 
recommendation; it is a statement of fact--to abrogate the 
States' permitting responsibilities. So we have to satisfy 
eight different States with many different standards to get a 
permit to do our facility.
    Mr. Visclosky. Let me ask you from a political standpoint, 
transportation to several facilities is probably not a 
practical solution, just from a monetary perspective?
    Mr. Decker. I guarantee you it is not an acceptable 
solution. The States that we have had good support and good 
understanding and have cooperated, so they want to get rid of 
this stuff, have made it very clear we understand you and we 
will now trust you, please get rid of this stuff, but don't you 
bring one more ounce of this stuff in here. It is just that 
simple. And so I would not advocate it.
    Mr. Visclosky. From your perspective then, maybe this is 
just a question of frustration on my part, is there something 
particular we can do? The politics I don't know how we solve. 
As far as the allocation of resources to dispose of these in as 
efficient a manner as we could, is there anything--I am just 
very frustrated.
    Mr. Decker. That is a fair and an honest question. I wish I 
could give you a pat answer, but the problem really is in 
reaching public acceptance of whatever method is chosen so we 
can get our permits.
    Most of the costs, though, the time to get permits is 
taking 5 and 6 years, we estimate, because Governors don't like 
to go in the face of a lot of resistance, so they will hold 
excess public hearings. And I don't know how to solve that, 
except to work at it hard.
    The Congress has been very supportive in resources. We have 
not been nickeled, but it is just a tough problem.
    We have made a lot of progress in the last 3 years. We now 
are permitted in Oregon. I didn't think we would ever get a 
permit in Oregon, but they finally said, you know, you are 
right. So we are starting work on that plan. So we have just 
got to slaughter our way through it.
    Mr. Visclosky. Thank you, Mr. Chairman.

                   TACTICAL HIGH ENERGY LASER SYSTEM

    Mr. McDade. Let me underline, if I may, the concerns about 
the ammunition. I know you have and you share a lot of them. I 
just want to underline my interest in the issue, and we really 
want detailed answers from you.
    I want to yield to Mr. Hobson in a second, but first let me 
ask you about the high energy laser system.
    My understanding is that there is no money in the budget to 
test the unit that is scheduled, I guess, to be delivered to 
the Israelis; is that right?
    Mr. Decker. You are talking about the Tactical High Energy 
Laser (THEL), or the laser demonstration system that we are 
working on in conjunction with the Israelis.
    There is a total contract budget, and the contract is in 
reasonably good shape in terms of funding. TRW is the prime 
contractor in conjunction with a couple of Israeli companies.
    The original thoughts--this was a program that got a bit 
politicized, and more was promised than could be delivered, and 
we had to get that boxed in. So now the system consists of 
system design and testing and integration, and it will be 
demonstrated at the San Juan Capistrano range in California. 
And if it works there, the contract is done. Then it is really 
up to whatever the Israelis----
    Mr. McDade. You say you have money in the budget to test 
it?
    Mr. Decker. Well, now, there was a glitch on funding 
shortfall.
    Mr. McDade. Yes. Mr. Skeen has a great interest, if I may 
say, too.
    Mr. Decker. I understand.
    Mr. McDade. And the information we have is that you didn't 
fund the testing.
    Mr. Decker. There was a $12 million shortfall created in 
1997, and I am not sure. Was that a decrement at OSD, or do you 
remember?
    General Hite. It was a cost growth.
    Mr. Decker. No, it is not a cost growth. We have a fixed 
price award fee program. There was some problems in funding 
flow there, and we lost----
    Mr. McDade. Well, Mr. Decker----
    Mr. Decker. We are $12 million short to stay on schedule.
    Mr. McDade. And the $12 million is for testing?
    Mr. Decker. Well, if you look at the program schedule and 
the way the funds flow to get the work done, taken on through 
to testing, it is a shortfall in near term work, and if you 
used all of the funds doing that, you will have none left to do 
the testing.
    Mr. McDade. I guess the answer is, yes.
    Mr. Decker. I think it is yes, because you have got to do 
the near term work, or you will never get to testing.
    Mr. McDade. We are glad to hear the answer. Let me get you 
on this because I----
    Mr. Decker. Well, I am only talking about the testing at 
San Juan. We never did commit--we finally got an agreement with 
the Israelis that we--they thought we were going to do 
additional testing on the side, so we are only going to test it 
at San Juan Capistrano.
    Mr. McDade. Whatever. The point is that you don't have 
money to test the system, nor do you have any money to procure 
it for you.
    Mr. Decker. We never had any intention of procuring it.
    Mr. McDade. Why not?
    Mr. Decker. The system is too limited in what it can do 
unless you spend a hell of a lot more money. It was driven by a 
desire on the Israelis to put it into a fixed station 
environment to protect the villages against Katyusha rockets.
    Mr. McDade. I saw a tape about 2 years ago of the results 
out at White Sands, where the system was knocking out Katyusha 
rockets like they were deer in Pennsylvania with you behind the 
gun.
    Mr. Decker. You saw a tape I never had any knowledge of. I 
know of one highly, highly staged demonstration with the 
miracle laser that shot one Katyusha.
    Mr. McDade. Well, you better look at some additional tapes, 
and I will send you one.
    Mr. Decker. All right.
    Mr. McDade. I will tell you what has got me really 
concerned. We had to add money for this program last year, and 
several years ago Chairman Murtha took a delegation over to 
Korea, and General Luck was there, and his biggest concern was 
something popping over the mountain and he has no defense.
    This system--and the Air Force is spending, as you know, 
about a billion dollars on an airplane-mounted system to get 
something in the boost phase, but here you guys are in the 
front lines, and you have got no defense, and this system, if 
that tape is accurate and what I have been told and Mr. Skeen 
has investigated it as well, would be perfect for the defenses 
in Korea, of the General's concern about something coming over 
that mountain and stopping his activities to reinforce or 
whatever the heck he has to do.
    It looks to us like it ought to have a very high priority, 
and I don't know why there is not more activity on it.
    Mr. Decker. Because to perfect the system and make it 
tactically hard in an environment that is probably 10 times 
more harsh than a C--I mean, a 737 airplane is probably a 
billion-dollar program.
    Mr. McDade. Well, is it worth $1 billion to get security in 
Korea?
    Mr. Decker. I am not sure that the probability of success 
is as high as our missile defense systems in any reasonable 
time frame. That is a judgment call.
    [The information follows:]

    In support of the joint United States-Israel Nautilus 
program, the United States Army Space and Strategic Defense 
Command (USASSDC) conducted tracking tests on 14 March 1997. 
Using the Mid-Infrared Advanced Chemical Laser (MIRACL) system 
located at the High Energy Laser Systems Test Facility 
(HELSTF), USASSDC conducted low power tracking tests on six 
incoming inert rockets. These tests were low power tests using 
the MIRACL system and not representative of the power levels or 
system required for a tactical configuration. However, the 
results and analysis contribute to pointer-tracker algorithm 
development in support of the United States-Israel cooperative 
Tactical High Energy Laser (THEL) Advanced Concept Technology 
Demonstration (ACTD).
    The first and second rockets were launched individually to 
verify the target impact point. The MIRACL system, using 
developmental THEL ACTD pointer-tracker algorithms, 
successfully tracked both rockets. The other four rockets were 
launched sequentially, approximately 15 seconds apart. All four 
targets were initially acquired with the HELSTF SeaLite Beam 
Director, and three out of four were successfully tracked 
during the predefined engagement window. Analysis continues in 
an effort to determine the cause of an anomaly preventing 
successful tracking of one of the four rockets.

    Mr. McDade. Well, I will tell you, we have got a big 
disconnect, and I would be very, very grateful if you would go 
back and take a look and call White Sands and find out if they 
tested the system against six incoming rockets and whether or 
not they were successful, because the information that we have 
is that they were successful.
    Mr. Decker. I will certainly do that, sir. I will get you 
some information for the record.
    Mr. McDade. Give me a call back.
    Mr. Decker. Okay.
    Mr. McDade. Because it comes down to the question, we have 
always been concerned about the vulnerability of the forces in 
Korea to that kind of an attack.
    Mr. Decker. Yes, sir.
    Mr. McDade. And the system has never been in place to try 
to stop it. It looks like it might be. That is why I want to 
raise it with you, I want to talk to you about it, and I would 
appreciate a call.
    Mr. Decker. Sure. You bet.
    Mr. McDade. I yield to the gentleman from Ohio.

                          PROCUREMENT FUNDING

    Mr. Hobson. Very quickly, and I will try not to tie you 
into this, but I am concerned about your statement that the 
Comanche, if fielded; and I would also like to know where the 
$50 million went that we put in it last year to help funding 
move forward. I am also concerned about the Black Hawks. But we 
don't have--I don't think you have time--we only have a couple 
of minutes left to vote.
    Mr. Decker. I will give you detail for the record, unless 
you want an answer now.
    Mr. McDade. For the record?
    Mr. Hobson. Yes, that is fine.
    Mr. McDade. Without objection, for the record, the Chair 
recognizes the gentleman from Pennsylvania.
    Mr. Murtha. I want to know who I am going to ask about this 
seat. I understand you are retiring this summer. Who am I going 
to ask about this HMMWV seat? You have been in that program for 
20 years.
    General Hite. Yes, sir. Sir, that is why we have the seat.
    Mr. McDade. It took 20 years.
    General Hite. It took 20 years.
    Mr. McDade. We will have some undoubtedly additional 
questions and information.
    Mr. Decker. We will be happy to answer any additional 
questions for the record. We will get the information on the 
envelope post haste. I will put a high priority on that, but we 
will get the others over expeditiously as well.
    Mr. McDade. We thank you very much for your presentation. 
It was, as usual, professional and excellent. We look forward 
to working with you.
    Mr. Decker. Thank you very much, sir. Thank you all.
    [Clerk's note.--Questions submitted by Mr. Skeen and the 
answers thereto follow:]

                   Test and Evaluation Infrastructure

    Question. Mr. Decker, would you comment for the record on the 
Army's budget request for Test and Evaluation (T&E) Programs? I am 
particularly interested in the Army's proposals, if any, to upgrade 
existing infrastructure to keep pace with military modernization 
requirements.
    Answer. The Army has continued to focus its T&E investment funding 
on modernization of the infrastructure. This focus enables the Army to 
test increasingly sophisticated weaponry, and to accomplish this 
testing more efficiently, utilizing fewer operating resources, and in a 
safe and environmentally acceptable manner.
    A prime example of the Army's investment of the T&E infrastructure 
is the ongoing Test Support Network project at White Sands Missile 
Range. This network of modern, digital fiber-optic cable communications 
will provide efficient data collection and remote operations through 
increased bandwidth and data throughout capabilities, reduced costs to 
customers, quicker turnaround time between tests, and signal security.
    The Test Support Network alone represents an Army commitment of 
approximately $100 million for T&E modernization. The network will 
support testing of some of the highest profile weapons programs in the 
Army, including the Theater Area Air Defense Program, the Multiple 
Launch Rocket System, and the Army Tactical Missile System.
    Sustainable instrumentation requirements average $90 million 
annually across the Program Objective Memorandum versus a $30 million 
annual budget. The major investment focus is the Virtual Proving 
Ground, a reengineering of the Army's test capabilities to leverage 
modeling, simulation, synthetic environments, high performance 
computers and distributed communications in support of Acquisition 
Streamlining.
    Current investments in virtual test technologies are primarily 
directed toward Command, Control, Communications, Computers and 
Intelligence and missile testing at White Sands Missile Range and 
Redstone Technical Test Center, and support for Comanche helicopter 
development and ground vehicle performance modeling. These investments 
are proceeding consistent with the limited funding provided.
    The Military Construction, Army budget for fiscal year 1998 
includes $18 million to complete the construction of a $28 million 
National Range Control Center at White Sands Missile Range, New Mexico. 
The new center replaces an obsolete facility which poses a health and 
safety health because of asbestos pollution. The new facility will 
enable the Army to manage all range activities consistent with 
environmental and safety parameters.
    The Maintenance and Repair program for fiscal year 1998 funds $60 
million of a $100 million annual requirement. An additional $10 million 
is budgeted specifically to rebuild the central stream system for the 
Edgewood Area of Aberdeen Proving Ground, Maryland. The total backlog 
of repair projects for the Test and Evaluation Command is $300 million.
    Question. Does the Army have any unfunded requirements related to 
Test and Evaluation (T&E) programs and/or infrastructure? Please 
provide for the Subcommittee a listing of such requirements.
    Answer. Congress was already provided a list of unfunded Army 
requirements on 17 March 1997 and many of the programs and/or 
infrastructure were included. The following programs represent the 
unfunded requirements in the Army's T&E infrastructure.
    The Mobile Automated Instrumented Suite is a mobile real-time 
casualty assessment data collection instrument which needs $33.2 
million in fiscal year 1998 to accelerate production into one year, 
saving $20 million dollars.
    The Fire Support Automated Test System is an automated test set for 
fire support acquisition which needs $4.2 million in fiscal year 1998 
and 1999 to upgrade along with the Advanced Field Artillery Tactical 
Data System (AFATDS) software to allow operational testing without 
significant test cost growth.
    The Army requested an increase in technical test capability for the 
U.S. Army Test and Evaluation Command (TECOM) to raise developmental 
test operations capability from 62 percent to 80 percent of executable 
workload. The request is for approximately $21.7 million and $10.2 
million for fiscal years 1998 and 1999 respectively.
    The Technical Test Sustainment Instrumentation program would fund 
66 percent of the prototype and replacement instrumentation backlog at 
the TECOM test centers. The request is for approximately $43.7 and 
$45.9 million for fiscal year 1998 and 1999 respectively.
    Test Range and Facility Modernization requires $10 million per year 
for fiscal year 1998 and 1999 to modernize TECOM test ranges and 
facilities. This will ensure TECOM's test capability, improve safety of 
test operations and comply with Occupational Safety and Health 
Administration guidelines.
    Virtual Ground Targets needs approximately $.8 million (fiscal year 
1998) and $.5 million (fiscal year 1999). This project will develop 
high fidelity virtual ground targets for modeling and simulation 
efforts to supplant developmental weapon system support, reducing the 
amount and cost of live testing.
    The Army requested $.6 million for fiscal year 1998 for the 
Universal Drone Control System. These funds will be used to complete 
development of a Universal Drone Control System which will eliminate 
the need (and high cost) for continued development of custom designed 
rotary wing target control systems.
     The Army requested $3 million and $4 million for fiscal years 1998 
and 1999 respectively to support the US Army Operational Test and 
Evaluation Command's new consolidated evaluation mission and to fund 
new requirements to evaluate Advanced Technology Demonstrations and 
Advanced Concept Technology Demonstrations.
    Finally, the Army requested approximately $6.7 million and $6.9 
million in fiscal years 1998 and 1999 respectively for Survivability 
Analysis, to include information warfare vulnerability assessment of 
Army Information and Tactical Systems.

    [Clerk's note.--End of the questions submitted by Mr. 
Skeen. Questions submitted by Mr. Hobson and the answers 
thereto follow:]

                           Comanche (RAH-66)

    Question. Last year, Congress added $49 million to the Comanche 
program to help level out the funding profile and to make a more 
efficient development program. If Congress were to make additional 
money available for the program, would it bring the number two 
prototype to flying status sooner?
    Answer. The acceleration of prototype #2 is dependent on the amount 
of additional funding that may be provided by Congress as part of the 
fiscal year 1998 (FY98) appropriation. While prototype #2 acceleration 
is important, restoring the flight test program and accelerating the 
reconnaissance mission equipment package design effort is more critical 
at this point in the program. The Comanche Program Manager has 
developed a prioritized list of areas that would be accelerated if 
additional funding is available in FY98. The acceleration of prototype 
#2 falls within the items listed if $100 million was added to the 
budget request.
    Question.Would additional money accomplish tasks that would provide 
a more capable aircraft for the demonstration of the so-called EOC 
``Early Operational Capability'' aircraft? Specific areas would be low 
observables and enhancing communications with other elements of the 
joint force.
    Answer. Additional funding in FY98 would certainly allow for an 
improved program to ensure the reconnaissance capability on the EOC 
aircraft was fully tested and would provide the user a more 
``production like'' reconnaissance capability to operate during the 
field evaluation. Two of the significant areas of added capability 
planned if additional funding is provided are enhanced communications 
and improved low observable features or characteristics. There are 
several low observable features that could be added that would provide 
enhanced signature characteristics and give us an opportunity to 
evaluate the maintainability and durability before production. 
Additional funds would also allow increased functionality with greater 
opportunity for communicating in the joint area via voice, data and 
imagery. Now that a stable flying platform has been demonstrated during 
the flight test program, the priority is on adding the reconnaissance 
capability as soon as possible to allow sufficient time to prove out 
the design prior to building the EOC aircraft.

                        Heavy Tactical Vehicles

    Question. In your statement, you assert that the Army's tactical 
wheeled vehicle program is ``essential to projecting and sustaining the 
forces.'' However, your fiscal year 1998 budget request includes no 
funds for heavy tactical vehicles. Your fiscal year 1998 request for 
light tactical vehicles is $100 million less than your fiscal year 1997 
appropriation. Although your statement addressed the need for heavy 
tactical vehicles, for the second year in a row, the Army budget 
includes no procurement funds for heavy tactical vehicles. General 
Reimer, please explain why the Army is not requesting funds for heavy 
tactical vehicles?
    Answer. Affordability is the reason. The Army prioritizes programs 
and, although heavy tactical vehicles are important, funding was 
insufficient to cover all our requirements.
    Question. Are the requirements for these vehicles fully satisfied?
    Answer. The Army's requirement for heavy tactical vehicles have not 
been met. The required/on-hand quantities are: (1) Palletized Load 
System (PLS)-3,711/2,277, (2) PLS Trailers-2,891/1,195, (3) PLS 
Flatracks-55,626/10,059, (4) Heavy Expanded Mobility Tactical Truck 
(HEMTT)-13,203/12,165 (HEMTT Wreckers-2,483/1,630 and HEMTT Tankers-
4,842/4073), and (5) Heavy Equipment Transporter System-2,412/1,358.
    Question. Does the Army intend to procure additional heavy tactical 
trucks in the future? If so, which ones?
    Answer. As stated in the fiscal year 1998 proposed President's 
Budget, in the future, the Army intends to procure heavy tactical 
vehicle systems consisting of the Palletized Load System (PLS), which 
includes trucks, trailers, flatracks, and devices, Heavy Expanded 
Mobility Tactical Truck (HEMTT), Heavy Equipment Transporter System 
(HETS), and HEMTT Extended Service Program (ESP) as follows:

                          [Dollars in millions]
------------------------------------------------------------------------
                                 FY98   FY99   FY00   FY01   FY02   FY03
------------------------------------------------------------------------
PLS...........................  \1\9.   59.6   16.6   48.7   34.8   34.8
                                    1
HEMTT.........................    0.0   38.3   30.7   48.7    1.0    0.0
HETS..........................    0.0   64.7   11.8    0.0   89.2   89.4
HEMTT ESP.....................    0.0    0.0    0.0    0.0   19.8   19.9
------------------------------------------------------------------------
\1\Flatracks and Devices Only.

    Question. Does the Army TAA03 reorganization result in the need for 
additional heavy tactical trucks for National Guard units? Provide for 
the record a list of the units and the number of trucks per unit 
involved in this reorganization.
    Answer. Yes, five additional Palletized Load System (PLS) truck 
companies and three additional Heavy Equipment Transporter System 
(HETS) truck companies will be added to the National Guard. Each PLS 
company has 48 PLS trucks and each HETS company has 96 tractor-
trailers. The companies are as follows:

------------------------------------------------------------------------
        Unit designation              Location         Activation date
------------------------------------------------------------------------
137th (PLS)....................  Olathe, Kansas....  1 Oct 97
1462nd (PLS)...................  Springfield,        1 Sep 98
                                  Michigan.
1056th (PLS)...................  Gering, Nebraska..  1 Sep 99
TBD (PLS)......................  (\1\).............  FY01
TBD (PLS)......................  (\1\).............  FY02
TBD (HETS).....................  (\1\).............  FY02
TBD (HETS).....................  (\1\).............  FY02
TBD (HETS).....................  (\1\).............  FY03
------------------------------------------------------------------------
\1\To Be Determined (TBD).

    Question. Provide for the record a list of priority unfunded heavy 
tactical truck requirements, for both the active Army and the Reserve 
Components, that could be funded in fiscal year 1998. Include a 
description and justification.
    Answer. Fiscal year 1998 funding for all tactical wheeled vehicles 
is 52 percent less than fiscal year 1997 due to affordability and 
priorities. The fiscal year 1998 Family of Heavy Tactical Vehicles 
(FHTV) is funded at only 3 percent of fiscal year 1997 budget. The 
funding for FHTV, which includes the Palletized Load System (PLS), 
Heavy Expanded Mobility Tactical Truck (HEMTT), and the Heavy Equipment 
Transporter System (HETS), could be increased by $95 million in fiscal 
year 1998 as follows: (1) $50 million for 150 PLS trucks and 50 PLS 
trailers for new units, and (2) $45 million for 96 HETS for a new unit. 
Optimally, an additional $111 million would be used as follows: (1) $33 
million for 109 HEMTT Wreckers to fill shortages throughout the Army, 
(2) $45 million for an additional 96 HETS for a second new unit, and 
(3) $33 million to procure HEMTT remanufactured vehicles earlier than 
planned. (Congress increased the fiscal year 1997 R&D budget by $2 
million to develop a HEMTT remanufacture program). All of these 
vehicles, except the HEMTT Wreckers, would be fielded to Reserve 
Components.

                     Light Tactical Vehicles (LTV)

    Question. The fiscal year 1998 budget request includes $66 million 
for High Mobility Multipurpose Wheeled Vehicle (HMMWV) production. Last 
year, Congress provided $162 million--$66 million over the budget 
request. According to your statement, the reduced funding is a result 
of fiscal restraints; however, the Committee has learned that the Army 
is planning to develop a new HMMWV in fiscal year 1999. According to 
the Army, the HMMWV is a ``world class vehicle''; however, 
supportability is becoming a problem. What supportability problems are 
you experiencing?
    Answer. The HMMWV has been the world's best light tactical off road 
vehicle. However, over the past 17 years since the HMMWV was designed, 
significant commercial component changes, statutory requirements and 
our demand for increased capability from the vehicle have significantly 
reduced the reliability of the vehicle and increased the sustainment 
cost. The demand for increased capacity has been a result of the new 
missions and constraints placed on the Army in the areas of payload, 
electrical power, configuration, and mission requirements. The 
significant increase in applique equipment and use of the light fleet 
vehicles for more roles has pushed the envelope with regard to the 
ability to package all of the new equipment in the vehicle. This has a 
major impact on the human factors of the vehicle and its ability to 
effectively execute the mission as well as increasing the safety risk. 
The HMMWV has a high scheduled maintenance time requirement with 
increasing unscheduled maintenance. This demands that we develop a 
vehicle that requires significantly less scheduled service time and 
reduced unscheduled time. Finally the changing commercial components 
are not easily packaged in the 17-year-old design and the cost to 
reconfigure the vehicle to accommodate new components is increasing 
dramatically. The Project Manager Light Tactical Vehicles is preparing 
a detailed discussion and justification for this program which will be 
forwarded to Congress next month. This document will fully explain the 
investment strategy for the light fleet.
    Question. Furthermore, the Army believes that the High Mobility 
Multipurpose Wheeled Vehicle (HMMWV) is only ``marginally meeting new 
requirements.'' What new requirements are not met by the HMMWV?
    Answer. There are standards that were objectives for the original 
HMMWV that were waived during prototype phase based on cost and 
complexity versus other critical mission requirements. An example of an 
original requirement not met is interior noise. The interior noise 
exceeds that the operation without hearing protection. The use of 
hearing protection reduces the combat effectiveness of the system. To 
meet the new mission demands for the light tactical vehicles we have 
had to make significant changes. We have: increased the payload and 
ballistic protection, redesigned the vehicle to meet new federal 
standards for emissions and safety, and reconfigured the vehicle to 
accommodate a plethora of new applique and integrated components. The 
latter effort stemmed from the increased emphasis on Command, Control, 
Communications, Computers, and Information (C4I) which are key elements 
for Force XXI. In meeting these requirements we have increased the 
maintenance burden on the Army in an environment of decreasing manpower 
and money. The vehicle also does not meet all of the federally mandated 
safety requirements and, in fact, can not be sold in the military 
configuration to the general public for operation on the highway.
    Question. Could those deficiencies be resolved by modifying the 
current vehicle? If not why?
    Answer. The Army is currently conducting a formal Analysis of 
Alternatives as a normal part of an Major Defense Acquisition Program. 
This analysis will identify the most cost-effective way to meet the 
Army's requirements. This study will be completed before the planned 
release of the solicitation later this year. Preliminary results 
indicate that adapting the current vehicle is not an economically 
viable alternative and would have greater risk. As a minimum, a new 
body, frame, engine, electrical system and transmission will be 
required to meet the user's requirements. It is probable that such 
extensive changes would result in a very expensive program.
    Question. What is the anticipated cost of the new light tactical 
vehicle acquisition program? For the record, please provide the total 
cost, per unit cost and anticipated fielding schedule.
    Answer. Based on our current program assumptions and analysis, we 
estimate that the prototype phase will cost $50 million and per unit 
average cost will be $86 thousand. Our anticipated First Unit Equipped 
(FUE) is in fiscal year 2002.
    Question. Given the Army's past experience with tactical vehicle 
programs, in terms of cost growth and schedule delays, do you think it 
makes sense to develop a new light vehicle? Why or why not?
    Answer. Yes, we and industry have learned a lot and have overcome 
the pitfalls of prior programs through general and specific acquisition 
actions. Application of Integrated Process Teams within the government 
and industry are reducing risk in both the requirement and acquisition 
arenas. We have established effective Teaming arrangements with 
contractors to identify and reconcile cost, schedule and technical 
performance issues quickly and amiably between the parties. These 
efforts are focused on resolution of conditions that have previously 
created complications in contracting for tactical vehicles.

                   Light and Heavy Tactical Vehicles

    Question. The Army continues to stress the importance of tactical 
vehicles. However, our fiscal year 1998 budget does not sustain the 
light and heavy tactical vehicle manufacturing lines. What steps are 
you taking to ensure that future Army requirements for tactical 
vehicles can be satisfied?
    Answer. Army High Mobility Multipurpose Wheeled Vehicle (HMMWV) 
production will cease in fiscal year 1998. In fiscal year 2000 we will 
begin production of the Light Tactical Vehicle which will replace the 
HMMWV. In addition, the Army will start remanufacturing HMMWVs with the 
USMC in fiscal year 1999. To ensure that platforms are available for 
other Army systems during the interim when there will be no production, 
we will store HMMWVs built in fiscal year 1996 and 1997. These HMMWVs 
will be issued as a platform as necessary. Also, 350 HMMWVs built in 
fiscal year 1997 will be armored in fiscal years 1998 and 1999. As 
stated in the fiscal year 1998 proposed President's Budget, the Army 
intends to procure HMMWVs and heavy tactical trucks including the 
Palletized Load System (PLS), Heavy Expanded Mobility Tactical Truck 
(HEMTT), Heavy Equipment Transporter System (HETS), and HEMTT Extended 
Service Program (ESP) as follows:

                                              [Dollars in millions]
----------------------------------------------------------------------------------------------------------------
                                                                   FY98    FY99    FY00    FY01    FY02    FY03
----------------------------------------------------------------------------------------------------------------
HMMWV...........................................................    66.2    14.1   120.5   114.5   129.0   234.5
PLS.............................................................  \1\9.1    59.6    16.6    48.7    34.8    34.8
HEMTT...........................................................     0.0    38.3    30.7    48.7     1.0     0.0
HETS............................................................     0.0    64.7    11.8     0.0    89.2    89.4
HEMTT ESP.......................................................     0.0     0.0     0.0     0.0    19.8    19.9
----------------------------------------------------------------------------------------------------------------
\1\Flatracks and devices only.

    Question. What impact does your fiscal year budget have on the 
industrial base?
    Answer. The impact on the industrial base in regards to light 
tactical vehicles is that the High Mobility Multipurpose Wheeled 
Vehicle (HMMWV) plant may close if the commercial customers, direct 
sales and Foreign Military Sales do not sustain the production line. 
The impact to the Government if the vendor is not able to sustain 
production would be the early closing of the current requirements 
contract. For heavy tactical vehicles, based on a fiscal year 1998 
program of $9.1 million, production stops on: (1) Palletized Load 
System (PLS)--April 1998, (2) PLS trailer--December 1997, (3) Heavy 
Equipment Transporter System--July 1998, and (4) Heavy Expanded 
Mobility Tactical Truck--July 1998. Based on a fiscal year 1999 program 
of $162.6 million, for those types of heavy trucks in which production 
stops, contract awards occur in December 1998 and the production 
startup is 9 months later. Reductions in the work-force at both prime 
contractors and suppliers will take place including migration of 
suppliers and vendors away from Defense business. Startup will most 
likely necessitate requalification of vendors and suppliers and result 
in approximately a 15 percent cost increase to the Army. Lastly, a 
restart may require redesign to meet Federal Motor Vehicle Safety 
Standards which are exempted if production is kept constant.
    Question. If the heavy and light tactical vehicles production lines 
are closed in fiscal year 1998, what is the anticipated cost of 
restarting the production lines at a later date?
    Answer. In regards to light tactical vehicles, the Army has no 
plans to restart the High Mobility Multi-purpose Wheeled Vehicle 
(HMMWV) production line. We will fund the facilities for the Light 
Tactical Vehicle and the HMMWV remanufacture program as necessary. The 
heavy truck prime contractor, Oskosh Truck Corporation, Oskosh, 
Wisconsin, has somewhat adapted to the fiscal reality through risk 
mitigation by combining their commercial and military production lines. 
If a particular type of military truck production is stopped, such as 
Heavy Expanded Mobility Tactical Truck, the entire line will not stop. 
Startup will most likely necessitate requalification of vendors and 
suppliers and result in approximately a 15 percent cost increase to the 
Army. In addition, a restart may require redesign to meet Federal Motor 
Vehicle Safety Standards which are exempted if production is kept 
constant.

            Heavy Tactical Vehicles Extended Service Program

    Question. Congress provided $2 million in fiscal year 1997 for a 
Heavy Expanded Mobility Tactical Truck (HEMTT) Extended Service Program 
(ESP). When does the Army intend to begin this program?
    Answer. The HEMTT ESP will develop enhancements by leveraging 
commercial technology to significantly improve vehicle reliability and 
maintainability resulting in higher fleet readiness rates. Pending 
release of these funds from withhold within the Defense Department, 
development of the HEMTT ESP will begin in April 1997. Procurement 
could begin in fiscal year 1998, earlier than the Army originally 
budgeted, if Congress provides an additional $33 million which would 
buy approximately 200 trucks.
    Question. HEMTT is a key vehicle for heavy and medium truck units. 
It is important for recovery and tactical unit fuel support. Does the 
Army have sufficient quantity of these trucks to meet these 
requirements?
    Answer. No. the requirements/on hand quantities of the HEMTT are 
13,203/12,165 (HEMTT Wreckers--2,438/1,630 and HEMTT Tankers--4,842/
4,073).

    [Clerk's note.--End of the question submitted by Mr. 
Hobson. Questions submitted by Mr. Dicks and the answers 
thereto follow:]

                          Comanche Helicopter

    Question. Last year, Congress added $49 million to the Comanche 
program to help level out the funding profile and to make a more 
efficient development program. If Congress were to make additional 
money available for the program, would it bring the number two 
prototype to flying status sooner?
    Answer. The acceleration of prototype #2 is dependent on the amount 
of additional funding that may be provided by Congress as part of the 
fiscal year 1998 (FY98) appropriation. While prototype #2 acceleration 
is important, restoring the flight test program and accelerating the 
reconnaissance mission equipment package design effort is more critical 
at this point in the program. The Comanche Program Manager has 
developed a prioritized list of areas that would be accelerated if 
additional funding is available in FY98. The acceleration of prototype 
#2 falls within the items listed if $100 million was added to the 
budget request.
    Question. Would additional money accomplish tasks that would 
provide a more capable aircraft for the demonstration of the so-called 
EOC ``Early Operational Capability'' aircraft? Specific areas would be 
low observables and enhancing communications with other elements of the 
joint force.
    Answer. Additional funding in FY98 would certainly allow for an 
improved program to ensure the reconnaissance capability on the EOC 
aircraft was fully tested and would provide the user a more 
``production like'' reconnaissance capability to operate during the 
field evaluation. Two of the significant areas of added capability 
planned if additional funding is provided are enhanced communications 
and improved low observable features or characteristics. There are 
several low observable features that could be added that would provide 
enhanced signature characteristics and give us an opportunity to 
evaluate the maintainability and durability before production. 
Additional funds would also allow increased functionality with greater 
opportunity for communicating in the joint arena via voice, data and 
imagery. Now that a stable flying platform has been demonstrated during 
the flight test program, the priority is on adding the reconnaissance 
capability as soon as possible to allow sufficient time to prove out 
the design prior to building the EOC aircraft.

                       Heavy Lift Aircraft Fleet

    Question. Last year Congress added $17 million for an important 
Army warfighter requirement, the CH-47D ICH program. However, that 
funding has yet to be released. Could you please tell us the status of 
this funding? Does the delay in obligation of these funds reflect a 
belief by the Army that this is not an important program?
    Answer. The $8.7 million of the $17.772 million ICH fiscal year 
1997 (FY97) Research, Development, Test and Evaluation Congressional 
add has been released to the Army. This $8.7 million will allow the ICH 
Program Office to fund all programmatic requirements through the end of 
FY97. The balance of the congressional add, currently on withhold in 
the Office of the Secretary of Defense (ODS) must be released to the 
Army at the beginning of FY98 to allow for the award of the ICH 
Engineering and Manufacturing Development contract in December 1997. On 
the contrary, the Army views the ICH as a critical program which will 
have a significant positive impact on our warfighting capability. The 
funding was not obligated because it was on withhold in OSD.
    Question. Would you please provide for the record your specific 
thoughts and concerns about the current and future state of the Army's 
heavy lift aircraft fleet, specifically the ability to conduct another 
operation such as Desert Storm and carry modern artillery?
    Answer. The Army believes that the CH-47D Engine Upgrade and the 
Improved Cargo helicopter (ICH) programs are absolutely necessary to 
keep its only heavy-lift cargo helicopter operationally effective well 
into the 21st century. A replacement cargo helicopter for use by all 
services--the Joint Tactical Rotorcraft (JTR)--is projected to be 
available no earlier than 2015. Specifically, the CH-47D Engine Upgrade 
program will upgrade the entire CH-47D fleet of T55-L-712 engines to 
the new, more powerful T55-GA-714A configuration. This engine will 
allow the CH-47D to lift an additional 3,900 pounds of payload. The ICH 
program, then, will extend the useful life of this aircraft an 
additional 20 years. The ICH will consist of an airframe remanufacture, 
airframe vibration reduction modifications, and an upgraded cockpit 
featuring multi-service digital compatibility and interoperability. 
These modernization efforts will result in a significant increase in 
the aircraft's operational capability and effectiveness, allowing it to 
bridge the gap to the procurement of the JTR.
    Question. On 1 December 1996, the Army submitted a report to 
Congress in response to language included in the FY97 Defense 
Authorization Act. This report lists modernization priorities for the 
Army Reserves. At the top of the list is a requirement for eight 
additional CH-47D Chinook Helicopters. Yet, the Army's budget does not 
appear to include a request for funds to procure Chinook helicopters 
for the Reserves. Recognizing the increasing rule that our reserve 
forces have played in military commitments around the world, why has 
the Army not requested funds for its top Army Reserve modernization 
requirement?
    Answer. The current total Army requirement for CH-47s is 525, with 
an inventory of 467, leaving a total shortage of 58 CH-47Ds. This 
shortage exists primarily in the operational readiness float accounts. 
Most of the warfighting requirements have been filled with certain 
exceptions. The Army Reserve has a warfighting requirement of 53 CH-
47Ds, which includes five operational readiness floats. However, they 
only have 45 aircraft on hand. The Army is currently planning to 
partially fill this shortage in FY97 or FY98. However, when CH-47Ds are 
inducted into the Improved Cargo Helicopter program beginning in FY02, 
shortages will again result in the Army Reserve fleet. Current fiscal 
constraints and competing priorities have prevented the Army from 
procuring the necessary aircraft to fill shortages within both the Army 
and the Army Reserve.
    Question. If the Congress included funds for procurement of three 
additional CH-47D helicopters, would the Army obligate the funds to 
this purpose?
    Answer. Yes. If given the approporaite level of funding, the Army 
would obligate the funds to procure three additional CH-47Ds.

                             C-17 Aircraft

    Question. I am told that the C-17 creates a wake of turbulent air 
proportionally greater than those of a C-141--making it unsafe to 
airdrop troops and sometimes ineffective when airdropping equipment. Is 
this accurate information?
    Answer. As with all large aircraft, the C-17 does create wing tip 
vortexes that create air turbulence. However, the Army has recently 
completed a successful personnel airdrop test with a mass tactical 
personnel airdrop of 612 paratroopers from a six C-17 ship formation on 
31 January 1997 at Fort Bragg. The Army and the Air Force have also 
successfully demonstrated the C-17's ability to execute its heavy 
equipment airdrop capability. There have been several (4) failures, but 
they have not been attributed to the C-17. One was attributed to the 
failure of a loadmaster to properly lock down the load and the other 
three were determined to be rigger errors.
    Question. Is the Air Force working with the Army to mitigate this 
problem? Are you confident that a fix can be implemented that will 
allow us to meet the airdrop requirements outlined in the initial C-17 
program?
    Answer. the C-17 meets the airdrop criteria as contained in the 
current C-17 Operational Requirements Document. However, the Air Force, 
Air Mobility Command, the C-17 Program Office, the Army and the Army 
Operational Test and Evaluation Command, along with the contractor, 
continuously strive to improve the C-17's effectiveness. On 31 January 
1997, the Army successfully executed a battalion size personnel 
airborne operation consisting of six C-17 aircraft with 612 
paratroopers. The separation between each three ship element was 40,000 
feet. No parachute/wing tip vortices interaction was experienced.
    Question. How is the C-17 performing in Bosnia?
    Answer. During the initial buildup of forces, the C-17 flew 26 
percent of the missions and moved 44 percent of the cargo. The C-17 
maintained a mission capable rate of 86.2 percent verses the 
requirement of 82.2 percent. The C-17 will continue to support 
Operation Joint Endeavor, when the mission requires the C-17's unique 
capabilities.
    Question. Is the C-17 able to meet the runway requirements outlined 
in the initial C-17 program?
    Answer. The C-17 has successfully demonstrated every requirement in 
the current C-17 Operational Requirements Document. The Army and the 
Air Forces have established a Joint Team to develop techniques, tactics 
and procedures to allow routine C-17 operations into small austere 
airfields.

               Theater High Altitude Area Defense (THAAD)

    Question. The THAAD Theater Missile Defense (TMD) system recently 
failed its fourth test since the initiation of the program. I am very 
concerned about this development because I believe that we lack the 
lack of adequate TMD is one of the critical issues facing our armed 
forces right now. The concern was echoed by the Commander-in-Chief's 
who testified in front of our subcommittee over the past couple of 
weeks. What is the current status of the THAAD program?
    Answer. The THAAD project is in the Program Definition and Risk 
Reduction (PDRR) phase of the development, and has completed seven of 
the eleven flights in the PDRR test flight program. The flight test 
program will validate system segment designs and integrate the full 
THAAD weapon system in a progressive step-wise fashion. The majority of 
the weapon system objectives have been accomplished during the seven 
flight tests.
    THAAD flight tests results are encouraging. In the seven flight 
tests conducted to date, the majority of weapon system objectives have 
been successfully accomplished. The Battle Management, Command, 
Control, and Communication and Intelligence (BMC\3\I) segment generated 
proper engagement solutions and implemented successful launch commands 
on all five tests in which it has been utilized. The launcher system 
has successfully issued the launch command to the missile on all seven 
flight tests. The radar has tracked the target and interceptor on four 
of the five missions in which it participated. Most notably, in the 
last flight test the radar performed as the primary sensor for the 
first time. The vast majority of missile functions have been 
successfully demonstrated in the seven flight tests. In the most recent 
test at the White Sands Missile Range on 6 March 1997, three ground 
segments of the THAAD weapon system (radar, BMC\3\I and launcher) 
responded appropriately to a representative tactical ballistic missile 
target as an integrated THAAD weapon system for the first time.
    Although the flight test program has achieved major steps in weapon 
system integration, unrelated missile anomalies on the four planned 
intercept attempts have precluded target intercept--the final step in 
achieving full system operation. The characteristics of the missile 
anomalies are typical of a PDRR phase for a sophisticated system 
development effort, and the THAAD team has taken steps to correct the 
problems discovered in the flight test program.
    THAAD near-term and far-term development schedules are being 
reviewed to maintain a baseline program with acceptable risk. 
Independent review teams chartered by the Ballistic Missile Defense 
Office (BMDO) Director are reviewing aspects of the missile design and 
flight test results as well as THAAD system requirements. They are 
scheduled to report findings to an Executive Steering Group chaired by 
the BMDO Director in mid-April. The THAAD Project Office and the prime 
contractor (Lockheed Martin) are formulating a recovery plan in 
parallel with the independent review process, and the plan is expected 
to incorporate key recommendations from the review process.
    The THAAD team is currently working to the next flight test in the 
July-August 1997 time frame. As a result of the missed intercept on 
flight seven, the decision to procure the forty missile rounds for the 
User Operational Evaluation System has been delayed. In addition, the 
Milestone II schedule extends approximately three to four months (to 
third quarter of fiscal year 1998). The program is also reviewing First 
Unit Equipped criteria to determine impacts, if any.
    Question. Is the most recent test failure going to result in a 
restructuring of the THAAD program?
    Answer. At this time, THAAD is executing to a baseline flight test 
program with the next flight test in the July-August 1997 time frame, 
and with subsequent tests every two to three months. The impact of test 
results from Flight Test #7 failure is uncertain. Initial findings 
indicate that the THAAD missile missed the target because the missile's 
Divert and Attitude Control System failed to function. A detailed 
anomaly investigation was initiated to determine the root cause. Some 
program schedule impacts may result from the flight seven failure 
investigation and on-going government independent reviews. Several more 
weeks may be required before the root cause is identified, and 
corrective actions defined.
    Based on the flight seven failure investigation and independent 
reviews, THAAD's development program will be revisited to reduce 
overall program risk, while maintaining timely delivery of THAAD to the 
user. Any recommended changes to the program, especially those 
impacting funding requirements or schedule will be made available to 
Congress at the earliest opportunity.
    Question. Is the problem with THAAD fixable in your judgment?
    Answer. The judgment of the government and prime contractor team is 
that the problems experienced to date are indeed fixable. Current 
expectations are that the THAAD system should be performing at a 
maturity level typically found in mid- to late Engineering 
Manufacturing Development phase that are about ready to be fielded.
    The information gathered in the seven flight tests on the THAAD 
system is invaluable to the successful deployment of a robust upper-
tier missile defense system that meets the warfighter's needs. The 
problems discovered on previous flight tests have been fixed and 
successfully demonstrated on subsequent flights. As a result of the 
flight seven failure investigation and independent government review of 
the missile design, additional component and system testing may be 
implemented prior to the next flight test to assure product quality and 
increase the probability of intercept success.

    [Clerk's note.--End of the questions submitted by Mr. 
Dicks. Questions submitted by Mr. Young and the answers thereto 
follow:]

                        Modernization Shortfalls

    Question. The Army is requesting $11.2 billion for Army 
modernization programs. This is $2.9 billion--about 15 percent less 
that the fiscal year 1997 appropriated amount. These funds will procure 
aircraft, ammunition, tracked and tactical vehicles, missiles and 
combat support equipment. This funding will also be used for research 
and development programs.
    Mr. Decker, your statement says, ``modernization must be given 
additional resources if the Army is to maintain its technological 
edge.'' What major modernization requirements are not funded in the 
fiscal year 1998 budget?
    Answer. The Fiscal Year 1998 budget is balanced and funds our 
programs at a level that permits the Army to develop and procure the 
equipment which enables our soldiers to remain the best in the world. 
There are however, opportunities where additional investment dollars 
would permit us to secure some savings. During his testimony, the Chief 
of Staff said that his first priority for any additional funding that 
might be made available would be applied to information systems such as 
those associated with Digitization/Force XXI activities. Programs that 
could be accelerated to place key capabilities in the hands of 
commanders and soldiers include: Additional funding for Information 
Technology integration and digitization which includes All Source 
Analysis System (ASAS), Digital Topographic Support System (DTSS), 
Forward Area Air Defense Command and Control (FAAD C2), Enhanced 
Position Location Reporting System (EPLRS), Aviation Radios, and Force 
XXI Tactical Operation Centers; Modification and improvements to Kiowa 
Warrior, Avenger, Improved Cargo Helicopter, Sentinel, Bradley, 
Multiple Launch Rocket System (MLRS), and Stinger, Firefinder, Bradley 
Fire Support Vehicle, and Bradley Linebacker; Accelerated procurement 
of Palletized Load System (PLS) Trucks, Family of Medium Tactical 
Vehicle (FMTV) and Heavy Equipment Transporter (HET); and development 
of the M1 Breacher prototype and the Comanche Flight Test.
    Question. What are your top four modernization programs? Are they 
fully funded in FY98? Are they optimally funded in the accompanying 
fiscal years of the Future Year Defense Plan (FYDP)? If not, what are 
the shortfalls?
    Answer. The top Army programs are ForceXXI/Digitization, Comanche, 
and Crusader. These programs are adequately funded to accomplish the 
Army's program objectives for fiscal year 1998. Currently, the Comanche 
program is flying one prototype aircraft to demonstrate and validate 
design criteria and capabilities. Crusader has down selected to a solid 
propellant to reduce program risk and has been successful at 
automatically firing 2 successive rounds using solid propellant. The 
resupply vehicle program is on track to field with the self propelled 
howitzer. The Army's digitization program recently completed its 
Brigade-Level Advanced Warfighting Experiment at the National Training 
Center. The results of this experiment will enable the Army to select 
the most promising technologies for the Army's first digitized 
division.
    In the FYDP, these programs have been optimally funded to achieve 
the most capability for the available funds. While increased funding of 
some programs can accelerate fielding, the cost to other programs would 
result in a less than optimal mix of capabilities on the future 
battlefield.
    Question. Mr. Decker do you believe that your fiscal year 1998 
(FY98) budget allows you to procure items at a rate that makes economic 
and operational sense? Which programs concern you the most?
    Answer. The FY98 budget funds our programs at a level that permits 
the Army to develop and procure the equipment which enables our 
soldiers to remain the best in the world. There are however, 
opportunities where additional investment dollars would permit us to 
secure some savings. For example, some items are purchased below the 
economic quantity rate and therefore, the unit cost is higher. 
Obviously, those programs with the highest per unit cost cause the 
greatest concern. Whenever we can reduce the cost per item even a 
fraction, the savings can be great over the life of the program. For 
example, in FY96, we bought 750 Hellfire 2 missiles. This was below the 
minimum sustaining rate of 1248 missiles. In FY97, the Army doubled the 
amount of funding to the program and purchased more than twice the 
number of missiles. The unit cost dropped from $68,000 to $46,000. 
Another example is the Stinger Block 1 missile. In FY96 by adding $4.8 
million to the $12.4 million in the line, we were able to drop the unit 
cost by eighteen percent. The added benefit to investments such as 
these is that it enables us to buy out the line earlier and get the 
equipment in the hands of the soldier sooner. We are constantly looking 
for ways to fund our programs to get the best quality for the least 
cost. You have been a great help to us in the past and we look forward 
to your continued support.
    Question. According to your statement, the Army's strategy for 
fiscal year 1998 (FY98) is to procure a limited number of new high pay-
off weapons and extend the lives of existing systems. What new high-
payoff systems are you procuring in fiscal year 1998? Is the funding 
adequate in fiscal year 1998?
    Answer. The Army is scheduled to begin full production on the Joint 
Surveillance Target Attack Radar System (JSTARS) Common Ground Station 
(CGS) in FY98. The module will provide long-range radar and other 
sensor surveillance battle management and targeting data to tactical 
commanders. This system is critical to achieving information dominance. 
Funding in FY98 is adequate to begin procurement of CGS.
    The Bradley Fire Support Team Vehicle will enter Low Rate Initial 
Production in FY98. This vehicle will allow fire support teams to 
decrease the response time and increase the accuracy of indirect fires 
in support of maneuver combat units. This vehicle will enhance the 
ability of the services to conduct precision engagement. Funding in 
FY98 is adequate to ramp into full production later in the Future 
Year's Defense Plan.

                           Additional Funding

    Question. Last year, you were very candid about identifying your 
top unfunded requirements to the Committee and working with us to 
provide additional funding for many of them. I hope you will continue 
that cooperation with us. General Hite, please describe your top 
unfunded weapons system acquisition priorities and why the fiscal year 
1998 budget is not sufficient in these areas.
    Answer. To achieve prominence as a superior fighting force, the 
Army has relied on and will continue to depend upon technology. As our 
force has become smaller, we must replace aging and obsolete systems 
and upgrade our capabilities, to maintain this advantage. The Fiscal 
Year 1998 budget is balanced and funds our programs at a level that 
permits the Army to develop and procure the equipment which enables our 
soldiers to remain the best in the world. There are however, 
opportunities where we can develop and buy additional required 
technologies and weapon systems beyond amounts affordable in our 
balanced, yet constrained budget. During his testimony, the Chief of 
Staff said that his first priority for any additional funding that 
might be made available would be applied to information systems such as 
those associated with Digitization/Force XXI activities. Programs that 
could be accelerated to place key capabilities in the hands of 
commanders and soldiers include: information technology integration and 
digitization systems which includes All Source Analysis System (ASAS), 
Forward Area Air Defense Command and Control (FAAD C2), Enhanced 
Position Location Reporting System (EPLRS), Aviation Radios, and Force 
XXI Tactical Operation Centers; modification and improvements to Kiowa 
Warrior, Avenger, Improved Cargo Helicopter, Sentinel, Bradley, 
Multiple Launch Rocket System (MLRS), and Stinger, Firefinder, Bradley 
Fire Support Vehicle, and Bradley Linebacker; accelerated procurement 
of Palletized Load System (PLS) Trucks, Family of Medium Tactical 
Vehicle (FMTV) and Heavy Equipment Transporter (HET); and development 
of the M1 Breacher prototype and the Comanche Flight Test.
    Question. What are the potential savings if the Congress were to 
provide additional funding in fiscal year (FY) 1998 for these items, 
either by buying them earlier than planned or by lower production unit 
costs through procurement at higher quantities? Please put the costs 
and savings in the record.
    Answer. The Army has developed an extensive list of unfinanced 
requirements, along with potential savings derived if additional funds 
were received in fiscal year 1998. These savings are not always 
monetary, but reap operational impacts/benefits as well. A 
representative sample of these savings/benefits follow: (a) Bradley 
Fire Support Team Vehicle (BFIST), receiving a plus up of $18.6 million 
in FY 98 will allow BFIST production to be completed in FY 07 instead 
of FY 08. This acceleration represents a cost avoidance of $31.6 
million in FY 07 and $8.2 million in FY 08. This plus up will result in 
a net savings to the Army of $13.0 million (b) Family of Medium 
Tactical Vehicles (FMTV), receiving $517 million more in FY 98 will 
allow the Army to realize a savings of an average $6 thousand per year 
per 2.5 ton truck replaced and $4 thousand per year per 5 ton truck 
replaced or a total of approximately $16.6 million dollars in operation 
and support class. This plus up will allow for the procurement of 3,336 
more FMTV's, alleviating truck shortages and increasing equipment 
readiness rates. (c) Sentinel, receiving $20.3 million in FY 98 will 
allow for the procurement of 14 additional Sentinel radar systems (for 
a total of 27) and decrease the fielding gap between Sentinel and FAAD 
C2. This will result in a $14.3 million savings and shorten production 
schedule by one year.
    Question. Which of these items are on any of the Commanders-in-
Chief (CINC) integrated priority lists?
    Answer. Information technologies, integration and digitization 
programs (ASAS, FAAD C2, and EPLRS) compliment the capabilities 
described on the CINC Integrated Priority Lists (IPL). CINC IPLs also 
addressed enhancements to logistics capabilities which specifically 
mentioned HETs, FMTV and aging truck fleets.
    Question. Last year, the Army submitted a list which focused on 
``smart investments.'' However, the list included: $24 million for 
unfunded digitization requirements that required an additional $470 
million in the outyears to complete; $360 million for 18 additional 
Apache Longbow helicopters to ``heavy up'' the 2nd Armored Calvary 
Regiment--a fielding decision that had not and still has not been made; 
$500 thousand to increase the Warfighter Information Network's 
capacity, which required an additional $370 million in the outyears to 
sustain; and $199 million to accelerate Comanche, which required an 
additional $1 billion in the outyears, which the Army stated it cannot 
afford to sustain. Mr. Decker, how will you ensure that the fiscal year 
1998 unfunded requirements list will focus on ``smart investments''?
    Answer. The Army has gone to great lengths in an effort to ensure 
that any of the high priority items included in our listing of unfunded 
requirements represents a ``smart investment'' with the potential to 
pay dividends in varieties of ways. Each of these requirements has been 
scrutinized for its executability, and the magnitude of its 
operational, functional, and/or economic payback has been carefully 
weighed and evaluated in terms of dollars saved, costs avoided, and/or 
capabilities enhanced. All of our high priority unfunded requirements 
represent opportunities to garner significant, quantifiable benefits by 
proven and effective techniques such as program accelerations; 
expedited fielding; procuring at the most economic production rates 
possible; through the economy-of-scale savings possible with multi-year 
procurement contracts; and through implementing the improvements and 
efficiencies we're pursuing as part of our acquisition streamlining and 
acquisition reform initiatives.
    Question. How will you ensure that the items are critical 
warfighting requirements and not just ``nice to have'' items?
    Answer. The Fiscal Year 1998 budget funds our programs at a level 
that permits the Army to develop and procure the equipment which 
enables our soldiers to remain the best in the world. Most of the 
Army's procurement decisions are based on warfighting requirements. 
These requirements are examined in great detail within the Army to 
insure the appropriate capabilities and quantities are being developed 
and procured. These requirements are validated by the Joint 
Requirements Oversight Council to insure interoperability across all of 
the Services. The Army also procures some items which are not directly 
tied to a warfighting requirement, but are critical requirements for 
the operation of the Army installation activities. Many of these items 
are purchased off-the-shelf like sedans, buses, power plant equipment 
and commercial air traffic control equipment. The Joint Services 
Intrusion Detection System, for example, is required to ensure maximum 
security of Army small arms weapons that are ordinarily secured in unit 
arms rooms. This equipment is required to ensure the proper functioning 
of day to day activities, the safeguarding of Army Equipment and the 
protection of soldiers and their families.
    With the severe funding constraints in today's budget, every 
requirement is closely examined to insure only the highest priority 
requirements were submitted in the President's Budget Request.

           Research, Development, Test and Evaluation Funding

    Question. The Army is requesting $4.5 billion for Research, 
Development, Test and Evaluation (RDT&E) activities--this is $200 
million higher than last year's budget request. In 1997, the Army spent 
29 cents of Research and Development (R&D) for every dollar of 
procurement. In this budget the Army proposes to spend 66 cents of R&D 
for each procurement dollar. Your 1998 budget clearly shows that the 
Army conducts much research and produces very little equipment. Mr. 
Decker, what has caused this trend and why is the budget so biased 
toward research rather than production?
    Answer. In 1997, before the Congressional Marks, the Army budgeted 
$6.32 billion in procurement and $4.32 billion in RDT&E. This equates 
to approximately 68 cents of RDT&E for every dollar of procurement. 
Currently the fiscal year 1998 budget is at an approximate ratio of 67 
cents of RDT&E for every dollar of procurement ($6.75 billion of 
procurement and $4.51 billion of RDT&E). Our RDT&E investment develops 
and provides significant technical insertions in our current systems 
while at the same time investing in the development of future systems 
that will ensure the accomplishment of our nation's goals. It is 
imperative that we maintain the Army's technological advantage on the 
battlefield now and in the future. Our investments in research today 
are critical to ensuring that the technologies and capabilities will be 
available when needed to forge the Army After Next.
    Question. Mr. Decker, you talk about a crisis in procurement. Most 
of the Army's aircraft, missile, tactical vehicle and ammunition 
accounts are funded below last year's budget request. However, 
Research, Development, Testing and Evaluation (RDT&E) is funded at a 
higher level than last year's budget request. Why are you trading off 
procurement dollars for research and development activities?
    Answer. In 1997, before the Congressional Marks, the Army budgeted 
$6.32 billion in procurement. Currently, the fiscal year 1998 (FY98) 
budget requests $6.75 billion, representing an increase of 6 percent. 
The FY97 budget requested $4.32 billion for RDT&E, while the FY98 
budget asks for $4.51 billion in RDT&E, only a 4 percent increase over 
the previous year.
    The RDT&E program in FY 98 is focused on supporting affordable 
options to achieve the capabilities envisioned for Force XXI, Army 
Vision 2010, and the Army After Next with emphasis on demonstrations of 
promising technologies with warfighter applications. The Army continues 
to maintain a strong and stable RDT&E program to ensure the timely 
development and transition of technology into weapon systems and system 
upgrades, and to explore alternative concepts in future global, 
capabilities-based warfighting.

    [Clerk's note.--Although the overall procurement funding 
does increase, $349,109,000 of the increase is a result of a 
transfer from the Ballistic Missile Defense Office (BMDO) for 
Patriot Missile Procurement to the Army missile procurement 
appropriation. Funding requested for ammunition and other 
procurement are less in fiscal year 1998.]

    Question. For the record, please provide a list of all ``new 
start'' Research, Development, Testing and Evaluation (RDT&E) 
activities in fiscal year 1998. Which ones are included in the 
Commanders-in-Chief (CINC) priority list?
    Answer. Guided Multiple Launch Rocket System in Engineering and 
Manufacturing Development and High Mobility Multipurpose Wheeled 
Vehicle (HMMWV) prototype. Although these systems are not specifically 
listed in a CINC's priority list they will provide Army components of 
the Joint Force with the Precision Engagement and Dominant Maneuver 
capabilities needed to enable Joint Vision 2010 operational concepts. 
The Military Operations in Urban Terrain Advanced Concept Technology 
Demonstration (ACTD), although not on a CINC's priority list, began in 
FY97 with Department of Defense funding. FY98 is the first year of Army 
funding for this ACTD.

                        Heavy Tactical Vehicles

    Question. The Army is requesting no funds to procure heavy tactical 
vehicles in fiscal year 1998. Mr. Decker, in your statement, you stress 
the importance of tactical vehicles. However, for the second year in 
the row, your budget proposes no funds to procure heavy tactical 
vehicles. Why?
    Answer. Affordability is the reason. The Army prioritizes programs 
and, although heavy tactical vehicles are important, funding was 
insufficient to cover all our requirements. Heavy tactical vehicles 
include the Palletized Load System (PLS), the Heavy Expanded Mobility 
Tactical Truck (HEMTT), and the Heavy Equipment Transporter System 
(HETS). In the Fiscal Year 1997 President's Budget, the Army budgeted 
$77.4 million for PLS flatracks/devices and $86.9 million for HETS. The 
Congress increased the Army's heavy tactical vehicle request by $50.0 
million for PLS trucks/trailers and $30.6 million for HEMTT wreckers/
tankers. The Army is requesting $9.1 million in Fiscal Year 1998 for 
PLS flatracks/devices.
    Question. General Hite, what is the Army's requirement for heavy 
tactical vehicles? Is the requirement satisfied? If not, what is the 
shortfall?
    Answer. The Army's requirement for heavy tactical vehicles have not 
been met. The required/on-hand quantities are: (1) Palletized Load 
System (PLS)-3,711/2,277, (2) PLS Trailers-2,891/1,195, (3) PLS 
Flatracks-55,626/10,059, (4) Heavy Expanded Mobility Tactical Truck 
(HEMTT)-13,203/12,165 (HEMTT Wreckers-2,483/1,630 and HEMTT Tankers-
4,842/4,073), and (5) Heavy Equipment Transporter System-2,412/1,358.
    Question. What is the impact of the fiscal year 1998 budget on the 
industrial base--both the prime and its suppliers?
    Answer. Oshkosh Truck Corporation, Oshkosh, Wisconsin is the prime 
contractor for the Palletized Load System (PLS), Heavy Expanded 
Mobility Tactical Truck (HEMITT), and Heavy Equipment Transporter 
System (HETS) tractors and produces these vehicles on a combined 
commercial and military assembly line to keep unit costs as low as 
possible. System and Electronics Incorporation, St. Louis, Missouri 
produces the HETS trailer. Based on a fiscal year 1998 program ($9.1 
million), production stops on: (1) PLS-April 1998, (2) PLS trailer-
December 1997, (3) HETS-July 1998, and HEMTT-July 1998. The fiscal year 
1998 program (Standard Study Number DA0500) of $9.1 million buys: (1) 
968 Container Roll-in/Out Plantforms-$8.1 million, and (2) 40 Container 
Handling Units-$1.0 million. Based on a fiscal year 1999 program 
($162.6 million) for those types of trucks in which production stops, 
contract awards occur in December 1998 and the production startup is 9 
months later. Reductions in the work-force at both prime contractors 
and suppliers will take place including migration of suppliers and 
venders away from Defense business. Startup will most likely 
necessitate requalification of venders and suppliers and result in 
approximately a 15 percent cost increase to the Army. Lastly, a restart 
may require redesign to meet Federal Motor Vehicle Safety Standards 
(FMVSS) which are exempted if production is kept constant.
    Question. Based on your 1998 budget, you plan on spending $162 
million in 1999 on heavy tactical vehicles. Since you will have a 
``cold'' manufacturing line, what will be the cost of restarting the 
line?
    Answer. Oshkosh Truck Corporation, Oshkosh, Wisconsin is the prime 
contractor for the Palletized Load System (PLS), Heavy Expanded 
Mobility Tactical Truck, and Heavy Equipment Transporter System (HETS) 
tractors and estimates that if a particular type of truck production is 
stopped, even though the total line does not stop, then start-up costs 
associated with renegotiating venders and suppliers (which represent 75 
percent of the assembly process) would increase unit costs by 
approximately 15 percent. In addition, a restart may require redesign 
to meet Federal Motor Vehicle Safety Standards which are exempted if 
production is kept constant. Start-up costs from System and Electronics 
Incorporated, St. Louis, Missouri, which produces the HETS trailer, are 
currently being developed.
    Question. It is our understanding that the lead time for heavy 
tactical vehicle is approximately 9 months. Does the fiscal year 1998 
budget include funds to procure long lead items required for 1999 
production? Why?
    Answer. No, the 1998 budget does not include funding for long lead 
items due to affordability.

                        Light Tactical Vehicles

    Question. Last year, Congress appropriated $166 million for light 
tactical vehicles, the High Mobility Multipurpose Wheeled Vehicle 
(HMMWV). The Army is requesting $66 million in 1998 for HMMWV 
production. Does the fiscal year 1998 budget satisfy Army requirements 
for light vehicles? If not, what are the shortfalls?
    Answer. The requested budget does not fill the remaining 
requirement for light tactical vehicles in the Army inventory. The 
total Army requirement for HMMWV is 119,518 vehicles. This is an 
increase over prior year requirements based on the Department of the 
Army decision to ``Pure Fleet'' the light tactical fleet using only the 
HMMWV. We have on hand today 100,854 leaving a shortfall of 18,664. The 
Army has budgeted for 774 vehicles in FY98 and of these 524 represent 
new production.
    Question. Does the budget request sustain the industrial base? If 
not, what is the impact?
    Answer. The U.S. Army can not predict the commercial, foreign 
commercial/military direct and Foreign Military Sales (FMS) of the 
HMMWV by the prime contractor AM General Corporation (AMG). AMG has 
advised the Government that to sustain a production rate of 16.5 
vehicles per day, their new minimum sustaining rate, they require the 
Department of Defense to procure 10 per day (2,350 vehicles per year). 
This represents Government funded procurements exclusive of any FMS 
cases. Thus, the amount requested would not satisfy the contractor 
identified requirement for the full year.
    Question. The Army has decided to develop a new light tactical 
vehicle and terminate the production of the High Mobility Multipurpose 
Wheeled Vehicle (HMMWV) at the end of 1998. According to the Army, the 
HMMWV is a ``world class vehicle''; however, supportability is becoming 
a problem. What supportability problems are you experiencing?
    Answer. The HMMWV has been the world's best light tactical off road 
vehicle. However, over the past 17 years since the HMMWV was designed, 
significant commercial component changes, statutory requirements and 
our demand for increased capability from the vehicle have significantly 
reduced the reliability of the vehicle and increased the sustainment 
cost. The demand for increased capacity has been a result of the new 
missions and constraints placed on the Army in the areas of payload, 
electrical power, configuration, and mission requirements. The 
significant increase in applique equipment and use of the light fleet 
vehicles for more roles has pushed the envelope with regard to the 
ability to package all of the new equipment in the vehicle. This has a 
major impact on the human factors of the vehicle and its ability to 
effectively execute the mission as well as increasing the safety risk. 
The HMMWV has a high scheduled maintenance time requirement with 
increasing unscheduled maintenance. This demands that we develop a 
vehicle that requires significantly less scheduled service time and 
reduced unscheduled time. Finally the changing commercial components 
are not easily packaged in the 17-year-old design and the cost to 
reconfigure the vehicle to accommodate new components is increasing 
dramatically. The Project Manager Light Tactical Vehicles is preparing 
a detailed discussion and justification for this program which will be 
forwarded to Congress next month. This document will fully explain the 
investment strategy for the light fleet.
    Question. Furthermore, the Army believes that the High Mobility 
Multipurpose Wheeled Vehicle (HMMWV) is only ``marginally meeting new 
requirements.'' What new requirements are not met by the HMMWV?
    Answer. There are standards that were objectives for the original 
HMMWV that were waived during prototype phase based on cost and 
complexity versus other critical mission requirements. An example of an 
original requirement not met is interior noise. The interior noise 
exceeds that for operation without hearing protection. The use of 
hearing protection reduces the combat effectiveness of the system. To 
meet the new mission demands for the light tactical vehicles we have 
had to make significant changes. We have: increased the payload and 
ballistic protection, redesigned the vehicle to meet new federal 
standards for emissions and safety, and reconfigured the vehicle to 
accommodate a plethora of new applique and integrated components. The 
latter effort stemmed from the increased emphasis on Command, Control, 
Communications, Computers, and Information (C4I) which are key elements 
for Force XXI. In meeting these requirements we have increased the 
maintenance burden on the Army in an environment of decreasing manpower 
and money. The vehicle also does not meet all of the federally mandated 
safety requirements, and, in fact, can not be sold in the military 
configuration to the general public for operation on the highway.
    Question. Could those deficiencies be resolved by modifying the 
current vehicle? If not why?
    Answer. The Army is currently conducting a formal Analysis of 
Alternatives as a normal part of an Major Defense Acquisition Program. 
This analysis will identify the most cost-effective way to meet the 
Army's requirements. This study will be completed before the planned 
release of the solicitation later this year. Preliminary results 
indicate that adapting the current vehicle is not an economically 
viable alternative and would have greater risk. As a minimum, a new 
body, frame, engine, electrical system and transmission will be 
required to meet the user's requirements. It is probable that such 
extensive changes would result in a very expensive program.
    Question. What is the anticipated cost of the new light tactical 
vehicle acquisition program? For the record, please provide the total 
cost, per unit cost and anticipated fielding schedule.
    Anwser. Based on our current program assumptions and analysis, we 
estimate that the prototype phase will cost $50 million and per unit 
average cost will be $86 thousand. Our anticipated First Unit Equipped 
(FUE) is in fiscal year 2002.
    Question. Given the Army's past experience with tactical vehicle 
programs, in terms of cost growth and schedule delays, do you think it 
makes sense to develop a new light vehicle? Why or why not?
    Answer. Yes, we and industry have learned a lot and have overcome 
the pitfalls of prior programs through general and specific acquisition 
actions. Application of Integrated Process Teams within the government 
and industry are reducing risk in both the requirement and acquisition 
arenas. We have established effective Teaming arrangements with 
contractors to identify and reconcile cost, schedule and technical 
performance issues quickly and amiably between the parties. These 
efforts are focused on resolution of conditions that have previously 
created complications in contracting for tactical vehicles.

               Family of Medium Tactical Vehicles (FMTV)

    Question. The Army is currently procuring the Family of Medium 
Tactical Vehicles (FMTV), 2.5 and 5 ton trucks, to replace those that 
have been in the fleet for over 20 years. The Army is requesting $209 
million for fiscal year 1998 for FMTV. During the past year, the Army 
has developed a new acquisition plan to develop a second producer. Mr. 
Decker, please describe the Army's new FMTV acquisition plan.
    Answer. We changed the FMTV acquisition strategy to mitigate a 
break in production, to reduce Operations and Support costs, to keep 
the FMTV pipeline flowing, to ensure commonality in FMTV rebuys and to 
ensure continual competition in the program. We plan to award a sole 
source, multiyear procurement contract to Stewart and Stevenson (S&S) 
in fiscal year 1998. The following year, fiscal year 1999, we plan to 
award a competitive, multiyear contract to a second source. While the 
new contractor is facilitizing and becoming qualified, S&S will 
continue to produce vehicles. Once the second source is qualified to 
produce, they will compete with S&S for FMTV funding.
    Question. Is you new acquisition plan funded in the budget?
    Answer. No, as a minimum we need an additional $44 million in 
fiscal year 1998 to mitigate a potential two month production gap.
    Question. We understand that the economic rate of production to 
maintain two Family on Medium Tactical Vehicles (FMTV) producers would 
require an annual procurement of $600 million. In the past few years, 
the Army has been unable to budget that amount for its entire tactical 
vehicle fleet. Given all of the modernization shortfalls you need to 
``fix'' how are you going to maintain that level of funding in your 
budget?
    Answer. I believe that the $600 million figure came from the 
Tactical Wheeled Vehicle Investment Strategy that the Department sent 
to the Congress in fiscal year 1995. Initially, to maintain two 
producers the Army believes that it needs $400 million per year. As you 
know, our budget process is an internal trade off between our 
prioritized requirements as affordability. We will do our best to fund 
our highest priorities.
    Question. As you know, out year projections usually do not 
materialize. If this happens, would you still want to continue with a 
second source?
    Answer. Our planning is predicated upon certain out year funding 
streams. If, at a future date those funding streams change, we will 
adjust our plans accordingly.
    Question. Are you satisfied with the Family of Medium Tactical 
Vehicles (FMTV's) that are currently being delivered to the Army?
    Answer. The Army is extremely satisfied with the FMTV. It is a 
first class vehicle that is very easy to maintain.
    Question. The Army is not required to compete the FMTV program or 
develop a second source. If your are satisfied with the product you are 
fielding, why not save the cost of the FMTV competition and award the 
contract to the current producer?
    Answer. The Army believes that it is in its best interest to 
interject competition in its procurement awards whenever possible.

                    Black Hawk Multiyear Procurement

    Question. Although the Army has a requirement for 500 additional 
Black Hawk helicopters, the fiscal year 1998 budget proposes to procure 
only a total of 36 in FY98 and FY99. The FY98 budget proposes to 
terminate Black Hawk production in 2000. Last year, the Army requested 
funding to begin a new multiyear contract for Black Hawk helicopters. 
Furthermore, the Army identified a $243 million shortfall in FY97 for 
Black Hawk procurement. The Congress provided $225 million for Black 
Hawks--$64 million above the President's Budget and the authority to 
proceed with a multiyear contract. This year's budget does not include 
funding for a Black Hawk multiyear contract. Why does your FY98 budget 
not include funds for the multiyear contract that you requested in 
fiscal year 1997?
    Answer. The FY98 budget reflects program budget decision (PBD) 722 
which anticipates a multi-service/multiyear contract for FY97-01 at 
quantities of 36, 18, 18, 18 and 18. The FY98 request reflects 
requirements to procure 18 aircraft in FY98 and advance procurement for 
12 aircraft in FY99. This completes the Army's portion of this 
contract.
    Question. Congress appropriated $65 million advanced procurement 
funds in fiscal year 1997 for the production of 36 aircraft in 1998. 
Since you are only procuring 18, can we rescind the money?
    Answer. The $65 million FY97 advance procurement funding is 
required to protect schedule, avoid breaks in production and procure 
Economical Order Quantities for the production quantities in FY98 and 
FY99. The budget is based on receiving $65 million in FY97. Even though 
we are only procuring 18 aircraft, any reduction to this amount would 
cause an increase in FY98 and FY99.
    Question. When, if ever, will you procure the additional 
helicopters to meet your requirements?
    Answer. The Army does not anticipate having sufficient 
modernization funds in the foreseeable future to enable it to procure 
the remaining Black Hawk requirement.
    Question. What is the operational impact of not fielding Black 
Hawks after 1999?
    Answer. The Army will have filled 100 percent of its active and 
reserve Black Hawk warfight requirements by 1999. The Army has decided 
it will accept the risks associated with Black Hawk shortages in the 
sustaining accounts (training, operational floats, repair cycle floats, 
and projected attrition) and the strategic reserve.
    Question. Does the fiscal year 1998 (FY98) budget request sustain 
the industrial base? Please explain.
    Answer. Yes. The intended program from program budget decision 722 
produces a multiservice/multiyear contract in FY97-01 which will 
maintain the Sikorsky industrial base.
    Question. If the Army decides to procure Black Hawks at a later 
date, what is the cost of restarting the production line?
    Answer. The cost impact of restarting the production line due to a 
significant production break is estimated to cover over $50 million in 
shut down and start up efforts.
    Question. The unit cost for Black Hawks, based on the multiyear 
procurement of 36 aircraft per year, is $8.7 million. The exact same 
helicopter will cost you $11.6 million with a single year procurement 
contact. The 36 aircraft you are buying in 1998 and 1999 will cost over 
$104 million more than if you would have continued the multiyear. Does 
this make good business sense to you? Why?
    Answer. The Army decided to withdraw funding from fiscal year 1998-
2001 (FY98-01) due to affordability. No additional cost would have 
occurred in FY98-99. Program budget decision 722 implemented the Deputy 
Secretary of Defense decision that directed the Army to continue to buy 
Black Hawk aircraft in FY 98-99.
    Question. The Army Aviation Modernization Plan is the strategy for 
replacing helicopters currently in the fleet. According to the plan, 
all UH-1, (Huey) utility helicopters will be replaced by the Black Hawk 
for both the active and reserve forces. How many UH-1 helicopters are 
currently in the army inventory?
    Answer. There are approximately 1000 UH-1s in the current Army 
inventory. The ongoing retirement and draw down programs will reduce 
the UH-1 inventory to approximately 900 aircraft by late 1999.
    Question. Will you keep UH-1 helicopters in the fleet to meet 
utility requirements? If not, how will those requirements be satisfied?
    Answer. Yes. UH-1s will fill requirements for the light utility 
helicopter mission, strategic reserve utility requirements, and 
peacetime training and support requirements.
    Question. What is the life expectancy of the UH-1 in the fleet?
    Answer. The UH-1 life expectancy is 30 years.
    Question. When will they reach their life expectancy?
    Answer. The remaining UH-1 fleet will reach an average fleet age of 
30 years in 2002. The Army has determined that it can safely operate 
and maintain its UH-1 fleet until 2010. The key to the UH-1's 
sustainability in its historical performance data and the abundant 
world wide parts supply.
    Question.For the record, please provide the anticipated retirement 
schedule for the UF-1 based on the Black Hawk fielding schedule?
    Answer. The majority of anticipated UH-1 retirements are based on 
ongoing Army National Guard force reductions. The Army will procure 
another 64 Black Hawks for fiscal years 1997-1999 (97=34, 98=18, 
99=12). These aircraft will enable the Army to displace 12 active 
component Medical Evacuation (MEDEVAC) UH-1's, 30 reserve component 
MEDEVAC UH-1's, field 8 UH-60As for a new command aviation company in 
Germany, and provide eight additional operational ready float Black 
Hawks.
    Question. According to the Army Modernization Plan, the UH-1 HUEY 
helicopters are ``old airframes, possessing inadequate lift, speed, and 
range for operations in high/hot environments.'' The Army was planning 
to replace all UH-1s with the Black Hawk, ``a solid performer with 
excellent deployability, sustainability, and maintainability.'' Since 
it appears that the Army is going to have UH-1s in the fleet for quite 
some time, are you going to improve the UH-1 to correct those 
deficiencies?
    Answer. These deficiencies describe the UH-1s inability to perform 
assault and general support missions in a wartime environment. Since 
the Army has filled 100 percent of its UH-60 wartime requirements, 
there are no warfight deficiencies to correct in the UH-1.
    Question. What is the estimated cost of a UH-1 upgrade program?
    Answer. The Army does not have a requirement for a UH-1 upgrade 
program. There has not been a cost estimate done for a UH-1 upgrade 
program.
    Question. Would it not be cheaper to procure new Black Haws, 
instead of upgrading the UH-1? Please explain.
    Answer. Since the Army has no plan to upgrade the UH-1, there is no 
cost basis to compare upgrading the UH-1 against the cost of procuring 
new Black Hawks.
    Question. What are the operation and maintenance cost for a Black 
Hawk? For a UH-1?
    Answer. Operational and maintenance costs are based on the theater 
in which the aircraft is operated. Current cost factors per flight hour 
for aircraft in Korea are: UH-60L-$1554 per hour; UH-1-$397 per hour.
    Question. The Army claims that reducing the type of helicopters in 
the fleet will reduce support and logistics costs. For the record, what 
would be the savings if you retired all helicopters and had only Black 
Hawks in the fleet?
    Answer. The Army will provide cost data at a later date. If all UH-
1s were retired, the Army would have a large number of mission 
requirements that do not need a Black Hawk. The 120 aircraft light 
utility helicopter mission does not require a UH-60. The Army also has 
a wide variety of UH-1 peace time support missions that do not require 
a UH-60.

    [Clerk's note.--The cost data was not provided to the 
Committee.]

    Question. The Congress directed that the global positioning system 
(GPS) be integrated on all service aircraft by 2000. Since you will 
have more UH-1s in the fleet than you anticipated, will you meet the 
deadline? If not, how many UH-1 helicopters will not have GPS by 2000?
    Answer. The Army has funded the procurement of GPS to integrate 
them in all remaining UH-1s by the year 2000.
    Question. Since you have decided not to go forward with the Black 
Hawk multiyear, it appears as if the Army will have to:
--pay $104 million more than you planned on spending for 18 
helicopters;
--Pay to maintain the UH-1; and pay the higher support and logistics 
costs associated with maintaining more than one type of utility 
helicopter fleet.
Mr. Decker, do you still believe the Black Hawk multiyear contact is 
unaffordable?
    Answer. Program budget decision 722 provided sufficient funding for 
an Army/Navy multiyear contract at 18 per year from fiscal years 1998-
2001 (FY98-01).
    Question. Recently, we have heard testimony from several of the 
Commanders-in-Chief (CINCs). All of the CINCs testified that they are 
faced with critical shortfalls in areas such as equipment maintenance 
and airlift. What do you think the CINCs would say about your decision 
to terminate Black Hawk production?
    Answer. Due to fiscal constraints, the higher priority of other war 
fighting systems is more important to our soldiers.
    Question. For the record, please provide, for each CINC, the number 
of UH-1s that are in his area of operations.
    Answer. Projected to the end of FY98: U.S. Army Europe--28; Korea--
3; U.S. Army Forces Command--81; U.S. Army Pacific--8; U.S. Army 
Southern Command--0; U.S. Special Operations Command--0.

                    CH-47 Improved Cargo Helicopter

    Question. The CH-47 is the Army's cargo helicopter which was 
fielded almost 40 years ago; its useful life expires beginning in 2002. 
The replacement helicopter, the National Transport Rotorcraft (NTR) 
will be a joint service helicopter and will be fielded after 2015. The 
Army's shortfall list in fiscal year 1997 (FY97) included funds to 
accelerate the procurement of new engines for the CH-47. The Army also 
identified funds to begin the development of Improved Cargo Helicopter 
(ICH) program. The ICH will be a CH-47 which will undergo an airframe 
overhaul and cockpit upgrade program. Congress provided the additional 
funding for both unfunded requirements. What is the status of the FY97 
funds?
    Answer. The $8.7 million of the $17.72 million ICH FY97 Research, 
Development, Test and Evaluation (RDTE) Congressional add has been 
released to the Army. This $8.7 million will allow the ICH Program 
Office to fund all programmatic requirements through the end of FY 97. 
The balance of the congressional add, currently on withhold in the 
Office of the Secretary of Defense, must be released to the Army at the 
beginning of FY98 to allow for the award of the ICH Engineering and 
Manufacturing Development contract in December 1997.
    Question. The Congress provided $17 million to begin the 
development of the ICH, an airframe overhaul and cockpit upgrade 
program for the CH-47. The Army is requesting $2.6 million to continue 
the program in FY98. The Army plans on delivering the first ICH to the 
fleet in 2003. The last ICH will be delivered in 2016. What is the 
anticipated cost of the ICH program?
    Answer. The current RDTE funding requirement for this program is 
projected to be $103 million in then year dollars. The current 
Procurement funding requirement for this program is projected to be 
$3.102 billion in then year dollars.
    Question. Is the ICH program adequately funded in your 1998 budget 
request? If not, what is the shortfall?
    Answer. The ICH program is not adequately funded in FY98 due to a 
$26 million FY98 RDTE decrement in Program Budget Decision 722. While 
the program remains executable, additional RDTE funds in FY98 would 
``buy back'' the year delay in fielding caused by this decrement and 
maintain program efficiencies during the Engineering and Manufacturing 
Development phase.
    Question. What is the anticipated useful life of the ICH?
    Answer. Once fielded, the useful life of the ICH will be 20 years.
    Question. The useful life of the CH-47 expires beginning in 2002. 
The first ICH will not be delivered until 2003, the last in 2016. 
Should the ICH program be accelerated? Please explain.
    Answer. The initial fielding date of 2002 was established to 
coincide with the end of the projected useful life of the CH-47D. 
Therefore, any delays of ICH fielding beyond this date would be unwise. 
Due to budget constraints during the production years, the ICH will 
only be fielded at one half the rate at which the CH-47D was fielded. 
Additional Procurement funding during the production years would allow 
the Army to accelerate procurement and fielding, providing our war-
fighters with this critical capability early.
    Question. The ICH program will be the second ``service life 
extension program'' for the CH-47; the first took place 20 years ago. A 
replacement helicopter, the NTR, for CH-47 will not be produced until 
after 2015 almost 20 years from today. Do you believe that the ICH will 
remain safe and operational until after 2015 or will not have to do 
another life extension program?
    Answer. Yes, the ICH will remain safe and operational for 20 years. 
The first ICHs will be operational until 2023, while the last ICH 
deliveries will be operational until 2036. The safety of these aircraft 
will be maintained through continued safety and sustainment efforts, 
much like the CH-47D fleet is today.
    Question. The Marine Corps is also considering a service life 
extension program for its cargo helicopters. Since both services will 
procure the NTR, would it not make more sense, operationally and 
economically, to accelerate the NTR instead of doing two service life 
extension programs?
    Answer. The ICH is intended to bridge the gap between now and the 
fielding of what is now known as the Joint Tactical Rotocraft (JTR). 
This is why the ICH program includes only the necessary quantities--300 
of the Army's 431 CH-47Ds--to achieve this bridge. The need to sustain 
the CH-47D fleet through another service life extension program in the 
immediate future is critical and cannot be delayed. Delaying the ICH 
program would result in an anticipated reduction in aircraft 
operational availability and increased Operating and Support costs 
until a replacement is fielded. Should the replacement program be 
delayed, this program would continue to grow. While the Army cannot 
speak for the Marine Corps, the JTR program is only in the very early 
stages of Concept Exploration. Many of the anticipated technologies 
required to achieve the desired performance objectives are still being 
defined. The JTR is currently projected to be fielded no earlier than 
2015, at which time the entire fleet of CH-47Ds will be over 20 years 
old.

                       Apache Longbow Helicopter

    Question. The Apache is the Army's attack helicopter originally 
fielded in the 1980's. The Army is planning to modify 758 of the Apache 
helicopters to the Apache Longbow. With its improved radar and weapon 
systems, the Apache Longbow will have improved targeting, survivability 
and maintainability features. Last year, the Army's shortfall list 
included funds to modify the Apache Longbow with a Second Generation 
Forward Looking Infrared (2nd GEN FLIR) that is being developed for the 
Comanche. Since the outyear integration costs for the Apache 2nd GEN 
FLIR program were not budgeted and projected to be approximately $700 
million, the Committee requested that the Army provide a report with 
the fiscal year 1998 budget submit outlining the risks and costs of the 
program. What is the status of the report?
    Answer. An interim report was approved for release on 11 March 
1997. The final report cannot be prepared until results of a flight 
evaluation are assessed. I the contract can be awarded by 30 June 1997 
a flight demonstration could take place in the Third Quarter, FY98. A 
final report will be prepared at that time.
    Question. When will you provide it to Congress?
    Answer. The interim report was sent the week of 24 March 1997.
    Question. The Senate provided the funds to begin the 2nd GEN FLIR 
program and their position prevailed in conference--the Congress 
provided $5 million to begin the program. What is the status of the 
FY97 funds?
    Answer. The funding provided in FY97 is being withheld by the 
Department of Defense Comptroller. The FY97 funding would allow the 
Army to do a flight evaluation of the Comanche FLIR on Apache. The 
intent of this evaluation is to provide the detailed information 
necessary to fully respond to the Congressional reporting requirement.
    Question. Does your FY98 budget include funds to continue the 
program? If not, what is the shortfall?
    Answer. Funding to support a FY98 program is not included in the 
FY98 budget. A FY98 program start would require $13 million.
    Question. Do you plan on providing offsets to continue the program 
in FY98?
    Answer. Offset decisions for FY98 have not been made yet.
    Question. The Army told us last year it believed using the Comanche 
2nd GEN FLIR would be cost effective because it would allow development 
of a single sensor for two aircraft. However, it is our understanding 
that competing contractors have told the Army they will protest ``sole 
source'' award. They say it is unfair not to compete the contract. If 
you must compete the contract, what is the anticipated cost of 
developing a new 2nd GEN FLIR for the Apache Longbow? Are funds 
included in the FY98 budget request?
    Answer. The cost of developing and procuring a new 2nd GEN FLIR 
would be approximately $774 million, $26 million more than the 
projected cost of leveraging the work already completed on the Comanche 
FLIR. Funding to support a 1998 program is not included in the 1998 
budget request.
    Question. It appears as if your Apache Longbow 2nd GEN FLIR program 
is in trouble because you did not provide Congress with a report as 
requested; the Office of the Secretary of Defense has not released your 
FY97 funds; you did not provide funds in FY98 to continue the program; 
and you can not award the contract without a competition. So why 
shouldn't we rescind the funds?
    Answer. Funding should not be rescinded because it was provided for 
the express purpose of investigating the feasibility of using the 
Comanche FLIR on the Apache, not necessarily to begin a Apache 2nd GEN 
FLIR program. Data derived from the feasibility study and flight 
demonstration will not only provide valuable information for any future 
Apache 2nd GEN FLIR program, but also serves as a risk reduction to the 
Comanche program. A sole source contract can be awarded for this 
feasibility study because there is only one developer of the Comanche 
FLIR. However, any new effort to develop and produce an Apache 2nd GEN 
FLIR would be competed in accordance with the Competition in 
Contracting Act.
    Funding to support follow-on 2nd GEN FLIR requirements will be 
addressed in the FY99-03 Mini-Program Objectives Memorandum.
    Question. Last year, the Congress provided $27 million to procure 
one crew trainer for the Apache Longbow. The Army identified an 
unfunded requirement for two crew trainers. It is our understanding 
that funds are not included in the fiscal year 1998 budget for the 
second trainer. Why?
    Answer. The FY98 budget request contains $81.7 million for Apache 
Longbow training devices. The 1998 funding would procure the best mix 
of required training devices based upon available funding. Devices to 
be procured in 1998 are two Longbow Crew Trainers, two Longbow 
Collective Training Systems, two Multiplex Avionics, Visionics, 
Weapons, and Electrical Systems Trainers, three Airframe Engine and 
Drivetrain Systems Trainers, and 45 Tactical Engagement Simulation 
Systems. With an additional $28 million, the Army would procure one 
additional Longbow Crew Trainer; one Multiplex Avionics, Visionics, 
Weapons, and Electrical Systems Trainer; and two Airframe Engine and 
Drivetrain Systems Trainers.
    Question. The Army is pursuing a six year multiyear contract for 
the Fire Control Radar (FCR), which is a key component of the Apache 
Longbow weapon system. The FCR provides automatic target detection, 
classification, and prioritization and a firer and forget capability. 
The Apache Longbow airframe is a five year multiyear procurement. Why 
are you requesting a six year multiyear contract for the FCR?
    Answer. A six year multiyear contract is being requested because it 
would complete the procurement of the remaining 207 FCRs and offer a 
considerable cost avoidance. Army analysis projects a cost avoidance of 
approximately $80 million.

                        Kiowa Warrior Helicopter

    Question. The Kiowa Warrior is the Army's armed reconnaissance 
helicopter. Originally fielded during the Vietnam War as the OH-58, 
this helicopter will start to be replaced after 2006 by the Comanche. 
The Army is requesting no funds for Kiowa Warrior production for fiscal 
year 1998. What is the Army's requirement for Kiowa Warriors? How many 
are in the current fleet? How many are on contract?
    Answer. The Army's requirement for Kiowa Warriors is 507, and 
includes all units, both Active and Reserve, that have Kiowa as part of 
required equipment. There are currently 314 in the fleet. There are a 
total of 398 on contract.
    Question. Last year, Congress provided an additional $190 million 
for Kiowa Warrior (FY97 plus up). What is the status of those funds?
    Answer. $79 million of the $190 million has been released by the 
Office of the Secretary of Defense (OSD). The $22 million will be used 
to continue procurement of 10 additional aircraft. The $57 million will 
be used for the Safety Enhancement Program (SEP). The remaining $111 
million for procurement of aircraft above the 398 quantity is still on 
withhold by at OSD.
    Question. The Army has requested that $57.3 million of the 1997 
funds appropriated for Kiowa Warrior production be reallocated to 
correct safety problems on Kiowa Warrior helicopters in the fleet. The 
funds will be used to procure and install crashworthy seats, airbags, 
restraint systems and engine upgrades. Last year you told us the cost 
of the program was $172 million. Has the cost of the safety enhancement 
program (SEP) changed? If so, by how much and why? Is it adequately 
funded in the budget? If not what is the shortfall?
    Answer. The entire SEP cost as estimated last year is $189 million. 
This includes a program which began in fiscal year (FY96) and continues 
through FY04. In FY96, $15 million was spent on the SEP; which leaves a 
remaining requirement of $174 million. The SEP is partially funded in 
the FY 97-01 budget at $115 million (includes the $57.3 million from 
the FY97 plus up). There is a total $59 million shortfall in FY00 
through FY04.
    Question. What effect will the Bell-Textron's recent contract award 
for the Marine Cobra and Huey upgrade program mean to its overhead 
rates? Will it lower the cost of production of Kiowa Warriors?
    Answer. During the first two years of the Marine Cobra and Huey 
program there will be no effect on the overhead rates. This is because 
the majority of the effort during the first two years will be for non-
recurring engineering. After two years of the effect will be to reduce 
the overhead rates for all programs and the cost of producing the Kiowa 
Warrior.

                          Comanche Helicopter

    Question. The Comanche is the next generation armed reconnaissance 
helicopter. The Comanche will significantly expand the Army's ability 
to collect reconnaissance information in all battlefield environments 
because of its improved sensors and greater flexibility for deployment. 
The Comanche will replace the Kiowa Warrior. The Army is requesting 
$282 million in fiscal year 1998 for continued development of Comanche. 
Mr. Decker, your statement says ``Comanche, if fielded,''--Is the Army 
considering not fielding the Comanche? Please explain.
    Answer. The Army has always expected to field this critical 
warfighting asset. My statement simply recognized that we have 
acquisition decision points to evaluate the operational performance 
before fielding a new system. I am confident that as Comanche fully 
demonstrates the capabilities it is designed to provide, it will be 
procured and fielded as programmed.
    Question. Last year, the Army requested an additional $199 million 
to accelerate the development of Comanche. Accelerating the program 
would not only field Comanche sooner, but would also save $3 billion in 
acquisition costs. Congress provided an additional $50 million for 
Comanche in FY97. How did the Army spend the additional $50 million?
    Answer. The $50 million was released to the Army on February 28, 
1997. Specific uses are additional flight testing, beginning 
development of the Link 16 communication capability for Comanche, 
earlier development work on the Electro-Optical Sensor System and the 
Low Observable development programs, and wind tunnel tests.

                          Hellfire II Missile

    Question. Last year, the Army's unfunded priority list included a 
request for economic order quantity funding for a proposed four-year 
Hellfire II multiyear contract. In this year's budget, the Army 
eliminated all Hellfire II production in fiscal year 1998 and out. 
Given that stability of requirement and funding are prerequisites for 
multiyear contracts, why did the Army request a multiyear for Hellfire 
II only to eliminate production in the FY98 and out?
    Answer. The Army could not afford the continued buy of Hellfire II 
missiles at less than the annual minimum economic rate and Congress did 
not support the requested economic order quantity funds to initiate 
multiyear procurement. In the near term, Army has over 37,000 Laser 
Hellfire missiles (all tactical configurations), which fully meet all 
anticipated operational requirements. The Army expects Foreign Military 
Sales to sustain the Hellfire II production line through FY99, as a 
minimum, and the Army will address restarting the Hellfire II (or an 
improved version) production line in the FY99-03 Program Objectives 
Memorandum build.
    Question. How can we work with you to understand the priorities 
that the Army is committed to sustaining in future budgets?
    Answer. The Congress needs to continue its open dialogue with Army 
Leadership to understand our priorities. In addition, the Army needs 
the assistance from the Congress in stabilizing individual program 
funds; minimizing the decrements to the modernization programs that 
have heretofore been required to support contingency operations; and 
its continued support for the Force XXI technical initiatives.

         Extended Range Multiple Launch Rocket System (ER-MLRS)

    Question. Last year, the Army's unfunded priority list included a 
request for funds for additional ER-MLRS rockets in order to smooth 
``the ramp up'' to the fiscal year 1998 buy. However, this year's 
budget reduces the FY98 buy of this rocket to zero. Why did the Army 
request additional quantities in FY97 only to zero the program the next 
year?
    Answer. Estimated Foreign Military Sales for FY98 allowed the Army 
the flexibility to fund higher priorities. Funding for FY98 will be 
used to help the Army execute Field Artillery redesign, allowing the 
Army to modernize more of the Army National Guard with Paladin 
howitzers, while maintaining combat capability in the Active Component 
divisions. Additionally, Extended Range Guided (ER-Guided) Rocket 
technology was successfully demonstrated in 1996 and resulted in the 
Army giving the ER-Guided Rocket program a higher priority than the 
Extended Range Rocket. Thus, during the FY98 budgetary process, the 
Army adequately funded an Engineering, Manufacturing and Development 
program for the ER-Guided Rocket beginning in FY98. The FY96 and FY97 
buys of 2,826 ER-MLRS Rockets and follow-on procurements provide an 
interim capability until the ER-Guided Rocket begins production.
    Question. What is the Army inventory requirement for this weapon?
    Answer. The requirement for the ER-MLRS Rockets is 150,000 rockets. 
The Army is currently assessing the requirement for the ER-Guided 
Rocket and will use the ER-MLRS Rocket as an interim capability until 
the ER-Guided Rocket is fielded in FY2003.
    Question. Under the current plan, when will this inventory 
requirement be met?
    Answer. The current plan required procurement of the ER-Guided 
Rocket to continue thru FY2012.
    Question. Would any of the Commanders-in-Chief (CINCs) agree that 
it is prudent to eliminate United States production for the ER-Rocket 
in FY98?
    Answer. The FY96 and FY97 procurement of 2,286 ER-MLRS Rockets 
provides the CINCs an interim capability through FY98. Limited follow-
on production planned for FY99 through FY01 will further increase 
quantities of the ER-MLRS Rocket available to meet contingency 
requirements. The CINCs require an MLRS rocket that provides them 
operational and logistical flexibility. The ER-Guided Rocket is the 
objective MLRS rocket that will provide the operational and logistical 
flexibility required by the CINCs. The ER-Guided Rocket is scheduled to 
begin production in FY2002 with fielding in FY2003.
    Question. How can we work with you to understand the priorities 
that the Army is committed to sustaining in future budgets?
    Answer. Maintaining an open dialogue with the Army leadership, 
assisting in stabilizing funding for individual missile programs, and 
continued support for the Army's Force XXI modernization initiatives 
will serve to provide a better understanding of the Army's priorities 
in sustaining future budgets.

                           Starstreak Missile

    Question. Given the availability of funding, is the Army committed 
to conducting Phase III side by side evaluation of the Starstreak and 
Stinger missiles? If not, why not?
    Answer. The FY97 Joint Appropriations Conference was specific in 
their language regarding Starstreak. The language stated, ``an increase 
of $15,000,000 only for continuation of the air-to-air Starstreak 
evaluation. The conferees agree that side-by-side testing with other 
missile candidates should not occur until after completion of Phase II 
testing of Starstreak''. Phase II missile firings are scheduled for 
completion in October 1998, with the final report expected in November 
1998. It is very important to complete the Phase II testing and data 
analysis prior to development of a launcher, and integration of the 
Starstreak missile system with the fire control radar on the AH-64 D 
Apache Longbow. Until Phase II is completed, the Starstreak missile's 
ability to accurately track and engage airborne targets, and its 
associated probability of hit for which target acquisition and tracking 
are major factors, will be unknown, and will significantly increase 
risk to the launcher and system integration designs for the Apache 
Longbow. Accordingly, the Army initiated an analytical effort to 
conduct a parallel cost and performance assessment of Stinger Block I/
II and Starstreak missiles fired from Longbow Apache and Comanche 
aircraft in simulated one-on-one and few-on-few combat scenarios, which 
also coincides with the Starstreak Phase II contract completion date. 
The Starstreak Phase II test results will be used to validate the model 
and achieve a high degree of confidence in the analytical performance 
comparison between missiles. The model provides the Army and the UK a 
means to evaluate the two air-to-air missiles without having to fund a 
costly Phase III side-by-side comparison test. Use of modeling and 
simulation, therefore, is the affordable approach to provide the 
comparisons between missiles without having to fund a Phase III side-
by-side test evaluation program which is estimated to cost $36.6 
million.
    Question. Is further work required to launch a Stinger from Apache? 
If so, please describe the additional work and the associated costs.
    Answer. Modification of the existing Stinger Air-to-Air launcher to 
ensure MIL-STD-1760 compatibility, appropriate battery cooling to the 
hellfire launcher to accommodate Stinger, and associated launcher 
qualification work would need to be conducted as part of a development 
program. Total development costs are estimated to be $18.6 million. 
After development cost investments for launcher development/
qualification, the cost to retrofit the Longbow Apache fleet would 
entail unit production costs of $100,000 per unit aircraft (2 
launchers), and minor modifications to the aircraft's fire control 
radar.

                 Army Tactical Missile System (ATACMS)

    Question. The Committee understands that there may be possible 
foreign sales for the Block IA extended range variant of ATACMS. What 
is the status of these Foreign Military Sales (FMS) cases?
    Answer. The extended range ATACMS Block IA is not currently being 
considered for foreign sales. However, the export version of ATACMS 
Block I is being offered for FMS. Turkey and Greece have agreed to buy 
72 and 41 Block I missiles, respectively. In the near term, the only 
possible additional FMS case is with South Korea.
    Question. Have the benefits of the additional quantities been 
factored in the pricing in the fiscal year 1998 President's Budget? If 
not, what savings are anticipated in FY98?
    Answer. Benefits to the Army from the Turkey case are reflected in 
the FY97 ATACMS Block IA budget. The contract for the Greece buy has 
not been definitized, therefore further Army FY97 benefits are not yet 
quantified. The Army bases savings on the increase in the production 
rate from FMS. The production rate benefits are leveled across all the 
missiles being procured concurrently ensuring the Army shares in the 
savings. The exact amount of the savings realized is dependent upon the 
contract that is negotiated, the number of additional missiles per year 
procured, and the actual contractor costs incurred in the early years 
of production. The Army is unable, at this time, to determine any 
potential FY98 benefits from the possible South Korean case.

                              Abrams Tanks

    Question. The 1998 budget requests $342 million to continue the 
multiyear procurement of M1A2 tanks. Last year, the Army procured 120 
M1A2 tanks for a unit cost of $1.8 million. For fiscal year 1998, the 
Army is planning on procuring 120 tanks at $2.9 million a copy. A 
Second Generation Forward Looking Infrared Radar (II GEN FLIR) and 
electronic upgrades, which were not included in previous M1A2's, will 
be included in the 1998 production vehicles. What is the per unit cost 
to procure and integrate the II GEN FLIR on the M1A2?
    Answer. First some clarification. The Army requests $622.2 million 
in procurement funding to continue and support the Abrams multiyear--
$328.6 million in regular procurement for the 1998 quantity, $266.2 
million in advance procurement for the 1999 quantity, $13.9 million in 
initial spares and $13.4 million in system training devices. The unit 
costs shown on the P-40 form only reflect ``Regular Procurement'', the 
correct unit costs can be derived from the Program Summary on the P-40 
form and are shown on the P-5 form. The correct unit costs for FY97 and 
FY98 are $4.18 million and $4.9 million respectively. In addition, II 
GEN FLIR upgrades the ``thermal sensors'' and is not a ``radar.'' The 
budget documentation shows the System Enhancement Program (SEP), 
including II GEN FLIR, cuts into the final 10 tanks of the 1998 
quantity. As a result, the 1998 buy bears the non-recurring start-up 
costs in addition to the recurring costs. We estimate $2.66 million per 
tank is required to start-up and procure 10 sets worth of II GEN FLIRs. 
As another point of comparison, for the first 500 tanks, our estimated 
costs for II GEN FLIR are:

                        UNIT COST--1ST 500 UNITS
                         [Dollars in thousands]
------------------------------------------------------------------------
                                                        FY96
                                                       Const $    Esc $
------------------------------------------------------------------------
II GEN FLIR.........................................      $753      $856
I GEN FLIR..........................................       359       408
                                                     -------------------
Delta...............................................       394       448
------------------------------------------------------------------------
Note: Constant--Const, Esc--Escalated.

    Project Manager Abrams is assessing a potential delay in the M1A2 
SEP development effort which may slip SEP production cut-in by two 
months/10 tanks.
    Question. What electronic upgrades, which were not included on 
earlier M1A2's, will be integrated on the tanks produced beginning in 
1998?
    Answer. The following lists the improvements to be introduced in 
1998:
    a. 2nd Generation Forward Looking Infrared Sensors
    b. Core Electronics (Digitization) Upgrades
          (1) New Hull/Turret Main Processors
          (2) Mass Memory Unit
          (3) Task Force XXI Command and Control Software
          (4) Open Architecture
          (5) Upgraded Displays and Soldier Machine Interface
    c. Enhanced Position Location Reporting System (EPLRS) interface
    d. Embedded Global Positioning System
    e. Voice Synthesis
    f. Under Armor Auxiliary Power Unit (APU)
    g. Thermal Management System
    Question. What is the per unit cost to procure and integrate the 
new electronics on the M1A2?
    Answer. Our estimate for the average unit cost for the first 500 
units as compared to the original electronics is shown below:

                  ELECTRONICS UNIT COSTS--1ST 500 UNITS
                         [Dollars in thousands]
------------------------------------------------------------------------
                                                        FY96
                                                       Const $    Esc $
------------------------------------------------------------------------
Under Armor APU.....................................      $104      $118
Thermal Management System...........................        80        90
Other Electronics...................................       278       316
                                                     -------------------
    Total Average Cost..............................       462       524
                                                     ===================
1st GEN Electronics & External APU..................      $389      $443
                                                     -------------------
Delta...............................................       $73       $81
------------------------------------------------------------------------

    Question. Will you retrofit the M1A2 tanks produced in prior years 
with the II GEN FLIR and electronic upgrades?''
    Answer. Yes, our current plan is to retrofit all M1A2s to the M1A2 
SEP configuration.
    Question. What is the cost of the retrofit program?
    Answer. The estimated total cost to retrofit 617 M1A2s to the M1A2 
SEP configuration is $828 million ($1.34 million each) over the period 
from FY00 through FY06.
    Question. What is the anticipated schedule for the retrofit 
program?
    Answer. The FY98 President's Budget initiates funding in FY00 for 
an initial quantity of two. Based on the funding in the modification 
line, the program will complete in FY07 at a total quantity of 617 
M1A2s.
    Question. Are funds included in the FY98 budget for the retrofit 
program? if not, what is the shortfall?
    Answer. Funds are included in the 1998 budget documentation to 
initiate the retrofit program. Over the period from FY00 to FY03, we 
plan to procure 187 M1A2 to M1A2 SEP retrofits.
    Question. In Fiscal Year 1997, the Congress provided $8 million to 
begin the development of the next generation tank. It is our 
understanding the funds have not been released by the Office of the 
Secretary of Defense Comptroller. Have you requested the funds?
    Answer. No. the Army has not requested the funds. It has taken some 
time to define an Army position regarding the use of the funds. In 
addition, the Congressional language supporting the plus-up requires 
competitive contracting. Since the Army did not anticipate this 
funding, we're behind where we'd like to be in preparing contractual 
documentation. Current policy is to not request release of funding 
until near contract award.
    Question. If the funds are released, would you use the $8 million 
to begin the development of the next generation tank?
    Answer. If the funding was released, we would apply it to tank 
modernization in accordance with Congressional language as follows:
    a. $3.5 million for two studies to (1) define a post M1A2 SEP ($1 
million) program to provide target acquisition and accuracy 
improvements increasing the tank's lethal range and (2) conduct Future 
Combat System (FCS) concept studies ($2.5 million) to assess potential 
requirements and technologies for a future tank.
    b. $2.8 million for Abrams (M1A2 and M1A1) operating and support 
cost reduction efforts. Specifically, $1.4 million to undertake a 
project to increase track and roadwheel life and $1.4 million for a 
Nuclear, Biological, Chemical Filtration system redesign. Both projects 
can make a significant impact in reducing the ownership costs of the 
Abrams fleet.
    c. Finally, $1.5 million to assess the feasibility of M1A1 Command 
and Control digitization using modified M1A2 SEP components.
    Question. If so, are funds included in the budget request to 
continue the effort?
    Answer. The Army has included funding for an FCS in the FY98 
budget. Program Element 63645, Project DQ19 (shown below) is 
specifically designated for initiating a focused FCS development 
effort. The FY97 piece is the result of the FY97 Congressional plus-up:

----------------------------------------------------------------------------------------------------------------
                                                           FY97    FY98    FY99    FY00    FY01    FY02    FY03
----------------------------------------------------------------------------------------------------------------
PE 63645DQ19............................................     7.8       0       0     2.0    24.8    28.9    38.5
----------------------------------------------------------------------------------------------------------------

    In addition, there is a significant amount of work ongoing in the 
Tech Base which supports the FCS. In essence, we plan to use a portion 
of the 1997 plus-up to focus the Tech Base and subsequently initiate a 
new start in the 2000 timeframe.
    Question. Is the Army planning to procure additional M1A2 tanks 
upon completion of the current multiyear contract? If so, how many?
    Answer. The Army may continue M1A2 procurement after the multiyear 
procurement; however, affordability will influence the annual upgrade 
production rates and may influence the configuration of the tank. The 
challenge is to strike the right balance among operational 
requirements, affordability and industrial base considerations. 
Currently, about 2,127 M1A2s are required to equip the Core Force 
(Force Packages 1 and 2) and meet the requirements for the training 
base and test vehicles. The current approved M1A2 program is for 1,079 
vehicles--19 pilots/prototypes, 62 new production and 998 upgrades. 
This quantity provides M1A2s for Force Package 1, training base and 
test vehicle requirements. At this point in time, the Army is not 
certain ``How many M1A2s'' it will procure. Right now, we're committed 
to buying M1A2 upgrades through the end of the multiyear (786 upgrades 
or 867 M1A2s).

                          Ammunition Programs

    Question. Last year, the Congress provided $1.1 billion for the 
procurement of ammunition. This represented an increase of almost $300 
million to the fiscal year 1997 budget request. The additional funds 
were provided to adequately modernize the ammunition inventory and 
preserve the industrial base. The Army's fiscal year 1998 budget 
request for ammunition is $890 million. Does the fiscal year 1998 
budget request adequately fund the Army's requirement for ammunition 
and sustain the capabilities of the industrial base?
    Answer. Within the context of the overall Army budget, we have 
built a balanced program that is suitable. We place funding priority on 
readiness which means training ammunition. We then buy modern munitions 
based on affordability. The fiscal year 1998 request adequately funds 
our demilitarization program and marginally funds requirements for our 
organic production facilities.
    Question. The Army's annual consumption of training ammunition is 
approximately $900 million. The fiscal year 1998 budget request for 
both training and war reserve ammunition is $694 million. As a result, 
the Army must use war reserve ammunition to support training 
requirements. Does this concern you? Why?
    Answer. The Army's use of war reserve to support training draws 
down the existing war reserve for use in training. Some of these items 
became excess as a result of post Cold War requirements reductions over 
the last several years. The use of these munitions in training avoided 
storage and eventual demilitarization costs. However, some of these 
items, which are not excess, have been drawn below the total needed for 
war reserve purposes and replacing them will be prioritized within our 
fiscal constraints.
    Question. The Army is responsible for the storage and maintenance 
of all conventional ammunition. In the past, the Army has budgeted $300 
million for this activity. How much is included in the fiscal year 1998 
budget request for this activity?
    Answer. The Army's fiscal year 1998 budget request for ammunition 
management totals $369.4 million, and includes funding for both the 
toxic chemical and conventional ammunition stockpile management 
programs. The toxic chemical munitions program ($79.1 million) provides 
for the proper storage, maintenance, and surveillance of chemical items 
until demilitarization actions are complete. The conventional 
ammunition stockpile management program ($290.3 million) provides for 
supply management, inspection, maintenance, and surveillance for the 
world-wide wholesale stockpile of conventional ammunition. This is 
considered an adequate level of funding to support the Army, as well 
our conventional ammunition storage mission in support of other 
Services.
    Question. Several contractors who operate Army ammunition plants 
have made Post Retirement Benefit (PRB) claims against the Army. The 
Army believes the cost of settling one of the claims, by Uniroyal, 
Inc., is approximately $35 million. What is a PRB claim?
    Answer. A PRB claim is a request for funds to pay post retirement 
benefits for health and life insurance or other non-pension welfare 
benefits to qualified retirees.
    Question. Why is the government liable?
    Answer. The issue of government liability has not been determined. 
The Army position is that there is no legal liability under the 
contracts as a direct cost. The Uniroyal request for extraordinary 
relief did not include a determination of government liability. The 
Army Contract Adjustment Board (ACAB) decided to grant the Uniroyal 
request under Public Law 85-804, in recognition of an equitable 
obligation based on how the Army historically told the contractors to 
account for costs. The ACAB decision gives rise to a legal obligation 
to pay in accordance with the decision.
    Question. It is our understanding that the Army would like to use 
expired years dollars to pay the claim. How would this be accomplished?
    Answer. The use of expired year dollars may require Congressional 
approval because the Office of the Secretary of Defense, Comptroller 
has determined the Army must use current funds.
    Question. What steps will you take to ensure that no future claims 
are filed against the government?
    Answer. We know of no way to ensure there are no future claims 
against the government other than to encourage all contractors to 
accrue the funds necessary to finance Post Retirement Benefit costs 
against current customers.
    Question. The fiscal year 1998 budget proposed that the Army 
procure no kinetic energy tank ammunition after 1998. Will the Army's 
requirement for kinetic energy tank ammunition be satisfied with the 
fiscal year 1998 procurement?
    Answer. No.
    Question. Last year, Congress requested a report on the industrial 
base for kinetic energy tank ammunition. Briefly outline your findings 
and solutions.
    Answer. The report determined that the depleted uranium projectile 
assembly was the critical issue (sabot and penetrator). The report 
indicates a viable option to fill the void with a combination of 25 
millimeter (mm) and 120mm kinetic energy rounds until the next 
generation of 120mm kinetic energy round completes development, if the 
Army decides to pursue the next generation.
    Question. What will be the restart costs for depleted uranium 
kinetic energy tank rounds if the production line closes?
    Answer. If we implement the findings of the report, there are no 
restart costs. If we choose to completely halt kinetic energy munitions 
production, it may not be possible to reconstruct the industrial base 
as currently configured. For example, the issue with the Depleted 
Uranium penetrator is not restart costs but Nuclear Regulatory 
Commission and state licensing over which the Army has no control. 
Restart costs are cartridge and acquisition strategy dependent and will 
require further study.
    Question. It is our understanding that the Army has no plans to 
procure Depleted Uranium (DU) in fiscal years 1998 through fiscal year 
2003. There are only two DU suppliers in the United States. What impact 
does this decision have on the industrial base?
    Answer. The fiscal year 1998 budget includes funding for both the 
120 millimeter (mm) (M829A2) and 25mm (M919) kinetic energy rounds, 
both of which have DU penetrators. If there is no procurement of 
kinetic energy munitions in fiscal years 1999 through 2002, the 
commercial facilities which produce DU would have no Department of 
Defense business. The decision to close the commercial facilities would 
be a commercial decision.
    Question. In the last five years, how much has the Army spent on 
DU?
    Answer. The Army buys cartridge which contains DU. the cartridges 
are procured from systems contractors; the DU is provided to the 
systems contractors by subcontract. Congress has funded the 120mm 
(M829A2) in each of the last five years, with an average DU component 
cost of approximately $10 million per year. The 25mm (M919) was funded 
in fiscal years 1994, 1995, and 1997, with an average DU component cost 
of $4.5 million per year.
    Question. Do either of the DU suppliers have non-defense customers? 
If so, do they have enough non-defense sales to keep them viable until 
2003?
    Answer. Both suppliers have multiple business activities, most of 
which are defense related or connected. Neither of the suppliers 
appears to have sufficient non-defense sales at this time to remain 
viable through 2003.
    Question. How will you ensure that DU is available after 2003?
    Answer. As indicated in our report to Congress, the Army is 
considering a plan to procure a combination of DU munitions until the 
next generation of 120mm kinetic energy round completes development. If 
this item is type classified, we would expect to procure modest 
quantities.
    Question. The Army demilitarizes conventional ammunition at an 
annual cost of approximately $100 million. The Army believes it can 
lower the cost of the demilitarization program by selling munitions to 
industry, who will destroy the munitions and then sell the by-products. 
What are the benefits of commercial demilitarization?
    Answer. There are two major benefits of selling munitions to 
industry. The first is a cost avoidance for demilitarization which can 
range from $800 to $1,200 per short ton, depending on the complexity of 
the to be demilitarized. The second benefit is the additional 
demilitarization which could be bought by the Army with the proceeds 
from these sales.
    Question. What are the anticipated savings?
    Answer. The actual savings would depend on the number of short tons 
actually sold and the price the Army could get for these obsolete or 
excess munitions.
    Question. The demilitarization program's goal is to reduce the 
ammunition stockpile to less than 100,000 tons by 2004. Based on 
funding available, will you reach your goal using the current methods 
of demilitarization?
    Answer. The three major factors which will impact the Army's 
ability to reach this goal are the accuracy of the forecasted 
generations into the demilitarization account; annual funding levels; 
and the Army's ability to minimize or reduce future cost increases. If 
the Army is able to successfully manage these three factors but is not 
able to increase sales of obsolete or excess munitions, then we 
estimate we could have approximately 40,000 short tons in addition to 
the desired inventory level of 100,000 short tons by the end of fiscal 
year 2004.
    Question. Would you reach your goal using the proposed method?
    Answer. The Army believes that the goal can be reached or exceeded 
if we have greater flexibility to sell obsolete or excess munitions 
from the demilitarization account as requested in our legislative 
proposal. This does not mean that we would not have to continue to 
closely monitor and manage other aspects of this program, i.e., funding 
levels, generations, and costs.
    Question. Are there any obstacles that will not allow you to 
implement your plan? If so, what are they and how can they be overcome?
    Answer. The Conventional Ammunition Demilitarization Program has 
received good support from both Congress and the Office of the 
Secretary of Defense. The Army is intensively managing this program to 
assure we have a balanced program (private industry/government and 
destructive/non-destructive technologies). One of our initiatives is 
the legislation allowing greater flexibility for sales from the 
demilitarization account. The Army is committed to reducing the 
demilitarization backlog to less than 100,000 short tons by the end of 
fiscal year 2004. The legislative initiatives is one of our efforts to 
assure that this goal is met.
    Question. Last year, Congress appropriated $45 million for the 
Armament Retooling and Manufacturing Support (ARMS) program. How do you 
plan on spending the $45 million?
    Answer. Approximately $5 million would be used for loan guarantees 
and to support program costs. The additional $40 million will support 
expansion of ARMS to four additional facilities that are not currently 
participating and support additional ARMS proposals at the other eleven 
eligible facilities.
    Question. You are requesting $5 million for fiscal year 1998 to 
continue the ARMS program, but no funds are budgeted for the outyears. 
Why?
    Answer. This is the maximum amount available for the Army to 
allocate to this program within current fiscal constraints. The Army 
will continue to assess future funding of this program as it refines 
its future programs and needs.
    Question. Will you terminate the ARMS program after 1998?
    Answer. The ARMS program will continue after 1998; the goal is to 
make it a self-sustaining operation.
    Question. The fiscal year 1998 budget provides funding for only 
five of the sixteen munitions required to modernize the Army's 
ammunition inventory. When does the Army plan on buying the 11 
munitions required to modernize its inventory?
    Answer. The Army intends to procure all fifteen of the munitions to 
modernize the inventory as soon as possible within its current fiscal 
constraints. Of the ten munitions which are not being procured in 
fiscal year 1998, three have filled the requirement, three are at or 
above fifty percent of the requirement, and one is still in 
development. Of the remaining three, one is programmed for procurement 
in the future.
    Question. What is the impact of the Army's decision not to procure 
all of the munitions required to modernize its inventory?
    Answer. The Army must continue to rely on the substitute munitions 
previously procured and maintained in the stockpile. The Army has 
chosen to accept this moderate risk in order to fully support training 
and thereby support near term readiness.

                              Digitization

    Question. The Army is creating a ``digitized battlefield'' that it 
believes will give it the ability to maintain a modern, but smaller 
force capable of decisive victory. Digitization is the application of 
information technologies--sensors, communications, computers, 
displays--to meet the needs of the battlefield commanders at all 
levels, providing a common picture in near-real time, shared data among 
battlefield systems and the synchronization of combat power.
    The Army is requesting only $57 million for ``horizontal 
battlefield digitization''. The fiscal year 1997 budget request 
forecast $110 million for fiscal year 1998 horizontal battlefield 
digitization. What is horizontal battlefield digitization?
    Answer. Horizontal battlefield digitization is the name of a 
specific program element and project in the Army's budget which funds 
the development of the Applique/Force XXI Battle Command Brigade and 
Below system and helps to support the overall digitization effort. That 
project is managed at the department level by the Army Digitization 
Office.
    Question. Why do you only need half of the funds you were planning 
on spending in FY98?
    Answer. The Army had planned to procure prototype digitization 
hardware in FY98 to outfit a heavy division for the division Advanced 
Warfighting Experiment (AWE). Due to fiscal realities, the Army decided 
to downsize the division AWE to a division command post exercise, 
reducing the requirement. However, I do need to clarify this. Recently, 
we have identified through the AWE process, other digitization related 
efforts which will require additional funding, such as some applique 
prototype improvements and testing.
    Question. What activities were you planning in fiscal year 1997 for 
fiscal year 1998 that are not funded?
    Answer. Hardware upgrades for a Limited User Test, and some 
improvements to software functionality.
    Question. What is the impact of the reduced horizontal battlefield 
digitization funding?
    Answer. The Division Advanced Warfighting Equipment (AWE) has been 
revised to make maximum use of simulation and will concentrate on those 
initiates which show promise in the Task Force (TF) XXI AWE. This 
event, as revised, will be executable. However, as the Army is still in 
a learning process, in reference to digitization, we may have to 
accommodate unforeseen requirements resulting from events such as the 
ongoing TF XXI AWE at the National Training Center.
    Question. According to the Army, schedule and cost risk of the 
digitization program is medium, however, the Army rates technical risk 
as high. Please define what you mean by ``medium'' and ``high'' risk.
    Answer. These ratings you refer to were a snapshot in time as of 
the first of December. High technical risk results when expected levels 
of performance are not realized and the fixes are not identified or 
sufficiently developed to overcome the problem. High cost risk results 
when sufficient funding is not available within the current budget to 
pay for unexpected cost increases. Medium technical risk results when 
expected levels of performance are not realized and potential fixes are 
identified and developed but not yet implemented. Medium cost risk 
results when additional costs have been identified and may cause 
reprioritization within existing program funding. The schedule risk is 
greatly influenced by the technical risk and the availability of 
funding.
    Question. Last year, we were told by General Reimer that cost risk 
was ``low'' and technical risk was ``medium''. This year you identify 
cost as ``medium'' and technical as ``high'' risk. What changed?
    Answer. Last year the risk assessment was based on our best 
estimate since we had not yet equipped the Experimental Force. In 1996 
we delivered the equipment into the hands of the soldiers in the field, 
and we have been able to assess complexity and the level of technical 
integration required. Based upon lessons learned during the platoon, 
company, and task force train-up, additional architecture, security, 
and integration work is required for the objective system, thereby 
raising the technical risk and cost risk.
    Question. Congress has provided over $350 million for the 
digitization effort. Given the resources committed to this effort, 
shouldn't the risk diminish each year? Please explain why this is not 
happening.
    Answer. The effort to ``digitize a division by the year 2000'' was 
initially judged to be high risk. This was a qualitative judgment based 
on the limited knowledge of the true complexity of digitizing the 
force. The experimental process has provided the opportunity for the 
Army to ``peel back the onion'' during successive experiments and 
simulations. Lessons learned and insights gained have formed the basis 
for updating operational requirements impacting on the technical 
performance issues and have served to provide a more complete blueprint 
of the digitization efforts required. The biggest technical and 
schedule challenge has been the integration of various diverse systems.
    Question. The Army is planning on fielding an ``interim'' digitized 
division in fiscal year 2001. The Army would like to field an 
``objective'' digitized division in FY06. What is an ``interim'' 
digitized division?
    Answer. An interim digitized division is an organization:
    a. Equipped with a mix of both legacy and immature (early design, 
but acquisition approved) systems.
    b. Able to command and control using digital methods; and able to 
maintain common relevant picture, situation awareness and Combat 
Service Support management throughout the unit.
    c. Organized in accordance with the Table of Organization and 
Equipment, but modified to compensate for lack of certain ``enabling 
technologies.''
    d. Trained primarily at the unit through both New Equipment 
Training and unit training.
    Question. What is the cost of fielding the interim digitized 
division? Is it adequately funded in the budget? What is the shortfall?
    Answer. The costs associated with fielding the first interim 
digitized division includes not only materiel, but all the other 
functional domains such as Doctrine, Training, Leadership, 
Organizations and Soldiers. The first interim digitized division will 
be fielded, for the most part, with systems that are in the pipeline 
and are scheduled to be fielded somewhere in the Army by FY00/FY01. 
Some additional funding will be required to do the architecture work, 
to develop security measures for the network, to integrate the system 
of systems, to develop training support packages, and to develop and 
integrate the system of systems Tactical Operations Centers. Ongoing 
analysis and experimentation indicate that additional FY98 and outyear 
funds may be required to perform the above stated functions. It looks 
like approximately $100 million in FY98.
    Question. What is an ``objective'' digitized division?
    Answer. An ``objective'' digitized division is an organization:
    a. Equipped with mature (objective) systems.
    b. Able to fully command and control using digital methods.
    c. Able to maintain common relevant picture, situation awareness 
and Combat Service Support status throughout the unit.
    d. Organized in accordance with the Table of Organization (TOC) and 
Equipment and with all currently planned ``enabling technologies.''
    e. Trained primarily at Training and Doctrine Command institutions 
as part of the institutionalized soldier development and training 
process.
    Question. What is the cost of fielding the objective digitized 
division? Is it adequately funded in your budget? What is the 
shortfall?
    Answer. The cost associated with the objective division is much the 
same as for the interim division. Since the objective division is not 
required and until 06, much of the equipment will be available through 
existing budgeted quantities. There may be an additional requirement 
for communications capacity, as well as the architecture, security, 
training, integration, and TOC costs indicated for the interim 
division. The architecture development may show a need for additional 
command and control workstations.
    Most of the funding to equip this division is available. However, 
the experimentation process is expected to demonstrate a need for 
additional funding for the above functions.
    We will not know the answer to this question until the results of 
the Task Force XXI Advanced Warfighting Experiment (AWE) are finalized. 
There may be a need for more items of equipment as we learn the value 
of digitization to the entire force. As we analyze the AWE we will 
identify those areas that need increased funding and welcome your help 
in addressing those.
    Question. What will be the benefit of the digitized division in:
    a. a lesser regional conflict?
    b. peacekeeping operations?
    c. an urban environment?
    Answer. The benefit of a digitized division compared to a non-
digitized division is the achievement of information dominance and the 
capability to place greater force at the decisive point in order to 
destroy the Threat. It doesn't matter what type of mission is assigned; 
the application of information in formulating decisions is what will 
allow the division to accomplish it's mission rapidly. Combined with 
his real time awareness of the disposition of his own forces, the 
commander can move essential and tailored force to influence and 
control events many times faster than can be done today. Thus, whether 
the event is a full scale enemy assault or a humanitarian assistance 
mission, the commander can stabilize the situation before it is out of 
control and he can accomplish this with minimum risk to his own force. 
Furthermore, the capability to deploy forces with higher efficiency 
reduces the total force commitment required to effect United States 
policy regardless of where it is in the spectrum of operations. The 
other advantage lies not necessarily in application of the capability 
that a digitized division brings to the battlefield, but rather that a 
potential hostile force knows that you know what he is doing and can 
bring more firepower to bear, quicker, than he can. A digitized 
division allows the United States to operate from a position of 
advantage decreasing the risk associated with these type operations.
    Question. What is the urgency of fielding the Army's interim 
digitized division by 2001? What is the perceived threat?
    Answer. An interim digitized division by 2001 should not be viewed 
as an urgency of fielding, but as capitalizing on windows of 
opportunity by optimizing programs that have been in development for 
years. For example, synchronizing their fieldings of the Army Tactical 
Command and Control System battlefield automation systems and creating 
a tactical internet by integrating existing communications systems 
through network engineering and management provides a leap ahead in 
capability to command and control. The threat today is not necessarily 
a specific country but the availability and proliferation of advanced 
offensive weapons capabilities available on the open market to 
virtually anyone with the where-with-all to purchase it. The reduced 
force structure of the Army requires the ability to rapidly respond to 
a variety of threats across the spectrum of operations.
    Question. Based on your own risk assessment of the digitization 
effort, do you believe that fielding the first digitized division by 
2001 is ambitious? Please explain.
    Answer. Yes, it is ambitious for a purpose. The Army has put an 
ambitious ``mark on the wall'' designed to continue with the rapid pace 
of modernization and development. Maintaining that ``mark'' has helped 
to maintain momentum of development.
    Question. Given the Army's tight budget, what is the benefit of 
fielding an interim digitized division? Why not save the dollars and 
accelerate the fielding of the objective division?
    Answer. The Army plans to embed, vice applique, the digitization 
capability into many of the combat vehicle systems scheduled for the 
objective division. The Research Development Test and Evaluation effort 
required to embed digitization into the combat vehicles is underway. 
Fielding of systems with embedded capability, e.g., M1A2 System 
Enhancement Package and M2A3 are scheduled for the fiscal year 2000-
2005 timeframe. In order to get the digitized capability in the field 
earlier than those dates it will have to be done with applique. 
Fielding an interim digitized division allows the Army to make use of 
technology enablers sooner, continue the learning curve for concepts 
and doctrine for the force, and continue to learn and develop tactics, 
techniques, and procedures as we move to the objective division.
    Question. How will you offset the cost of the digitized division in 
your budget? What is of lesser priority, pay, operations and 
maintenance, research and development? Or procurement dollars? Please 
explain.
    Answer. Both the interim and objective divisions will use systems 
which are either already fielded or programmed for delivery in time to 
meet Army digitization objectives. However, given the experimental 
underpinning of the digitization effort, additional operation and 
maintenance, research and development, and procurement funds may be 
required to completely link systems together and integrate them into 
the divisions. Efficiencies, such as those gained through the 
synchronization of fielding schedules, will help to mitigate the impact 
of these incremental costs. Ultimately, though, the Army may have to 
make hard choices between systems and programs to ensure that we are 
able to fully realize the enhanced capability of digitization. You can 
rest assured, however, that the Army remains committed to maintaining 
unit readiness to support the National Military Strategy.
    Question. Digitization depends on the ``Tactical Internet''. Last 
year, the Army said the Tactical Internet was the ``long pole'' in the 
digitization effort. This year, it continues to be the ``long pole''. 
It is our understanding that the Tactical Internet provides limited 
Command and Control connectivity, that voice-data contention is a 
problem, and the robustness and capacity of the network has not been 
fully determined. The Tactical Internet is an Enhanced Position 
Locating System (EPLRS) based system. Is this the tactical internet you 
will field with the ``interim'' digitized force? To the objective 
digitized force? Please explain.
    Answer. The architecture of the Tactical Internet is being matured 
to substantially improve delivery of command and control messages. 
Functionality of the EPLRS will be enhanced to provide more flexible 
and adaptable services. Selected parameters of the Single Channel 
Ground and Airborne Radio System System Improvement Program and the 
associated internet controller will be adjusted to provide significant 
improvements in combined voice-data nets. The TI provided to the 
interim digitized division will be a significant step forward from that 
used in Task Force XXI. The TI for the objective division will continue 
to evolve from this base, while introducing improved capabilities and 
functionalities as they can be matured and tested.
    Question. What is the objective tactical internet?
    Answer. The next increment of the tactical internet will increase 
capacity through the incorporation of components of the Warfighter 
Information Network such as the Future Digital Radio Block II, High 
Capacity Line-of-Sight Radio and Asynchronous Transfer Mode hubs.
    Question. When will you field the objective tactical internet?
    Answer. There really is not an ``objective'' tactical internet. We 
expect as technology moves forward the Army will adapt to those 
improvements and upgrade as required. We have adopted an open systems 
architecture to allow us to leverage from the commercial sector.
    Question. The digitized battlefield will have high data rate 
requirements. The current infrastructure can not support all of the 
communication requirements of the digitized battlefield. Which Army and 
other Department of Defense systems will satisfy the high data 
requirements for the digitized force?
    Answer. The requirements for data capacity have not yet been fully 
defined. However, currently under development are some systems designed 
to give increased data rates. Those include systems such as; Near-Term 
Data Radio (NTDR) also called Future Digital Radio Block I.; Future 
Digital Radio Block II; High Capacity Line-of-Sight Radio; Global 
Broadcast Service--Battlefield Awareness Data Dissemination System. On-
going enhancements to Enhanced Position Location Reporting System 
(EPLRS) and Single Channel Ground and Airborne Radio System (SINCGARS) 
will also provide modes data capacity improvements that will be 
available near-term.
    Question. Will those systems be available when you field your 
``interim'' digitized division? If not, what is the impact?
    Answer. The NTDR is scheduled to be available for the interim 
division. Enhancements to SINCGARS and EPLRS will also be available. We 
are looking for an interim capability and these systems should be able 
to provide sufficient data handling capacity.
    Question. The Force XXI Battle Command Brigade and Below (FBCB2) is 
the software for the digitized force. Currently in development, all 
digitized platforms, from tanks to Apaches, will receive FBCB2. What is 
the status of the FSCB2 development program?
    Answer. FBCB2 is more than just software. It also includes 
hardware, which is commonly referred to as the applique, and platform 
interfaces. Version 1 of the FBCB2 software is currently undergoing 
experimental testing with the Experimental Force at the National 
Training Center. It contains sufficient functionality for 
experimentation. Version 2, with increased functionality and robustness 
and fixes resulting from the lessons learned thus far, is currently 
under development. It should be available in mid fiscal year 1998.
    Question. Initial Operational Test and Evaluation for FBCB2 is 
scheduled for late 1999; fielding is scheduled for 2000. Do you believe 
this is an ambitious schedule? Why?
    Answer. Yes, we have always said that the schedule is aggressive. 
We are following a streamlined approach to acquisition. Although the 
schedule is aggressive, we have included successive iterative testing 
of the hardware and software and have incorporated the users during the 
development to ensure the products are useful and meets the users 
needs.
    Question. If FBCB2 encounters problems in development, will the 
date for the ``interim'' digitized division slip? Please explain.
    Answer. Not necessarily. Although we have the aggressive schedule, 
we have built into that schedule time for the iterative testing of the 
hardware and software. We also are building the software with a 
``core'' functionality with which the division should be able to 
execute its mission even if all, the desired functionality is not 
there. The problems would have to be severe and it of course would 
depend on the nature and criticality of the problem.
    Question. The digitized force will be extremely vulnerable to 
information warfare. According to the Army, information security poses 
one of the greatest challenges for the digitized battlefield. The Army 
is currently assessing the vulnerabilities of the digitized battlefield 
systems to attack. How are you testing the vulnerability of individual 
digitized systems to attack?
    Answer. We are conducting vulnerability assessments both in the 
field (Red Teaming) and in the laboratory so we can develop fixes and/
or mitigate the effects in support of the warfighter. The six Red Team 
tasks we are conducting during Task Force XXI Advanced Warfighting 
Experiment (AWE) is a good example of what we are doing to test the 
vulnerability of systems.
    Question. How will you reduce the vulnerability of the 
``digitized'' systems from attacks?
    Answer. We're building a warfighter information system that will 
provide the decision maker the information needed in a timely, 
accurate, and secure manner.
    a. A security Integrated Concept Team and Integrated Process Team 
have been stood up to address the network security issues/designs for 
the AWEs and the First Digital Division. Concerned with the total 
spectrum of Information Warfare attacks, but focusing on Electronic 
Warfare and hacker/virus attacks first.
    b. We're designing the network to be as protected as possible with 
the Command and Control (C2) Protect tools/devices that are available 
and a ``defense in depth'' approach.
    c. An external perimeter made up of Transmission Security, 
Communications Security, firewalls, security guards and physical 
isolation will protect our systems and the information on them from 
external attack. Within the tactical environment, the Army has a 
classified backbone network, which utilizes bulk encryption techniques 
thereby giving us a high level of assurance.
    Throughout the infrastructure, all classified information 
processing is protected by the best encryption technology provided by 
the National Security Agency. Security guards (Hardware/Software) and 
physical access controls then isolate the network.
    d. Internal subperimeters limit the access between user domains 
using firewalls and/or router filtering while remaining transparent to 
authorized users.
    e. Workstations include individual access controls, configuration 
audit capability, and C2 Protect procedures and tools to identify any 
security anomalies.
    f. This technologically evolving network will be overlaid with a 
network management system and workstation procedures that provide real-
time security management and intrusion detection.
    Question. Does the budget provide funding to implement information 
security tools for the ``digitized'' systems? If not, why?
    Answer. Yes, funding is available, at the system level, but not 
enough. The Army is currently addressing the requirements for the First 
Digital Division and Force XXI.
    Question. The Maneuver Control System (MCS) is an automated Command 
and Control (C2) system for the Force Level Commander. MCS will 
integrate data from other C2 systems to create a common picture of the 
battlefield. MCS has been in development since the mid-1980's. Riddled 
with developmental problems since its inception, MCS is scheduled for 
its Initial Operation Test and Evaluation in fiscal year 1998. The Army 
is using MCS in the Force XXI Army Warfighting Experiment (AWE). Are 
you satisfied with its performance? Please explain.
    Answer. Yes. The Task Force XXI AWE at the National Training Center 
indicates that the Army is on the right track for digitizing the 
battlefield, and that training and leader development are key 
imperatives in this effort. Based upon the excellent performance of MCS 
during this experiment at the National Training Center, the Army fully 
supports the fielding of common hardware II devices to the MCS training 
base. Institutional training of MCS and other Army Battle Command 
Systems is vital to the training and leader development imperatives of 
the Army's Force XXI initiative. The Army needs to equip the schools 
with MCS now to allow for the timely development of training before the 
system is fielded to operational units. The risk in procuring 
commercial hardware is low, and the payoff of averting the normal two 
year lag between the fielding to operational units and the first 
graduation of school training users is high.
    Question. The Army is using Maneuver Control System--Block III in 
the AWE; however, Block IV is currently under development and will be 
fielded to the ``interim digitized force'' in fiscal year 2001. What is 
the difference between Block III and Block IV software?
    Answer. The major difference between Block III and Block IV 
software is that Block IV uses the advanced Common Operation 
Environment (COE) software and has additional functionalities. Block 
III software contains COE 2.1 from the Defense Information Systems 
Agency (DISA). Block IV software will contain COE 3.1, 4.0, and 5.0 as 
it is developed. Approximately 50 percent new functionality will be 
built in Block IV (upon this improved foundation) over that which 
currently exists in Block III. Additional functionalities to be added 
in Block IV, for example are: Engineering, Military Police, and 
Aviation support software.
    Question. Do you believe the Block IV program schedule is high 
risk? Please explain.
    Answer. No, the schedule is not high risk. However, the schedule 
assumes the risk characteristics of the Defense Information 
Infrastructure (DII) COE upon which it is based. Whenever DII COE 
software is not delivered, Block IV will have to develop this software 
independently if DISA, or not have needed functionality.
    Question. If the problems with MCS are not resolved with the Block 
IV upgrade, will the date for digitizing the ``interim'' division slip? 
Please explain.
    Answer. Developmental problems with the Block III software were 
primarily limited to the Army's experience in 1993 with the Loral 
contract. Since 1993, MCS has been on a progressive and planned 
recovery. This recovery has exceeded expectations in III Corps and Task 
Force XXI. Digitizing the ``interim'' division could occur with the 
Block III software with its limited COE and functionality. However, 
this is not the Army's plan. The Army wants and needs an MCS based on 
COE, Army Technical Architecture, Joint Technical Architecture and the 
additional functionalities Block IV provides.
    Question. The Near-Term Digital Radio (NTDR) will replace the 
SINCGARS and EPLRS radios. A production contract will be awarded in 
1999. The Army is requesting $18.6 million to build and test the NTDR 
in 1998. What is the status of the NTDR development program?
    Answer. A contract for $10.7 million was awarded in January 1997 to 
a team led by ITT to procure and test 110 NTDRs. NTDR is planned to 
meet the Block I requirements of the Future Digital Radio (FDR) ORD as 
the backbone data radio system to augment/replace the EPLRS system for 
Force Package I units. The production contract for 1999 is contingent 
upon successful technical/operational testing planned for early fiscal 
year (FY99). The Army has $201 million in the President's Budget from 
FY99 through FY06 to produce, field, and support the procurement of 
4,579 radios and 23 Network Management Terminals. NTDR is a data only 
radio and will not replace SINCGARS which has voice capabilities. 
Contingent upon funding being made available, a competitive Research 
and Development contract in FY99 will be awarded for the development of 
the FDR Block II/III (programmable multi-band multi-mode radio) which 
is planned to eventually replace all of the legacy radios and 
potentially be a joint service program. The FDR Mission Needs Statement 
is scheduled for a Joint Requirements Oversight Council decision in 
June 1997.
    Currently, the NTDR system is undergoing integration testing to 
serve as the inter-Tactical Operations Center data hauler for the 
Division XXI Advanced Warfighting Experiment planned for November 1997.
    Question. What is the anticipated per unit cost of the NTDR?
    Answer. It is anticipated the average hardware unit cost for the 
4,579 fieldable NTDRs will be around $14 thousand each.
    Question. The Army believes to digitize its force, it can no longer 
field weapons systems one system at a time. Since systems will be 
operationally and technically interdependent they need to be fielded in 
``packages.'' The Army would like to field systems based on 
requirements for a particular division. Who has the responsibility for 
ensuring that the future Army systems will be operationally and 
technically interdependent? Will it be the program managers for each 
system or will you create a new ``oversight'' office?
    Answer. The Army is currently studying the entire process to 
determine who and how to best perform this function. Since this is a 
new way of doing business, we must ensure we have done our homework. We 
suspect that an overall system integrator will be required.

                         Force XXI Initiatives

    Question. Last year, the Army's number one unfunded requirement was 
the ``Force XXI Initiative.'' The Army identified a $100 million 
shortfall; Congress provided $50 million in fiscal year 1997. The Force 
XXI Initiative is ``an ACTD-type approach to streamlined acquisition of 
high pay off technologies.'' This year the Army is requesting $99 
million to continue the Force XXI Initiative.
    The Army believes that the Force XXI Initiative would provide 
``funding flexibility to jump start technology programs early, without 
having to wait up to two years to fund a new initiative'' during the 
budget cycle. Please give us some examples of the technologies the Army 
want to ``jump start.''
    Answer. The largest number of ``technologies'' are in the 
information dominance area and have to do with improving the way 
information is transmitted, formatted, stored, retrieved, used, and 
interpreted on the battlefield. Some of the systems designed to improve 
information use are Army Airborne Command and Control System (A2C2S), 
Aviation Tactical Operations Center (AVTOC), Maneuver Control System 
Courses of Action Tools Integrator for Situational Awareness, Network 
Encryption System (NES), Tactical Internet (TI) and Applique. Other 
technologies involve the updating of combat systems with new 
technologies or providing new systems that leverage information and 
weapons technologies needed to operate in Army XXI. Some of these 
technologies are incorporated in the Palletized Loading System-Enhanced 
(PLS-E) which provides enhancements to reception, staging and movement 
activities in addition to implementation of velocity management, 
intransit visibility and battlefield distribution. Radio Frequency 
Technology/Tagging provides total asset visibility and intransit 
tracking capability to combat service support managers. Mortar Fire 
Control System (MFCS) provides a complete, fully integrated digital on-
board fire control system for mortars and brings them in line with 
capabilities on the battlefield such as the upgraded Advanced Field 
Artillery Tactical Data System (AFATDS). Gun Laying Positioning System 
(GLPS) allows faster and more accurate fires from light artillery 
units. The Lightweight Laser Designator Rangefinder (LLDR) provides 
both artillery and dismounted infantry a lightweight and portable 
rangefinder that is more accurate than current capabilities.
    Question. The Army is also requesting $137 million to fund Advanced 
Concept Technology Demonstrations (ACTDs) which according to your 
testimony last year ``give us a great opportunity to transfer 
technology to the warfighter.''
    ACTDs and the Force XXI Initiative appear to be mechanisms for 
fielding systems outside of the acquisition and budget process. What is 
the difference between ACTDs and the Force XXI Initiative?
     Answer. Neither the ACTD process nor the Force XXI Initiative/
Warfighting Rapid Acquisition Process (WRAP) are done ``outside the 
acquisition and budget processes''. Both methods use nontraditional 
acquisition techniques such as rapid prototyping, commercial 
technologies, use of available evaluation data, etc., to shorten the 
time it takes to field new systems and new technology to the 
warfighter. The methods are not the same. Force XXI initiatives are 
potential solutions which have already undergone all or most of the 
development and evaluation necessary to reach production within one to 
two years. The Force XXI initiatives concentrate on providing 
immediately available technology that matches future goals to the 
warfighter as fast as possible and requires a funding commitment before 
being accepted as a final candidate. These initiatives cover the full 
spectrum of capabilities required. ACTDs are designed to match a 
warfighter's requirement with a concept and technology expected to 
satisfy the requirement. The nearly mature technology and concept 
evolve to a residual capability at the end of the demonstration period 
(assuming success). ACTDs take between two and four years to complete. 
There is not a requirement to acquire technologies developed as a 
result of the ACTD. Acquisition Integrated Process Teams (IPT) are 
formed for each ACTD to develop proposed acquisition strategies for 
ACTD ``systems'' if required by the user/sponsor (Commander-in-Chief) 
and successfully competed in the service's Program Objective 
Memorandum.
    Question. The technologies which you will ``jump start'' are part 
of the Army's Warfighting Experiment (AWE). During the AWE the Army 
will test other new technologies to see how they would operate under 
battle conditions. The AWE will take place at the National Training 
Center (NTC) in the California desert.
     Since the AWE is an experiment, will those technologies that you 
wish to ``jump start'' go through additional testing?
    Answer. The final evaluation from the Operational Test and 
Evaluation Command (OPTEC) of the effectiveness and capabilities of the 
system are probably the most significant part of the final choice of 
candidates. OPTEC will provide information on success or failure (and 
degree), additional testing required and effectiveness to the force 
among other issues. All of the issues considered under normal 
circumstances for operational test and evaluation will be considered 
under the WRAP process. The difference is that WRAP uses ongoing 
evaluations and other available data on usage and capability to 
evaluate the system not just what is gathered from the experiment. 
OPTEC is required to certify each system as having met the requirements 
of operational testing as prescribed by law. Because some of the 
systems must undergo additional test and evaluation at some level, any 
Force XXI Initiatives funds for those systems will be used to complete 
that evaluation and get the system into production.
    Question. The NTC is in the desert; how will you ensure that the 
technologies are operable, reliable and supportable when taken out of a 
controlled warfighting experiment for example:
    a. Will it operate in cold or wet weather;
    b. Is it rugged enough to survive the battlefield; and
    c. Is it interoperable with other Army or service systems?
    Answer. OPTEC will determine what additional test and evaluation is 
required based on the maturity of the system including any evaluations 
necessary under other weather conditions or if the system is ruggedized 
enough for the battlefield. The AWE is utilizing links to Joint STARS, 
Unmanned Aerial Vehicles (UAV) and national intelligence assets to 
receive and pass information just as would be required on a 
battlefield. In addition, information has been passed through planned 
nets to the Marine Corps operating out of Twenty Nine Palms. Close Air 
Support (CAS) aircraft have been used in the AWE to provide strikes. 
The AWE is evaluating interoperability within the evolving architecture 
required by the Joint Staff for all the services. As such, all the 
systems being used in the AWE should be interoperable with Army and 
other service battlefield systems.
    Question. The Committee understands there are 96 candidates 
currently being evaluated to receive the fiscal year 1997 Force XXI 
Initiative funding. One example of the type of technologies you are 
evaluating is the mortar fire control radar. It is our understanding it 
will cost approximately $200 million to field the mortar fire control 
radar.
    How will you ensure there is adequate funding in the outyears to 
sustain projects funded with Force XXI Initiative dollars?
    Answer. The WRAP process requires that outyear funding requirements 
(funding tails) be identified for all candidate systems. If a candidate 
is selected, then the sponsoring functional area must find the funding 
internally before turning to the rest of the Army to fund. In any case, 
no candidate will be accepted without having identified the out year 
funding necessary and the offsets to pay the bill.
    Question. When will you budget for outyear dollars required to 
develop and field Force XXI technologies?
    Answer. Army is using current input on candidates to affect the 
current mini-POM actions. In addition, for candidates that could go 
into production (possible low rate) in fiscal year 1998, we will be 
looking at how to reprioritize within functional areas in the upcoming 
budget year. For longer term funding, all programming and budgeting 
documents for years after fiscal year 98 will reflect the funding lines 
for the approved initiatives.
    Question. Will they continue to be funded in the force XXI 
Initiative account?
    Answer. WRAP policy is specific in that no more than two years of 
``jump start'' funding will be provided to complete ALL actions to get 
to procurement. This accounts for the time it usually takes for the 
system to be put into the resourcing cycle. At that time, the system 
will no longer be carried by the Force XXI Initiative account. Because 
we allow two years maximum, we also require the candidates to identify 
two years of funding if necessary.
    Question. Since you are not budgeting for the total development and 
fielding costs of Force XXI initiatives, you will be forced to 
reallocate funds in your budget. Will you provide offsets to the 
Congress? What programs in your budget do you view as potential offsets 
for Force XXI initiatives?
    Answer. The Army will identify the outyear bills and give Congress 
assurance that these will be funded in the next Future Years Defense 
Plan (FYDP). Details of offsets must achieve concurrence through the 
formal Program Object Memorandum (POM) and budget process to accomplish 
this.
    Question. What will be the average development and fielding 
schedules for Force XXI technologies? Do you plan on fielding them at a 
quicker rate than trucks or helicopters?
    Answer. WRAP policy requires putting the systems into regular 
programming and into production within two years of receipt of funding 
(less if done later in the fiscal year). Fielding schedules are based 
on the individual system and he quantity, production rate, spread 
across the force, etc. If a ``buy out'' of the total Army quantity at 
an inexpensive rate can be accomplished in one year and it is smart to 
do so, we will make that recommendation. If it takes longer to field, 
then we will look at that timeframe with reference to all the 
candidates and other Force XXI issues. Systems based on commercially 
available or immediately available military technologies that are 
usable with little or no modification may be fielded faster than 
others, the length of time to field is system dependent. The key is 
that we will not spend years in development for the systems.
    Question. Congress provided $50 million in fiscal year 1997 for the 
Force XXI Initiative. Has the Army received the fiscal year 1997 funds?
    Answer. Funds are on withhold at Office of the Secretary of Defense 
(OSD) until the Army completes the evaluation of candidate systems, 
provides recommendation to Congress as required by law and receives 
approval from Congress on the candidates recommended. Notification to 
Congress is expected to occur during the first week of May 1997.
    Question. If not, why?
    Answer. Evaluation of candidate systems will not be completed until 
the AWE is finished. There is no requirement to use these funds until 
that evaluation is finished.
    Question. When do you expect the funds to be released?
    Answer. Late May to early June 1997.
    Question. When do you expect to obligate the funds?
    Answer. Depending on the system, between late June and late August 
1997. It is a requirement of all candidates that the program office be 
able to obligate the funds by the end of August this fiscal year to 
receive the funds.
    Question. Last year, the Congress directed that none of the Force 
XXI Initiative funds may be obligated without prior notification. The 
notification is to include the requirements, maturity, affordability, 
and sustainability for each system. When will the Congress receive 
notification for the fiscal year 1997 funds?
    Answer. Notification is expected to be provided the first week of 
May 1997.
    Question. Will the notification include the funds required to 
complete the program in fiscal year 1998?
    Answer. If a candidate requires fiscal year 1998 funds from the 
Force XXI Initiative account, they will be identified. If other funds 
are required, those will also be identified. The Army is viewing these 
funds across several years not just one year at a time.
    Question. Will you provide the offsets in your fiscal year 1998 
budget request to continue the activity?
    Answer. If the activity requires funding from regular sources 
during fiscal year 1998, offsets/billpayers will be identified for 
reprioritization.
    Question. This year you are requesting $100 million for the Force 
XXI Initiative, $50 million more than last year's appropriated amount. 
Given the shortfalls in your modernization accounts, why did you 
increase the funding?
    Answer. The Army requested $100 million in fiscal year 1997 but 
only received $50 million. The funding request for fiscal year 1998 
remains the same as for fiscal year 1997--$100 million. These funds 
allow us to apply streamlined acquisition techniques to rapidly acquire 
new and available technologies at lower risk and lower cost thereby 
filling gaps in our modernization accounts that might otherwise not be 
funded. It also allows us to bridge to the Program Object Memorandum 
build for fiscal year 1997 initiatives having requirements in fiscal 
year 1998.

    [Clerk's note.--The fiscal year 1997 budget request 
included no funding for the Force XXI initiative.]

           Advanced Concept Technology Demonstrations (ACTD)

    Question. Advanced Concept Technology Demonstrations (ACTDs) are 
the Department of Defense sponsored initiatives developed to accelerate 
and facilitate the application of mature technologies to solve military 
problems and provide new operational capabilities to the field sooner 
than the normal acquisition process.
    This year the Army is requesting $137 million for ACTDs--this is 35 
percent higher than last year's appropriated amount. Mr. Decker, why is 
your fiscal year 1998 request for ACTDs 35 percent higher than last 
year?
    Answer. The amount requested by the Army for ACTDs in the FY98 
President's Budget is $154 million ($137 million + $16.5 million for 
Theater High Energy Laser (THEL) ACTD). In FY97, the amount 
appropriated last year for Army ACTDs was $157 million. The net change 
is a reduction of $3 million in FY98. THEL ACTD funding of $44.06 
million was provided by the Congress in FY97. The Army request for THEL 
in FY98 is $16.5 million.
    Question. For the record, please provide the ACTDs planned for 
FY98. Please include prior year funding, planned funding for the fiscal 
year and future funding requirements. Also include any Defense-wide or 
other Service Research, Development, Test and Evaluation funds which 
have or will be provided for each ACTD.
    Answer. Approved Army ACTD chart follows. Please note that MOUT 
ACTD, the Combat ID ACTD, and the Rapid Terrain Visualization ACTD are 
dependent on transfers from the Office of the Secretary of Defense 
(OSD) ACTD funding line FY98.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Question. What process is in place to determine which technologies 
should be fielded?
    Answer. To determine which technologies should be fielded, the ACTD 
selection process forces a technical evaluation to be made of the 
proposed advanced capability. Successful candidates must provide 
residuals (software/hardware) which are of sufficient maturity to be 
available in the timeframe of the ACTD with low risk in a configuration 
which troops can use. The selection process includes:
    a. Technology reviews by Army Chief Scientist
    b. ACTS requirements validation by Commanding General, Training and 
Doctrine Command (CG, TRADOC)
    c. Joint Requirements Oversight Council (JROC) prioritization
    d. Commander in Chief (CINC) sponsorship
    e. Under Secretary of Defense (Acquisition and Technology) approved
    f. CINC/field commander acceptance prior to fielding with soldiers
    From an acquisition reform in action--getting technology into the 
hands of soldiers quickly for evaluation, getting immediate feedback, 
while providing CINCs a new operational capability. This approach is 
supported in the Department of Defense (DoD) 5000 series regulations.
    Question. How do you ensure that the technology will be reliable 
and operable in military operations?
    Answer. Prior to putting technologies in the hands of soldiers. 
ACTDs go through developmental, operational and safety testing. Exit 
criteria is established in coordination with users to ensure the ACTD 
meets CINCs requirements. Ultimately, CINC/field commanders evaluate 
test results and ACTD performance prior to deploying ACTD technology 
with soldiers.
    Prior to transitioning ACTD, the Army, with OSD, conducts ACTD 
Transition Integrated Product Teams (TIPTs). These teams ensure that 
necessary preparations are made during the formulation, execution and 
residual support phase of an ACTD. The TIPTs recommend appropriate 
acquisition strategies for Army consideration. Upon successful 
completion of an ACTD and favorable evaluation of the leave behinds by 
the user, the acquisition and fielding of the new capability will 
compete against Army Program Objective Memorandum (POM) priorities in 
the Planning, Programming and Budgeting System (PPBS) process.
    Question. How do you ensure that the operating and logistics cost 
for successful ACTD technologies can be supported in future budgets?
    Answer. Transition Integrated Product Teams (TIPTs) also ensure 
that supportability assessments of ACTDs residuals are developed. These 
assessments include estimates for out year funding of leave behind 
systems, assuming favorable ACTD results. Operating and logistics costs 
are included in the system life cycle cost estimates which are 
considered in the Program Objective Memorandum (POM) prioritization 
process. As an example, the Rapid Force Projection Initiative (RFPT) 
ACTD TIPT is addressing four key areas related to future fielding: 
requirements; acquisition; fielding and supportability; and test, 
evaluation and analysis.
    Question. For the record please provide a list of technologies 
fielded as a result of the ACTD process. Please include testing, 
fielding, and support cost for each system.
    Answer. Since ACTDs began in 1995, and these are normally 3-5 year 
programs, the Army has completed the demonstration phase of only one 
ACTD to date, Precision/Rapid Counter-Multiple Rocket Launcher ACTD, in 
October 1996, in Korea for the Commander in Chief United Nations 
Command (CINCUNC). The following hardware and software (SW) items are 
continuing to be evaluate in the residual phase of the ACTD:

------------------------------------------------------------------------
                                                           Procurement,
                                                            testing and
                      Leave behind                         support costs
                                                               ($ in
                                                            thousands)
------------------------------------------------------------------------
Work Stations...........................................           5,500
Visualization SW........................................          \1\125
Weapon-Target Pairing SW................................           3,150
                                                         ---------------
      Total.............................................           8,775
------------------------------------------------------------------------
\1\(Government furnished equipment).

    The Army also supports other Service/Agency ACTDs. The highly 
successful Predator ACTD provided a radar mission package called 
Tactical Endurance Synthetic Aperture Radar (TESAR). TESAR is enabled 
by the Army-developed aided target recognition hardware and software.
    Question. What are your views as how the present ACTD program is 
structured? How can it be improved?
    Answer. The ACTD program is structured for evaluation of relatively 
mature technologies and concepts in an operational environment. The 
Army view is to use the ACTD process in complex system-of system 
scenarios to solve critical military needs for the warfighter. The 
success of Precision Rapid Counter Multiple Rocket Launcher ACTD in 
Korea for the Commander-in-Chief United Nations Command is an 
outstanding example of the value ACTDs provide to rapidly and 
effectively respond to warfighter urgent needs for technology 
innovation. The ACTD process could be improved by stronger commitment 
from Services/Agencies to cooperate in the joint arena and by greater 
stability in the Office of the Secretary of Defense funding lines.

                       Chemical Demilitarization

    Question. The Army has the responsibility for destroying all 
chemical warfare related material. The Army is currently constructing 
chemical demilitarization facilities at various storage locations. 
Congress mandated that the 31,493 tons of chemical munitions must be 
demilitarization by 2004. To date, 1,440 tons have been destroyed. The 
Army is requesting $620.7 million for chemical demilitarization in 
fiscal year (FY) 1998.
    The FY97 Appropriations Act included a general provision which 
prohibited the obligation of funds for the construction of a baseline 
incineration facility in Kentucky or Colorado until 180 days after the 
Secretary of Defense submitted a report on alternative destruction 
technologies. The President's FY98 budget proposes to delete the 
provision. Why?
    Answer. This prohibition could potentially delay the completion 
date for the disposal of chemical weapons from four to ten years. The 
Department's intent is not to delay the timelines to destroy the United 
States' chemical weapons. The National Research Council (NRC) of the 
National Academy of Sciences concluded that the greatest risk 
associated with the chemical weapons stockpile results from its 
continued storage. In the interest of public safety and environmental 
protection, we want to get on with the chemical weapons destruction 
process as quickly as possible and proceed with a concurrent program to 
assess alternative technologies for the assembled chemical munitions. 
This is our commitment and obligation to the citizens whose communities 
surround the stockpile storage sites. The NRC also concluded that the 
incineration baseline technology is currently the only mature process 
which can demilitarize the complete weapon--the agent, explosives, and 
decontamination of metal parts.
    Question. What impact does the general provision have on the 
chemical demilitarization schedule? On program costs?
    Answer. The schedule and cost impacts are not known at this time as 
the Program Manager for Assembled Chemical Munitions was just recently 
designated (December 1996). The prohibition could potentially delay the 
disposal completion date from four to seven years beyond the 
Congressionally mandated date of December 2004, if a technology is 
identified and demonstrated at the location where it is to be employed; 
and if the technology is demonstrated at a different location from 
where the technology will be used, delay could be as great as seven to 
ten years. Delays to the program will result in additional cost 
growth--inflation factors, storage of the stockpile, Chemical Stockpile 
Emergency Preparedness Program (CSEPP) costs, and program management 
costs. The annual cost of delay for these two sites is approximately 
$50 million.
    Question. If the provision is repealed, do you believe that 
Kentucky or Colorado will allow the Army to begin the construction of 
demilitarization facilities before the alternative technologies studies 
are completed? Please explain.
    Answer. Repealing the prohibition would not remove all obstacles 
which could jeopardize the Army meeting the operations completion date 
of December 2004. There are other site-specific and public acceptance 
issues which must be resolved and locally legislated mandates which may 
prohibit or delay the Army obtaining the necessary environmental 
permits. The Commonwealth of Kentucky has passed legislation which 
requires that the technology used be fully proven in a comparable sized 
facility, for a sufficient period of time, at a 99.9999 percent removal 
efficiency for all substances proposed for destruction or treatment 
under all operating conditions, including occurrence of malfunctions, 
upsets, or unplanned shutdowns. Colorado requires a Certificate of 
Designation, issued by the local county for the location, construction, 
operation, and closure of a hazardous waste incinerator. This is a 
lengthy process which is initiated after the Resource Conservation and 
Recovery Act permit is issued.
    Question. With the exception of the Colorado and Kentucky 
facilities, do you believe that the chemical demilitarization program 
will remain on track?
    Answer. Yes, the other sites are on track for completion by 31 
December 2004. The greatest risk to schedule is in environmental 
permitting activities. Changing community perception also impacts on 
schedule attainment. Implementation of alternative technologies poses 
schedule risk. Delays are anticipated awaiting investigation, pilot 
demonstration and testing of technologies to achieve required levels to 
validate their efficiency, maturity and effectiveness.
    Question. Currently chemical munitions are demilitarized through 
incineration. Congress provided $40 million in fiscal year (FY) 1997 to 
identify and demonstrate no less than two alternative technologies to 
the baseline incineration process for demilitarization of assembled 
chemical munitions. Explain how you intend to use the $40 million 
appropriated in FY 1997? Is the $40 million sufficient to conduct the 
alternative technology demonstration program? If not, what are the 
shortfalls? When will this program be complete?
    Answer. Congress appropriated $40.0 million in FY 1997 to identify 
and demonstrate alternative technologies to the baseline incineration 
process to demilitarize assembled chemical munitions. In compliance 
with Public Law 104-208, Dr. Paul Kaminski, the Under Secretary of 
Defense (Acquisition and Technology), appointed Mr. Mike Parker as the 
Program Manager for Assembled Chemical Munitions Demilitarization 
Alternatives. Mr. Parker reports directly to Dr. Kaminski and not 
through the Army. Answers to these questions should be addressed to the 
office of the Under Secretary of Defense (Acquisition and Technology).

    [Clerk's note.--End of questions submitted by Mr. Young.]
                                           Thursday, March 6, 1997.

               NAVY AND MARINE CORPS ACQUISITION PROGRAMS

                               WITNESSES

JOHN DOUGLASS, ASSISTANT SECRETARY OF THE NAVY FOR RESEARCH, 
    DEVELOPMENT AND ACQUISITION
VICE ADMIRAL DONALD L. PILLING, UNITED STATES NAVY, DEPUTY CHIEF OF 
    NAVAL OPERATIONS, RESOURCES, WARFARE REQUIREMENTS AND ASSESSMENTS
LIEUTENANT GENERAL JEFFREY W. OSTER, UNITED STATES MARINE CORPS, DEPUTY 
    CHIEF OF STAFF, PROGRAMS AND RESOURCES

                              Introduction

    Mr. Young. The Committee will come to order.
    This afternoon the Committee will conduct a hearing on Navy 
and Marine Corps acquisition programs, and this is an open 
session. We are pleased to welcome Mr. John Douglass, Assistant 
Secretary of the Navy for Research, Development and 
Acquisition. Secretary Douglass is accompanied by Vice Admiral 
Donald L. Pilling, the Deputy Chief of Naval Operations for 
Resources, Warfare Requirements, and Assessments; and by 
Lieutenant General Jeffrey W. Oster, Deputy Chief of Staff for 
Programs and Resources.
    Admiral Pilling's biography will be placed in the record 
inasmuch as this is his first appearance before this 
Subcommittee in this capacity, and we are happy to make a 
permanent record of that, Admiral.
    The Department of Navy's fiscal year 1998 budget request 
for modernization provides for only 51 new aircraft, of which 
only 39 are combat aircraft, 512 missiles and 4 combatant 
ships. Last year we were told that four combatant ships was the 
lowest Navy ship acquisition since 1933, so we added funds for 
more ships. But this year the Administration's new budget 
returns us to the 1933 level. The problem isn't just in 
shipbuilding. The number of tactical aircraft requested is the 
lowest since 1941.
    Mr. Douglass, your statement implies that the Navy's 
acquisition budget supports the war fighting needs of the 
theater CINCs, and their forces. When we look at the details of 
the budget, we see a number of problems. For example, we 
understand that under your current program for the DDG-51 
destroyer program, the next 12 ships to be built will lack any 
cruise missile self-defense and ballistic missile defense 
capabilities.
    Your statement further claims that the Navy's budget 
continues an ``all-out effort'' to protect our sailors and 
Marines serving aboard ships against missile attack. But the 
budget zeroes out all production funds for cooperative 
engagement and ship self-defense installations.
    The budget proposes an overhaul of the USS NIMITZ aircraft 
carrier without any new ship self-defense features, including 
cooperative engagement, that were planned a year ago.
    The budget terminates or delays several other important 
ship self-defense programs.
    We talked about this this morning with the Secretary of the 
Navy and Admiral Johnson, and we were told that that is the way 
it had to be, that budgetary problems were budgetary problems. 
We are frankly concerned about that, and I would like to have 
you get into great detail with us on the importance of building 
ships without self-defense capabilities.
    We are talking about systems where the R&D has already been 
done, the IOC has been reached, and all we have to do is 
produce and install them. Where ship self-defense is concerned, 
it is particularly disturbing that programs are proposed to be 
delayed or halted after billions of dollars of R&D has been 
completed and the leadership of the Defense Department and the 
Navy have raved about their technical performance.
    So, we do have some concerns about your acquisition budget. 
We agree with those from the Defense Department who have told 
us there are a lot more things that you really need in order to 
maintain the modernization schedule that we have been led to 
believe the Administration wanted. So we would like to get into 
detail with you today about some of those items. But I am 
really concerned about tremendous amounts of money building 
ships that aren't going to have these new self-defense features 
on them.
    So I would like to hear your statement and the admiral's 
and the general's, and then we will have some interesting 
questions for you.
    Mr. Murtha, do you have an opening statement?
    Mr. Murtha. Let me just add to what the Chairman said. We 
started this self-defense thing, Mr. Kilian recommended it, I 
don't know how many years ago. We started it 5, 6, 7 years ago. 
The Navy, kicking and screaming and complaining, didn't want to 
do it. Admiral Boorda recognized the importance of it. Research 
was done, a lot of money was spent on research, and now we are 
talking about $20 million a ship, as I understand it, this 
could be implemented. I cannot believe that we are spending 
money the right way when we are allowing these ships to go out 
without sufficient protection.
    We are limited in the amount of money that we can 
distribute. You are limited by the amount of money you get. But 
it just doesn't seem wise to me that you are leaving a hole, 
which is so important to the security of our forces out there. 
I just cannot imagine that you are letting this happen.
    So I hope you will be able to explain it, and look forward 
to hearing your explanation. But I hope we can resolve this 
thing.
    Mr. Young. Mr. Secretary, we welcome your statement and 
look forward for the opportunity to discuss it in detail with 
you.
    [Clerk's note.--The Charts referred to by Mr. Douglas are 
printed at the end of this statement. See page 180.]

                   Summary Statement of Mr. Douglass

    Mr. Douglass. Thank you, Mr. Chairman. I would like to 
begin by requesting that our joint statement be entered into 
the record, sir, in its entirety. What I would like to do, if 
this is acceptable to you, is summarize it in a series of 
charts and some videos that we think will be interesting to the 
Members. We will try to get through that as quickly as we can. 
All of us will participate in this briefing with the charts and 
the videos, and then we will move quickly into any questions 
that you may have, sir.
    Mr. Young. Mr. Secretary, that is fine. I am remiss, I 
should have mentioned your statement in its entirety will be 
placed in the record.
    Mr. Douglass. Thank you, sir.
    I want to open my testimony by saying that no one is more 
mindful than me, sir, of some of the comments that you and Mr. 
Murtha have made about ship self-defense and other programs. I 
am especially mindful that the way our system works is that you 
gentleman are the representatives of the people, and these 
questions that you are asking are right on target, sir. So we 
hope that we can have a good dialogue with you and answer these 
questions to your satisfaction. Sir, for anything we can't 
answer today verbally, we are committed to working with this 
committee to get you a full and complete answer for the record, 
sir.
    Mr. Young. Thank you very much.
    Mr. Douglass. You have already beat me to the punch in 
introducing my two colleagues today, both distinguished 
warriors. It is a great pleasure for me to work with them.
    I would just remind the Members that last year was the 
first year we brought to you a fully integrated budget in which 
the Navy and the Marine Corps budgets had been integrated from 
the ground up. We followed that procedure again this year, and 
as you pointed out, this is Don's first year. Jeff was here 
last year as we went through that process. I think the process 
of integration is getting better as the time goes by, sir. 
Could I have the next chart.

                Procurement and Research and Development

    (CHART 1) This is a brief summary here of what you are 
going to see. We will go into it in a lot more detail. The 
budget, if you add up all the RDT&E and procurement and 
National Defense Sealift Fund, NDSF, is actually up 1 percent 
from where we were last year when you view the combined the 
Navy and Marine Corps budget request.
    As you can see, what we are trying to do, sir, is stabilize 
our programs. We are mindful of the direction that this 
Committee has given us regarding multiyear procurement on some 
of our aircraft programs and so on, and you will see we do plan 
to take that very seriously.
    The Department is working hard at acquisition reform. We 
will have a little bit to say about that at the end. You are 
going to see, sir, as we go through this briefing, some real 
concerns about the future industrial base for the maritime 
forces. This is becoming an increased concern.
    The systems you see on the bottom of the chart are all new 
systems in which we are investing. Major systems we are 
investing research and development dollars in that have not yet 
gone into production. We will go very briefly into those, and 
we will then be able to answer any detailed questions that the 
Committee has. The next chart, please.

                            Budget Summaries

    (CHART 2) We thought this might be helpful in placing this 
$27 billion budget request in some perspective. You can see the 
blues columns are where we were last year, and the reds columns 
are where we are this year. All the accounts except for 
shipbuilding are down slightly from last year. Shipbuilding has 
increased this year, and we will discuss that in some detail. 
But you are absolutely right in your opening statement. We are 
back to four ships again this year, not counting our ships that 
are in the Ready Reserve Fleet or going to our Prepositioned 
forces. We haven't counted them in that count. But that is how 
our dollars are being spent. I would also note on the right 
side of the chart procurement of ammunition for the Marine 
Corps and Navy is up slightly this year. The next chart, 
please.

                            Navy Trendlines

    (CHART 3) This is the dilemma. You all have been very 
helpful to us in explaining this to the American people. This 
is where we were in the 1980s, and many of us were in this 
business in the 1980s. You can see on that chart that the level 
of procurement was up there at or above $50 billion early in 
the 1980s. This was pretty much sustained with a slight decline 
during this time frame. There was also a very robust RDT&E 
funding level back at the 1980s.
    (CHART 4) The next chart is where we have been in the 
1990s. This is the problem I know this Committee has been 
deeply concerned with, and that is the nose-dive you see in the 
procurement budget includes airplanes, ships and other systems. 
There has been a gradual erosion of our research and 
development base, noted by the blue line, as we have gone 
across the 1990s and on into the beginning of the next century.
    Mr. Murtha mentioned to me just before the hearing, he is 
concerned, and we certainly share his concerns, about how are 
we going to get up that slope again. That is something that we 
have tried to pay some considerable attention to, Mr. Chairman. 
We are very open to working with this Committee as we work out 
the inevitable gives and takes on the priorities required for 
our Navy and Marine Corps to get up that slope. We are 
dedicated to trying to get there from here.

                           Shipbuilding Plan

    (CHART 5) The next chart I think will be revealing in this 
respect. This is our shipbuilding plan. We start here because 
that is probably the defining point for our Navy. As you 
correctly pointed out, there are only four ships in fiscal year 
1998, but I think it is very important to tell you that we have 
been able to fully fund all these ships in this program.
    In our previous programs, you may recall, we had received 
some policy direction from the authorization committees that 
some of these ships could be shown in the budget but did not 
have the money put in the budget. We had various qualifications 
on our submarines, and we didn't have the carrier in until this 
year. So this is the first year in recent years that we have 
brought to the Congress a shipbuilding program in which all of 
these ships are fully funded in our Future Year Defense 
Program. That has been a very substantial effort for us to be 
able to fit these ships in, and it is something we are proud 
of.
    We do have two block buys or multiyear buys, if you will. 
We are proposing on our New Attack Submarine to buy all four of 
the initial submarines on a single contract. This is new and 
something different. Of course, we have the DDG-51 multiyear 
buy for which the Congress gave us authority last year. The 
next chart, please. We will get into individual programs in 
detail.

                        CVN-77 AIRCRAFT CARRIER

    (CHART 6) Our first priority in the ship area, of course, 
is CVN-77, the last of the NIMITZ carriers. As you may recall, 
Mr. Chairman, last year we only had the advanced procurement in 
for this ship. This year it is fully funded, and that is a 
fairly significant addition to our shipbuilding program.
    We have proposed to the Congress a change in our New Attack 
Submarine construction program. Right now the law requires us 
to compete either the first two boats or the first four boats.
    We have been working with both Newport News and Electric 
Boat, the two shipbuilders that will be the builders on the New 
Attack Submarine. They have made some proposals to us on how to 
develop this submarine as a team instead of in a competitive 
way. We estimate just in the Future Year Defense Program, 
compared to last year's budget, this would save us between $450 
and $600 million, by going into this teaming arrangement. We 
think it is a good idea. We are proposing it to the Congress. 
We are hopeful that it will be well received and we will have 
permission from the Congress at the end of this legislative 
cycle to go ahead with this teaming approach, because we really 
can't afford the competitive program that was directed in the 
law the last 2 years.

                           SEAWOLF SUBMARINE

    As we talk about the SEAWOLF program, this is where the 
videos start. SEAWOLF has been doing exceptionally well in its 
sea trials so far. She is quieter and faster than we had 
predicted her to be. As a matter of fact, she surprised us so 
much with her speed that we had some flooding in the wide 
aperture array and had to put her back in the shipyard and 
batten down the array fairing. But all of the systems are 
performing actually quite a bit better than we predicted. So 
technically she is a wonderful success, and we just put her 
back in the water again to finish the sea trials.
    We have a short video. Admiral Pilling will narrate the 
video.
    [Clerk's note.--The Committee proceeded to view a series of 
short videos.]
    Admiral Pilling. The video is a 40-second clip that starts 
off with the christening back in June of 1995 and ends with 
some of the sea trials.
    Mr. Douglass. It starts with your morning witness and his 
wife breaking the champagne bottle.
    Admiral Pilling. We are getting underway for the sea 
trials. It was last fall, and Mr. Douglass already mentioned it 
was a superb set of sea trials, with one exception, a fairing 
on the aft part of the ship for the wide aperture array failed. 
That whole covering has been redesigned and repaired. The ship 
will continue the sea trials at the end of this month and will 
be commissioned in the late spring.
    Mr. Douglass. We are very proud to tell you, Mr. Chairman, 
that we remain under the $7.2 billion cost cap that the 
Congress has given us, and we are sure that we will be able to 
finish the three submarines within those provisions.

                            DDG-51 DESTROYER

    On the DDG-51 program, you may recall last year the 
Congress gave us authority to procure the next 12 ships in a 
block buy. In round numbers, this is going to result in a 
savings to the taxpayer of around $1 billion. We are in the 
process now of formulating the request for proposals that would 
go out to the two builders. Those will go out sometime in the 
weeks ahead, and we will be glad to answer any questions you 
may have on that.

                                 LPD-17

    We have also awarded the lead ship contract for the LPD-17, 
and we will be glad to answer any questions the Committee may 
have on that. That program, as you probably know, is being 
reviewed by the GAO right now. The next chart, please.

                               SMART SHIP

    (CHART 7) I don't know if you have had the opportunity to 
go to Pascagoula and see the Smart Ship Program. This is a 
program started by our late CNO, Admiral Mike Boorda. It has 
been an outstanding success. The idea is to use technology to 
take crew members off the ships. For every crew member we can 
get off the fleet, we can save $800,000 in life cycle costs. 
This project has shown us a way to get the crew size down by 90 
to 100 people.
    I have been out on the YORKTOWN, and she is doing very 
well. We have a skipper, Mr. Chairman, from the University of 
Florida. He has that Gator in his wardroom just like I have in 
my office. I can tell you this program is doing really well and 
is a great credit to our late CNO.

                              ARSENAL SHIP

    We are also in the business of working together with 
Defense Advanced Research Projects Agency (DARPA), to develop 
an Arsenal Ship. This is a completely new kind of ship. We have 
three contractor teams working on this ship now. We just down-
selected from five teams. The idea is to produce a ship with 
massive firepower but very low life cycle costs. I am very 
proud to tell you that the three proposals involved crew sizes 
of 30, 23, and zero. One of the offerers is proposing a ship 
that for all practical purposes will go into combat with no 
people aboard it.
    This is a demonstrator program, it is a one-of-a-kind. We 
have not decided whether we are going to put it into production 
or not, but we are learning enormous amounts of information, 
things we really need to know as we design our new carrier and 
our new surface combatant of the future.

                          CVX AIRCRAFT CARRIER

    CV(X) 78 is our next-generation aircraft carrier. This year 
we are getting underway on the research and development for 
this ship. It is a tremendous challenge. We lay her keel in 
2006; she goes to sea in 2013.
    I have a 1-year-old son at home, just celebrated his 
birthday. He will be 78 years old when that ship retires from 
the fleet. So you can imagine, Mr. Chairman, we are trying to 
look at where will aircraft technologies be when my little son 
is 78 years old. Where we will be with computers, with 
propulsion systems and so on. We are trying to design a ship 
that can have the long-term technical viability to absorb all 
these changes in technology that we know are coming in the 
years ahead and still be an effective weapons system for the 
Navy of the future.

                        SC-21 SURFACE COMBATANT

    Our next surface combatant is SC-21. This is an enormously 
innovative program. We are trying to take lessons from the 
Smart Ship, from the Arsenal Ship, from the work we are doing 
on our aircraft carriers, from the work we are doing on our 
submarines, channel that learning about the Navy of the future 
and how to build the ships of the future into our SC-21 
program. Don and I have most recently looked at how we could 
accelerate the schedule for this program so it fits nicely into 
the back of the current DDG-51 program.

                         COMBAT LOGISTICS SHIPS

    Finally, in our shipbuilding programs in the beginning of 
the early years of the next decade, the next century, we are 
going to have to build some future combat logistic ships. We 
will be bringing forward legislative proposals to the Congress 
about instead of buying these ships and putting them in the 
Navy's inventory, how we could acquire these ships under a 
build and charter concept that would allow us to avoid the 
capital expenditures so we could spend our scarce capital on 
other things. But it would require some legal changes on our 
ability to do long-term charters. The next chart, please.

                           AVIATION PROGRAMS

    (CHARTS 8 and 9) We will be switching to our aviation 
programs. This is a snapshot of aircraft procurement. And here 
again, Mr. Murtha, this is the bow wave we talked about. You 
can see we are in the bottom of an even steeper valley on 
airplanes than we were on ships. The bottom of that valley is 
the lowest level in my time. You mentioned 1941, Mr. Chairman. 
I was told the year was 1938. I think we are both in the 
ballpark. It has been a long time since we were down at that 
level.
    We are starting up the ramp. Fiscal year 1998 is 
substantially higher than where we were a couple of years ago 
in fiscal year 1996, as you can see. The main thing is we are 
beginning to increase the numbers of F/A-18s and V-22s that we 
are purchasing for the Department. You will see that as we go 
on into the next couple of charts.
    Please take that chart down and let's show a quick video 
first on the F/A-18E/F and then on the V-22. Don and Jeff will 
narrate the video.

                              F-18 FIGHTER

    Admiral Pilling. The F/A-18 video is about one minute long.
    As you know, the first flight of the F/A-18E was in 
November of 1995. This is a video of the sea trials we had in 
January where we actually went out on the STENNIS in a 
snowstorm. The first landing was made by a Navy Lieutenant by 
the name of Frank Morley. While we were out there, we did 64 
catapult launches and 64 arrested landings. No problems. The 
plane is on schedule. It is under weight, which is unusual for 
a plane at this stage.
    Mr. Murtha. You didn't mention cost.
    Admiral Pilling. It is still under the cost profile we 
agreed on at the beginning.
    Mr. Douglass. It is under cost.
    Admiral Pilling. You can see it was a very successful sea 
trial.
    Mr. Douglass. Under cost in both development and 
production, Mr. Murtha.
    Mr. Young. Some of our colleagues suggested we would be 
better off buying more C and Ds rather than going into the more 
expensive E and Fs, and that we would get more airplanes for 
the dollar. Can you give us an answer on that? How much more do 
we get from the E and F than we do the C and D?
    Admiral Pilling. For a complete answer, we would have to be 
in a closed session. There are some classified aspects of this 
plane. But we have growth in this airplane. There is no more 
room for growth in the C and Ds. It is under weight; it has 17 
cubic feet of volume that can be used for growth in the future. 
Some of the capabilities being built into that airplane, 
including range and increased bring-back capability to the 
carrier deck, we think are well worth the investment.
    Mr. Douglass. When you look at the size of the RDT&E 
program, I think it has been an outstanding success. It is the 
first program to win the Packard Award for Excellence from the 
Department of Defense. We are very proud of the F/A-18E/F.
    I am aware of a few questions from other committees 
regarding engine problems. You may be interested to know that 
we had a slight engine problem during the development flight 
test program. It had to do with some improvements in the engine 
that we were trying to make. We looked very quickly at the 
parts involved, changed them slightly, and completely solved 
the problem. That is the only real problem we have had in the 
flight test program so far.
    So I am very happy to report that the handling capabilities 
are excellent, its takeoff and landing capabilities are 
excellent, and this is really a success story, Mr. Chairman.
    Do you want to go on into the MV-22 here?

                             MV-22 AIRCRAFT

    General Oster. Mr. Chairman, the film clip will show some 
full-scale development aircraft. The first part of the film 
will show the aircraft and flight operations around and aboard 
the flight decks. The V-22 is fully compatible with the LHA/LHD 
class ships. This is a wingfold test with the blade folded to 
show it, and then you will see it moved on the elevator. It is 
fully shipboard compatible.
    The next series of clips show a simulated assault landing 
in rugged terrain, taking Marines into the objective area, to 
be followed up by another full-scale development craft 
evacuating a wounded Marine.
    Next you will kind of see, you saw it real quickly, that is 
the flight mode versus the helicopter mode. We are happy to say 
we are now into an Engineering and Manufacturing Development, 
(E&MD). Aircraft number seven was delivered. The first flight 
was February 5th, with all tests successful. We have had four 
other flights since then, and the next event we are looking 
forward to is the flight ferry up to Pax River to finish the 
testing. That will finish the exit criteria for the E&MD 
models.

                          JOINT STRIKE FIGHTER

    Mr. Douglass. If you can put the chart back up, we are 
pressing on with the Joint Strike Fighter. As you probably 
know, Mr. Chairman, we had a source selection this year. The 
way we manage this program is we provide the program manager to 
my colleague Art Money in the Air Force who is the Senior 
Acquisition Executive, (SAE). Then we flip-flop the SAE when we 
rotate the program manager. So it went through its transition 
on into full-scale development under Art's leadership, and we 
down-selected under his leadership. We are now down to two 
contractors, which would carry it into the next phase. The Navy 
investment this year in this program is $449 million.

                         Marine Corps Aircraft

    The AV-8Bs are on track. We are doing really well with this 
program. The Marines love it. We are buying 11 airplanes in 
fiscal year 1998 for an investment of just under $300 million.
    We are very happy to tell you we have gotten our 4 Bladed 
November/4 Bladed Whiskey/4BN/4BW, helicopter remanufacture 
program approved by the Department of Defense and are on into 
the research to make that program a reality. It is $81 million 
of RDT&E funds this year. The next chart, please.

                  ADVANCED AMPHIBIOUS ASSAULT VEHICLE

    (CHART 10) I will talk about that first bullet for a 
second. The AAAV, Advanced Amphibious Assault Vehicle is 
another outstanding acquisition reform success. We went through 
a source selection since my last testimony here. We co-located 
the program office with the contractor in Woodbridge, VA. 
General Electric Land Systems is the contractor. The program is 
on track and doing well. We have a short video on it that you 
might like to see, if you will run the video.
    General Oster. Throughout this program we have gone through 
a series of technology demonstrators. In the first part of the 
video you will see what we called the hydro-dynamic test rig. 
The real technological concern all along was could you get it 
up on plane. We demonstrated you could do that with the engine 
and propulsion, and we have achieved speeds in excess of 30 
knots. We have been able to demonstrate the transition from sea 
to land with the hydrodynamic test rig.
    But we also want it to be an infantry fighting vehicle, so 
we have also gone through some tests with automotive testing. 
We have involved the user from the beginning, so we have had 
the Marines in and around the mock-ups. Their suggestions have 
been built in.
    In terms of the tests up at Aberdeen, we passed all the 
tests and out-performed the M-1A1 tank on all overland 
operations, which were part of the threshold capabilities of 
the vehicle.
    We are real proud of our AAAV technology center down in 
Woodbridge. Some of your staffers have already visited. We 
would like to invite any of the Members or staffers to come 
down. We have a virtual design facility. We have the user and 
the designer and the fabricator working together to deliver 
what the Marine needs for the 21st century.

                      MARINE CORPS GROUND PROGRAMS

    Mr. Douglass. Putting our development team right in there 
with the contractor is, we think, a pretty interesting approach 
to increase communication and to hold these people accountable. 
We have got a great Marine Corps program manager down there, 
and I am very proud of that program.
    The next program is the Lightweight 155. This is an 
artillery improvement program for the Marines. We had three 
bidders on this program. We had a shoot-off. We are just about 
to announce the source selection on this within the next week 
or 10 days. The source selection authority is actually an Army 
general who reports to my colleague in the Army, Gil Decker. I 
will review that decision in the next week, and we should be 
announcing it before the month is out.
    Then, of course, we have our Medium Tactical Vehicle 
Remanufacture program. This is really a success story, where 
the Marines have gotten together with the Army and worked on 
the vehicle remanufacture program in order to get the costs 
down and be able to revitalize the Marine Corps truck fleet. We 
are looking at this technique and other kinds of Marine ground 
vehicles. The next chart, please.

                   C4I SPACE AND INFORMATION WARFARE

    (CHART 11) Here we get into programs that are of vital 
interest to this Committee. The are in the C4I Space and 
Information Warfare area. Cooperative Engagement Capability is 
one you mentioned in your opening statement, Mr. Chairman. 
Technically this program is doing very well. The issue, of 
course, is how quickly can we get this capability out into the 
fleet. We will be glad to answer any questions that you have on 
that.

                   THEATER BALLISTIC MISSILE DEFENSE

    Regarding Theater Ballistic Missile Defense, we have a 
video we would like to show you, and I would like to make a few 
comments about where we are with that program. This one has an 
audio on it, as I recall.
    This is a dramatic picture here. That was taken from the 
actual sensor in the front of the missile.
    I am happy to put credit where credit is due. We wouldn't 
be where we are in this program if it wasn't for the leadership 
in this Committee and some of the interests of some of your 
Members, Mr. Chairman. We are doing very well in the Area-Wide 
program. This was our first direct hit success. I now have the 
authority from Dr. Kaminski to buy all of the missiles that I 
need to finish the development of this program, the engineering 
development of this program, and to do what we call an initial 
user capability. We are pressing ahead to do that.
    In my judgment right now, getting this out into the fleet 
is only limited by the time it is going to take us to build 
these missiles and get them deployed. We are pretty confident 
that we are going to be able to get an initial capability 
during fiscal year 1999 on this program. We will have a full 
unit operational capability in fiscal year 2001. So the Area-
Wide system is doing well, and a lot of the credit for its 
success is due to the leadership and the support that has been 
evident on this Committee.
    Theater-wide, as you know, we are also----
    Mr. Murtha. Mr. Secretary, I misunderstand what you are 
saying. You are saying it is going to be deployed, or you are 
saying it is just research?
    Mr. Douglass. Admiral Pilling knows, it will be deployed. 
We will have our first ability to have this out in the fleet in 
fiscal year 1999, and the first full unit deployment will be in 
fiscal year 2001. We are pressing on.
    Mr. Murtha. I thought, though, you weren't putting it on 
the ship.
    Mr. Douglass. Mr. Murtha, this might be a good time to 
explain that. There are kind of two things you need to do to 
get this out into the fleet. You need to build the missiles 
themselves, which we are doing, and which we have now got the 
authority to build, and those missiles are actually under 
construction today. Then you actually have to make changes to 
the ships, certain technical changes in the ships, so that they 
can launch them. That work is also underway.
    Now, the question is how many ships do you modify to be 
able to launch these missiles, and how many missiles do you 
have?
    Ideally you would want to keep this in balance. In other 
words, you wouldn't want to spend the money to have, say, 30 
ships able to shoot the missiles if you didn't have any 
missiles to go on the 30 ships. You would want the 
modifications to the ships and the modifications to the 
missiles to be roughly in sync.
    I think one of the things that your Committee has pointed 
out in its analysis of our budget is that some of the ships 
that are going to be converted to be able to do the Theater 
Missile Defense are ships that are under construction now, and 
some of those ships are ships that are out there in the fleet 
already. Some of our budget documentation has indicated that of 
the 12 ships in the multiyear contract we are buying, we were 
not buying the capability to put the missiles in those 12 
ships.
    We are committed to relooking at that. That is not in 
concrete. We can fix that in the outyear budgets. But we will 
get ships and missiles in sync. We are committed to do that, 
sir.
    Mr. Murtha. That answers the question.
    Mr. Douglass. On Theater Wide, the issue over the long haul 
is how many resources do you put in year after year. As you 
know, we get our resources from the BMDO organization. Due to 
the plus-ups of this Committee last year, you have been able to 
put us on the road to a very robust program. The issue for us 
is how much money is going to be put into the outyears to keep 
this program sustained. Frankly, how much we are able to 
accomplish and when we can get an operational capability for 
Upper Tier depends on that allocation of resources. But 
technically that program is moving ahead.
    I have to be fair and tell you that there is a lot of 
debate, both in the Congress and in the Pentagon, about how 
much money should go into which programs. This program has 
competing programs in the Army, as you know, and sometimes we 
don't all agree. But ultimately, what we do depends on how many 
resources we can afford to put into it.
    Basically once I know how much per year I have to work 
with, I can tell you what date that I could bring this into the 
fleet.

                        COMMUNICATIONS PROGRAMS

    Regarding Global Broadcast Service, this is getting the 
small TV satellite antennas where you can get 100 channels we 
can all buy for our houses now, and getting those out into the 
fleet. The problem has been that commercially nobody beams that 
kind of traffic out to the middle of the ocean because there 
are no subscribers out there.
    For a very modest amount of money, we were able to get 
transponders put on three satellites that we had already paid 
for. We had to stick our neck out a little bit betting on the 
conference for some funding. Your Committee and the other three 
oversight committees worked on this with us, and we saved a lot 
of money for the taxpayers.
    This program is on track, and we will be moving that 
capability out to the fleet. Of course, we will not just use it 
to show TV movies. There will be an enormous amount of 
intelligence information, weather information, status 
information on weapons systems and other things that we can now 
push out to the fleet.
    Challenge Athena, which is our voice and imagery across the 
SATCOM program provides a big boost in the quality of life for 
our Sailors and Marines at sea. We started to bring you a video 
on this. Every time I see it, it brings tears to my eyes 
because it is a lot of videos of young Sailors talking to their 
moms and dads or little kids and so on. We are moving ahead 
with Challenge Athena as quickly as we can. The next chart, 
please.

                              MINE WARFARE

    (CHART 12) Mine and undersea warfare is next. This is an 
area that in the past from time to time has been neglected. We 
are doing our very best within our resources to support it now. 
The Congress has asked us for the last couple of years for a 
Mine and Undersea Warfare Plan and has asked that we certify 
that it is fully funded and meets the requirements of the 
Chairman of the JCS and in a joint service way.
    I am happy to report to this subcommittee that again this 
year, it is fully funded. Every year this is a struggle within 
the Pentagon. We have to all stretch and work hard together to 
get this fully funded, but we have kept it on track. It is 
going to give us a good organic capability in the fleet to do 
the kind of mine warfare that we need to do as we move on into 
the next century.
    As you can see, we have already completed conversion of the 
INCHON. We have the remote minehunting system, our interim 
system deployed with the KITTY HAWK last year. So that area is 
reasonably well-funded.

                         ANTI-SUBMARINE WARFARE

    Anti-Submarine Warfare is another area of great concern. We 
are pressing ahead. We have made some pretty significant 
accomplishments there. Some of them are listed on the chart, 
not the least of which is that we are going to have on the New 
Attack Submarine a dynamite C3I system that is a big leap 
forward from the one we have on SEAWOLF, which is itself a 
great improvement from what we have had in the past. There will 
be a significant amount of commercial off-the-shelf information 
and display equipment. It is just a tremendous leap forward. 
There will be no periscopes anymore.
    We are going to have displays on big video screens, some of 
which will be three dimensional portrayals of the ocean 
environment the submarine is in. We think this part of our 
Anti-Submarine Warfare program is well-funded, but it is 
something we are having to watch very carefully.
    We also, Mr. Chairman, I would draw your attention to the 
fact that we have been asked to provide both a classified and 
unclassified report to the Congress on how well we are doing 
here, and we are committed to getting that report over here in 
a few months on time and at the proper classification level so 
that you can see the whole picture.

                           ACQUISITION REFORM

    (CHART 13) I will wrap this up very quickly with one final 
chart, by telling you that we are working hard to maintain the 
steam on our Acquisition Reform Program. We had a stand down 
this past year in which all 43,000 Navy acquisition employees 
stopped for a day and asked ourselves what can we do to improve 
the way we do acquisition in the Navy and Marine Corps.
    I had some 5,000 suggestions come in to me as a result of 
the stand down. My staff is going through every single one of 
those suggestions, and hundreds and hundreds of them are being 
implemented. We are focusing on total ownership costs. That 
means as we modernize the fleet, we are trying to produce 
weapons systems that will take fewer and fewer Sailors into 
harm's way.
    By reducing the crew sizes on our ships in the outyears, we 
are going to be able to bring the operations costs down very, 
very dramatically. I mentioned the Smart Ship. We have already 
seen a way to get 100 sailors off of a cruiser. The Arsenal 
Ship is planned to have a very small crew. We think the SC21 
crew size will be below 100.
    So focusing on total life cycle costs, it is really going 
to pay some of the bill, Mr. Murtha, to get us up that hump in 
the outyears. We are also doing a lot of partnering with 
industry. This year we had our second conference with the CEO's 
of many of the companies that do business with the Navy. We are 
listening to what they say. I give them a report at the end of 
the year on how we are doing on things that the industry people 
have suggested we change in Navy acquisition. We have received 
many accolades during the year, far too many to list here 
today.
    The one I am most proud of here is the F/A-18 E/F. It won 
the Packard Award this past year. We are very proud of that. We 
have received now some 22 Hammer Awards from Vice President 
Gore on acquisition reform, which are outstanding examples of 
acquisition teams in the Department.
    These range all the way from small teams of Marine Corps 
personnel getting together to figure out how to bring down life 
cycle costs of existing equipment, to new ideas on our 
submarines and airplanes.
    That is a very quick overview, Mr. Chairman, of the 
multibillion-dollar program that we have proposed for your 
review and approval, and we will be glad to answer any 
questions you have, sir.
    [The joint statement and charts of Mr. Douglass, Vice 
Admiral Pilling and Lieutenant General Oster follow:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                           SHIP SELF-DEFENSE

    Mr. Young. Okay. Mr. Douglass, thank you very much. We 
appreciate the extensive details in your presentation. I need 
to go back to this issue one more time now, the issue of the 
ship defense systems. You had a very good answer to the 
question, but as I thought through it, the answer left out a 
few things. That is, this morning one of the answers was we 
will probably retrofit. But when you retrofit, that gets very 
expensive, much more so than if you put the systems in as you 
go.
    Another problem that we haven't mentioned is--we did 
mention, but there was no response--on the DDG-51's, we are 
talking about a multiyear contract on 12 ships. What is that 
multiyear contract going to say about ship defense systems? Is 
it going to be included? Is there going to be a provision in 
the multiyear? If there is no answer for that now, how can you 
enter into a multiyear if you don't have the answer on what you 
are going to do with the ship defense systems?
    Mr. Douglass. One thing I could tell you, Mr. Chairman, 
there is a misconception here. The DDG's are going to have a 
significant amount of ship self-defense.
    Mr. Young. But not the state of the art.
    Mr. Douglass. The two items that have been contentious have 
been getting them ready as we produce them for ballistic 
missile defense capability, and the incorporation of CEC. As I 
said earlier, we are re-looking at our plans there.
    Some of these changes, as you point out, are much cheaper 
if you catch them while you are building the ship. Things that 
generally require mechanical changes to the ship are expensive 
to retrofit. But some of these are also, Mr. Chairman, just 
electronics changes where you pull out one black box and put in 
another one or change the software. In that category it is 
really not that much more expensive to do retrofits than it is 
doing it in production.
    I will tell you, it is my own hope and I will dedicate 
myself to try and do this, because I feel that I am in the same 
place you are, Mr. Chairman, on this issue. I would not like to 
see us emerge from this congressional cycle or from our budget 
development cycle for next year with that multiyear contract 
not having those capabilities in the ships to the maximum 
degree that we can. We are dedicated to doing that.
    There is a long story about why it is not in the plan. It 
is more along bureaucratic lines than it is along the intent of 
what Admiral Pilling and I, the CNO, and the Secretary 
intended. We are going to fix it.
    Mr. Young. I am sure with all of us working together, we 
will get it fixed. As you can tell, there is considerable 
concern.
    Admiral Pilling. There are really two issues here on CEC. 
One is the forward-fit issue on the DDG's, and then there is 
another issue on back-fits. I think I would like to just 
address both of them fairly quickly. The DDG issue is 12 ships 
in the multiyear. It was our original plan that the last four, 
the third ship in 2000 and the three ships in 2001, would have 
an upgrade to their radar systems.
    There was some risk in that. As we put the multiyear 
package together, we took the radar upgrade system out, and CEC 
was part of it. We checked retro back-fit costs and forward-fit 
costs for the CEC, because it would be mostly installing black 
boxes and racks, there would not be much of a difference. That 
is what happened with the DDG's.
    On the back-fit of the other ships, it had been our plan 
all along to have five carrier battle groups fully outfitted 
with CEC by fiscal year 2002. We already have two outfitted. 
For a variety of reasons that John alluded to in the 1998 
column, we ended up not procuring, at low rate initial 
production, any CEC units in fiscal year 1999, because the 
OPEVAL for CEC is in fiscal year 1998. So instead of getting to 
five battle groups by 2002, we are going to get to three. We 
will go to full rate production in 1999.
    Mr. Douglass. The bottom line though is we share your 
concern and we are going to do what we can.
    Mr. Young. We will work it out, right?
    Mr. Douglass. Yes, sir.

                             V-22 Aircraft

    Mr. Young. You mentioned the V-22 and you were pretty proud 
of the V-22 program as we are, because it was this Committee 
that kept the pressure on to keep the V-22 a viable program for 
years when there were those across the river who said we 
couldn't afford it.
    Last year, the Committee directed that the V-22 program 
achieve a production rate of 36 aircraft a year by the year 
2000. In your statement, you said today we were going to 
achieve a production rate of 18 aircraft per year. Tell us why 
the Congress said 36 a year, and you decided on 18 a year.
    Mr. Douglass. Sir, it is pretty simple. It is money. Last 
year you gave us the money. You gave us $70 million for 
advanced procurement for seven additional airplanes, and we do 
not have the money in our budget to buy those additional seven 
airplanes. So I am not trying to hide anything. I would love to 
see those extra airplanes in there as an acquisition person.
    We simply did not have the money to add. It is another 
$700-plus million as I recall, Jeff. If you just take that and 
push it on forward, we can't get up to the 36 aircraft when you 
told us to.
    I don't know how to say it in any other way other than I 
share your concern. As soon as we can possibly get this past 
low rate production, I want to see us have a multiyear contract 
here. What I would hope that we could do is, have a multiyear 
contract. Sometimes when we make a multiyear contract, you save 
hundreds of millions of dollars, and the money tends to go 
somewhere into other programs or some other place.
    I would hope that any savings on this program that come 
from multiyear, once we get through this low-rate production 
part in the program, we would plow back, to get those numbers 
up as high as we can as early as we can. We share all the 
concerns. I went back and read some of the previous testimony 
of this Committee about your concern about the age of our older 
helicopters. It is just a financial limitation problem.
    Mr. Young. Can you tell us what the unit cost would be at 
18 per year versus the unit cost at 36 per year?
    Mr. Douglass. I could, sir. I don't have it at the tip of 
my fingers.
    Mr. Young. If you could provide it. My question comes back 
to this: I thought we provided 12 versus 5 advanced 
procurement. I thought we already provided the money for 12.
    Mr. Douglass. You provided the advanced procurement. It was 
$70 million, and to give you the exact status of that, Mr. 
Chairman, I am going to choose my words carefully here because 
we are getting into some fighting in the building. We get every 
year undistributed reductions from the Congress.
    In other words, when you get down to the end game, you say, 
we can't figure out how to balance the books, so here is an 
undistributed reduction of so many million dollars. We get 
Bosnia bills to pay. We get bills for the Small Business 
Innovative Research Program. We get this and that.
    It turns out on this program, those bills added up to 7 or 
8 percent of the whole cost of the program. It was in the range 
of 40 or 50 millions of dollars in our RDT&E program. So I have 
asked the Department to forward over to the Congress a request 
to reprogram this $70 million back into the research and 
development program so I can keep this program as healthy as I 
possibly can, so we can get the numbers up into the future. But 
I regret, and I sincerely regret we could not follow through 
and build those extra seven airplanes for which you gave us the 
advanced procurement.
    General Oster may want to add to that.
    General Oster. Yes, sir. There is also a little bit of good 
news. As you know, we have been operating under the billion-
dollar cap before, which was kind of an arbitrary restriction. 
The best we were ever able to do in the FYDP in the last year's 
budget, we thought we could get to 21. That has been lifted, 
and in this particular FYDP we get up to 24 a year.
    Clearly not 36, but 24 a year moves the Initial Operational 
Capability (IOC) and the Full Operational Capability (FOC) up 
for us. Our goal still is to get up to 36 a year. So there is 
some good news in this, but it really comes down to, as the 
Secretary indicated, there is the affordability issue as these 
programs compete.
    Mr. Douglass. Just to give you an idea, Mr. Chairman, in 
this program even as it is, we have $530 million in research 
and development, and I am asking that we supplement that with 
the $70 million from last year that I mentioned to you. We have 
$542 million to buy those five low rate production birds. That 
is almost $1.1 billion. I am sure this Committee is acutely 
aware of the fact that Marines stretch their bucks as far as 
they can. That is a big bill for our Corps.
    We are going to continue to try to get the numbers up as 
high as we can. That is my commitment to this Committee as your 
acquisition person, but I can't invent the money. These two 
individuals more or less control the money. But I will do 
everything I can as your acquisition person to get the most 
airplanes for the dollars. I tell you, I have been out to the 
plant twice now. I have had the contractors in, to see me when 
we started getting the prices on these airplanes. They came in 
with a pretty substantial price increase. General Krulak and I 
personally called the CEO's of those two companies in and 
looked them in the eye and said, you know, you are going to 
have to show us where every penny of this price increase is. 
The result was that the price increase went away. So we are 
paying all the attention we can to the program. It has the 
support of our Commandant, it has the support of Secretary 
Dalton, and beyond that, sir, I don't know what to say to you.

                       FAST PATROL CRAFT PROGRAM

    Mr. Young. We appreciate that. We know it is not easy. The 
goals are the same, to provide the best technology and the best 
equipment at the best price. Some of my colleagues who are not 
members of this subcommittee have asked me to just ask one 
further question.
    Last year, the Committee directed that fiscal year 1996 
funds appropriated for the Fast Patrol Craft Program be 
released by the Office of the Secretary of Defense to the Navy 
and expeditiously obligated only for that purpose. That 
language was in the report.
    My understanding is that has not been done and that is not 
going to be done and several of my colleagues have asked me to 
ask you why?
    Mr. Douglass. I think the most basic reason why is that it 
hasn't been released to the Navy. The Department of Defense has 
never released it. That is my answer as the acquisition person. 
I think beyond that, the reason why the money hasn't been 
released is because, frankly, we haven't asked for it to be 
released, because I don't think the requirement side of the 
Navy sees a requirement for those boats.
    Admiral Pilling. There is no Navy requirement. We are 
trying to find out from the Special Operations Forces if they 
have a requirement for such a craft.
    Mr. Young. Okay. Thank you very much. I apologize to my 
colleagues for taking so much of the Committee's time.
    Mr. Murtha.

                      CHEMICAL/BIOLOGICAL WARFARE

    Mr. Murtha. One of the programs that I went down to visit 
last year during the Atlanta Olympics was the chemical-
biological warfare mission. We brought it up last year in the 
Committee that I feel this is one of the major threats. I think 
this is as important as anything we can do, is find a way to 
combat that threat.
    When I went down to visit, I came back and visited with the 
Chairman, and we decided what had been done, with the little 
bit of the Marine Corps money. The Marine Corps really handles 
that money well. Nobody does it better than the Marine Corps. 
They had a system, but it wasn't good enough. It wasn't near 
good enough. So we put $10 million in, and it has been improved 
substantially, and I understand during inauguration they 
brought the unit up here.
    Is this program to the point where we should have units, 
say, on both coasts?
    The reason I ask that question, one of the ways you 
overcome biological warfare is you have to react very quickly, 
and even with chemical warfare you have to act quickly. Should 
we also have a unit that could deploy on the West Coast because 
of the time element? Is this something we should consider? Are 
we to that point where the demonstration is over and we can 
adapt another unit like this? Maybe not in the Marine Corps, 
but another unit like this?
    General Oster. As you know, this is one of the things that 
came out of the commandant's planning guide. As we looked over 
the horizon of the requirements there, there wasn't an incident 
response capability out there. So we set about to do that. It 
was really an idea that went rapidly from concept to 
deployment. We deployed it first to Atlanta, even before we 
came up here.
    We have always believed that with the reach-back 
capability, the small amount of gear, and the rapid time lines 
for deployment, that we can deploy in a very rapid time in the 
United States. We considered the aspect of adding additional 
forces, additional units, but as of now, we have not decided to 
do that.
    Mr. Murtha. How about if we prepositioned equipment?
    General Oster. Certainly, if we preposition equipment in 
other locations, that would make life an awful lot simpler.
    Mr. Murtha. They tell me the biological response time is 4 
hours. If you have a contamination, you have to respond within 
4 hours. I think they are based at Camp Lejune to hustle them 
together and get them any place in the West Coast would take a 
lot longer obviously.
    General Oster. Clearly, it is a concern with regard to the 
response. We feel especially proud we have this capability out 
there right now.
    Mr. Douglass. Mr. Murtha, I might add to that. I think that 
the fact that the Marines have that capability is testimony to 
General Krulak's leadership and the support by you and others 
on this Committee. I think the issue begins to go beyond the 
Marines, though, in the sense that we probably should look at 
that more widely across the Services.
    One of the concerns that I have heard General Krulak 
express when he and I have testified together is that if he has 
to deploy that overseas, let's say we had another DESERT STORM, 
and then we had a terrorist event back here, we would be in a 
pickle. We couldn't do things like move it down to the 
Olympics.
    Mr. Murtha. I wish you would take a look at it and see if 
we couldn't come up with a plan to cover an emergency, once you 
get it up to a point where you think it is working.
    One other thing I would like to mention. The Chairman 
mentioned a couple Members wrote letters about releasing money. 
I am not sure, Mr. Secretary, and both of you realize how 
difficult it is for us to put a bill together. I mean, we don't 
take these requests lightly.
    When a Member comes to this Committee and makes a request, 
we turn down probably, what, three for every one.
    We put a bill together and there is nobody better at it 
than us. We do as good a job as anybody. But then it gets stuck 
because in your shop down there, both Republicans and Democrats 
tell me we got problems getting stuff broken loose, because 
some administrator is making a decision that this is not 
important.
    Well, let me tell you, to get the bill through is 
important, and to get the overall bill through is important. 
And I hope you will consider that as you go through this 
process. It is a matter of opinion whether some of these things 
are important or not important. And the Members are careful, 
considerate, and usually have good recommendations. If they 
aren't, we throw them out. So I would hope----
    Mr. Douglass. Mr. Murtha, I couldn't agree with you more. 
As you know, I spent 4 years working for Senator Nunn over on 
the Senate side. I know how hard we struggled and I know what a 
conference is and I know how the Members end up over here at 
9:00, 10:00, 11 o'clock at night trying to hammer out these 
deals.
    Just suffice it to say that it is not stuck in my shop. 
Where these things get stuck are in the Comptroller's shops. 
They have a job to do. We have to recognize that they have to 
worry about how we are going to pay for Bosnia, and this, that 
and the other possible contingencies.
    One of the problems we are looking at in the building today 
is that year after year, what we find is in order to pay for 
today's operational problems, we borrow from tomorrow's 
modernization dollars. Often the first place they look, let us 
all face it and be honest about it, over there in that 
building, if it was added by the Congress and it hasn't been 
thought up over there in the building that is the first place 
they look when they have to cut.
    I guess that is human nature. I don't know. So I agree with 
you.
    Mr. Murtha. That is a real mistake, Mr. Secretary, because 
so many of the programs we have added have absolutely turned 
out to be beneficial. The V-22 is a perfect example. You folks 
wanted to kill it, and it went straight from the Secretary 
right down. And this Committee right here with Bill Young in 
the forefront trying to save the V-22.
    Mr. Douglass. Mr. Murtha, I agree with you. I argued that 
to the best of my ability within the constraints of my office 
and there is no better example than some of the things that you 
have brought up. I can think of others.
    Mr. Murtha. The sealift transport ships, just on and on and 
on. CEC. We have been around a couple of years. It is not as 
though we haven't been around. And Manufacturing Technology, 
you zeroed MANTECH out. MANTECH is a program that saves us 
money, for heaven's sake. That is frustrating.
    Mr. Douglass. I think the young man sitting next to you 
rocking in his chair will tell you that I have bent my pick 
trying to get MANTECH funded. It is another one we are going to 
take a tough look at.
    Mr. Murtha. Okay, thank you.
    Mr. Young. I just wanted to comment that I am sure the 
Florida Gators want to figure out how to solve a lot of these 
problems.
    Mr. Douglass. I sometimes feel like an old alligator 
arguing some of these.
    Mr. Young. At least you have a tough hide.
    Mr. Douglass. We can always remember who has a tough hide.
    Mr. Young. Mr. Cunningham.
    Mr. Cunningham. Thank you.
    I am not concerned that the Secretary was not enlightened 
because he was appointed by the President of another party. Not 
only is he a Gator, but he is Air Force.
    Mr. Douglass. Sir, I was in the Navy before I was in the 
Air Force. My dad was a Chief Petty Officer, and I am proud of 
it.

                    GROUND PROXIMITY WARNING SYSTEM

    Mr. Cunningham. I know that. And I would say that having 
worked with Secretary Douglass, I would be proud to serve with 
him because of the work that we have done.
    And if you could, you know, make Duncan Hunter happy, you 
have done a lot. And the Secretary is accessible, and if 
everybody in the President's administration was as 
straightforward, nonpolitical, get to the question and the 
problem, as the Secretary, we would be much better off in this 
organization. I want to thank you.
    I have a program I would like to raise. The Ground 
Proximity Warning System for Cargo and Troop-Carrying 
Airplanes, we put about $2 million in that program last year. 
Do you still consider that a viable system that is going to 
save aircraft and lives, and if so, do you have any plans to 
put it on other assets for Marine Corps or Navy? If you don't, 
you can provide that for the record.
    Mr. Douglass. I would have to provide that for the record. 
I think the answer is yes, but I really don't know.
    [The information follows:]

    Ground Proximity Warning is an important capability to the 
Navy and Marine Corps. To illustrate its potential, analysis of 
CH-53E Controlled Flight Into Terrain (CFIT) mishaps over the 
last 10 years shows that a Ground Proximity Warning System 
(GPWS) would have provided a warning in 75% of these accidents. 
The CH-53E has lost an average of 0.4 aircraft and 1.4 lives 
each year due to CFIT. Implementation of the GPWS into the CH-
53E would have had the potential to save 3 aircraft and 14 
lives over the last 10 years.
    The Navy and Marine Corps will complete the development and 
integration of a GPWS in fiscal year 1997 using the $2 million 
appropriated last year. Installations into CH-53E, CH-53D, MH-
53E, CH-46E, CH-46D, UH-46D, and MH-46D will begin in fiscal 
year 1998. Additionally, the Navy is defining requirements for 
the potential installation of GPWS into the H-60 and UH-1 
platforms.

                          PRIVATE/PUBLIC YARDS

    Mr. Cunningham. The second thing, Mr. Secretary, we have 
been working on the issues of Bosnia funding, its impact on 
ship repair and the private versus public yards. This is very 
important to San Diego and the West Coast and the Nation for 
national security. The supplemental now looks like it will 
include, as I hear, Mr. Chairman, a disaster supplemental tied 
into it.
    Are there plans to take the money from the supplemental and 
give back the ships that we have lost in the private yards, or 
are they going to take the money they have already stolen from 
you, plus the supplemental, and apply it to Bosnia? Can we 
expect some of those ship repairs which were scheduled for 
private shipyards to come back our way?
    Mr. Douglass. I am not sure I fully can predict the outcome 
of that, but let me say this----
    Mr. Cunningham. Say it this way, would you fight for that?
    Mr. Douglass. Yes, sir. You know that I came over to talk 
to you, Congressman Hunter, and Congressman Filner about this 
issue. And we tried to work out an agreement, which is that we 
can get as much of this backlog that is done in those private 
yards as possible. We have made a commitment to you for a 
certain amount for the San Diego area, and I am going to fight 
like a tiger for that money.
    I would also say that I am busy trying to make sure that we 
balance the work load in our public yards so that we don't have 
to keep moving people around. I know that is an irritant for 
all of us, and I am going to do the best I can to stay on top 
of that.

                           BUDGET PROJECTIONS

    Mr. Cunningham. Mr. Secretary, knowing how professional you 
are in the job, one of the things I think we all ought to be 
concerned about is solving the problem. We look at things like 
affordability. We don't have the dollars to do it. The 
President proposes to cut $4.8 billion out of the defense 
budget, so we don't have the money to do the things we really 
need to do.
    The Bosnia money, I am not naive. I would bet my house 
against yours, and I have got a pretty nice one, that we are 
going to go through another conflict in the next 4 years and we 
will have to pay for it just like that. I believe it is 
unrealistic and the chart you put up there that showed in the 
year 2002 where our modernization takes place. Remember last 
year when General Shalikashvili and all the Joints Chiefs put 
their careers at risk by saying that $60 billion is what we 
need for procurement, and the President said no, $35 billion.
    Well, something you ought to be really concerned about, Mr. 
Secretary, is the President's balanced budget cuts 98 percent 
of its domestic spending during the last 2 years. And I don't 
think logically there is any way that those who want to put the 
money in social spending are going to allow us to make those 
increases in national security spending. I mean, it is just not 
logical.
    You know the smoke and mirrors that goes on around here, 
but it is something we ought to be taking a look at. If I would 
have had my way, I got here just as Dick Cheney cancelled the 
fighter the Chairman was talking about in the last hearing, and 
I disagreed with it.
    But my intent was to increase the dollars for the F-14, F-
14D. I went against McDonnell Douglas on this one. We got the 
F-18 after I pushed a personal check, like I did with my house, 
and said hey, it is going to cost us more than the $2 billion 
in R&D, for the F/A-18 effort and we only get 15 percent more 
in range. The radar won't see as far as the SU-27s radar, it 
won't even see as far as the AA-10 or AA-11 missile we will go 
up against. But we have to buy that airplane, and to fill our 
decks, and I support that.
    But in doing that, in looking at the out-year dollars, I 
would also support the increasing procurement of the V-22 to 
36. Here is an article that showed the value of a higher 
procurement rate. It is one of the best articles to make the 
case. It is written by Major General John Rhodes. And if you 
don't have this, I will provide you copies and submit it for 
the record.
    I didn't provide copies in the last hearing, but the 
article makes a really good case and us well written. I will 
give you copies. Talks about an operation which took something 
like 87 hours for a helicopter to go in, fly 480 miles, refuel 
twice, put them in daylight risk. While it only took 7 hours in 
the V-22. with lower risk.
    But with straight-line funding, we are faced with having to 
build three versions of the JSF, three completely different 
ones. The R&D cost for those, in the low-procurement numbers 
that are projected, are astronomical. If you want to save 
money, give us a flat-line procurement, we don't have to bring 
on and lay off workers. We have some idea of the spare parts 
needed and those sorts of things, which we never seem to do 
that.
    These are things we can really do together. But the V-22, I 
would increase the procurement rate, if it were up to me. I 
don't know if we can or not. But last year, you said we cut 
things that Congress added. But we also put in things that you 
really needed, that you were short.
    When the Secretary stood up and said everything is rosy, we 
found out the Marine Corps has AV-8Bs that are falling out of 
the sky. 50 percent of them have a interim fix because the 
Department doesn't have the money in order to truly repair 
them. So these are life-and-death questions, and I would hope 
that you would support us for the adds that we put in. And I 
know you do for the supplemental, Mr. Secretary, and the 
Admiral and General here.
    But I have some real concern because we push everything 
into the out-years. Since I have been here, when Les Aspin was 
sitting in the Chair for National Security, everything was 
going to the out-years and we were always going to do it later. 
We are not going to be able to do that, sir, realistically.
    Mr. Douglass. We understand your concerns, Mr. Cunningham, 
and we appreciate your support and we will do everything we can 
to work with you.
    One thing you said that I particularly agree with is this 
interwar period. I think people who think that there is no 
conflict going to come for the next 30, 40 years, or something 
like that, just haven't read the history books.
    We can't predict how these things develop. But if you look 
at the history of our country--and I am pretty proud of the 
fact that I read history pretty avidly and really stay on top 
of it--we all know it is a dangerous world and it is cyclic. 
One of the challenges we have, all of us, those on this 
Committee, and the people appointed by the President to take 
care of things for the Administration, is to stretch these 
dollars as far as we can.
    Mr. Cunningham. I have a couple of questions for the record 
I would like to submit, and when I do, I will submit this for 
the record.
    Mr. Young. No objection, Mr. Cunningham.
    Thank you very much.
    [The article follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Young. Mr. Visclosky.

                   NEW ATTACK SUBMARINE PROGRAM COST

    Mr. Visclosky. Thank you, Mr. Chairman.
    Mr. Chairman, I also have a number of questions for the 
record, if I could have those submitted, I would appreciate 
that very much.
    Mr. Secretary, Admiral, General, I want to associate myself 
with the remarks made earlier by the Chairman and Mr. Murtha on 
the ship self defense systems. I think that there is a great 
importance that we ought to all attach to that, and I would 
want to associate my remarks with them.
    I would like to talk to you about the submarine program, if 
I could, and now that the administration has decided to do a 
teaming arrangement between Electric Boat and Newport News, I 
am wondering if you could compare for me the total program 
costs today for that original 30-boat program compared to what 
it would have looked like with the sole source.
    Mr. Douglass. The original program which was made some 
years ago is some $60-plus billion program, Mr. Visclosky. The 
part that we of course struggle with, is the front end of the 
program, how are you going to build the first four or five 
boats? And as you know, the Navy's original plan was to select 
Electric Boat as the designer and builder. We were going to 
build submarines there and carriers down at Newport News.
    For several years now, the Congress has not only urged us, 
but written it into the law that we would have a competition 
between the two yards. That competition added, depending on 
whether you are conservative or liberal with your figures, 
between $3 and $6 billion cost to the program. We figured it 
was around $3 billion, the GAO figured it was closer to $6 
billion.
    Those costs were because instead of building one boat in 
one facility with one design, you were going to have two basic 
design teams, two learning curves, smaller quantity buys for 
the initial procurement of the materials and so forth. We were 
never able to fully come to grips with that extra cost of that 
competitive program, and last year we brought forward a 
recommendation to the Congress that committed us to try to do 
this competition, but did not have the money for all of the 
boats, those first four boats.
    In the time that has gone by since our last round of 
hearings on the Hill, the shipbuilders came into us and said 
look, it would be to everyone's advantage to allow us to team 
to build the New Attack Submarine. With regard to teaming, 
there is another example, Mr. Chairman, of something that was 
added by the Congress that we very much appreciate and turned 
out to be fortuitous for us. Congress added a new submarine 
large scale research vehicle for us, and the Congress allowed 
us to get these two shipyards to team on this research vehicle. 
It is a miniaturized submarine that we can use, to try on 
various new techniqies.
    Their teaming on that research vehicle went so well that 
they came to us and made proposals to me and my staff that they 
would be willing to team on the overall program on the first 
four boats, provided that we could: A. Obtain Congressional 
approval of their teaming concept, and B. That we could buy the 
first four boats in a block buy.
    Now, that has not been done before, and there is some risk 
associated with that. We looked at it very carefully. My staff 
has estimated that the savings in that program, not from this 
competitive program but from what we had in the budget, was 
going to be in the neighborhood of $450 to $600 million. That 
is a lot of money that I can spend on other things. So I 
recommended that proposal to the Secretary of the Navy, the 
Secretary recommended it to the Secretary of Defense, he 
recommend it to the President, and now all of us are 
recommending to the Congress that we change the law and allow 
us to move from a competitive program, which we never had the 
money to fund, to one of teaming.
    The bottom line of all of this is that we think the 
ultimate total cost for all those 30 ships under this approach 
will probably fall. But the reason why I have not given you a 
30-ship number for teaming versus a 30-ship number for 
competition, was that we never developed that 30-ship number 
for competition. We never extrapolated it all out.
    But I can tell you competition was at least $3 to $6 
billion more expensive on just the first four boats alone. 
Further, more and this is an important point, there was never a 
point where you could say, let's have a real competition, in 
the sense that we might have on an airplane. Where there are 
big quantities, and you can give so many to one company and so 
many to the other. For years and years, we were only going to 
be building one boat a year. So it meant every year one yard 
would get one, and another the other, unless you simply wanted 
to say we will just go down to one builder. First, we didn't 
think that was politically viable. Secondly, what would you do 
with the boats built by the loser who is now out of the 
submarine business? We would have what we refer to as orphan 
boats, and very expensive orphan boats. So for all of those 
reasons teaming began to look better and better for us, and 
that is what we have proposed to the Congress.
    Mr. Visclosky. Mr. Secretary, I have been on sabbatical for 
the last two years on this issue, but my recollection is one of 
the Committee's concerns two years ago, if not before that, was 
that there would be room in your budget over the years for the 
procurement on an annualized basis of a regular number of new 
attack submarines. You indicated here that the estimate for 
those 30 boats was $60 billion. And then you mentioned----
    Mr. Douglass. Approximately.
    Mr. Visclosky. Approximately.
    Mr. Douglass. Yes, sir.
    Mr. Visclosky. And then that the increased cost was $3 to 
$6 billion. That is not over the $60 billion, as I understand 
your answer, that is over the first four boats.
    Mr. Douglass. But it would have been added to the $60 
billion. We just never calculated it all the way out.
    Mr. Visclosky. Now, I don't understand your answer. Are you 
saying----
    Mr. Douglass. Let's say it was $60 billion, just for 
hypothetical purposes.
    Mr. Visclosky. For 30 boats.
    Mr. Douglass. It would have gone up to somewhere between 
$63 and $66 billion.
    Mr. Visclosky. With the single yard?
    Mr. Douglass. No, no, with the competition. There was all 
this extra cost at the beginning of the program. We saw no way 
of recapturing it back.
    Mr. Visclosky. Okay. So the $3 to $6 billion would be the 
additional costs because of the partnering, spread over the 
course of the 30-boat contract, that additional cost being 
attributed to the up-front cost of testing the theory of the 
partnering?
    Mr. Douglass. Not partnering. That was the extra cost for 
competition. Partnering allowed us to reduce the cost not back 
to what it would be as a sole-source producer, but 
substantially less than what it would be to have two yards 
competing with each other, two design teams, two different 
learning curves, et cetera.
    Mr. Visclosky. Okay. So because of the competition today, 
all of the things being equal, the costs for a 30-boat run 
would be, ballpark, $63 to $66 billion.
    Mr. Douglass. Yes, sir.
    Mr. Visclosky. You mentioned savings of $450 to $600 
million. Is that because of the partnering, and is that 
attributable only to the first four boats or over the 30 boats?
    Mr. Douglass. No, that is over just the first four boats, 
and it is attributable to teaming and it is a fairly 
conservative figure.

                               UNIT COSTS

    Mr. Visclosky. What do you anticipate the unit costs of the 
first four boats to be?
    Mr. Douglass. I don't have an average figure, but let me 
give you a figure that deals with the fifth boat, if I could. 
It is pretty close to that. Let me see if I have it here in my 
notes somewhere. Because I asked that same question of my staff 
early this morning, and I do have it somewhere.
    We had a metric that the Congress asked for in a similar 
line of questioning that you are putting forward. And they 
said: Tell us what you think the fifth boat would be under 
these various ways. And if you did it sole source, just one 
yard, original plan, back to Electric Boat, that fifth boat was 
going to cost about $1.55 billion. Doing it in a competition, 
the price of that boat went up to about $1.8 billion. By 
teaming, we can get the price back down to $1.65 billion for 
that boat.
    Mr. Visclosky. Okay.
    Mr. Douglass. Those are fairly rough, sir.

                           CONTRACT STRATEGY

    Mr. Visclosky. The next question I have, as I understand 
it, the contract for these first four is going to be a 
multiyear contract and is not for advanced procurement. These 
are actual construction dollars.
    Mr. Douglass. Yes, sir, we are asking for authority to 
build the first four boats in one contract. I would point out 
that some people sort of opened their eyes and said: Oh, this 
has never been done before. That is not true. It is done all 
the time.
    The only thing is we don't usually do it on submarines. We 
do it all the time on airplanes. On the B-2 program, we bought 
the first six B-2s, which cost almost as much as a submarine, 
one big contract, that was a team between Northrop and Boeing 
where Northrup was the prime contractor.
    I have got other statistics here in my notes about how many 
F/A-18s we bought on the first contract, how many various other 
kinds of things we normally buy. We just don't normally buy 
ships that way. So one of the things we are trying to do----
    Mr. Visclosky. Your contract would be cost plus, I 
understand?
    Mr. Douglass. Yes, sir, like any development contract.
    Mr. Visclosky. My recollection, and I don't have any notes 
in front of me from two years ago, but that the $1.65 billion 
for the fifth ship, I assume today is higher than it was two 
years ago?
    Mr. Douglass. Well, as I said, two years ago the figure we 
had was based on a sole source.
    Mr. Visclosky. And then we have the competition and then we 
have the savings because--my point on this would be that I 
appreciate knowing of any ship contract where the costs came in 
under what we thought they were at the beginning of a program.
    Mr. Douglass. I could supply that for the record. There are 
some, you might be surprised to know that, but there are some.
    Mr. Visclosky. My concern, to be honest with you here, is 
we are starting a new shipbuilding program on a very 
sophisticated piece of equipment, multi-lot contract, cost 
plus. And I am very concerned on behalf of the Committee of the 
obligation we are going to find ourselves in with the 
tremendous pressure you face on your entire shipbuilding 
program.
    [The information follows:]

    From Fiscal Year 1971 through Fiscal Year 1995, 402 ships were 
authorized at an original Navy budget request of $173.4 billion. These 
ships have been and will be delivered to the Fleet at a final budget 
cost projection of $169.5 billion (2.3 percent variance).
    The Naval ship acquisition and industrial construction process is 
one of the most challenging and successful joint government and 
industry endeavors. We have consistently delivered high quality ships 
to the fleet within our estimated costs. Competitive forces have 
influenced industry prices but in general the final cost outcome has 
been predictable. Many hardware components of a ship cost more and take 
longer to build than other weapon systems. Subsystem software, testing, 
and infrastructure support costs are higher. Long production cycles 
require long-range forecasting for productivity, industrial workload, 
overhead structure and industrial base. Long production cycles for the 
ship platform creates cost risk associated with technology changes and 
obsolescence of ship components and weapons systems.
    The cost of a ship evolves on a constant basis from the time of 
award until its delivery. The change is driven by a wide range of 
factors, including engineering changes inserted into the ship design 
after award to more effectively respond to desired changes in war 
fighting capability, or to implement changes in the desired number of 
hulls or ship construction profile, as well as other factors, such as 
changes in the inflation rate between contract award and ship 
completion. As a result, the initial estimate of ship cost at the 
``beginning of a program'' is not a very good metric. Point estimates 
of a ship's estimated cost are done two to five years in advance of the 
actual construction contract award. These estimates constantly evolve 
to account for changes in proposed ship design and market conditions. A 
more valuable metric is to examine the variability between Navy ship 
cost estimates versus actual construction costs over a long period of 
time.
    The Navy has done an exceptionally credible job of accurately 
estimating the total costs of ship programs over the past 15 years. The 
Navy has also institutionalized an aggressive policy of both 
controlling costs and improving cost estimating procedures. Based on 
these factors, we have high confidence in our ability to accurately 
estimate ship construction costs in the Five Year Defense Plan.

                        INDUSTRIAL BASE CONCERNS

    Mr. Douglass. If I might add, there is another factor here 
that I think is important for the Congress to take into 
consideration. I don't think you were here when I showed the 
ship production that our country has proposed for the next 6 
years--the lowest levels since the 1970s.
    There are six big private yards that can build ships for 
our Navy. I cannot keep all of those yards viable with four or 
five ships a year. So what we are going to see, unless I am 
able to get some legislation through the Congress that will 
open up American shipbuilding to the world commercial 
shipbuilding market to help us build more ships for our own 
domestic and commercial shipbuilding, is some form of collapse 
of our shipbuilding industry.
    Now, we have to ask ourselves do we, as the greatest 
maritime nation in the world, want to sustain this industrial 
base? The Navy came up with a sustainment plan, and it was to 
build the New Attack Submarine at one builder, and the Congress 
said no, no, you are not going to do that, you have to have two 
builders.
    All I am saying is if we are going to keep two builders in 
business, the best way is to have those builders team rather 
than through a competitive situation that is much more 
expensive than a teaming arrangement. We recognize and agree 
with you that there are significant challenges for the long-
term controlling costs on these programs, but I am pretty proud 
of our record in recent years in getting costs under control on 
all of our programs.
    We are paying off a few bills from 4 or 5 years ago on our 
Roll-on/Roll-off RO-RO sealift ships, but other than that, all 
our airplane, ships, across the board, are not overrunning. The 
Navy acquisition team working with our war-fighters has done a 
tremendous job.
    It is not my job alone. I am just the leader of the 149,600 
people in the Navy acquisition commands. But we have done a 
tremendous job of holding the line as numbers have gone out of 
the building programs, and so on, to keep these programs from 
overrunning.
    I share your concern, sir, but all I am saying to you is 
that I can save between $450 and $600 million on those first 
four boats, and also get technology into those boats much 
quicker. Because those submarine yards are not going to share 
their best technology with each other if ultimately they think 
we are going to pull the rug out from under one of them in some 
form of competition. Then we have the problem of orphan boats, 
what do we do with the loser's boats, the two or four, or 
whatever they built during the competition?
    Mr. Visclosky. Are you saying those yards collapse because 
they don't have the capacity, or don't have the business?
    Mr. Douglass. No, we don't have the business for them.
    Mr. Visclosky. Thank you, Mr. Chairman.

                         MULTIYEAR CONTRACTING

    Mr. Young. Mr. Douglass, the questions that Mr. Visclosky 
raised on the submarine, I realize that was a tough issue. We 
dealt with that last year, if you recall, trying to figure out 
how to handle that issue and keep both yards viable, and Mr. 
Visclosky asked some important questions relative to the 
submarine contract.
    I want to come back to the issue of the multiyear contract 
for the first four items off of a production line. And you said 
that has been done before. I have asked around the table here 
with the staff, and nobody remembers when that was done before.
    Mr. Douglass. Not on ships has it been done, not that I 
know of. It has been done on other complex programs like 
airplanes and other projects.
    Mr. Young. The first item?
    Mr. Douglass. Sure.
    Mr. Young. Give us some examples of that, for the record.
    Mr. Douglass. I have a list of them here. I just didn't 
want to spend too much time on the issue.
    Mr. Young. Do that for us, and then go back to the fixed 
price versus the cost plus. If the contractors are getting the 
advantage of a multiyear contract, why do we also have to give 
them a cost-plus contract?
    Mr. Douglass. Well, one of the reasons that I think it is 
important to not rush too quickly, we are eventually going to 
get to fixed-price contracts on these. But again, I am choosing 
my words carefully here because I don't want to make anybody 
mad.
    There has not been consensus in the Congress on this issue. 
We have some Members, Mr. Chairman, who really are pushing us 
hard to put more technology into those boats, and we have upped 
our budget substantially. We have in the neighborhood, in 
addition to all the money, which is, as I recall, over $300 
million a year now for research on the New Attack Submarine 
itself, we have about $100 million per year in the budget for 
submarine technology.
    Now, we want to take that technology, the results of that, 
and insert it into our boats as quickly as we can, to improve 
the boats as we go along. And indeed, to further answer the 
Congressman, maintaining the submarine base is often thought to 
be maintaining the shipyard workers who can build submarines. 
That doesn't maintain the industrial base.
    You have to keep the engineers who design the submarines 
employed, or when it comes time for the next submarine you 
don't have anyone who knows how to design a submarine. So we 
are getting into an area where we have got to do preplanned 
product improvement. So on the one hand, we are being driven 
not to go down to one contractor, we are being driven to put as 
much technology into the boats as we can and to allocate boats 
in certain ways between these two builders. So we found sort of 
the middle ground, the best compromise that we have been able 
to work out is to get these yards to work together, to share 
their good ideas. Now they are willing to open up all their 
design secrets to each other and really team.
    Now, this is a lifetime team. So people have asked, are you 
just going to team on the first boats and have a competition? 
No. This is it.
    If the Congress gives approval to do this, these two yards 
for submarines are teamed for the life of this program. That 
means they have to share all their internal production secrets. 
We are going to build all the front ends in one place, and all 
the back ends in another place for example, so the members of 
the team concentrate on their part of the program, so we don't 
need two design teams for the back. We get down to one design 
team in each place.
    In order to do that, we have to give them some reasonable 
degree of stability, and that is why I have recommended those 
four boats be bought on a block contract buy. But frankly, as a 
person who has been in this business for 35 years, I don't see 
any difference between building the first four submarines on a 
class in this kind of arrangement as in some other big program, 
like bombers. I don't remember the number on B-1s. I was around 
in those days, but I have forgotten the number.
    I think on B-2s, we built the first six on a development 
contract. In the FA-18 program, we had 8 or 9 airplanes, all 
built on the first contract. These big aircraft programs or 
armor contracts are essentially teaming programs. They are not 
all built 100 percent at one place. They get together.
    In the case of the B-2, the wings are built by Boeing, 
Grumman builds the fuselage, somebody else the tail, and so on. 
We have got to take that idea, which has been very, very 
successful in our aerospace industry and we are still the best 
aerospace country in the world. We know how to build the best 
airplanes in the world. We need to get that expertise and how 
to do those things into our shipbuilding industry.
    Unfortunately, I am sad to tell you that our shipbuilding 
industry is not the best in the world. They build the best 
warships in the world, but, you know, we are losing out on the 
commercial market. So somehow we have got to get those modern 
construction techniques and modern management techniques into 
the shipbuilding business or we are going to wake up some day 
and there will be some future Assistant Secretary of the Navy 
come before you with a radical idea of building a ship 
overseas, instead of here.
    All I am telling you is on my watch, Mr. Chairman, if there 
is anything I can do, work 24 hours a day, it isn't going to 
happen on my watch. I believe at the core of my soul that we 
need a maritime industrial base for this country. We are a 
great maritime nation. We need to build our warships, including 
our submarines, here at home. That is what I am trying to do, 
keep this industrial base viable so we can do that.
    Mr. Young. I think we can close on that thought, because I 
don't think you will find any disagreement from any Member of 
this Committee certainly, by any Member of Congress. We agree 
we have a great maritime nation and we must maintain our base, 
there is no doubt about that, our ability to build our own 
ships and submarines.
    Thank you very much for an interesting hearing. We will 
undoubtedly have additional questions, in fact, we have some, 
and ask that you respond in writing along with those that Mr. 
Cunningham and Mr. Visclosky asked for.
    The Committee will adjourn now until next Tuesday, March 
the 11th, when there will be an open hearing at 1:30 p.m., in 
2212 Rayburn, on the Fiscal Year 1998 Air Force Budget. The 
witnesses will be the Secretary of the Air Force, and the Air 
Force Chief of Staff, General Fogleman.
    Nothing further, the Committee is adjourned until then.

    [Clerk's note.--Questions submitted by Mr. Livingston and 
the answers thereto follow:]

                             LPD-17 Program

    Question. If additional funds were provided in Fiscal Year 1998 by 
Congress for the second LPD, would the Navy be able to execute the 
program or a contract in FY98 for this ship?
    Answer. The Navy would be able to execute the LPD 17 program if 
$739.3 million were provided in Fiscal Year 1998 for LPD 18. The 
current cost plus award fee contract structure provides for a lead ship 
and options for two follow ships with the phased combat system. The 
current budget structure provides for only a lead ship and one follow 
ship with the phased combat system, before beginning the fixed price 
incentive contract for the full combat system with Evolved Sea Sparrow 
Missile and Vertical Launch System. Consequently, the existing cost 
plus award fee option for the third ship, the first ship at the second 
yard, would not be exercised in the budget as now structured. 
Accelerating a follow ship into fiscal year 1998 also has a beneficial 
effect on the shipbuilding industrial base workload. The estimated cost 
of a fiscal year 1998 LPD 17 class ship reflecting option prices from 
the Full Service Contract is $739.3 million. A ship added in fiscal 
year 1998 would result in a reduction in total Shipbuilding and 
Conversion, Navy program costs of approximately $50 million.
    Question. In terms of unfunded requirements, is a second LPD ship 
of high, medium, or low military utility?
    Answer. The LPD 17 class ships have extremely high military value, 
because the national strategy of forward presence through naval 
expeditionary forces fundamentally depends on amphibious ships. The LPD 
17 class is urgently required to accomplish the critical replacement of 
the four aging and obsolescent classes in the Fleet that have been 
extensively and continually deployed in fulfilling national strategic 
objectives. Accordingly, the LPD 17 program will significantly improve 
readiness and provide warfighting capability that has extremely high 
military value in the national strategy.

                           LMSR Ship Program

    Question. The FY 1998 budget request includes $70 million for 
advance procurement of the last Large, Medium Speed, Roll-On/Roll-Off 
(LMSR) ship in 1999. If Congress were to accelerate the last LMSR from 
FY99 to FY98, what would be the total funding requirement for this 
ship?
    Answer. The Fiscal Year 1998 President's Budget requests $70 
million for Advanced Procurement in Fiscal Year 1998 and $322 million 
in fiscal year 1999 for the final ship. In Fiscal Year 1998, $265 
million would be required to accelerate the Fiscal Year 1999 ship--this 
translates to $92 million in total program savings ($35 million 
reprogrammed in Fiscal Year 1997 and $2 million in Fiscal Year 1999).
    Question. Would the Navy be able to execute a contract for this 
ship in FY1998 if additional funds were provided by Congress?
    Answer. If funds in the amount of $265 million above the 
President's Budget Request of $812.9 million were provided by Congress 
in Fiscal Year 1998, the Navy would be able to execute the contract 
option to procure the nineteenth and final Sealift ship. In April, the 
Navy ran a limited competition for the last 2 LMSRs. On May 23, 1997, 
NASSCO was awarded the third Fiscal Year 1997 ship. An option for the 
remaining Fiscal Year 1999 ship was established on the Avondale 
contract with an Advanced Procurement option for long lead time 
material in Fiscal Year 1998.
    Question. What is the Navy's current plans for the award of the 
last two LMSRs?
    Answer. In April, the Navy ran a limited competition for the last 
two LMSRs. On May 23, 1997, NASSCO was awarded the third Fiscal Year 
1997 ship. An option for the remaining Fiscal Year 1999 ship was 
established on the Avondale contract with an Advanced Procurement 
option for long lead time material in Fiscal Year 1998.
    Question. What are the Navy's plan for the construction of the 
extra LMSR funded in the Fiscal Year 1997 DOD Appropriations bill? When 
will an award be made?
    Answer. The Navy plans for the construction of the third Fiscal 
Year 1997 LMSR to be completed by NASSCO. The award was made May 23, 
1997.
    Question. If Congress provided additional funding in Fiscal Year 
1998, what is a higher priority for the Navy, accelerating the last 
LMSR or a second LPD?
    Answer. Assuming that the last LMSR remains in Fiscal Year 1999, 
the LPD 18 would be a higher priority, since the current program meets 
strategic mobility requirements for Fiscal Year 2001.

                          ADC(X) Ship Program

    Question. Last year's budget submission funded the first ship of 
the ADC(X) class in Fiscal Year 2000. This year's submission does not 
include the ADC(X) in Fiscal Year 2000 or any outyear. Is there still a 
requirement for the ADC(X) ship?
    Answer. There is still a requirement for ADC(X). While there is no 
Fiscal Year 2000 ADC(X) reflected in this year's budget submission, the 
Secretary of Defense Guidance directs the Navy to explore Charter and 
Build as a procurement alternative for ADC(X).
    Question. If so, what is the current time frame for this class of 
ships?
    Answer. If the Navy is allowed to lease these vessels through a 
Charter and Build approach, the current projections for ADC(X) are:
          --Contract awards for design & construction commencing in 
        Fiscal Year 2000.
          --Two new ships would commence construction each year through 
        Fiscal Year 2005.
          --Ship deliveries would commence in late Fiscal Year 2003.
          --Two ships would deliver each year through Fiscal Year 2008.

                                            ADC(X) Delivery Schedule
----------------------------------------------------------------------------------------------------------------
                   Fiscal year                      2000   2001   2002   2003   2004   2005   2006   2007   2008
----------------------------------------------------------------------------------------------------------------
Contact..........................................      2      2      2      2      2      2  .....  .....  .....
Deliver..........................................  .....  .....  .....      2      2      2      2      2      2
----------------------------------------------------------------------------------------------------------------

    Question. How many ships are planned for this class and what is the 
current price estimate for one of these ships?
    Answer. Ten to twelve ships are currently planned at an estimated 
average ship cost between $300 and $400 million.
    Question. Describe the current characteristics and capabilities of 
this class of ships. How will this ship be classified in terms of 
military specifications?
    Answer. The purpose of ADC(X) is to replace the current capability 
of the T-AE 26, T-AFS 1, T-AFS 8 and AOE 1 Class ships. ADC(X) will 
provide logistic lift from sources of supply such as friendly ports, or 
at sea from specially equipped Ready Reserve Force merchant ships by 
consolidation, and will transfer this cargo (ammunition; food; limited 
amounts of petroleum, oil and lubricants (POL); repair parts; and 
expendable supplies and material) at sea to station ships and other 
ships operating with naval forces. ADC(X) may be required to act in 
concert with a T-AO Class ship as an equivalent station ship. The 
ADC(X) is intended to operate independently underway, but could be 
escorted by Navy combatants when required for protection. The ADC(X) 
will be built to commercial standards and will have few, if any, 
military specifications.
    Question. Is the Navy considering a ``build and charter'' approach 
to the ADC(X)? If so, how would it work?
    Answer. Yes, the Navy is considering a ``build and charter'' 
approach. The Navy would sign agreements to charter the vessels with 
commercial entities, who would then design and construct the vessels to 
meet the Navy's requirements. The Navy would then make lease payments 
to the owners upon delivery of the vessels. The Navy's preferred 
``build and charter'' approach would be a bareboat charter where the 
Navy would lease the asset from a commercial entity and operate it as a 
public vessel. Crewing would be provided by the Military Sealift 
Command (MSC) with civilian mariners.
    Question. Would the Navy contract with an operator as opposed to a 
shipyard?
    Answer. The contract could be with either an operator or a 
shipyard. Charter arrangements are normally made through an owner. This 
owner could be an operator, a shipyard, or another type of company with 
marine interests.
    Question. Does the Navy currently have the authority to proceed 
with such a procurement approach? What changes in current law are 
required?
    Answer. OMB has established guidelines regarding leases of capital 
assets. Depending on how OMB evaluates the proposed ADC(X) ``Build and 
Charter'' program structure, legislation may be required if the program 
is to be executed without the need for upfront Budget Authority and 
Appropriations. However, in order to enter into a long-term charter 
arrangement, statutory authority would be required. Specifically, the 
Navy would need authority to charter vessels for 25 years, allowance 
for termination liability to be held in reserve in current Navy O&M 
accounts, and view the hire as a cost of the Navy Working Capital Fund.
    Question. If Congress did not approve changes in law to allow a 
``build and charter'' approach, what are the Navy's back up plans for 
acquiring these ships?
    Answer. If Congress does not approve any changes that might be 
necessary to executive the building and chartering of ADC(X) vessels, 
the Navy will have to enter into costly Service Life Extension Programs 
for AOE-1s, AEs, and AFSs. If and when Budget Authority and 
Appropriations become available, the Navy will replace these aging 
vessels with ADC(X) ships.
    Question.What is the Navy's current or past experience with ``build 
and charter'' arrangements?
    Answer. The Navy successfully executed long-term vessel leases in 
the 1980s for the MPS and T-5 tanker programs. In addition, MSC 
frequently leases vessels on a short term basis for up to five years.
    Question. Has the Navy ever compared its financial experience in 
the build and charter arrangement for the MPF ships versus the cost of 
acquiring and operating these ships by the government? If so, what does 
this comparison show?
    Answer. Such an analysis was conducted prior to the procurement of 
the MPF ships. A similar financial analysis based on OMB guidelines is 
being conducted for the ADC(X) vessels.

                  LCAC Service Life Extension Program

    Question. The Committee understands that a ``basic'' SLEP phase to 
extend the service life of LCACs to 30 years and bring the craft up to 
a common configuration will be ready for implementation in 1998. 
However, this transition to production has not been programmed to start 
until 2000. If so this is a departure from the LCAC SLEP plan the Navy 
submitted to Congress in 1996. Why has the Navy elected not to start 
the ``basic'' SLEP effort in fiscal year 1998?
    Answer. On October 7, 1996, the Secretary of the Navy informed the 
Honorable Bob Livingston, of the House of Representatives, that funding 
limitations precluded commencement of the SLEP program in fiscal year 
1998 and fiscal year 1999, and that Navy requirements could be 
satisfied by commencing the program in fiscal year 2000.
    Question. If Congress were to provide the additional funds for this 
effort, what would be required to restore this program to the original 
schedule so that it can begin in FY 1998?
    Answer. The funding profile required would be ($M): fiscal year 
1998, $24.1; fiscal year 1999, $24.7; Total, $48.8.
    These amounts include the required integrated logistics, interim 
support of equipment, technical trainer upgrades, government furnished 
equipment in support of SLEP, and Department of the Navy engineering 
services support in areas of testing, configuration management, 
technical support and craft scheduling and transportation.

                        CVN-77 Aircraft Carrier

    Question. It has been reported that changes in the method of 
construction of the CVN 77 could reduce the cost of this ship by as 
much as $600 million. What changes have the potential to reduce 
acquisition costs of one ship by this amount?
    Answer. Newport News Shipbuilding (NNS) has proposed a ``Smart 
Buy'' approach for CVN 77 that would optimize the aircraft carrier 
industrial base and improve CVN 77 affordability. NNS proposes to 
accelerate the purchase of selected components and materials, detailed 
design work, and construction of low risk hull sections/modules on CVN 
77. These efforts would begin in Fiscal Year 1998 instead of Fiscal 
Year 2002. The ship delivery date will be remain in Fiscal Year 2008. 
NNS claims its ``Smart Buy'' proposal will generate potential savings 
to the total ship cost of $600 million.
    More specifically, the NNS ``Smart Buy'' proposal would generate 
savings from three main areas:
          1. Early Construction of Low Risk Hull Sections/Modules: NNS 
        asserts that $300 million can be saved by starting the 
        construction of selected low risk hull sections/modules in 
        Fiscal Year 1999. This would maintain critical structural 
        trades (welders and shipfitters) across the dip in the manning 
        curve at NNS and would preclude it from having to incur costs 
        associated with the layoff, and subsequent rehiring and 
        retraining of workers between CVN 76 and CVN 77.
          2. Increase Advance Procurement Funding: NNS states that $150 
        million in savings can be obtained by purchasing additional 
        long lead time material and equipment starting Fiscal Year 
        1998, to take advantage of current contracts for CVNs 75 and 
        76. This would allow critical subcontractors to maintain their 
        production lines and keep costs down. This would be in addition 
        to the advance procurement of nuclear components currently 
        programmed in Fiscal Year 2000.
          3. Escalation Savings. NNS estimates substantial escalation 
        savings (approximately $150 million) could be realized under 
        its ``Smart Buy'' proposal.
    The Department of the Navy has reviewed the NNS ``Smart Buy'' 
proposal (which includes a $17 million RDT&E plus-up and a $345 million 
SCN plus-up in Fiscal Year 1998) to determine if it is feasible and 
would generate the proposed costs savings. The Navy believes the 
proposal is feasible and has merit, however, cost estimators from Naval 
Sea Systems Command, RAND and the Office of the Secretary of Defense/
Cost Analysis Improvement Group (OSD/CAIG) have reviewed the estimates 
and the consensus is that the savings would be closer to $400 million. 
Early construction/workforce savings are expected to be $220 million, 
the advanced procurement savings $120 million, and escalation savings 
$60 million.
    Additionally, RAND has studied the cost impacts of accelerating or 
delaying the start of construction of CVN 77 and various build periods 
as part of its overall aircraft carrier industrial base study. They 
concluded that significant savings, on the order which NNS asserts, can 
be generated by starting construction of CVN 77 in Fiscal Year 2000 
while holding the delivery date of the ship in Fiscal Year 2008.

                      Shipbuilding Industrial Base

    Question. What is the Navy's assessment of the financial health of 
the shipbuilding industrial base?
    Answer. The major shipyards which build new Navy ships are healthy 
enough today to compete for and win major U.S. Navy shipbuilding 
contracts. The Navy conducts periodic reviews of the financial health 
of individual shipbuilding companies and also conducts more detailed 
reviews when a major shipbuilding contract is pending. Awards are not 
made to financially troubled shipyards, if the Navy determines that 
they lack the financial resources to complete the contract under 
consideration. An assessment of the financial health of the industry 
over future years will be part of the ongoing joint Department of 
Defense and Navy Shipbuilding Industrial Base Study.
    Question. What steps could be taken by the Navy to improve this 
health?
    Answer. All of the shipyards which conduct the bulk of their 
business with the Navy are facing downturns, or, at best, no growth in 
future Navy business prospects, as the last of the ships ordered in the 
waning days of the Cold War are completed. This has prompted the Navy 
to emphasize the potential for growth in the industry through expanded 
commercial and foreign military sales. As a result of a significant 
amount of work by the Congress and the Maritime Administration over the 
past several years, some new commercial work has begun in shipyards 
that had not recently built for the international commercial market. In 
addition, American shipyards are bidding on, and winning, international 
combatant shipbuilding contracts. While entering these new, highly 
competitive markets may place some shipyards under short term financial 
stress, the long term benefits of increased market access, increased 
diversification, and improved competitive pressures may help the long 
term financial health of the individual companies involved in these 
projects.
    In order to assess how the Department of Defense should address 
these and related issues in the industry, The Office of the Secretary 
of Defense and the Navy are conducting a joint study of the 
shipbuilding industry. This study is a follow-on to the work done 
during the Quadrennial Defense Review. One portion of this study will 
include an assessment of the financial health of the industry. A 
strength of this study is the emphasis on early information input by 
U.S. shipyards. This should increase the veracity of the results within 
the Department of Defense, with the Congress, and, most importantly, 
within the American shipbuilding industry.
    Question. What is the Navy's current position on the NDF (National 
Defense Features) program as one method of maintaining the industrial 
base?
    Answer. The Navy supports a National Defense Features (NDF) program 
to provide an active complement to the successful inactive Ready 
Reserve Force (RRF) in time of mobilization. The follow-on surge 
sealift mission is accomplished today through ships in the RRF. 
Currently, a shortfall exists and is projected to continue through 
fiscal year 2001. NDF ships could be used to augment the RRF and 
possibly replace aging RRF assets in a more cost effective manner, 
thereby transitioning some RRF capacity to an active status. Congress 
provided $50 million of fiscal year 1996 funs for the National Defense 
Features program. The Navy has requested proposals and is currently 
evaluating them in anticipation of a late September 1997 contract 
award. Depending on the lessons learned from this effort, follow-on 
solicitations may be issued, if future funding is identified.

                         Deep Ocean Relocation

    Question. Why is the Deep Ocean a viable candidate for relocation 
of contaminated harbor and coastal sediments?
    Answer. The potential benefits of deep ocean disposal has been 
under discussion for over twenty years. Marine sediments are uniquely 
qualified for ocean disposal. By law, and for scientific reasons, they 
may be the only waste stream that should merit such consideration. The 
principal contaminants in marine sediments are likely to remain bound 
to the sediments as long as they remain in the marine environment. The 
deep ocean, in particular, offers the potential for long term, reliable 
isolation of relocated sediments. The deep ocean is a relatively benign 
environment, characterized by low currents, relatively few living 
organisms, is geologically stable, and not susceptible to inadvertent 
human intervention.
    Left in place, or disposed of in shallow water, which is the 
current accepted practice in harbors such as New York, Boston, San 
Francisco and other locations, contaminated sediments are currently 
subject to resuspension by natural disturbance and can propagate 
through the environment and potentially into the food web.
    Relocation to the deep ocean can provide a long term dredged 
disposal solution, however, the environmental benefits as well as the 
economic viability must be rigorously demonstrated.
    Question. Does the Navy have a role in solving the problem and, if 
so, why?
    Answer. Contaminated sediments are both a national and 
international problem. Long term solution of the problem must answer 
scientific, engineering, and regulatory questions that affect world-
wide commercial and naval operations. Like the Navy's contribution in 
the TWA recovery process, there is no single agency with a broad enough 
scope to address the complete problem. However, we believe the Navy 
with its deep ocean technical and operational experience, can 
contribute to assembling a government/industry team capable of 
grappling with the total problem and prototyping potential solutions. 
We believe our experience in demonstrating and validating complex 
military systems can be applied to rigorously quantifying the costs, 
risk, and benefits of deep ocean relocation of marine sediments.
    Finally, we also believe that solving the international problem of 
contaminated sediments, especially as it relates to international fresh 
food and water supplies, falls within the context of preventative 
defense and creative, confidence building international diplomacy in 
terms of working with our allies to enhance our peace-strengthening 
capabilities through increased attention to our common natural 
environment in the Post Cold War World.

    [Clerk's note.--End of questions submitted by Mr. 
Livingston. Questions submitted by Mr. Lewis and the answers 
thereto follow:]

                          F/A-18 E/F Aircraft

    Question. Secretary Douglass, I can't help but notice with 
admiration that the F/A-18E/F program has been a stellar performer in 
that it has been on schedule, under cost and under weight throughout 
its development. What are your thoughts relating to the consideration 
of a multi-year procurement of the F/A-18E/F?
    Answer. I have tasked the F/A-18E/F program office and the Hornet 
Industry Team to investigate the implementation of a multi-year 
contracting approach for procurement of the F/A-18E/F as early as full 
rate production. Once this Government-Industry team is able to assess 
appropriate timing, resources required, strategy, and commensurate 
savings, Department of Defense and the Navy will consider a prudent 
application of a multi-year approach, given that the F/A-18E/F weapon 
system design is sufficiently mature and stable, and there are 
sufficient cost savings to be garnered.

    [Clerk's note.--End of questions submitted by Mr. Lewis. 
Questions submitted by Mr. Nethercutt and the answers thereto 
follow:]

                         EA-6B Prowler Aircraft

    Question. This year the EA-6B will assume its role as the primary 
radar jamming aircraft in the Department of Defense. Last year, the 
Navy named EA-6B modernization as a priority unfunded item, and 
Congress added over $100 million for this purpose. I am disappointed to 
see, then, that the Navy's request for EA-6B modifications has slipped 
back to about $87 million. What modifications are funded in the budget, 
and what additional modifications would you like to fund this year to 
ensure that the EA-6B can adequately protect our nation's aviators?
    Answer. The President's Budget reflects EA-6B modernization with 
$32 million for upgrading eight Block 89 aircraft to the Block 89A 
configuration. Over the course of the Future Years Defense Plan, all 
EA-6B aircraft will be upgraded to the Block 89A configuration. $5 
million is planned for completion of the three year long safety of 
flight upgrade by finishing installation of the Electronic Flight 
Instrumentation System (EFIS). $33 million is planned for procurement 
of 103 Universal Exciter Upgrades, and $16 million for reliability 
improvements to the jammer hard back. The remainder of the Fiscal Year 
1998 funding request is for miscellaneous improvements to support 
equipment.
    Additional modernization upgrades not funded or fully funded 
include: Polarization fix to transmitters, Universal exciter upgrade, 
USO-113 communications jammer, Center Wing Sections, Overhead 
connectivity, and J52P408A engine blade containment efforts.

    [Clerk's note.--End of questions submitted by Mr. 
Nethercutt. Questions submitted by Mr. Cunningham and the 
answers thereto follow:]

                           F/A-18 E/F Program

    Question. What will be the total RDT&E costs associated with the F/
A-18E/F program?
    Answer. The following table presented in million of dollars, 
illustrates the F/A-18E/F program's total RDT&E cost as reflected in 
the Fiscal Year 1998/1999 President's Budget request:

                                                [In fiscal years]
----------------------------------------------------------------------------------------------------------------
                    1992-1995                      1996   1997   1998   1999   2000   2001   2002   2003   Total
----------------------------------------------------------------------------------------------------------------
3,836...........................................    803    343    268    129     61     55      6      6   5,507
----------------------------------------------------------------------------------------------------------------

    The above total cost is lower than the original program's total 
RDT&E estimate.
    Question. As you know, I have always been concerned with our 
ability to give our warfighters the air assets that they need. One of 
the toughest decisions that we will have to make over the next few 
years is how to most efficiently plan and fund the F/A-18E/F program 
and the Joint Strike Fighter (JSF) program. You currently plan to buy a 
total of 1000 Super Hornets for the Navy and the Marine Corps. When 
considering this program, has the Navy discussed or investigated the 
possibility of a multi-year procurement arrangement as a cost saving/
efficiency measure?
    Answer. Yes, the Navy is investigating the application of a multi-
year procurement strategy for the F/A-18E/F as early as full rate 
production. The F/A-18 program office has teamed with the Hornet 
Industry Team to develop a proposed multiyear approach which addresses 
appropriate timing, resources required, strategy, and commensurate 
savings. Upon completion of this study this effort, the Department of 
Defense and the Navy will consider a prudent application of a multiyear 
approach, given that the F/A-18E/F weapon system design is sufficiently 
mature and stable, and there are sufficient cost savings to be 
garnered.
    (Point of clarification: Current plans do not include procurement 
of F/A-18E/F aircraft for the Marine Corps. The current inventory 
requirement for the F/A-18E/F is a total quantity of 1000 for the Navy 
only, to replace the F/A-18C/Ds, F-14, and A-6E.)
    The Navy is investigating the feasibility of a multi-year 
procurement for the F/A-18E/F aircraft, and the potential benefits in 
cost and efficiency a properly funded and administered multi-year 
procurement could yield. Based on the F/A-18E/F's demonstrated 
performance, technical maturity, success in flight test and significant 
test hours accumulated to date, as well as the program's unprecedented 
success acquisition arena, this multi-year procurement could reasonably 
be initiated as early as the first lot of full rate production in 
Fiscal Year 2000. In addition to the potential cost avoidance through 
the term of a multi-year procurement, this could also favorably impact 
the industrial base. The relative stability afforded by a multi-year 
procurement allows our prime contractors (McDonnell Douglas in St. 
Louis, MO, and General Electric in Lynn, MA) to enter into long term 
agreements with suppliers which incentivize investment in process 
improvements and workforce training, yielding long term benefit in 
terms of product quality, cost, and improved competition.
    The Navy has been working with its industry partners, as well as 
the Department of Defense, to formulate a budget which reflects 
procurement of the first five lots of full rate production (222 
aircraft) into a multi-year, fixed price incentive fee contract. This 
proposal will be forwarded to the Department of Defense for final 
review and endorsement.

                    Advanced Self-Protection Jammer

    Question. Last year the Congress added $50 million for Advanced 
Self-Protection Jammer (ASPJ) procurement to support pilots flying in 
contingency operations such as Bosnia. I am told that the responses 
coming back on this technology from the operators in the field is 
excellent. I also understand that, with the limited number of these 
systems currently in the fleet, our operators are forced into a ``hand-
to-mouth'' situation. Are you satisfied with this type of operation 
with respect to such a promising pilot survivability asset; and would 
you support additional funding to buy more ASPJ systems?
    Answer. The ``hand-to-mouth'' situation, called crossdecking, 
always provides challenges and are a typical event in on station 
reliefs (at sea or ashore); ASPJ certainly is not the only system the 
Navy currently has to crossdeck. The Navy believes that the current 
number of systems (to include Fiscal Year 1997 plus-up systems) are 
sufficient given present deployment schedules and projections in 
support of contingency operations.

    [Clerk's note.--End of questions submitted by Mr. 
Cunningham. Questions submitted by Mr. Hefner and the answers 
thereto follow:]

                        P-3C Aircraft Update III

    Question. Secretary Douglass, there has been much discussion about 
the benefits of COTS and NDI equipment. It is clear that more and more 
benefits are being derived by all the services through the use of these 
commercial systems instead of using the old mil-specs for everything.
    Just the other day I learned of one instance where two companies 
independently developed a COTS NDI acoustic system which can be used 
for the P-3 upgrade. This product known as the ``rainbow system'' is 
currently being flight tested and I understand the results have been 
very impressive. Additionally the procurement cost and support cost are 
significantly less than mil-spec equipment. Mr. Secretary, the Navy 
should be commended for taking advantage of these opportunities when 
industry provides them. Would you let me know how the Navy plans to 
take advantage of this opportunity?
    Answer. The Navy plans to provide industry the chance to compete 
for an upgrade to a portion of the P-3C Update III common 
configuration. We anticipate receiving responsive proposals using 
commercial-off-the-shelf (COTS ) or non-developmental item (NDI) 
hardware.
    The Navy has 140 P-3C in the Update III configuration. The current 
Update III procurement performs a Block Modification to 25 additional 
P-3C. The Navy intends to maintain a common configuration for the P-3C 
Update III. If a strategy other than maintaining the common 
configuration is pursued, new trainers and support infrastructure will 
be required, the Tactical Mission Software will have to be modified, 
and a separate software version will have to be supported.
    The Navy does continue to upgrade the common Update III 
configuration to account for out-of-production equipment. For these 25 
aircraft, because the AN/UYS-1 Acoustic Processor is out of production, 
the functionality of the AN/UYS-1 will be embedded within the AN/USQ-
78A acoustic Display and Control System using COTS or NDI hardware. The 
Navy's acquisition strategy is to have a competition conducted at the 
subcontractor level to embed the UYS-1 capability into the USQ-78A.
    The Navy intends to contract with Lockheed Martin Tactical Defense 
Systems (LMTDS) on a sole-source basis for the P-3C Update III upgrade 
kit. LMTDS will be responsible for delivering a fully integrated 
system. The Navy is awarding a sole-source contract to LMTDS for the P-
3C Update III upgrade kits because Lockheed Martin is the designer, 
developer, and sole manufacturer of more than 65% of the total avionics 
suite to be installed. LMTDS is the only source with the technical 
capability, specialized expertise, experience, and technical data 
necessary to perform the required effort, and maintain a common 
configuration.
    LMTDS will subcontract to Lockheed Martin Federal Systems (LMFS) 
Manassas, the designer, developer, and sole manufacturer of the AN/USQ-
78A acoustic Display and Control System, to be the acoustic systems 
integrator. LMFS will conduct a competition to incorporate the 
functionality of the AN/UYS-1 in the AN/USQ-78. No Lockheed Martin 
division will be allowed to compete for this upgrade. An Integrated 
Product Team has been designated, with Government participation, to 
oversee the competition.
    Because a validated technical data package does not yet exist for 
the AN/USQ-78A, a competition conducted by the Navy would put the 
Government at schedule and performance risk. The Navy would have to 
provide the newly competed system as Government Furnished Equipment to 
LMTDS, placing system integration responsibility on the Government 
without validated technical data. In addition, achieving a common 
configuration would be jeopardized.
    At the request of industry, the fleet Patrol Wings allowed multiple 
contractors the opportunity to prototype their engineering design 
models on P-3Cs for contractor conceptual demonstrations, to include 
Lucent Technologies' Rainbow system. Data obtained during these 
demonstrations were for the contractors' systems development purposes 
only and were not reviewed by Navy procurement and acquisition 
personnel due to the planned subcontractor competition. To preserve the 
integrity of the contractor's acoustic processor competition, the 
potentially competitive systems were not evaluated by Program Office 
personnel.
    The Navy's acquisition strategy reduces the integration risk 
associated with this P-3C Update III upgrade to the lowest level 
achievable. With this acquisition strategy, the Navy is likely to 
obtain the benefits of COTS/NDI while competing that portion of the 
effort that can be competed.

    [Clerk's note.--End of questions submitted by Mr. Hefner. 
Questions submitted by Mr. Visclosky and the answers thereto 
follow:]

                    Advanced Self Protection Jammer

    Question. Are you pleased with ASPJ performance while it was 
installed on F/A-18C/D and F-14D fleet aircraft flying in Bosnia and 
the Persian Gulf?
    Answer. Yes, While no operational data is available regarding 
aircraft ``saved'' with ASPJ installed, operational evaluation testing 
indicates that ASPJ provides a very robust response to a particular 
threat weapon system of interest. Modifications to the ASPJ rack have 
proven successful. Built In Test (BIT) problems have not been mentioned 
by forward deployed squadrons. To further research this area, the 
COMOPTEVFOR/DOT&E approved method for BIT reliability data collection 
is being utilized by ASPJ equipped squadrons in a carrier airwing 
currently on deployment.
    Question. Last year the Congress added $50 million for ASPJ 
procurement to support contingency requirements. It looks like that is 
still not enough to cover potential hostile areas. Do you have enough 
ASPJ systems to adequately protect aircraft that are currently flying 
in Bosnia, the Persian Gulf and other potential hot spots?
    Answer. The Fiscal Year 1997 plus-up money will yield an additional 
36 systems, to include spares. This will provide a sufficient number of 
assets for current deployment schedules in support of contingency 
operations (Bosnia and South West Asia). The final delivery for this 
buy is predicted to be complete in November 1999.
    Question. We understand that with the limited number of ASPJ 
systems currently in the fleet you are forced into a cross-decking 
situation on a hand-to-mouth basis. Are you satisfied with this type of 
operation?
    Answer. While not optimal, cross decking operations are a fact of 
life in a fiscally constrained environment. The number of ASPJ units 
available after this year should ensure the Navy retains a robust 
capability to both train and fight (if necessary) in all of our routine 
environs.
    Question. Would you desire for the Congress to add funding to the 
budget to buy more ASPJ systems?
    Answer. The Navy believes that the current number of systems (to 
include Fiscal Year 1997 plus-up systems) is sufficient until IDECM 
Radio Frequency Countermeasures (RFCM) sub-system reaches initial 
operational capability in 2002.
    Question. We understand that IDECM could be an alternative system 
for the F/A-18C/D but, with initial deliveries of IDECM systems 
scheduled for 2002, they won't be ready for retrofit on the F/A-18C/D 
for another 6-8 years. Are you comfortable with the current F/A-18C/D 
protection for several more years?
    Answer. As stated above, after the Fiscal Year 1997 plus-up systems 
have been fielded, a sufficient amount of ASPJ equipped aircraft would 
be realized for contingency operations for this interim period. The 
February 14, 1997 report to Congress cites possible candidates for 
radio frequency self-protection systems for the F/A-18C/D, to include:
         ASPJ
         Portion of IDECM (internal IDECM RFCM components 
        without a towed decoy)
         ALQ-126B upgrade
    The only cost and operationally suitable options are ASPJ or a 
portion of IDECM RFCM (minus towed decoy) mounted internally in the F/
A-18C/D. A decision will be made in FY99 regarding what path will be 
taken. This decision will coincide with the IDECM LRIP decision.
    Question. We understand that it may not be possible to install a 
towed decoy on the F/A-18C/D. If you wait several years for IDECM for 
the F/A-18C/D and the IDECM towed decoy is not installed, how will 
IDECM performance compare with today's ASPJ performance?
    Answer. Performance for the two systems, ASPJ or IDECM (without the 
towed decoy), is comparable. There are obvious long-term logistic 
benefits (fleet commonality) to a solution involving a portion of the 
IDECM system.

    [Clerk's note.--End of questions submitted by Mr. 
Visclosky. Questions submitted by Mr. Young and the answers 
thereto follow:]

                            CINC Priorities

    Question. Mr. Douglass, your statement says that the programs in 
your budget ``reflect the priorities established by the warfighters--
the theater Commanders-in-Chief.'' Your budget proposes a 12 ship DDG-
51 multiyear contract. However, not a single ship will be delivered to 
the fleet with anti-ship missile defense nor theater ballistic missile 
defense capabilities installed. Is this what theater CINCs want?
    Answer. ------. The option that provides the Navy the most rapid 
deployment of these capabilities is via backfit. Under the current Navy 
plan the first ships to receive Area Theater Ballistic Missile Defense 
capability, other than the User Operational Evaluation System (UOES) 
demonstration ships will be two Aegis cruisers in FY 00. Additional 
cruisers will be backfit in FY 02 and FY 03. The first DDG-51 class 
destroyer will be backfit in FY 03 with additional ships scheduled in 
FY 04 and out. By the Secretary of the Navy and Chief Naval Operations 
direction, Navy is reviewing acceleration options that could nearly 
double the number of ships provided both Area TBMD and CEC capabilities 
(from 15 to 28) by FY 03.
    Navy considerations associated with balancing Ship Construction, 
Navy funds for the entire Department and executing a fully funded DDG-
51 class ship procurement plan moved the introduction of Cooperative 
Engagement Capability (CEC), and Theater Ballistic Missile Defense 
(TBMD) capability in a forward fit configuration, out of the FY 98-FY 
01 DDG 51 Multi-Year Procurement (MYP).
    These 12 ships will be built with the combat systems and computer 
software configuration base to allow rapid introduction of these 
capabilities as funds become available for procurement and installation 
of CEC and TBMD. The 12 ships in the DDG 51 Multi-Year Procurement will 
have the greatest capability of any ships built to date, with respect 
to individual anti-ship cruise missile defense. CEC, is a synergistic 
enhancement to total Carrier Battle Group (CVBG) or Amphibious 
Readiness Group (ARG) self defense, including those ships, in company 
with Aegis ships, whose self defense systems are not as advanced. In 
this manner CEC leverages the superior defense capability of Aegis 
ships enhancing the entire battlegroup's defense, CEC, will also 
enhance TBMD for ships operating in a group as a means for advanced 
cueing.
    Question. Cooperative engagement is essential to fleet situational 
awareness and coordination, ship self-defense, and ballistic missile 
defense. Former Secretary Perry called it ``the most significant 
technological development since stealth.'' Your budget proposes to 
funds for cooperative engagement installations in 1998 although the 
system achieved IOC in 1996. Is this what the theater CINCs want?
    Answer. CEC was designed to counter the threat posed by 
increasingly capable cruise missiles and aircraft and provide greater 
C4I at the tactical level through the provision of a coherent tactical 
picture. ------. By FY 1999, there will be two CEC-equipped 
Battlegroups in the Fleet and CEC will be installed on an additional 
three Battlegroups in FY 2000. By FY03, the CEC inventory is projected 
to reach 60 units.
    Question. Your budget proposes to perform a nuclear refueling 
overhaul on the U.S.S. Nimitz aircraft carrier. Yet the ship would be 
delivered back to the fleet without: cooperative engagement, integrated 
self-defense (SSDS), the advanced combat direction system, the rolling 
airframe missile, the SPQ-9 navigation radar, a common high-band data 
link, the battlegroup passive horizon extension system, an outboard 
weapons elevator, conversion of nuclear magazines, emergency ordnance 
handling, and improved propellers. Is this what the theater CINC's 
want?
    Answer. Navy's plan supports the currently established CINC 
priorities. The following installations are currently planned for 
accomplishment during the Refueling Complex Overhaul (RCOH):
          Cooperative Engagement Capability (CEC)
          Advanced Combat Direction System (ACDS)-reduced scope
          Nuclear magazine conversions
          Emergency Ordnance Handling-increment 1
    The Outboard Weapons Elevator Engineering Change Proposal is 
currently under review for potential inclusion in the RCOH. The RCOH 
drydock work includes refurbishment and modifications to the ship's 
existing propellers.
    Following the RCOH, U.S.S. Nimitz will undergo a Post Shakedown 
Availability/Selected Restricted Availability (PSA/SRA), as is typical 
after an overhaul of such scope. The Navy is planning the following 
installations as a part of the PSA/SRA:
          Ship Self Defense System (SSDS)
          Rolling Airframe Missile (RAM)
          SPQ-9B navigational/fire control radar
          Common High Band Data Link (CHBDL)
          Battle Group Passive Horizon Extension System (BGPHES)
    Upon completion of the RCOH and the PSA/SRA, U.S.S. Nimitz will 
rejoin the Fleet as a modernized, recapitalized, fully capable asset 
prior to her first post-RCOH deployment.
    Question. Your budget proposes no funds for installation of ship 
self-defense systems in 1998 that are vital for a lone ship to defend 
itself from cruise missile attack. In the outyear plan, only 8 ships 
are now going to get the equipment rather than 15 planned just last 
year, and apparently the whole class of LHA ships to support Marine 
Corps combat operations is simply gone. Is this what the theater CINCs 
want?
    Answer. In the case of SSDS this slipped the procurement and 
installation of 1 LSD, 1 LHD and 2 shore based sets. We have 
satisfactorily rescheduled those ships for installation during follow-
on availability's. In the interim those ships will be protected by the 
baseline self defense systems now installed. LHAs are not currently 
included in the program due to affordability issues and projected 
service life. The theater CINCs fully support SSDS as a program and 
would like to have this capability in the fleet as soon as possible.
    Question. Our nation has already built missiles that are 
essentially invisible to radars. It is only a matter of time until 
other nations field advanced stealthy anti-ship missiles, and the Navy 
knows it. Once a ship's radar detection becomes limited, infrared 
detection becomes essential. The budget proposes no funds for 
development or production of infrared (heat-sensing) sensors for Navy 
ships. Is this what the theater CINCs want?
    Answer. Higher program priorities in the Fiscal Year 1998 budget 
submission necessitated a reduction in development funding for Infrared 
Search and Track (IRST) Sensor. There is sufficient funding in place to 
complete landbased prototype testing. Based on that test data, 
consideration will be given to fully fund this program within fiscal 
limits and against other program priorities. Theater CINCs recognize 
that IRST has the potential to add capability to ship self defense but 
also await test data before providing the appropriate level of support 
relative to other requirements.
    Question. The budget proposes insufficient funds for both the near-
term (Lower Tier) and far term (Upper Tier) theater ballistic missile 
defense, and the Navy is not planning to meet any Congressional 
fielding deadlines for these systems. Is this what theater CINCs want?
    Answer. The Navy is very serious about developing and delivering a 
sea-based theater ballistic missile defense capability to the Fleet as 
soon as possible. Navy has incurred difficulties in achieving 
Congressional fielding deadlines for these systems due to several 
factors: the amount of time required to initiate the programs; delays 
experienced in executing the Congressionally directed plus-ups; and, in 
the case of Navy Theater Wide, the process leading to a program 
decision from DoD. However, the Navy has made significant progress over 
the past year toward delivery of an initial capability to the theater 
CINC. On 24 January 1997 at the White Sands Missile Range, the Navy 
conducted the first ever intercept of a TBM target with a modified SM-2 
Block IV missile. Subsequently, at a Milestone II DAB on 22 February 
1997, OSD approved the Navy AREA TBMD program to proceed to 
Engineering, Manufacturing and Development. I have approved a plan to 
designate two ships (U.S.S. Lake Erie and U.S.S. Port Royal) to serve 
as focal points for TBMD system testing and evaluation, much like the 
approach used to achieve early evaluation of CEC in U.S.S. Eisenhower 
Battle Group, Designated by the codename ``LINEBACKER,'' (in lieu of 
the term User Operational Evaluation System (UOES)) these two ships 
will lead the Navy in TBMD development. They will receive the first 
TBMD equipment and software modifications in Fiscal Year 1998 and begin 
serving as the Navy's spearhead for both testing and tactics 
development. The sailors of these two ships will provide early feedback 
to the technical and tactical communities which can influence the 
system design and TBMD doctrine development. Most importantly, as we 
begin to deliver BLK IVA EMD missiles in fiscal year 1999, these ships 
will provide the theater CINC a contingency capability in the event of 
a crisis involving the threat of TBMs. We have also made some recent 
progress in the Navy Theater Wide program. Our work with BMDO and OSD 
over the past year has been structured to demonstrate the affordability 
of our evolutionary strategy and credibility of the Navy Theater Wide 
capability in order to ensure appropriate funding and priority within 
the DoD Ballistic Missile Defense family of systems architecture. This 
past December Dr. Kaminski designated NTW as a core BMDO program and, 
in support, in January 1997 Navy added over $200 million to the Navy 
Theater Wide program across the Future Years Defense Plan. Finally, to 
further ensure our resources are appropriately focused, in October 
1996, the Secretary of the Navy and I directed our staff conduct a 
comprehensive review of Navy TBMD programs and report back with a plan 
that could accelerate delivery of this capability to the Fleet. The 
review is nearing completion and we will be briefed on the results. All 
of these actions confirm Navy's commitment to deliver this capability 
to the theater CINC as early as possible.
    Question. The budget proposes no funds for production of an 
improved CIWS gun (called CIWS surface mode) that allows Navy ships to 
see and hit terrorist patrol boasts such as the Iranian boghammers. The 
Navy's budget plan leaves LHA, LHD, FFG-7, and LSD ships unprotected. 
Is this what theater CINCs want?
    Answer. These ships are not unprotected. Deployers to contested or 
high threat areas are routinely outfitted with 25mm chain guns. 
Additionally each have 50 caliber machine gun self defense emplacements 
coupled with support from other smaller caliber weapons. Additionally, 
FFG 7 class has a MK 75 76mm gun and standard missile with excellent 
anti-surface capabilities. All the above mentioned ships have the 
flexibility to carry armed helicopters equipped with either missile 
pods or automatic guns. The CIWS surface mode can provide the 
capability to detect and engage terrorist patrol boats as well as 
hostile attack Helos. The Navy will complete operational testing of the 
system later this year and receive fleet comments before we commit to 
full scale production. The fleet CINCs are very supportive of the CIWS 
surface mode for ships that do not have a major caliber gun.
    Question. The first new strategic sealift ship is underway, but it 
has no support equipment (lighterage) for the Army to unload it during 
combat operations. If no port was available, a theater CINC would have 
to take support away from the Marines and give it to the Army--which of 
course jeopardizes the Marine's mission. Is this what the theater CINCs 
want?
    Answer. The situation today is no different than it has been since 
deployment of the afloat prepositioned Army War Reserve (AWR-3) package 
in 1993. If no port is available, the Army must use the modular 
causeway sections (MCS) onboard T-ACS GOPHER STATE and the watercraft 
onboard AMERICAN CORMORANT that are part of the AWR-3 package 
prepositioned in Diego Garcia to offload the ships. The Army intends to 
augment this capability in Fiscal Year 1998 with an additional heavy 
lift prepositioning ship, the STRONG VIRGINIAN. If additional 
lighterage is required, the CINC must choose whether or not to use 
lighterage from ships of the Maritime Prepositioning Force (MPF) to 
assist in the offload of these ships.
    Question. In your budget, the V-22 has a 25 year production profile 
which the Commandant thinks will cost $8-11 billion more than an 
economic production program. Is this what the theater CINCs want?
    Answer. The new production run is 24 years (based on the 
President's Fiscal Year 1998 budget). With our revised economic 
assumptions, we estimate that it will cost approximately $1 billion 
less than the 25 year production profile.
    Two of three CINCs responding (IPL List) requested that the V-22 
procurement be increased over the Defense Acquisition Board (DAB) 
profile. The Department in the President's fiscal year 1998 budget 
increased the procurement rate over the DAB profile by 14 aircraft in 
the FYDP to 24 MV-22 inn fiscal year 2003.
    The Department would defer to the theater CINCs for further 
comments.
    Question. In your budget, funding for basic research and RDT&E 
management support are increased $87 million above last year's level. 
Is this what theater CINCs want?
    Answer. Basic Research was appropriated last year at $352 million 
(after Congressional undistributed reductions). This year's budget 
request is for $382 million or $30 million more than last year. 
However, the Department originally requested $35 million more last year 
than was appropriated. Congress cut $20 million specifically against 
Basic Research and levied another $15 million in general undistributed 
reductions. These FY 1997 reductions give the false appearance of a $30 
million ``increase'' over last year, when in fact, the Department's 
requirements for Basic Research have basically not changed.
    RDT&E Management Support was appropriated last year at $540 
million. This year's budget request is for $595 million or $40 million 
more than last year. In these programs, a major change in funding Test 
and Evaluation programs resulted in about $5 million of the increase 
(funds were transferred into a centrally managed program from other 
customers in RDT&E) and $15 million was added for development of the F-
4 aircraft into targets to support test and evaluation of major 
aircraft and weapons systems. However, part of this ``increase'' is 
actually a reduction in FY 1997 of $22 million for specific and 
undistributed Congressional reductions. Taken from this perspective, 
only $15 million of the noted ``increase'' is growth and that supports 
other major aircraft and weapon system.
    In addition to their fundamental support of the President's Budget, 
the Fleet CINCs are direct and significant players in the Navy R&D 
requirements process. They develop a set of Command Technology Issues 
(CTIs), which are submitted for inclusion in the Navy Science and 
Technology Requirements Guidance. Coupled with Fleet representation at 
every Science and Technology (S&T) Round Table and Working Group 
meeting, the Fleet has multiple direct channels to request and 
influence S&T support. The RDT&E management investment supports the 
above activities; the 6.1 Basic Research investment is designed to 
provide the scientific basis and enabling technologies to address these 
issues and other Navy needs.
    Question. In your budget, the Navy has deferred outyear funds for 
the LCAC (Landing Craft Air Cushion) service life extension, yet the 
Marines are looking for LCACs to perform more missions such as 
transportation of fuel to ground combat vehicles and mine clearing. Is 
that what the theater CINCs want?
    Answer. Navy requirements support commencing the LCAC SLEP program 
in fiscal year 2000 in consonance with fleet concerns. An affordable 
LCAC SLEP program that meets CINC requirements is under review. We are 
actively engaged with the CinCs to identify evolving roles and missions 
for LCAC, of which fuel delivery and mine clearing are two.
    Question. In your budget, funding for Advanced Technology 
Transition--``demonstration projects''--is increased $18 million. Is 
this what theater CINCs want? Name which CINC has included Advanced 
Technology Transition as a program on his integrated priority list, and 
how it ranks in terms of his priorities.
    Answer. Advanced Technology Transition was appropriated last year 
at $69 million (after Congressional undistributed reductions and plus 
up for SLICE project). This year's budget request is for $87 million or 
$18 million more than last year. However, the Department originally 
requested $37.4 million more last year than was appropriated. Congress 
cut $34.4 million specifically against Advanced Technology Transition 
program and levied another $3 million in general undistributed 
reductions. These FY 1997 reductions give the false appearance of a $18 
million ``increase'' over last year, when, in fact, the Department's 
requirements have declined.
    Yes, without question. Although the CINCs' Integrated Priority 
Lists are expressed in terms of capabilities rather than specific 
programs, the Advanced Technology Demonstration (ATD) Program responds 
directly to those needed capabilities and ranks first in terms of CINC 
S&T priorities and interests. The Fleet CINCs are an integral part of 
the annual ATD proposal and evaluation process, in which CINC 
priorities play a dominant role.
    The Advanced Technology Transition program (PE 0603792N), which in 
fiscal year 1997 includes a total of 16 active ATDs, is developed from 
proposals based on the Science and Technology Requirements Guidance 
(developed in part from CINC input). Fleet CINCs are represented on the 
Navy Science and Technology Working Group (STWG), with the opportunity 
to review the entire list (usually about 150) of ATD proposals and to 
review in depth the 25 finalists as part of the ATD selection process.
    The fiscal year 1997 President's Budget request of $104 million was 
reduced in the appropriation to $72 million as a result, a number of 
high-priority Fleet needs could not be satisfied. The $87 million 
request for fiscal year 1998 level for PE 0603792N represents a modest 
increase to satisfy the highest priority CINC requirements. Even at the 
requested level, an additional 10% growth would be necessary to return 
to the level appropriated in fiscal year 1995.
    The ATDs represent the Navy S&T program with strongest CINC 
engagement and support. The CINC-recommended list of ATD selections, 
each with high ratings for need, transition opportunity and technical 
quality always greatly exceeds the dollars available.
    Question. In your budget, $150 million is included as a downpayment 
towards development of an Arsenal Ship demonstrator project. Is this 
what the theater CINCs want? Name which CINC has included the Arsenal 
Ship program on his integrated priority list, and how it ranks in terms 
of his priorities.
    Answer. The Arsenal Ship is not specifically listed on the CINC 
integrated priority list; however it will enhance our ability to meet 
many of those requirements.
    Question. In your budget, growth is requested for ``Studies and 
Analysis Support'', the ``Center for Naval Analysis'', ``Management, 
Technical and International Support'' and ``RDT&E Science and 
Technology Management.'' Is this what theater CINCs want? Name which 
CINC has included any of these programs on his integrated priority 
list, and how it ranks in terms of his priorities.
    Answer. Studies, Analyses and Support was appropriated last year at 
$6.7 million (after Congressional undistributed reductions). This 
year's budget request is for $8.8 million or $2.1 million more than 
last year. This increase reflects a new study for the Large Land Based 
Aircraft (LLBA) as a potential replacement to the E-6, EP-3, P-3, C-130 
and C-9 aircraft.
    The Center for Naval Analyses (CNA) was appropriated last year at 
$38.6 million (after Congressional undistributed reductions). This 
year's budget request is for $43.4 million or $4.8 million more than 
last year. However, 75 percent of this ``increase'' is actually a 
reduction in FY 1997 of $3.6 million for undistributed Congressional 
reductions.
    Management, Technical and International Support was appropriated 
last year at $19.7 million (after Congressional undistributed 
reductions). This year's budget request is for $24.3 million or $4.6 
million more than last year. This increase reflects the addition of 
funds supporting Modeling and Simulation (M&S) efforts, including 
support for a central M&S office which will coordinate all Navy M&S 
initiatives to avid duplications among programs. It is anticipated 
substantial long term cost and operational savings will accrue.
    RDT&E Science and Technology Management was appropriated at $56 
million (after Congressional undistributed reductions). This year's 
budget request is for $57.6 million or $1.6 million more than last 
year. This increase reflects the transfer of the Naval Industrial 
Reserve functions to the Office of Naval Research and is a net zero 
change within the total Navy budget.
    To map CINC Integrated Priority Lists (IPLs) directly to management 
support programs is difficult, as Fleet priorities tend to be expressed 
in terms of capabilities rather than specific programs or line items. 
In addition, the IPLs address predominantly O&M issues rather than S&T. 
The studies, analyses and management programs listed above support the 
development of technical responses to the CINCs' IPL capabilities. 
Those IPL requirements which can be addressed by S&T in terms of long 
term improvements are developed through direct Fleet CINC participation 
in the S&T requirements process.

                           Ship Self-Defense

    Question. Mr. Douglass, your statement says ``Bottom line: our 
budget continues an all out effort to protect our Sailors and Marines 
serving aboard ships against missile attack.'' Under your plan, not a 
single ship from the 12 ship DDG-51 multiyear buy would be delivered to 
the fleet with either cooperative engagement capability nor theater 
ballistic missile defense capability. Is this ``an all our effort'' by 
the Navy?
    Answer. The 12 ships in the Multi-Year Procurement (MYP) will be 
built with the combat systems and computer software configuration base 
to allow rapid procurement and installation of Cooperative Engagement 
Capability (CEC) and Theater Ballistic Missile Defense (TBMD) as funds 
become available. The Navy has an integrated backfit plan for 
installing these capabilities and is reviewing acceleration options 
that deliver these much needed capabilities to the fleet as the 
technology becomes available, at the beginning of the next century.
    Significant progress has been achieved over the past year. 
Evaluation continues of the two CEC IOC ships, CG 68 and CG 71, in 
fleet exercises, along with correction and refinement of both system 
equipment configuration, software and CEC integration with the Aegis 
Weapon System on those ships. On 24 January 1997 at the White Sands 
Missile Range, the Navy conducted the first ever intercept of a TBM 
target with a modified SM-2 Block IV missile. Subsequently, at a 
Milestone II DAB on 22 February 1997, OSD approved the Navy AREA TBMD 
program to proceed to Engineering, Manufacturing and Development. In 
addition, efforts in working with BMDO and OSD to elevate the funding 
and priority of the Navy Theater Wide (NTW) program within the DoD 
Ballistic Missile Defense Architecture are beginning to pay off. This 
past December, Dr. Kaminski designated NTW as a core BMDO program and, 
in support, in January 1997, Navy added $207 million to the Navy 
Theater Wide program across the Future Years Defense Plan. Most 
importantly, in October 1996, the Secretary of the Navy and Chief of 
Naval Operations directed their staffs to conduct a comprehensive 
review of Navy TBMD programs and report back with a plan to accelerate 
delivery of this capability to the Fleet. The acceleration plan 
includes both TBMD and CEC. This plan, nearing completion, will be 
briefed to the Secretary of the Navy and Chief of Naval Operations in 
the near-future. All of these actions confirm Navy commitment to 
deliver these capabilities to the Fleet.
    Question. Under your plan, the U.S.S. Nimitz would be overhauled 
and sent back to the fleet without ship self-defense, cooperative 
engagement, and rolling airframe missiles. Is this ``an all out 
effort'' by the Navy?
    Answer. Following the Refueling Complex Overhaul (RCOH), the ship 
will undergo a Post Shakedown Availability/Selected Restricted 
Availability (PSA/SRA) as is typical following an overhaul of this 
scope. The Navy's plan is to incorporate the most critical warfighting 
improvements during either the RCOH or the follow-on PSA/SRA.
    Cooperative Engagement Capability (CEC) is in the CVN-68 RCOH work 
package. Ship Self Defense System (SSDS) and Rolling Airframe Missile 
(RAM) are both planned for installation during the PSA/SRA.
    Question. Under your plan, no funds are requested in 1998 for 
cooperative engagement capability installations although the system 
reached IOC in 1996. Is this ``an all out effort'' by the Navy?
    Answer. The Navy views CEC as a top priority and is committed to 
its implementation in both surface ships and aircraft. Given the 
restraints and budgetary decisions that had to be made, Navy is 
continuing procurement and production of CEC units. CEC systems to 
complete a second battlegroup are currently being procured and 
installed with RDT&E funds to support OPEVAL in fiscal year 1998. By 
fiscal year 2003 Navy will have installed CEC into 60 ships and 
aircraft. This will put CEC into 6 Carrier Battlegroups by fiscal year 
2003. In addition, Navy intends to integrate CEC in the E-2C Mission 
Computer Upgrade Program starting in fiscal year 1998. The airborne CEC 
system will IOC in the first E-2C squadron in fiscal year 2002.
    Question. Under your plan, no funds are requested in 1998 for ship 
self-defense system installations, which are vital to lone ship 
survivability from cruise missile attack. Is this ``an all out effort'' 
by the Navy?
    Answer. The fiscal year 1998 budget request slipped Ship Self 
Defense System (SSDS) procurement and installation of 1 LSD, 1 LHD and 
2 shore based sets. We have satisfactorily rescheduled those ships for 
installation during follow-on availability. In the interim those ships 
will be protected by the baseline self defense systems now installed. 
SSDS continues to be a high priority system that fulfilled the 
Congressionally mandated Quick Reaction Combat Capability.
    Question. Under your plan, no funds are requested in 1998 for 
infrared sensor development or production which are essential for 
detection of stealthy cruise missiles. Is this ``an all out effort'' by 
the Navy?
    Answer. Higher program priorities in the fiscal year 1998 budget 
submission necessitated a reduction in development funding for Infrared 
Search and Track (IRST) Sensor. There is sufficient funding in place to 
complete landbased prototype testing in fiscal year 1998. Based on that 
test data, consideration will be given to fully fund this program 
within fiscal limits and against other program priorities. Theater 
CINCs recognize that IRST has the potential to add capability to ship 
self defense but also await test data before providing the appropriate 
level of support relative to other requirements.
    Question. Under your plan, no funds are requested in 1998 for 
installation of surface ship CIWS guns (CIWS surface mode) which have 
been a fleet requirement for many years to see and hit terrorist patrol 
boats that may attack Navy ships. Is this ``an all out effort'' by the 
Navy?
    Answer. Post cold war maritime operational concepts have been 
developed and concentrate in coastal or ``littoral'' areas. US Navy and 
Coast Guard operations around Haiti and Cuba are well documented 
examples of this type of maritime operation. These littoral operations 
require a defense against small, high speed, very maneuverable surface 
threats and low, slow air threats that are expected. The requirement 
initially centered on an Advanced Minor Caliber Gun System (AMCGS) for 
the US Navy. The Navy conducted an extensive COEA as well as additional 
follow-on analysis, testing, and detailed review. Based on the results 
of these efforts, the AMCGS requirements was planned to be best 
operationally and financially satisfied by implementing the CIWS 
Surface Mode. We agree that CIWS surface mode can provide the 
capability to detect and engage terrorist patrol boats. To that end, we 
will complete Operational Testing of the capability this year and 
receive fleet comments before we commit to full scale production.
    Question. Isn't the bottom-line really that in its budget the Navy 
has taken care of its industrial base, its contractors, and Navy labs 
rather than taking care of the theater CINCs, Sailors, and Marines?
    Answer. Our nation's industrial base, contractors, and Navy labs 
support the Navy and Marine men and women who form the heart of the 
United States Navy, and the theater CINCs that command them.
    In attempting to strike a balance between today's needs and 
tomorrow's, the budget cannot completely meet all priorities. The final 
budget product is by necessity a compromise and I appreciate 
Congressional support and interest in fashioning the best balance 
possible.

                           Shipbuilding Rate

    Question. The Navy requests $7.4 billion for shipbuilding in fiscal 
year 1998. To support a ``346 Ship Navy'' as suggested by the Bottom Up 
Review, consisting of ships whose service life is about 30 years, 
requires average construction of about 10 ships per year. Secretary 
Douglass, what annual rate of construction does the Administration's 
new budget request and accompanying future years defense plan envision?
    Answer. The fiscal year 1998 President's Budget request and 
accompanying future years defense program support a construction rate 
of 5 to 6 ships per year. A summary of the Navy's fiscal year 1998 
shipbuilding and conversion plan is attached.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Question. Admiral Pilling, given this low rate, how can you 
maintain a 346 ship Navy?
    Answer. Procurement rates must increase. I share the Chief of Naval 
Operations' view that the greatest concern right now is focused after 
the end of the current Future Years Defense Plan (1998-03) when the 
lead SC-21 ship is procured in fiscal year 2003. With the SC-21, Navy 
surface combatant production has to increase to help bring total SCN 
new procurement quantities up to the 9-10 ship/year level necessary to 
support long-term recapitalization.
    The NSSN procurement rate will also have to increase following the 
initial 4 ship teaming arrangement requested in the fiscal year 1998 
FYDP program. The budget also supports ships refueling and service life 
extensions that help maintain ship force levels in the near-term.
    The ship acquisition is also a large topic with in the Quadrennial 
Defense Review. Options to increase SCN funding to support higher 
procurement levels are being addressed there.
    Question. What is the magnitude of the Navy's ship modernization 
shortfall from now until 2002?
    Answer. I share the view of Secretary of the Navy and the Chief of 
Naval Operations expressed earlier today. I am satisfied with the ship 
procurement plan today. However, certainly the DoN needs to eventually 
increase its ship building rate to about 10 ships per year once the 
ships procured back in the 1980s reach the end of their service lives.
    The current 5 ship per year budget is 4-5 ships per year below the 
goal. The ``procurement holiday'' enjoyed in recent years must end. I 
do not underestimate the immense challenges ahead to recapitalize and 
invest in the Navy of tomorrow.
    Question. The Navy's shipbuilding plan envisions multiyear 
contracts for 12 DDG 51 destroyers and the first 4 new attack 
submarines. Isn't this risky strategy, given that ``outyear budgets'' 
never seem to materialize at the level originally forecast by DoD?
    Answer. The Navy intends to comply with the fiscal year 1997 
Authorization and Appropriations Acts and execute a multiyear contract 
for the 12 fiscal year 1998 through fiscal year 2001 DDG 51 Class ships 
at a rate of three per year. The three ships planned in fiscal year 
1998 are fully funded in the fiscal year 1998 President's Budget 
request and the funding for the remaining nine ships are programmed in 
the accompanying Future Years Defense Program. The DDG 51 Class 
multiyear procurement is currently estimated to yield a total savings 
of $1.2 billion dollars over four years. Final savings will not be 
known until contracts are awarded in the fall of 1997.
    The Navy has proposed a new acquisition strategy for the New Attack 
Submarine which constructs four ships over five years under a single 
contract with an Electric Boat Corporation/Newport News Shipbuilding 
team. Teaming and a single contract is expected to save $450 million to 
$650 million over a similar construction profile without teaming. The 
single contract is an important element of this acquisition strategy 
because it provides the business incentive to the two shipbuilders to 
team. The first New Attack submarine is fully funded in the fiscal year 
1998 President's Budget request and funding for the remaining three 
ships is programmed in the accompanying Future Years Defense Program.
    The benefit of using an explicitly stated single contract is that 
it stabilizes the program, thus providing the opportunity for savings 
for economic order quantities of material procurement and reduction of 
workforce fluctuation costs. Although explicitly stated termination 
liability costs for the single contract make subsequent reductions in 
procurement quantity much more expensive than would normally be the 
case with annual contracting, the savings opportunities override this 
risk. A single contract is literally a ``win-win'' strategy for 
industry and Government, so long as the Government can avoid under 
funding the procurement in the outyears. We believe that the 
procurement levels we are estimating for both programs over the Future 
Years Defense Program are the minimum, and consequently the termination 
risk is low.
    Question. We have seen much industry consolidation in the aircraft 
production industry (e.g. Boeing and McDonnell Douglas proposed 
merger). What are your views on the need for similar consolidation in 
the nation's shipbuilding industry, and how will the Navy foster it?
    Answer. The reduction in defense spending has resulted in a 
significant number of mergers in other industrial sectors--primarily in 
those industries with shorter build times and lower backlog compared to 
the shipbuilding industry. These other sectors have been forced to 
rationalize their business base arrangements and many did so by 
downsizing or merging.
    The shipbuilding industry has also begun a similar rationalization 
process with General Dynamics' purchase of Bath Iron Works, the teaming 
arrangements for the LPD 17 amphibious assault ships, and most recently 
the proposed teaming for New Attack Submarines. Both OSD and the Navy 
view the current state of the industry with concern, and are working to 
determine the best possible plan for the long term health of this 
critical national industry. With the downsizing of the defense budget, 
industry must continue to consolidate, reengineer itself to be 
sustainable at proposed funding levels, or expand into new markets. 
These new markets include both commercial shipbuilding and foreign 
combatant sales. We anticipate further changes in the shipbuilding 
industry and will work closely with OSD to monitor the effects of any 
proposed business decisions. We will take the necessary actions to 
ensure sufficient viability of the overall shipbuilding industrial base 
to meet our national defense requirements.

                           Shipbuilding Plan

    Question. During the past year, the Navy has placed great emphasis 
on developing an integrated shipbuilding plan that fully funds the next 
aircraft carrier, revises the New Attack Submarine Program, and buys 
destroyers in a multiyear program. Secretary Douglass, please describe 
the Navy's new shipbuilding plan.
    Answer. The Navy's shipbuilding plans for fiscal year 1998 include 
a continued, stabilized procurement of DDG 51 Aegis destroyers through 
use of a 12 ship multi-year procurement to meet Congressional direction 
contained in the Fiscal Year 1997 Authorization and Appropriations 
Acts. In addition to requesting three DDG 51s, we are requesting 
research and development funds for three new classes of surface 
combatants, SC 21, the new advanced development Arsenal Ship and CV(X), 
the next generation aircraft carrier. These efforts demonstrate the 
Navy's intention to invest in future technologies and ship designs to 
position our surface fleet for the challenges of the next century.
    Submarines are very much a key element of our overall shipbuilding 
plan. Our budget includes funding for the lead New Attack Submarine and 
for the final incremental procurement funding for SSN 23 in fiscal year 
1998. The Navy is ready to proceed with lead ship construction and has 
requested $2.6 billion in fiscal year 1998 for the design and 
construction of the first New Attack Submarine. The Navy has proposed 
an innovative teaming arrangement for procurement of four New Attack 
Submarines over the next five years from Electric Boat Corporation and 
Newport News Shipbuilding. Use of a single contract for the four 
submarines is a key element of the Navy plan because it provides the 
business incentive for the two submarine shipbuilders to team. 
Together, the contracting and teaming approaches generate substantial 
cost savings over the current plan. This acquisition strategy is 
affordable, executable and supports our national security requirements.
    The Navy executed the contract award for the first ship in the LPD 
17 Class in December 1996. No LPD 17s are planned in fiscal year 1998. 
We plan on resuming procurement in fiscal year 1999, procuring an 
additional nine ships between fiscal year 1999 and fiscal year 2003.
    No new construction aircraft carriers are planned in fiscal year 
1998; however, we still need to maintain a fleet of 12 aircraft 
carriers (11 deployable and 1 reserve/training carrier). To meet this 
need, the Navy is requesting funding in fiscal year 1998 for the 
refueling of U.S.S. Nimitz (CVN 68) which is scheduled to begin complex 
refueling overhaul in fiscal year 1998, and advance procurement funding 
for the refueling of U.S.S. Eisenhower (CVN 69) which is scheduled to 
begin a complex refueling overhaul in fiscal year 2000. The cornerstone 
of our shipbuilding plan for the Future Years Defense Program in fiscal 
year 1998 through fiscal year 2003 is full funding of the final Nimitz 
class aircraft carrier, the CVN 77.
    On average, we are planning to build approximately five new 
construction ships per year throughout this period. Key factors used in 
developing our plans for the future are the number of active ships now 
in the fleet (approximately 350 ships and submarines today) and their 
average age. As we right-size the Navy, we have decommissioned a large 
number of older surface combatants, amphibious ships, and aircraft 
carriers which has resulted in not only a smaller fleet, but a younger, 
more capable one.
    Question. We understand that significant changes to any 
shipbuilding program within the plan, such as accelerating the funding 
for the aircraft carrier into fiscal year 1998, may cause negative 
impact on other programs such as DDG-51 or LPD-17 construction. Please 
explain this to us.
    Answer. The fiscal year 1998 ship building plan requests 1 new 
attack submarine, 3 DDG-51 Arleigh Burke class destroyers, the U.S.S. 
Nimitz refueling complex overhaul, and 2 sealift ships. CVN-77 is 
needed in fiscal year 2008 to replace the U.S.S. Kitty Hawk (CV-63), so 
fiscal year 2002 is the right time to build CVN-77. It is not needed 
earlier. Accelerating SCN funding into fiscal year 1998 could 
unnecessarily ``crowd out'' other shipbuilding funding dollars required 
for submarines, surface combatants, the U.S.S. Nimitz refueling, and 
sealift ships.
    However, an addition of $17 million in RDT&E funds could be of 
great use to the CVN-77 program in fiscal year 1998. This would allow 
accelerating efforts that will make CVN-77 a true ``smart transition'' 
carrier which will introduce technology improvements to reduce life 
cycle and construction costs. The Navy is currently evaluating 
contracting RDT&E proposals that claim to save up to $600 million 
against the final cost of CVN-77.
    Question. DoD outyear budget projections usually do not materialize 
as originally planned. If this happens again, what priority would the 
Navy assign to its shipbuilding plan?
    Answer. The shipbilding plan would receive the highest priority 
possible within the constraints of reduced funding. As with all budget 
submissions, a balanced plan is forged to meet Navy's requirements. 
Aviation procurement and shipbuilding would be near the top of that 
plan.
    Question. Secretary of Defense Cohen recently announced the 
formation of a Program Management Advisory Group that will conduct a 
comprehensive review of the shipyards that build surface ships. Please 
explain why this is necessary, why now, and what will be done. Why was 
this review not conducted prior to the LPD 17 contract award?
    Answer. Dr. Kaminski (USD(A&T)) and Mr. Douglas (ASNRDA)) formed 
the joint Program Management Advisory Group to conduct an independent 
assessment of the viability of Bath Iron Works and Ingalls Shipbuilding 
as producers of surface combatants and to make recommendations for a 
long term integrated approach to the surface combatant industrial base. 
This was done in response to Ingalls Shipbuilding's concerns about its 
long term viability. The Navy did a formal analysis of the DDG 51 
industrial base in 1994 and 1995, which included several variations on 
possible LPD-17 award outcomes.
                        MODERNIZATION SHORTFALL
    Question. The Navy's fiscal year 1998 budget requests $25.7 billion 
for Navy and Marine Corps procurement, shipbuilding, and R&D. This is 
$.5 billion--about 2 percent--lower than the fiscal year 1997 
appropriated amount. The funding provides for only 51 new aircraft (of 
which only 39 are combat aircraft), 512 missiles, and 4 combatant 
ships. Admiral Pilling, is the Navy's fiscal year 1998 modernization 
budget adequate?
    Answer. Yes. However, if additional modernization was made 
available by Congress, they could be used to accelerate development and 
procurement of systems in our long-range program.
    Question. What is the risk to the future of readiness of the Navy 
and the Marine Corps of such low procurement rates of Navy Weapons?
    Navy Answer. The Navy funding contained within the fiscal year 1998 
budget and that in the Future Years Defense Program (FYDP) contains 
what we believe to be the right choices to modernize our forces while 
ensuring readiness is maintained within existing resources.
    It should be noted that in comparing the fiscal year 1998 budget to 
fiscal year 1997, the advanced procurement funding in the fiscal year 
1998 Navy aircraft procurement account was reduced by approximately 
$500 million to reflect the minimum essential funding for government 
and contractor furnished equipment. Navy has budgeted for advance 
procurement only when it is cost-effective.
    In addition to funds for 4 combatants, Navy Shipbuilding Account 
includes $1.7 billion for a Refueling Complex Overhaul (RCOH) that will 
enable CVN-68 to provide 25 years of additional service.
    Marine Corps Answer. No, our fiscal year 1998 modernization budget 
is not adequate. Maintaining current readiness levels and sustaining 
the momentum of quality of life initiatives are our top priorities. 
Funding these priorities within our reduced fiscal year 1998 topline--a 
topline which is 4.5% less in real terms than the fiscal year 1997 
level, required a shift from investment accounts, both in terms of 
modernizing equipment for our ground forces (PMC and ammo) and 
maintaining our bases and stations (MRP, Base Ops, and MilCon). 
Although Marine Corps modernization funding begins to improve in fiscal 
year 1999, the fiscal year 1998 level is at a historical low--the 
lowest level since 1972. In order to reduce the risk to future 
readiness, we have selectively funded our top priority ground combat 
programs such as C4I equipment and Javelin. The budget request for 
fiscal year 1999 and the current estimate for the outyears reflect 
significant increases in funding for modernization--funding for PMC and 
ammo doubles in fiscal year 1999, allowing us to capitalize on recent 
investments in R&D.
    Question. What major requirements are not funded in the fiscal year 
1998 budget?
    Navy Answer. All immediate Navy major readiness and modernization 
requirements are funded in the fiscal year 1998 budget. However, the 
pace with which we are outfitting our ships with integrated ship self-
defense and cooperative engagement systems is not as fast as many would 
like. As pointed out in Admiral Johnson's testimony, this has been 
purely an affordability budget decision, and by no way demeans Navy 
commitment to ship self-defense. The Navy is dealing with finite 
resources and procurement requirements compete with near-term 
readiness, quality of life must be supported, and a balance must be 
struck. Not all requirements can be funded.
    Marine Corps Answer. The fiscal year 1998 budget is an austere, 
fiscally-constrained program emphasizing Defense Planning Guidance 
priorities on readiness and quality-of-life programs. With a fiscal 
year 1998 topline 4.5% less than the fiscal year 1997 level, we were 
forced to make difficult choices in order to fund our top priorities--
readiness and quality of life. As in past years, financing these 
priorities has forced the diversion of funds from investment accounts 
and precluded budgeting for investment at desired levels. My concerns 
include the continued reliance on aging systems and failure to more 
rapidly field readily available improved technology. Following is a 
list of systems which could be accelerated if additional funds were 
available:
                                                (In Millions of Dollars)
Base Telecommunications Infrastructure............................ $42.6
Javelin...........................................................  17.0
Lightweight Tactical Vehicle Replacement..........................  65.1
ITEMS LESS THAN $10 MILLION.......................................  18.2
    Combat Vehicle Appended Trainer............................... (9.2)
    ISO Beds...................................................... (6.2)
    Improved Direct Air Support Center (IDASC) PIP................ (0.4)
    Combat Rubber Reconnaissance Craft............................ (1.6)
    LAV RAM.......................................................  (.8)
Chemical Biological Incident Response Force.......................  15.1
Power Generation Equipment, Assorted..............................  22.1
MX11620 Generation III 25mm Image Intensification Tubes...........  11.1
ITEMS LESS THAN $10 MILLION.......................................  24.3
    Close Quarters Battle Weapon..................................  (.4)
    M2 Flatrack................................................... (3.2)
    Logistics Information Systems................................. (3.5)
    Defense Message System........................................ (2.4)
    Underwater Breathing Apparatus................................ (1.2)
    Marine Enhancement Program.................................... (1.7)
    Special Effects Small Arms Marking System..................... (1.5)
    Military Motorcycle Replacement............................... (3.3)
    Advanced Demolition Kit....................................... (3.0)
    TERPES........................................................ (4.1)
Shop Equipment Contact Maintenance................................  12.2
                                                                  ______
        Total..................................................... 227.7
                        =================================================================
                        ________________________________________________
                                                (In Millions of Dollars)
RDT&E, N Account:
Commandant's Warfighting Lab......................................  19.8
Marine Enhancement Program........................................   0.6
Advanced Amphibious Assault Vehicle...............................  10.1
Light Weight 155MM Howitzer.......................................   3.6
Tactical Remote Sensor Systems....................................   1.5
Marine Common Hardware Suite (MCHS) Development & Management......   0.7
TERPES............................................................   1.0
                                                                  ______
        Total.....................................................  37.3
                        =================================================================
                        ________________________________________________

    Question. What are your top 4 modernization programs? Are they 
fully funded in fiscal year 1998? Are they optimally funded in the 
accompanying fiscal years of the Future Years Defense Plan?
    Navy Answer. New procurement, and capability upgrades to current 
systems and platforms, continue to be the top modernization priorities 
for the Navy in the fiscal year 1998 budget. Procurement of the U.S.S. 
Arleigh Burke-class destroyer, the Osprey (MV-22) tilt rotor aircraft, 
the Super Hornet fighter/attack aircraft (F/A-18 E/F), and the New 
Attack Submarine (NSSN) are critical components of Navy future 
readiness and need continued Congressional support. These four programs 
are fully funded in fiscal year 1998. CVN-77 is also a top 
modernization program, a critical warfighting requirements. However, 
advanced procurement funding for this national asset is not required 
until fiscal year 2000.
    These programs are optimally funded in the 1999-2003 fiscal years 
of the Future Years Defense Program given the resources available for 
modernization.
    Marine Corps Answer. The Marine Corps' top four modernization 
programs are AV-8B, V-22, general acceleration of ground equipment, and 
the AAAV. I remain concerned about the pace of modernization for these 
and other aviation and ground equipment programs.
    If additional funds were available, I would like to accelerate 
these important modernization programs:
    I would like to maintain the fiscal year 1997 pace of 
remanufacturing our AV-8Bs. The budget provides funding for 
remanufacturing of 12 aircraft in fiscal year 1997 and 11 in fiscal 
year 1998. The remanufacturing program, among other things, provides 
for a more capable, reliable engine. Also, the current budget does not 
allow for remanufacturing of our training assets--the TAV-8B. I would 
like to procure improved engines for the TAV-8Bs, thus adding needed 
safety and reliability improvements to an important warfighting asset.
    I would accelerate procurement of the V-22. At the current level, 
we will attain our procurement objective in fiscal year 2020. 
Acceleration would allow us to field this needed capability to the 
fleet earlier, and would provide for a more efficient rate of 
production.
    In the area of support to our ground forces, I would like to 
accelerate the acquisition of modernized equipment to include improved 
C4I equipment for our MAGTFs, the Javelin--replacement for the aging 
Dragon medium antitank system, Light Tactical Vehicle Replacement 
Program, combat rubber reconnaissance craft, rebuilding our light 
tactical vehicles, and improving telecommunications support.
    I would also accelerate the development of the AAAV. Fabrication 
and testing of an additional Demonstration and Validation prototype 
would allow testing activities to be safely conducted in parallel, 
mitigating the impact of equipment failures.

                           Additional Funding

    Question. Last year were very candid about identifying your top 
unfunded requirements to the Committee and working with us to provide 
additional funds for many of them. I hope you will continue that 
cooperation with us.
    Admiral Pilling and General Oster, please describe your top 
unfunded priorities and why the fiscal year 1998 budget is not 
sufficient in these areas?
    Navy Answer. In addition to the integrated ship defense and 
cooperative engagement capability concerns discussed previously, 
several other programs could benefit from increased fiscal year 1998 
funding, if additional resources were made available by Congress. 
Priorities here are accelerating procurement of systems in our long-
range program. Navy priorities would be to accelerate procurement of 
aircraft (F/A-18 E/F and E-2C), ship (DDG-51 and LPD-17), and weapons 
(Navy Area Theater Ballistic Missile Defense, Tomahawk, and Joint 
Standoff Weapon) systems. Navy Theater Wide TBMD, surface fire support, 
CVN-77, and other high priority RDT&E investment efforts could also be 
accelerated in a more cost effective manner. The attached table 
summarizes these priorities.
    Faster development and procurement was not possible in the fiscal 
year 1998 budget request due to competing requirements to maintain 
near-term readiness and to support the quality of life of all Navy 
personnel.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Marine Corps Answer. The Marine Corps' fiscal year 1998 topline is 
down by 4.5% from the fiscal year 1997 level in terms of real spending 
power. In order to fund our top priorities, near-term readiness and 
quality of life for our Marines and their families, we were forced to 
shift funds from our investment accounts, both in terms of 
modernization of equipment for our ground forces, and maintaining our 
bases and stations.
    The Marine Corps' fiscal year 1998 account for procurement of 
equipment to support our ground forces is at a historical low--the 
lowest since fiscal year 1972. Within this level of funding, we have 
selectively funded our top priorities ground combat programs, however, 
I am concerned about the pace of ground equipment modernization as well 
as aviation platforms.
    If additional funds were available, I would like to accelerate 
procurement of several important aviation and ground weapon systems.
    My first priority is safety issues. I would like to maintain the 
fiscal year 1997 pace of remanufacturing our AV-8Bs. The budget 
provides funding for remanufacture of 12 aircraft in fiscal year 1997 
and 11 in fiscal year 1998. The remanufacturing program, among other 
things, provides for a more capable, reliable engine. Also, the current 
budget does not allow for remanufacturing of our training assets--the 
TAV-8B. I would like to procure improved engines for the TAV-8Bs, thus 
adding needed safety and reliability improvements to an important 
warfighting asset.
    I would accelerate procurement of the V-22. At the current level, 
we will attain our procurement objective in fiscal year 2020. 
Acceleration would allow us to field this needed capability to the 
fleet earlier, and would provide for a more efficient rate of 
production.
    I would procure additional F/A-18Ds. The current inventory of F/A-
18Ds is inadequate to meet future training or Fleet squadron Primary 
Aircraft Authorized requirements until replacement by the Joint Strike 
Fighter (JSF). First deliveries of JSF are currently scheduled for 
fiscal year 2007.
    In the area of weapon systems to support our ground forces, I would 
like to accelerate the acquisition of modernized equipment to include 
improved C4I equipment for our MAGTFs, the Javelin--replacement for the 
aging Dragon medium antitank system, Light Tactical Vehicle Replacement 
Program, combat rubber reconnaissance craft, rebuilding our light 
tactical vehicles, and improving telecommunications support.
    I would also like to accelerate the development of several programs 
which are critical to ensure we remain a viable force into the next 
century. These include the Commandant's Warfighting Lab, the Advanced 
Amphibious Assault Vehicle, and the Light Weight 155MM Howitzer.
    Question. What are the potential savings if the Congress were to 
provide additional funding in fiscal year 1998 for these items, either 
by buying them earlier than now planned or by lower production unit 
costs through procurement of higher quantities? Please put the costs 
and savings in the record.
    Navy Answer. Potential savings that may be achieved as a result of 
any additional funding provided by the Congress in fiscal year 1998 
will be addressed as part of the fiscal year 1999 budget process.
    Marine Corps Answer. It is reasonable to assume that savings will 
be generated as a result of increased production quantities in addition 
to cost avoidance realized from escalation and inflation by buying 
ground and aviation systems earlier than currently planned. In addition 
to the savings and cost avoidance to be realized by accelerated 
procurement of these systems, earlier fielding will significantly 
enhance our warfighting capability.
    One ground program worthy of note is the International Standards 
Organization (ISO) Bed Modification program. Funding this program in 
fiscal year 1998, at the current contract option prices will save 
approximately $2 million over projected contract option prices in 
fiscal year 1999 by investing an additional $6.2 million in fiscal year 
1998.
    A $7.85 million future development cost avoidance could be achieved 
with an additional $3.6 million in Marine Corps ground combat RDT&E, N 
funds for the Lightweight 155 Howitzer program. These funds would allow 
for rapid evaluation of engineering change proposals by computer 
modeling vice live fire testing; earlier integration of lessons learned 
in the Commandant's Warfighting Lab experiments; as well as 
acceleration of improved optical fire control systems.
    There are a number of programs which will accelerate combat 
capability rather than generate cost savings or avoidance. For 
instance, an additional $17 million to fund acceleration of the Javelin 
program would allow for attainment of 100% of the Acquisition Objective 
during the FYDP and satisfy an out-year funding deficiency. The Marine 
Enhancement Program (MEP) buys only a few items as budgeted, thus 
minimal cost avoidance from inflation or a slightly lower unit price 
would be gained from buying additional MEP items; the same is true of 
Power Equipment items. Additional fiscal year 1998, funding to support 
these programs would for earlier fielding, thereby enhancing our 
warfighting capability.
    My top aviation acquisition priority is accelerating procurement of 
the V-22 aircraft. The most cost-efficient rate of procurement of the 
MV-22 is 36 per year. As the Undersecretary of Defense (Acquisition and 
Technology) stated in his letter of 30 May 1996 to the House Committee 
on Appropriations, as we increase production to 36 V-22's per year, we 
will realize additional real savings of $2.7 million per aircraft 
(constant fiscal year 1994 constant dollars). A production rate of 36 
per year thus saves $1.2 billion in constant fiscal year 1994 dollars 
over the total program, and up to $4.8 billion of inflation savings for 
a combined savings of up to $6.0 billion. Multi-year procurement is 
estimated to save even more since we can order materials more 
economically. Increasing V-22 production rates, even without multi-year 
procurement, is the most cost-effective way to modernize our aging 
fleet.
    Also, procurement of one additional remanufactured AV-8B in fiscal 
year 1998, would result in cost savings to the total program of 
approximately $1.7 million.
    Question. Which of these items are on any of the CINC integrated 
priority lists?
    Answer. The latest set of Unified CINC Integrated Priorities Lists 
(IPLs) were submitted to OSD between November 1996 and January 1997 to 
support the fiscal year 1999-2003 Program Review. The Unified CINCs' 
IPLs continue to stress near-term readiness, recapitalization, upgrades 
of existing systems, personnel quality of life, and have added 
counterterrorism and force protection.
    The unfunded Navy procurement, research and development, operation 
and maintenance, and manpower items identified in the answers above are 
all mentioned as priority items in separate READINESS, MODERNIZATION, 
RECAPITALIZATION, COMBAT FORCE STRUCTURE, THEATER MISSILE DEFENSE, 
STRATEGIC LIFT, AIR COMBAT, SEA COMBAT, COMBAT IDENTIFICATION, THEATER 
C41, MUNITIONS STOCKPILE, and FOLLOW-ON TACTICAL AIRCRAFT category 
sections of various CINC IPLs.

                                Examples
------------------------------------------------------------------------
              CINC                   IPL priority        Navy program
------------------------------------------------------------------------
USACOM..........................  Near-Term           Depot Maintenance
                                   Readiness and Qol   DDG-51, F/A-18  E/
                                   Recapitalization    F E-2C, Acoustic
                                   Modernization.      COTS
CENTCOM.........................  Theater Missile     Area and Theater
                                   Defense Sea         Wide LPD-17, ADS
                                   Combat Combat ID.   CEC
PACOM...........................  Theater-wide C4ISR  Info-Tech 21, DAMA
                                   Munitions           TLAM, JSOW LPD-17
                                   Stockpile           F/A-18 E/F Real
                                   Amphibious Lift     Property Maint.,
                                   Follow-On           Piers
                                   Tactical A/C Base
                                   Infrastructure.
------------------------------------------------------------------------


    Marine Corps Answer. The following items are listed on CINC 
integrated priority lists:
                                                         ($ in millions)
PMC...........................................................    $159.1
    Base Telecommunications Infrastructure....................      42.6
    Javelin Medium Antitank Weapon System.....................      17.0
    Light Tactical Vehicle Replacement (LVTR) Prgm............      65.1
    Combat Rubber Reconnaissance Craft (CRRC).................       1.6
    Light Armored Vehicle-Reliability and Maintainability (LAV 
      RAM)....................................................       0.8
    Chemical/Biological Incident Response Force (CBIRF) 
      Equipment...............................................      15.1
    MX11620 Gen III 25mm Image Intens Tubes...................      11.1
    Marine Enhancement Program (MEP)..........................       1.7
    Tactical Electronic Reconnaissance Processing and 
      Evaluation System (TERPES)..............................       4.1
O&MMC.........................................................     355.9
    Operating Forces O&M and Training Support.................      38.8
    Base Operations...........................................      40.7
    Initial Issue.............................................      20.7
    Chem/Bio Incident Response Force (CBIRF) Training and 
      Support.................................................       4.5
    Personnel Support Equipment...............................      25.4
    Joint Recruiting Information Support System (JRISS) 
      Infrastructure..........................................       4.8
    Rigid Raider Craft (RRC) Rehab Program....................       1.9
    Maintenance of Real Property (MRP)........................     194.1
    Depot Maintenance.........................................      25.0
O&MMCR........................................................       0.4
    Maintenance of Real Property..............................       0.4
APN...........................................................   1,424.3
    AV-8B (1 A/C, 22 T-AV8B Engines, Simulators...............     236.5
    V-22 (11 A/C, Spares and AP for Additional 9).............   1,094.0
    F/A-18D (2 A/C and Spares)................................      93.8
RDT&E (AVN)...................................................       3.9
    AV-8B Safety, Reliability and Operational Enhancement.....       3.9
RDT&E (GRND)..................................................      15.3
    Marine Enhancement Program (MEP)..........................       0.6
    Advanced Amphibious Assault Vehicle (AAAV)................      10.1
    Light Weight 155MM Howitzer (LW155).......................       3.6
    Tactical Electronic Reconnaissance Processing and 
      Evaluation System (TERPES)..............................       1.0
SCN...........................................................     746.0
    LPD-17....................................................     746.0
                    --------------------------------------------------------------
                    ____________________________________________________

Total.........................................................  $1,280.6
                    ==============================================================
                    ____________________________________________________
                  

                           DDG-51 Destroyers

    Question. The fiscal year 1998 budget requests $2.8 billion for 
construction of 3 DDG 51 destroyers. In last year's law, the Committee 
provided both additional funding and legislative authority for the Navy 
to pursue a 12 ship multiyear buy over 4 years. Secretary Douglass, 
please explain the Navy's acquisition plan for DDG 51 destroyers.
    Answer. The Navy intends to comply with the Fiscal Year 1997 
Defense Authorization and Appropriations Acts and execute a multiyear 
contract for the 12 fiscal year 1998 through fiscal year 2001 DDG 51 
Class ships at a rate of three per year. We plan to issue a multiyear 
Request For Proposals from Bath Iron Works and Ingalls Shipbuilding 
this spring, and award a contract before October 1997.
    Question. Last year, when the Navy formally requested (because it 
was not a proposal in the President's budget) additional funds to 
pursue a DDG 51 destroyer multiyear procurement contract, we were told 
that the tradition of evenly allocating ships between the 2 shipyards 
(Bath and Ingalls) would be maintained. Is that still your plan? If 
not, on what basis would you allocate work to the destroyer shipyards? 
Is it your intent to penalize the Bath yard in the DDG 51 program 
solely because it won the competition for a different (LPD 17) class of 
ships?
          Why is the Navy willing to compensate the Ingalls yard with 
        more work (taken from Bath) when Bath was not compensated in 
        the DDG 51 program years ago in an identical situation (when 
        Ingalls received contracts to build 7 LHD ships)?
    Answer. The Navy plan has been to evenly allocate ships between the 
two yards unless both shipbuilders concur with some alternative 
arrangement. The LPD-17 award has caused some concerns, and these 
concerns are under evaluation. The Navy will be involved in discussions 
with both shipbuilders on this issue, and the exact distribution of 
ships will be decided before the multiyear Request For Proposals is 
issued. The Navy does not intend to penalize any shipbuilder that loses 
a competitive contract. The Navy, however, must always reserve the 
authority to take appropriate action to preserve the defense industrial 
base when required. The Navy closely monitors the overall viability of 
the shipbuilding industrial base to ensure adequate sources of supply 
and capabilities are maintained to support the future needs of the 
Navy, and total program affordability.
    Question. Admiral Pilling, please explain why it is acceptable to 
the CNO, the fleet CINCs, and you that in the Navy's budget not a 
single ship under the multiyear plan (1998-2001) will be delivered to 
the fleet with anti-ship cruise missile defense nor ballistic defense 
capabilities?
    Answer. The Navy, in considerations associated with balancing Ship 
Construction, Navy (SCN) funds for the entire Department and executing 
a fully funded DDG-51 class ship procurement plan moved the 
introduction of Cooperative Engagement Capability (CEC), and Theater 
Ballistic Missile Defense (TBMD) capability in a forward fit 
configuration, out of the fiscal year 1998-fiscal year 2001 DDG-51 
Multi-Year Procurement (MYP). The 12 ships in the Multi-Year 
Procurement (MYP) will be built with the combat systems and computer 
software configuration base to allow rapid procurement and installation 
of Cooperative Engagement Capability (CEC) and Theater Ballistic 
Missile Defense (TBMD) as funds become available. The Navy has an 
integrated backfit plan for installing these capabilities and is 
reviewing acceleration options that deliver these much needed 
capabilities to the fleet as the technology becomes available, at the 
beginning of the next century.
    Question. Under your current plan, when is the first year that a 
DDG-51 would be delivered to a CINC's fleet with these capabilities 
installed?
    Answer. The option that provides the Navy the most rapid deployment 
of these capabilities is via backfit. Under the current Navy plan the 
first DDG-51 class destroyer will be backfit in fiscal year 2003 with 
additional ships scheduled in fiscal year 2004 and out. Under the 
current plan, ships appropriated in fiscal year 2002 will receive the 
first forward fit configuration, in production/construction. By 
Secretary of the Navy and Chief of Naval Operations direction, Navy is 
reviewing acceleration options that could nearly double the number of 
ships provided this capability (from 15 to 28) by fiscal year 2003.
    Question. Is there any technical reason why ship self-defense and 
ballistic missile defense capabilities cannot be installed on DDG 51 
destroyers prior to 2002 funded ships.
    Answer. It is technically feasible to introduce both Cooperative 
Engagement Capability (CEC) and Theater Ballistic Missile Defense 
(TBMD) as part of the multiyear procurement. The Navy is developing a 
plan which details the schedule and funding requirements necessary to 
ensure that both computer programs and equipment will support in-line 
introduction of TBMD and post-shakedown availabilities of CEC for the 
multiyear ships.
    Question. Mr. Douglass, we have never formally discussed the DDG 51 
multiyear proposal in a hearing. What are the costs, and what are the 
savings, from a multiyear strategy for 12 DDG 51 ships?
    Answer. The DDG multiyear procurement will save $1.2 billion 
dollars between fiscal year 1998 and fiscal year 2001. Savings that can 
be attributed to procurement savings, material savings and other 
factors equate to $788 million and are directly tied to the 
unprecedented long term stability offered by the multiyear process. The 
remaining $420 million is from increasing the number of ships purchased 
from 11 to 12 and by guaranteeing long term orders to the shipbuilders 
which reduce the unit cost of each ship by $35 million. In order to 
reap these impressive savings, we will spend $525 million in fiscal 
year 1997 and fiscal year 1998 for large economic order quantity buys 
of selected shipboard equipment. These funds were appropriated in 
fiscal year 1996 and fiscal year 1997 for this purpose or are included 
in the fiscal year 1998 budget request.
    The multiyear plan is a ``win-win'' strategy for the Congress, Navy 
and industry. Industry gets the long term stability in ship acquisition 
that they need to successfully plan for the future, the Navy gets an 
extra ship, and Congress sees significant cost reductions for the DDG 
program.
    Question. For the record, show the costs by fiscal year and ship 
hull number for capabilities that were dropped from DDG 51 ships 
between the time the multiyear approach was presented to Congressional 
committees last year and the current FYDP. Show each capability (e.g., 
CEC, TBMD, others) separately.
    Answer. The Navy had planned to introduce Baseline 7 Phase II in 
the Fiscal Year 2000 ships starting with DDG 97. This baseline includes 
CEC, TBMD, Advanced Processing, ID Upgrade Phase 2, SM-2 Blk 3B full 
integration, LAMPS Mk3 Block II, AIEWS Phase II, IRST/Precision ESM, 
NSFS, and several other software and hardware upgrades. Due to fiscal 
and technical concerns assessed in July and August 1996, we elected to 
defer the implementation of this baseline by four ships to fiscal year 
2002 (DDG 101), the first year after the multiyear. Since last July, we 
have been able to resolve many of the technical issues we faced, but 
the fiscal constraints remain. Deferring Baseline 7 Phase II from DDG 
97, 98, 99, and 100 saved a total of $117 million across fiscal year 
2000 and fiscal year 2001.
                              Arsenal Ship
    Question. The 1998 budget requests $150 million for development of 
the Arsenal Ship, which is basically a ship loaded with long range 
attack missiles. While cost estimates are very sketchy at this early 
stage in the program, the six ship program would cost at least $3 
billion. Admiral Pilling, please explain the Arsenal Ship concept.
    Answer. Arsenal Ship represents an affordable and much needed 
enhancement to our existing force of carriers and land attack capable 
combatants and submarines. It is not a replacement for these or for 
land-base air. Instead, it is a part of the whole--just as the 
Battleship was a part of the whole for nearly a century. Operating 
under the control and umbrella of regularly deployed Aegis combatants, 
Arsenal Ship will supply substantial firepower, early: giving unified 
Commanders-in-Chief (CINCs) the capability to halt or deter invasion 
and, if necessary, enable the build-up of coalition land-based air and 
ground forces to achieve favorable conflict resolution. With a force 
totaling about six, Arsenal Ships will be stationed continuously 
forward, always available for rapid movement upon receipt of even 
ambiguous or limited strategic warning. Much like our maritime pre-
positioning force, they will remain on station in support of a Unified 
CINC for indefinite periods without dependence on host nation support 
or permission.
    Question. Why do we need an Arsenal Ship, and why is it urgent to 
build it now?
    Answer. We need the Arsenal Ship as an affordable way to station 
massive firepower continuously forward, as an enhancement to our 
existing forces. The urgency to build it now falls into two areas: 
operational and programmatic. Operationally, we have a need to position 
massive firepower in forward areas and we need to do it affordably. We 
can and do currently accomplish that; Arsenal Ship allows us to do it 
cheaper. The sooner we build that capability, the sooner we can take 
advantage of those economies. Programmatically, there are many 
technologies that are now maturing to the point that they can be 
incorporated into this ship and the timing allows the Arsenal Ship to 
provide a technological bridge to the Navy's next surface combatant, 
the SC-21. Also programmatically, the Arsenal Ship is the Navy's most 
radical example of acquisition reform. Conducting this research and 
development project under DARPA's Section 845 authority now will allow 
us to learn from this effort and to incorporate the most successful 
aspects of acquisition reform into subsequent acquisitions.
    Question. Is the Arsenal Ship on any of the CINC integrated 
priority lists of requirements?
    Answer. The Arsenal Ship is not specifically listed on the CINC 
IPL, however it will enhance our ability to meet many of those 
requirements.
    Question. Who will ``own'' the Arsenal Ship?
    Answer. Arsenal Ship will operate in both peace and war as an 
integral fleet unit within the chain of command under Joint Combatant 
Command (COCOM). Peacetime Operational Control (OPCON) will normally be 
exercised by numbered fleet commanders. Within a Joint Task Force 
structure, OPCON will normally be exercised by the Joint Force Maritime 
Commander. Tactical Command (TACON) will normally be assigned to a 
naval commander.
    Question. How will the Arsenal Ship be employed, and what will be 
its mission?
    Answer. With about 500 missiles and space for future extended range 
gun systems, Arsenal Ships will be capable of launching many current 
and planned Department of Defense weapons across the warfare spectrum. 
Arsenal Ship can be positioned to destroy the enemy's critical 
infrastructure at or near inception of hostilities. Using precision 
guided missiles equipped with advanced penetrating warheads and sub-
munitions, this ship will serve as an additional maneuver element in 
the landing force or ground force commander's plan by isolating, 
immobilizing, or destroying enemy armored fighting vehicles, as well as 
providing fire in direct tactical support of ground forces.
    Employing the Cooperative Engagement Capability (CEC) ``remote 
magazine'' launch concept, the Arsenal Ship will provide additional 
magazine capacity for Theater Ballistic Missile Defense (TMBD) and air 
supremacy missiles. This concept allows for remote missile selection, 
on-board missile initialization and remote launch orders, and provides 
remote ``missile away'' messages to the control platform.
    Question. How will the Arsenal Ship contribute to the CINC's 
warfighting capability?
    Answer. Arsenal Ship is a firepower multiplier that, in conjunction 
with other naval forces, increases decisively the options available to 
the theater CINC. Arsenal Ship will be assigned to theater CINC to 
provide:
          Conventional Deterrence against regional aggression inimical 
        to U.S. interests,
          Flexible response for demonstration of power independent of 
        diplomatic limitations,
          Credible forward firepower support to joint and coalition 
        land forces early in a regional contingency if deterrence 
        fails.
    The Arsenal Ship weapon loadout will be robust, flexible and 
tailorable to CINC requirements in order to expand CINC options for use 
of assigned joint forces.
    Arsenal Ships will be fully integrated into the joint warfighting 
force structure. The ships will be capable of firing a variety of 
weapons in support of a land campaign, including Long Range Strike, 
Invasion topping, Fire Support to Joint Ground Forces, Tactical 
Ballistic Missile Defense and Air Superiority.
          Arsenal Ships will be stationed, operated and supported in 
        forward theaters for conventional deterrence and to provide 
        immediate responsiveness upon onset of hostilities.
    Question. Won't the Arsenal Ship be more vulnerable than other 
warships in theater?
    Answer. Though the Arsenal Ship will operate in any threat 
environment under the protective umbrella of the joint battle force, it 
must be survivable against 21st century anti-ship missiles, torpedoes, 
and mines. Passive defense will capitalize on the benefits of mass 
(tonnage), innovative applications of multiple hull integrity, and 
signature reduction. Active self-defense, if required, will be roughly 
equivalent to that of a combat logistics force ship.
    Question. What size crew will man the Arsenal Ship?
    Answer. Offboard integration of all but the most rudimentary C4I 
and survivability achieved primarily through passive design techniques 
will allow the Arsenal Ship to have a very small crew. Crew size will 
not exceed 50 personnel and the design objective is to minimize crew 
size to the maximum extent which is technically feasible. Reduced crew 
size is a principle driver in reducing the cost of ownership i.e., life 
cycle costs.
    Question. What is the total estimated development cost of the 
Arsenal Ship, and how was this number derived?
    Answer. Total Current Estimated Then-Year Dollar Development Cost 
for Arsenal Ship (in thousands of dollars)

----------------------------------------------------------------------------------------------------------------
                                        FY96       FY97       FY98       FY99       FY00       FY01      Total
----------------------------------------------------------------------------------------------------------------
DARPA..............................      1,000     18,577     47,200     50,000     36,000     22,000    174,777
NAVY...............................      3,999     17,976    102,994    139,499     79,680     11,287    355,435
                                    ----------------------------------------------------------------------------
Total..............................      4,999     36,553    150,194    189,499    115,680     33,287    530,212
----------------------------------------------------------------------------------------------------------------


    During the formulation of the Arsenal Ship Program in early 1996, 
rough order of magnitude (ROM) estimates were prepared for the various 
elements of the program. These included concept formulation, functional 
design, detailed design, the integration of various technologies, 
construction and testing of the prototype ship. The Navy/DARPA funding 
split was based on these ROM estimates and technology focus areas for 
the Navy and DARPA was codified in the May 26, 1996 Memorandum of 
Understanding between ASN(RD&A), CNO, and DARPA.
    Question. What are the estimated production costs for each of the 
six Arsenal Ships planned by the Navy, and upon what methodology are 
these amounts derived? Explain ``learning curve'' assumptions in 
detail.
    Answer. To allow the industry teams the maximum flexibility in 
meeting the aggressive Unit Sailaway Price (USP) goal of $450 million 
per ship, they have been asked to provide their production profiles for 
the construction of five Arsenal Ships and the conversion of the 
Demonstrator to an Arsenal Ship. The proposed production schedule of 
the one industry team selected to do detailed design of the Arsenal 
Ship and construction of the Demonstrator will be known in January 
1998. The Navy will use this input in developing its production profile 
and supporting SCN funding stream. The cost estimate for a production 
ship is unknown at this time as it is contingent on the successful 
industry team's irrevocable fixed price USP based on construction of 
the five ships. The USP will be strongly influenced by the production 
rate and build schedule proposed by the successful Phase III industry 
team. The three industry teams presently performing functional design 
work under DARPA Section 845 agreements are in an aggressive 
competition. Based on this competition, it is anticipated they are 
closely analyzing cost as an independent variable to ensure their 
concept designs can meet the government's USP goal of $450 million 
($550 maximum) in fiscal year 1998 dollars.
    Question. The Navy originally down-selected from five to two 
contractor teams for Arsenal ship development. Please explain your 
recent action, apparently in response to pressures from the Senate 
related to the Ingalls LPD 17 contract award protest, to reinsert the 
Ingalls team into the Arsenal ship competition after it had lost.
    Answer. The Arsenal Ship Phase II Source Selection, conducted by 
the joint Navy/DARPA team, determined that three, vice the previously 
anticipated two, industry designs were of such maturity and offered 
best value to the Government so as to be worthy of continued effort.

                     LPD-17 Amphibious Assault Ship

    Question. The LPD 17 class of 12 ships is a competitive program 
which will allow the Navy to retire 41 current ships and reduce 
manpower by 7,800. Congress appropriated funds for the first ship in 
fiscal year 1996, and the second ship was planned for fiscal year 1998. 
However, in the new budget, no funds are requested for the second ship. 
Secretary Douglass, would you please explain the Navy's acquisition 
strategy and rationale for your recent selection of the winning 
contractor team.
    Answer. The Request for Proposals (RFP) informed industry of the 
specific evaluation criteria to be used and their relative importance. 
The four categories used to evaluate proposals were:
    1. Detail Design, Total Ship Systems Integration, Testing, 
Logistics and Life Cycle Support Planning. This was a pass/fail 
category encompassing the traditional evaluation areas of management 
approach, program build strategy, technical approach to detail design, 
total ship engineering and integration, production approach, past 
performance and configuration management. In this category, the 
Offerors were also required to address the acquisition reform 
initiative known as Integrated Product and Process Development (IPPD), 
a management approach required to be used for performance of the 
contract consisting of co-located Government/Contractor personnel.
    2. Integrated Product Data Environment (IPDE). Another acquisition 
reform initiative implemented by the LPD 17 RFP, IPDE was defined as an 
information system capability which would be implemented in phases and 
which would support all phases of ship design, construction and life 
cycle support. Its core is to be a central product model database which 
is to serve as the single source of configuration data over the live 
cycle of the ship class. Traditional support data products, such as 
drawings and technical manuals, and program execution information, such 
as plans, schedules and procedures are also to be integrated within the 
IPDE. The RFP required that all of these previously paper-bound 
products be developed, updated, and available for reuse in an 
electronic form in a digital data environment.
    3. Ownership Cost Reduction Approach--Offerors were required to 
describe changes to existing processes and ways of doing business while 
designing and constructing LPD 17 that would lead to life cycle cost 
reductions during the in-service phase of all 12 ships in the class. 
Additionally, Offerors were required to describe an approach to 
developing tools and techniques to create a realistic baseline of life 
cycle costs against which savings could be measured and validated and a 
plan for integrating these tools and techniques into the IPDE.
    4. Price to Government--the price evaluation consisted of 
determining a realistic total evaluated estimated cost for each 
Offeror's proposed technical approach, taking into consideration audit 
findings with regard to each Offeror's projected labor and overhead 
rates for the period of performance.
    Section M of the RFP indicated that the basis for award would be 
overall best value to the Government and the best value would be 
determined as follows: non-price categories were significantly more 
important than price, and provided an Offeror received an acceptable 
score in Category 1, Category 3 was more important than Category 2. 
Section M also stated that the Government was willing to pay a premium, 
within budget constraints, and accept reasonable risk for the technical 
approach that demonstrated the potential for greater life cycle cost 
reductions.
    The Navy awarded the contract to the Avondale Alliance, a team 
consisting of Avondale Industries, Inc., as the prime contractor, Bath 
Iron Works as a shipbuilder teammate and major subcontractor, Hughes 
Aircraft Corporation as the total ship systems integrator, and 
Intergraph Corporation as the IPDE integrator. Using the criteria 
discussed above, a decision was made that the Avondale Alliance 
proposal represented the ``best value'' to the Government.
    Question. What, in your opinion, are the merits of the losing 
contractor team's recent protest to the General Accounting Office?
    Answer. By decision dated April 7, 1997, the General Accounting 
Office upheld the Navy's decision to award Avondale Industries, Inc., 
the contract for detail design, integration, and construction of U.S.S. 
San Antonio (LPD 17), with options for construction of LPD 18 and LPD 
19. The General Accounting Office's decision reflects a thorough 
examination of the facts related to the Navy's contract award. This 
decision validates the Navy award to Avondale Industries as proper and 
representing the best value to the Government and the American 
taxpayer.
    Question. The Navy's new shipbuilding plan proposes multiyear 
contracting for both DDG 51 destroyers and new attack submarines for 
many years. What is the risk to the LPD 17 program if Congress agrees 
to ``lock in'' funding for these ship programs, and then outyear 
budgets fail to materialize as currently projected by DoD--which by the 
way is what historically always happens?
    Answer. If outyear budgets fail to materialize, the production 
profile of LPD 17 could be reduced if production profiles of 
shipbuilding programs in multiyear contracts are held constant. 
However, the outyear shipbuilding budget profile for all programs is a 
balanced plan and we fully expect to fund the programs we have 
reflected in this plan.
    Question. How much would be required, and how much would be saved, 
if Congress appropriated funds for the second LPD 17 in fiscal year 
1998 rather then waiting until next year as envisioned by the 
Administration's plan?
    Answer. Accelerating a fellow ship into fiscal year 1998 has a 
beneficial effect on the shipbuilding industrial base workload. The 
estimated cost of a fiscal year 1998 LPD 17 class ship reflecting 
option prices from the Full Service Contractor is $746 million. A ship 
added in fiscal year 1998 would result in a reduction in total 
Shipbuilding and Conversion, Navy program costs of approximately $50 
million. Also, the current cost plus award fee contract structure 
provides for a lead ship and options for two follow ships with the 
phased combat system. The current budget structure provides for only a 
lead ship and one follow ship with the phased combat system, before 
beginning the fixed price incentive contract for the full combat system 
with Evolved Sea Sparrow Missile and Vertical Launch System. 
Consequently, the existing cost plus award fee option for the third 
ship, the first ship at the second yard, would not be exercised in the 
budget as now structured.
    If a ship is added in fiscal year 1998, the following table 
illustrates the delivery dates of the first, sixth and twelfth ship of 
the LPD 17 class:

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
FY 1998 Plan.........................  Sept 2002..............  Dec 2005...............  Dec 2008
FY 1998 Add..........................  Sept 2002..............  Jun 2005...............  Jun 2008
----------------------------------------------------------------------------------------------------------------


    Question. Will the winner of the competition be awarded all 12 
ships of the class?
    Answer. The approved acquisition strategy provides for establishing 
a long term relationship with the selected Full Service Contractor. 
Negotiated procurements with the Full Service Contractor are planned 
for the remaining nine ships assuming continued successful performance 
of each contract.
    Question. Compare estimated delivery dates of the first, sixth, and 
twelfth ships under the new budget plan compared to last year's plan. 
Is the program on track or slipping?
    Answer. The estimated delivery dates for the last ship of the LPD 
17 class is estimated to be six months later in the fiscal year 1998 
plan compared to the fiscal year 1997 plan. The following table 
illustrates the delivery dates of the first, sixth, and twelfth ships 
of the LPD 17 class:

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
FY 1997 Plan.........................  April 2002.............  June 2005..............  June 2008
FY 1998 Plan.........................  Sept 2002..............  Dec 2005...............  Dec 2008
----------------------------------------------------------------------------------------------------------------

                          New Attack Submarine

    Question. The Administration's plan for new submarine construction 
has been contentious in Congress during the past 2 years. The budget 
proposes a new plan, and Secretary Douglass is the architect. Mr. 
Douglass, please explain the Navy's new strategy for a teaming 
arrangement between Electric Boat and Newport News to jointly build the 
first 4 New Attack Submarines under a multiyear procurement contract.
    Answer. The Navy originally planned to sustain nuclear ship design 
and construction capabilities at Electric Boat with New Attack 
Submarines and at Newport News Shipbuilding with CVN construction and 
overhauls. The Fiscal Year 1996 and Fiscal Year 1997 National Defense 
Authorization Acts rejected this plan and split the first four New 
Attack Submarines between the two shipbuilders and directed a price 
competition for the fifth and later ships. The Navy could not fund the 
Congressional plan within its budget constraints.
    The Secretary of Defense Report on Nuclear Attack Submarine 
Procurement and Submarine Technology submitted to Congress on March 26, 
1996, stated that the Department would face major near term 
affordability issues in pursuing the plan directed by the Congress. The 
Secretary of Defense and the Secretary of the Navy, however, certified 
that the Navy would compete future New Attack Submarines on the basis 
of price in response to requirements in the National Defense 
Authorization Acts for Fiscal Years 1996 and 1997. In making this 
certification, the Navy made it clear that the Navy budget did not 
contain sufficient funds to execute the competition as directed by 
Congress.
    In addition to the funding issues mentioned above, the wording of 
the competition legislation presented other problems. The legislation 
directed that competition take place after allocation of two or four 
submarines. If competition were conducted after allocation of two 
submarines, neither submarine would be anywhere new completion at the 
time of the competition. If the competition were to occur after four 
submarines had been allocated, none of the four would be complete at 
the time of the competition.
    The legislation also called for a competition based on ``price''. 
This strongly implied that the winner should be chosen on the basis of 
price alone, regardless of the performance of the contractor in 
constructing the allocated submarines or the quality of the 
contractor's proposal. This section of the legislation also implied 
that the competition would be a ``winner-take-all'' competition. After 
such a competition, the Navy would be back in a sole source position 
and the losing contractor would still be building one or two 
submarines, leaving the future of these ships and their costs open to 
question.
    Finally, the fiscal year 1996 legislation contained a gap in 
production in fiscal year 2002 that would have created serious problems 
at one of the construction yards.
    A winner-take-all competition also risks shutting down one of the 
two remaining nuclear capable shipbuilders. In response to questions 
from Congress in 1995, the Navy estimated that it would cost $650 
million to $1.1 billion to transfer New Attack Submarine to Newport 
News Shipbuilding and shut down Electric Boat Corporation (worst case 
scenario). The Navy would also be faced with completing construction of 
expensive orphan submarines allocated by Congress to the losing 
shipbuilder and large cost impacts to the Seawolf program, should the 
Seawolf contractor lose the competition.
    Construction teaming will involve both shipbuilders, as Congress 
directed, but at a price the Navy can afford. Predicted cost avoidance 
from construction teaming ($450 million-$650 million over like 
profiles) makes the four-ship plan affordable. Specifically, teaming 
will:
          Enable near single learning curve economies;
          Avoid certain one-time costs from being incurred at both 
        yards (e.g., duplicate data bases, jigs, fixtures, etc.);
          Take advantage of each builder's strengths;
          Avoid the costly inefficiencies inherent in the restricted 
        communications which occur between two competing shipyards as a 
        result of proprietary concerns; and
          Provide stability to vendors, which yields savings in 
        material procurement.
    Competition in construction will not benefit the Government given 
the anticipated low build rate for submarines because:
          For effective price competition, at least two suppliers are 
        needed.
          To sustain two suppliers, there must be a sufficient, steady 
        level of business. The Navy outyear budget projections do not 
        contain sufficient submarine production to sustain an annual 
        competition until well into the next century.
          Loss of a builder with ongoing construction would be 
        extremely costly and result in a sole source submarine 
        supplier.
          Therefore, neither the Congressional mandate to have two 
        builders engaged in submarine construction nor the Department 
        of Defense policy to sustain two nuclear capable shipbuilders 
        would be achieved.
    The New Attack Submarine is a critical piece of a long range 
shipbuilding program that satisfies two overarching objectives. First, 
it meets the submarine force level requirements in the near term, as 
needed to maintain readiness by providing our Sailors with the best 
equipment at the most affordable price. Second, it seeks to protect to 
the extent possible without limited resources, the nation's critical 
maritime industrial base--shipyards, equipment suppliers, and 
engineering support base--that provides us with the most modern and 
war-ready Navy in the world.
    To be successful in these two objectives, we had to develop an 
affordable shipbuilding program that brings together all of the major 
constituent interests including Congress, the Department of Defense, 
the Navy research, development and acquisition communities, the 
warfighters, and the shipbuilding industry. To make this program more 
affordable, we had to be innovative and commit to establishing and 
maintaining a consistent shipbuilding program while investing in long-
term affordability initiatives as a key objective in the face of 
limited budget levels. The New Attack Submarine construction teaming 
and a single contract for four ships over five years is an affordable 
plan that is fully funded, executable and supports our national 
security requirements.
    Question. Has a Defense weapon system ever used a multiyear 
contract for the first four items off a production line? What are the 
risks? What are the benefits?
    Answer. Multiyear contracts for the first four items off a 
production have not been used by the Department of Defense. In the case 
of the New Attack Submarine the program was budgeted using a teaming 
approach and a single contract for production of the first four 
submarines. The use of a single contract for four ships provides the 
stable fiscal environment and business incentive for the two 
shipbuilders to team. Additionally, use of a single contract provides 
the least cost approach for maintaining both nuclear shipbuilders in 
the submarine construction business.
    Multiyear contracts have not been used for initial production 
contracts due to the statutory requirement for a stable design, which 
is usually proven out by Engineering and Manufacturing Development 
(EMD) units. In the case of aircraft programs, multiple units have been 
procured under a single, research and development contract for first 
item testing:
          The B-2 bomber program procured 6 EMD aircraft from Northrop 
        with Boeing as a major subcontractor. A production run of 20 
        aircraft were ultimately procured.
          The F/A-18 E/F program is procuring 7 EMD aircraft. 
        McDonnell-Douglas is the prime contractor and has a major 
        subcontractor relationship with Northrop-Grumman. The prime 
        holds the production contract with the government and has 
        associate contracts with all subcontractors.
    In the case of ships and submarines, the high unit costs make it 
impractical to have unique test platforms--so every effort must be made 
to reduce both risk and cost in the design, testing and production of 
the initial ship. Contracts for the first unit of any new design 
inherently involve a higher degree of cost uncertainty than follow-on 
contracts which can be priced using return cost data. However, the New 
Attack Submarine contract should present far less risk of cost growth 
than prior lead ship contracts due to actions taken by the program to 
mitigate risk and keep a focus on cost control.
    New Attack Submarine is the first submarine application of the 
design/build process, which eliminates the government as a middleman by 
making the shipbuilder responsible for ensuring that communications 
between designer and builder are fast, effective, and efficient. 
Historically, the government has acted as a middleman between the 
design agent and construction yard. A significant number of contract 
disputes over the past 25 years attributed major cost overruns to 
defective or late design information from separate Government design 
contracts. This problem should be avoided with New Attack Submarine's 
design/build approach.
    Based on the demonstrated success of the design/build process, 
confirmed by an OSD Design Maturity review completed in January 1997, 
the New Attack Submarine design will be far more mature than other 
submarine designs at the beginning of construction. For example, 
Seawolf had 4.5% of ship drawings available prior to construction 
contract award. New Attack Submarine plans and is on track to have 36% 
of ship drawings available prior to construction contract award and 60% 
available at construction start. Consequently, New Attack Submarine 
drawings will be available on average 1.5-2 years prior to construction 
requirements, as compared to less than a year for Seawolf. The early 
availability of drawings greatly reduce the risk of design changes 
during ship construction--traditionally, a major cause of cost 
increases.
    New Attack Submarine cost estimates are the most detailed ever 
developed for a new design submarine, and are based on an order of 
magnitude more cost estimating relationships than available on any 
other submarine. Consequently, the contract cost negotiated should be 
the most realistic ever.
    The use of a single contract for the first four New Attack 
Submarines will benefit the government by:
          Provides the opportunity for economic order quantities of 
        material,
          Allows for managing gaps in the production by providing a 
        mechanism for level loading of the manpower and workload,
          Gives near term stability for the shipbuilders and their 
        component suppliers to commit assets to the most cost effective 
        capitalization plans in support of this critical program.
    Question. The Committee understands that the contracts for the 
first 4 ships will be ``cost-plus'' versus ``fixed price.'' Is there a 
precedent in DOD for cost plus multiyear contracting?
    Answer. There is no precedence in shipbuilding for using a cost-
plus multiyear contract. Recent Department of Defense Guidance requires 
that a cost reimbursable contract be used for the lead ship of a class. 
In order to effectively manage ship construction costs under a cost 
reimbursable contract, the Navy will include incentive provisions 
similar to those used in fixed price contracts where the contractor can 
earn additional fee through reduction of costs.
    Question. Explain the Navy's plan to seek ``advance construction'' 
funding rather than the traditional ``advance procurement'' funding. 
Isn't this really just a euphemism for ``incremental funding''?
    Answer. The Future Years Defense Program accompanying the Fiscal 
Year 1998 President's Budget request identifies $767 million in fiscal 
year 2000 for the New Attack Submarine Program. These funds will be 
used as follows:
          $295 million will be used for advanced construction of the 
        fiscal year 2001 submarine. These advanced construction funds 
        will sustain critical waterfront tradesmen during the break in 
        New Attack Submarine production in fiscal year 2000. During 
        fiscal year 2000, these trades will begin work on the fiscal 
        year 2001 submarines. The funds are similar to the $450 million 
        industrial base funds provided by Congress for SSN 23 in fiscal 
        year 1992.
          $472 million will be used for advanced procurement of reactor 
        plant components for the fiscal year 2002 New Attack Submarine.
    Question. What is the Navy's acquisition strategy for the remaining 
boats, after the first 4 are built?
    Answer. The Navy intends to team for construction of the 30 ship 
New Attack Submarine class. The proposed construction teaming 
arrangement for the first four ships, however, neither requires, nor 
precludes, competition for subsequent submarine classes. The Navy 
reserves the option to adjust its submarine acquisition strategy based 
upon actual teaming experience and projected workloads in the future.
    Question. Why didn't the Administration simply propose a teaming 
arrangement years ago in the first place?
    Answer. The teaming proposal evolved as an affordable compromise 
between the Navy and Congressional New Attack Submarine construction 
plans. The Navy originally planned to sustain nuclear ship design and 
construction capabilities at Electric Boat with New Attack Submarines 
and at Newport News Shipbuilding with carrier construction and 
overhauls. This plan is affordable and retains two nuclear capable 
shipbuilders, as recommended in the 1993 Bottom Up Review. The Navy's 
proposal for single source New Attack Submarine construction was 
rejected by Congress. The Fiscal Year 1996 and Fiscal Year 1997 
National Defense Authorization Act required the Navy to allocate the 
first four New Attack Submarines to two shipbuilders then compete 
following ships on the basis of price.
    To reduce the cost of involving both shipbuilders, Electric Boat 
Corporation and Newport News Shipbuilding proposed a construction 
teaming arrangement under which the work for the first four ships will 
be shared by the shipbuilders. Construction teaming will allow both 
shipbuilders to be involved in New Attack Submarine construction, as 
Congress directed, but at a price the Navy can afford.

                           Strategic Sealift

    Question. The program to procure 19 Large Medium Speed Roll-on/
Roll-off (LMSR) ships is well underway at a cost of $6 billion. The 
1998 budget requests $813 million for LMSRs, to include $611 million 
for procurement of 2 ships, $132 million for overruns on the first five 
conversion ships, and $70 million for advanced procurement of the last 
ship in 1999. Mr. Douglass, what is the status of the LMSR program?
    Answer. The total requirement is for 19 ships of which five were 
conversions of commercial ships and the remaining 14 will be new 
construction. The five conversion ship contracts were awarded in July 
1993. Three ships have been delivered and the remaining two will 
deliver in May and November of this year. Of the 14 new construction 
ships we have 10 under contract; five each at Avondale (New Orleans) 
and NASSCO (San Diego). The first three new construction ships are 
scheduled to deliver in fiscal year 1998. Included in the 10 ships are 
two contract options for ships appropriated in fiscal year 1997 that we 
exercised in December 1996. Congress appropriated funds for a third 
ship in fiscal year 1997 which is not currently under contract.
    Question. What is your acquisition strategy for the additional ship 
added by Congress in 1997, and for the last ship remaining in fiscal 
year 1999?
    Answer. Our plan is to issue a two ship Request For Proposals in 
April 1997, combining the third fiscal year 1997 and the fiscal year 
1999 ships as a limited competition between the existing builders, 
Avondale and NASSCO. Contract award is planned for this summer.
    Question. How much would be required and how much would be saved, 
if Congress appropriated funds for the last LMSR in fiscal year 1998, 
rather that waiting until next year as envisioned by the 
Administration's plan?
    Answer. The fiscal year 1998 President's Budget requests $70 
million for advanced procurement in fiscal year 1998 and $322 million 
in fiscal year 1999 for the final ship. In fiscal year 1998, $306 
million would be required to accelerate the fiscal year 1999 ship--this 
translates to $51 million in total program savings. There would be no 
schedule recovery as each shipbuilder will be near maximum capacity in 
fiscal year 1998.
    Question. Explain the need for $131 million to cover overruns on 
the first 5 LMSRs, which were conversions of existing commercial ships. 
Is this the entire cost growth?
    Answer. The $131 million covers the portion of the cost growth for 
which the government is responsible. This is the entire cost growth of 
this program and remains unchanged from a year ago.
    The government was responsible for an initial schedule delay of 
approximately seven months for two primary causes. First, the U.S. 
Coast Guard revised and significantly increased the fire fighting 
system requirements to account for the hazardous cargo load. Second, 
the government furnished class standard equipment detail design 
information was delivered later than required by the shipbuilders. This 
was caused by accelerating the ship contract awards to support Army and 
JCS required delivery dates as well as strong interest in getting work 
into the industrial base. There is an additional 8-15 months of 
contractor responsible delay due to underestimating the complexity of 
the project, inefficient production, and slow start up by both 
contractors. These delays are reflected by the increased cost on the 
contract sharelines which the government shares with the contractor up 
to the ceiling amount.
    Question. What is the cost and schedule performance of the new 
construction LMSRs so far?
    Answer. Based on the December 1996 Selected Acquisition Report 
(SAR) and current returns on cost and schedule, all signs indicate each 
contractor will deliver their ships at or slightly above target price 
but within the Program Managers Estimate to which the Program is 
budgeted. The ships should also deliver within the revised schedule, 
which includes one or two months delivery date slippage related to 
recent strikes.
    Question. The Navy Comptroller revised all aircraft program advance 
procurement funding to conform to a new policy starting in 1998. Is the 
LMSR advance procurement following the same policy?
    Answer. No, LSMR advance procurement is not following the same 
policy as the aircraft program. The new policy for aircraft programs is 
to reflect minimum essential funding for advance procurement and 
contractor furnished equipment and budget for advance procurement only 
when it is cost effective and not to protect production schedules. The 
aircraft program advance procurement analysis now includes a present 
value analysis comparison of the procurement profile with and without 
advance procurement funding, showing cost effectiveness. In addition, 
the amount of termination liability coverage provided with advance 
procurement has been kept to a minimal level, covering only until the 
regular funding becomes available in October of the next fiscal year. 
In the past, some programs had adequate termination liability funding 
to cover the first quarter.
    The LMSR advance procurement reflects $70 million in fiscal year 
1997 to procure Contractor Furnished Equipment (CEE) equipment such as 
reduction gear, main control console, ship control console and main 
diesel engine. These long lead items, have a fifteen to eighteen month 
delivery schedule. In order to meet the Army load out date of fiscal 
year 2001, it was necessary to accelerate the build process of the 
fiscal year 1999 LMSR ship.
    Question. Explain why advance procurement is needed at all for the 
last ship.
    Answer. Advanced procurement is required only for the fiscal year 
1999 ship to support the DoD requirement to have all LMSRs delivered by 
the end of Fiscal Year 2001.
    Question. Was advance procurement used for the first 18 ships?
    Answer. There was no advanced procurement used for the first 18 
ships because there was sufficient time to build the ship after 
appropriations and still meet the required delivery dates as 
established in the Mobility Requirements Study.
    Question. What is the cost penalty if Congress denies this request 
in 1998?
    Answer. Should Congress deny this request, the penalty would be an 
increase in escalation and the inability of the Navy to meet the DoD 
requirement to deliver all LMSRs by the end of fiscal year 2001.

            Strategic Sealift Support Equipment (Lighterage)

    Question. The strategic sealift (LMSR) ships being built by the 
Navy are to support operations of the Army during war. Therefore, it is 
the Army's responsibility to buy support equipment for the new ships 
once they are delivered. Admiral Pilling, is it true that the first 
LMSR is now in operation but it has no lighterage aboard it?
    Answer. Yes, but Army modular causeway sections (MCS) are aboard T-
ACS GOPHER STATE and AMERICAN COMORANT also has Army watercraft assets 
aboard as part of the current Army War Reserve-3 package.
    Question. Are we buying $6 billion of LMSR sealift ships, yet have 
no equipment to unload them during combat?
    Answer. The Army is responsible for equipping and offloading the 
LMSRs. I defer to the Army to answer the offloading issue.
    Question. If the Army fails to buy lighterage, then a theater CINC 
would have to take lighterage from the Marines (MPS ships) and give it 
to the Army (LMSR ships). General Oster, would this be acceptable 
generally to the Marines during wartime?
    Answer. Generally, this option is acceptable upon the completion of 
the Maritime Prepositioning Force (MPF) mission. The CINC has fully 
capable, self-sustaining MPF assets and any use of the MPS lighterage 
to offload the Army LMSRs, prior to completion of the MPF mission, will 
degrade this mission capability.
    Question. Admiral Pilling, explain the CINC's requirement for ``Sea 
State 3'' lighterage.
    Answer. The CINCs require a sea state 3, service-interoperable 
LOTS/JLOTS capability to support expeditionary and theater sustainment 
logistics when ports are degraded or unavailable. In some critical 
areas of operation, sea state 3 conditions exist greater than 50% of 
the time. Failure to operate in sea state 3 in these situations may be 
a war stopper for these CINCs, if he cannot meet his throughput 
requirement to sustain the warfighting effort. A sea state 3 capable 
causeway lighter is one of the key systems required to successfully 
execute LOTS in a sea state 3 environment.
    Question. Mr. Douglass, please explain the Navy's plan and 
acquisition strategy to pursue Sea State 3 lighterage development and 
procurement.
    Answer. The Navy and the Army signed a Memorandum of Agreement in 
August 1996 to jointly develop a sea state 3 lighterage system. We are 
currently developing the Operational Requirements Document. The Navy 
plans to develop this as an Advanced Concept Technology Demonstration 
and has submitted a proposal for a two year $43.4 million development 
to OSD. The OSD approval will not be known until June 1997.
    Question. Does the Navy have all the funds it needs in the fiscal 
year 1998 budget for a robust development program to meet the CINC's 
requirements for sea state 3 lighterage? If not, how much is needed?
    Answer. No, we do not. The Navy has $4.8 million in the NDSF 
sealift R&D account for this development. The Navy has requested $15.9 
million from the OSD ACTD program to complete the fiscal year 1998 
funding requirements. An additional $22.7 million will be required in 
fiscal year 1999 to be shared by Army, Navy, and the ACTD program. As 
part of the ACTD, the following funding profile was proposed:

                                                 ($ in millions)
----------------------------------------------------------------------------------------------------------------
                                                               FY 98              FY 99              Total
----------------------------------------------------------------------------------------------------------------
ACTD (OSD).............................................              $15.9               $9.3              $25.2
Navy...................................................                4.8                4.3                9.1
Army...................................................                0.0                9.1                9.1
                                                        --------------------------------------------------------
    Total Funding......................................              $20.7              $22.7              $43.4
----------------------------------------------------------------------------------------------------------------

    Question. What would be the benefits, in terms of mating lighterage 
equipment to LMSR ship deliveries, of beginning the Sea State 3 
lighterage program in 1998?
    Answer. The proposed fiscal year 1998 ACTD would allow procurement 
of sea state 3 lighterage systems to begin in fiscal year 2000. The new 
systems could be loaded on the propositioned LMSRs as they return to 
the United States as part of their scheduled maintenance cycle.
    Question. What are the advantages during combat operations of 
having Sea State 3 lighterage versus today's Sea State 2 equipment?
    Answer. Advantages:
    1. With existing lighterage systems, offload of sealift ships stops 
as conditions approach the upper end of sea state 2. In some areas of 
operation, sea state condition 3 exists greater than 50% of the time. 
Having sea state 3 lighterage provides a critical element in achieving 
a sea state 3 capability that will enable the CINC to continue 
operations during higher sea states.
    2. Reduced life cycle costs through:
          O&M savings in operations and training through use of 
        identical systems by both services.
          O&M savings by using composite materials in lighterage 
        construction to decrease maintenance costs resulting from 
        storage and operations in a salt water environment.
          Economies of scale in acquisition and parts support.
                      LCAC Service Life Extension
    Question. The Navy's ``From the Sea'' strategy needs V-22s in the 
air and LCAC (Landing Craft Air Cushion) boats in the water to allow 
Marine combat forces to strike at great distances. Unfortunately, the 
LCAC fleet is not in good shape and the Navy has been slow to address 
the problem. Admiral Pilling, in what condition is the LCAC fleet 
today?
    Answer. The average craft in today's LCAC fleet is in very good 
condition. Today's LCACs have continued to perform well in a variety of 
challenging roles and have demonstrated a high degree of reliability. 
Every LCAC in the fleet currently meets or exceeds the Mission 
Reliability goal of 0.94 set by the LCAC Top Level Requirements (TLR). 
Although today's news is good, our concern is focused on the future 
condition of the LCAC fleet. The goal of our LCAC Life Cycle 
Maintenance Plan is to ensure that the current high levels of 
performance and reliability will be sustained well into the future.
    Question. How long can it remain viable if no Service Life 
Extension is performed?
    Answer. The cumulative detrimental effects of corrosion on the LCAC 
hull and its components pose a threat to the attainment of a full 20 
year design life. Without a major Depot Level effort to correct 
corrosion damage, the service life of some craft may be reduced to 
between 12 and 15 years. If a SLEP is not performed, the LCAC of the 
future will be less capable, less reliable, and significantly less 
affordable.
    Question. Does the FYDP (Future Years Defense Plan) accompanying 
the President's fiscal year 1998 budget contain an LCAC service life 
extension program. Is it fully funded?
    Answer. The FYDP accompanying the President's fiscal year 1998 
budget does contain an LCAC SLEP program. Navy requirements support 
this program commencing in fiscal year 2000. The LCAC's planned for 
induction into the SLEP program are fully funded.
    Question. The Committee understands that when the Navy retires its 
LST ships, the Marines will have to use LCACs to deliver fuel to shore. 
Do you have a sufficient number of LCACs to perform this mission?
    Answer. A number of concepts are currently being explored regarding 
future methods for the delivery of fuel, some of which involve the use 
of LCAC. These studies have not yet been completed, therefore, it has 
not been conclusively determined that fuel delivery will be a future 
LCAC mission.
    Fuel delivery is a follow-on assault echelon effort that could be 
supported by LCACs made available as the required lane breaching and 
critical landing of troops, amphibious vehicles, and HMMWVs are being 
completed. Bulk fuel delivery will be performed after hostile fire has 
been suppressed or eliminated around the craft landing zones. 
Reconfiguration for fuel delivery should not be a problem, since LCAC 
breaching and troop transporting configurations are designed for rapid 
installations and removals. Existing fuel container and pump systems 
can be accommodated by the LCAC. However, the exact number of LCAC 
required to carry out this mission has not yet been determined.
    Question. The Committee understands that a main mine-clearing 
approach involves LCAC launched anti-mine explosive charges. Do you 
have a sufficient number of LCACs to perform this mission?
    Answer. The Navy is currently developing mine clearing systems 
known as the Shallow Water Assault Breaching System (SABRE) and 
Distributed Explosive Technology (DET). Both are expected to reach a 
Milestone III decision in fiscal year 1998. A contingency capability is 
also being developed which will utilize the currently available MK-58 
Linear Demotion charge until the SABRE line charge is available in the 
fleet. At present, the LCAC is envisioned as the delivery platform for 
both of these systems. The number of LCAC required to perform the Lane 
Breaching mission has not yet been definitized. The quantity varies 
depending on a number of factors such as the tactics to be utilized, 
the number of lanes to be cleared, the egress route to be followed, and 
hydrography. War games and simulations are planned for the future to 
help quantify the number of craft required. It will then be necessary 
to determine whether or not the Lane Breaching mission requires 
dedicated craft in addition to those required for the basic mission of 
amphibious assault.
    Question. So without fuel and the ability to clear mines, how can 
the Marines perform their mission?
    Answer. Current doctrine capitalizes on the speed, range, and 
maneuverability of the LCAC to assault enemy beaches at locations of 
our own choosing, where the mine threat is minimal or non-existent. If 
this option is not available, traditional methods of mine clearance 
would be utilized. Delivery of fuel would likewise be accomplished 
utilizing traditional methods, whereby displacement craft and 
helicopters would transport fuel to the beach until such time as an 
offshore pipeline system could be put in place as part of the follow-on 
Maritime Prepositioning Force (MPF) or the Joint Logistics over-the-
Shore (JLOTS) Systems.
    Question. The LCAC fleet of today consists of 91 vehicles. Is that 
enough?
    Answer. The currently planned inventory level of 91 craft is 
sufficient to provide the 60 craft required to perform the mission of 
Amphibious Assault assuming a lift requirement of 2.5 Marine 
Expeditionary Brigade (MEB) plus 12 craft for training. Craft in excess 
of these requirements can be used to fulfill other missions or to cover 
for those craft in extended maintenance cycles.
    Question. Explain how the $37 million appropriated by Congress two 
years ago for LCAC SLEP was used.
    Answer. The $37 million is being used for LCAC SLEP development. 
This effort includes developing engineering packages for a new skirt, 
improved engine, improved corrosion control and updated electronics. 
Installation of these items on LCAC 91 will be accomplished in new 
construction. This is the last craft on the assembly line, scheduled 
for delivery in fiscal year 1999, and it will be the test platform for 
the new improvements.
    Question. Explain how the $37 million appropriated by Congress two 
years ago for LCAC SLEP was used.
    Answer. The $37 million is being used for LCAC SLEP development. 
This effort includes developing engineering packages for a new skirt, 
improved engine, improved corrosion control and updated electronics. 
Installation of these items on LCAC 91 will be accomplished in new 
construction. This is the last craft on the assembly line, scheduled 
for delivery in fiscal year 1999, and it will be the test platform for 
the new improvements.

                            Trident Backfit

    Question. The 1998 budget contains $154 million in the Other 
Procurement appropriation to start in earnest the TRIDENT submarine 
backfit with the D-5 missile. Secretary Douglass, is the TRIDENT 
backfit on track?
    Answer. Yes. The Fiscal Year 1998 President's Budget request funds 
the backfit of four of the original TRIDENT I (C-4) SSBNs stationed at 
Bangor, Washington, to TRIDENT II (D-5) capability under a ``split 
backfit'' approach. This approach was adopted, following the Nuclear 
Posture Review (NPR), as a strategy in the Navy's Fiscal Year 1996 
Budget to minimize then-current FYDP costs. The second set of backfits 
are funded entirely outside the FYDP. USS ALASKA (SSBN 732) and USS 
NEVADA (SSBN 733) will be backfit during the non-refueling engineered 
overhauls starting in fiscal year 2000 and fiscal year 2001, 
respectively. USS HENRY M. JACKSON (SSBN 730) and USS ALABAMA (SSBN 
731) will be backfit during refueling overhauls beginning in fiscal 
year 2004 and fiscal year 2005, respectively. Since each of the 
refueling overhauls is scheduled for a nominal two years, the four-ship 
backfit program will complete by the beginning of fiscal year 2007. The 
remaining four TRIDENT I (C-4) SSBNs are scheduled to be removed from 
strategic service in accordance with the NPR--two in fiscal year 2002 
and two in fiscal year 2003. All procurement actions leading to a 
planned May 2000 backfit start are proceeding on schedule.
    Question. In what years is the Trident Backfit program funded, and 
when will it be completed?
    Answer. The TRIDENT backfit schedule, as directed by the Nuclear 
Posture Review (NPR), is fully funded. Four of the original C4 TRIDENTs 
are planned to be backfit to D5 capability in a split schedule, the 
first two in fiscal year 2001 and 2002 and the second two in fiscal 
year 2004 and 2005. Other Procurement, Navy (OPN) funding for the 
shipboard portion (separate from Missile Flight Hardware and Motor Set 
expenditures) of the backfit program commences in fiscal year 1997 with 
procurement of long-lead (three year) hardware equipment. Funding 
continues through planned program completion in fiscal year 2007.
    Question. The budget proposes to slip $50 million for training 
equipment at the Bangor base from 1998 to fiscal year 1999. Why was 
this done and what is the impact? If the backfit program itself is not 
slipping compared to last year's schedule, then why would the training 
equipment be slipping?
    Answer. As an affordability measure within the Navy during Program 
Objective Memorandum (POM) 1998, $50 million in funds to procure 
equipment required to establish D-5 Strategic Weapons System training 
at Bangor were moved from fiscal year 1998 to fiscal year 1999. The 
funding delay of one year will have minimal, if any, impact on the 
ready for training (RFT) date in Bangor, since the strict lead-away-
from-need contract date was late fourth quarter of fiscal year 1998. 
The program manager (Director Strategic Systems Program) is attempting 
to prevent any delay in the RFT date by offsetting a one to two month 
procurement delay with a corresponding reduction in installation, test 
and checkout lead time. It should be noted that the original RFT date 
was set to coincide with the Pacific D5 initial operational capability 
(IOC) (May of 2002), and included provisions to fly the crews of the 
first two backfit units to Kings Bay for their conversion training. If 
a delay in training RFT date were to occur, there would exist a need to 
fly additional crews to Kings Bay for their refresher training, but no 
impact on the backfit schedule would be imposed.
    Question. When (and if) the START II Treaty is ratified, what are 
the Navy plans for use of the 4 Trident submarines that would be 
retired in 2003 not because of their service life but because of treaty 
constraints? Describe the expected conditions of these boats. What 
alternative uses are being considered?
    Answer. The Nuclear Posture Review determined that only 14 TRIDENT 
SSBNs are required for strategic service under START II, making 4 
available for other uses. Once START II ratification occurs or if a 
relaxation of the law prohibiting removal of these units from strategic 
service prior to START II ratification were provided, the possibility 
exists to convert them to a tactical role. The TRIDENT platform's 
inherent stealth, mobility and endurance, and potential for offensive 
armament could be put to good use in what the Navy is currently 
examining as the TRIDENT SSGN concept (combined Strike/Special 
Operations Forces (SOF)).
    Under the concept, the TRIDENT SSGN would carry up to 132 vertical 
launch missiles (Tomahawk or Navy Tactical Missile (NTACM)) and be 
fitted to employ both the dual dry-deck shelter (DDS) or Advanced Seal 
Delivery System (ASDS) and over 100 fully equipped SOF troops. The 
extensive planned maintenance program for the TRIDENT submarines has 
kept them in outstanding condition.

                          Aircraft Carrier R&D

    Question. The budget requests $90 million for aircraft carrier 
research and development for the carrier after the next one. The next 
one, CVN-77, is planned for construction starting in 2002 while the 
future carrier, CVX, is planned to begin construction in 2006. Total 
R&D investment for CVX will be at least $650 million through 2002. 
Admiral Pilling, please discuss the Navy's vision for the next 2 
aircraft carriers, CVN-77 and CVX.
    Answer. The total R&D investment for CVX will be at least $812 
million through 2002. The Navy is fully committed to a dual track 
carrier acquisition strategy that maintains the current force 
structure. This strategy procures the tenth and final Nimitz class 
carrier, CVN 77, in fiscal year 2002 to replace a KITTY HAWK class 
carrier after completion of 47 years of active service in fiscal year 
2008. The second element of the Navy's strategy is to transition to the 
future with a new carrier design, CVX, to begin in fiscal year 2006 to 
replace USS Enterprise (CVN 65) at the end of her service life at 52 
years in fiscal year 2013.
    CVN 77 will be a ``Smart Transition'' aircraft carrier that will 
incorporate new technologies to improve affordability and reduce total 
ownership costs for CVN 77. In addition, these technologies could be 
backfit into the existing Nimitz class carriers to reduce life cycle 
costs. It would also mitigate risk for selected new technologies to be 
fully implemented in CVX.
    The Navy's vision for CVX is to design a new class of aircraft 
carrier for operations in the 21st century that will maintain the core 
capabilities of naval aviation (high-volume firepower, survivability, 
sustainability and mobility), to significantly reduce total ownership 
costs, and to incorporate an architecture for change within the design 
of the ship. Achieving this vision will require significant design 
changes for a new platform. The Navy is pursuing significant 
improvements in the future design, such as a new aircraft launch and 
recovery system, increased sortie generation capability to match 
projected fast turnaround capabilities of next-generation aircraft, 
improvements in ship survivability, improvements in C4I capability, 
reducing topside design congestion, and reducing manpower requirements. 
Such ambitious goals require a new ship design to incorporate the 
advances that are being made in technology and to incorporate 
affordability initiatives.
    Question. How would CVX be different from the current class of 
aircraft carriers, and why is so much R&D required?
    Answer. CVX will be the first new carrier designed in over 30 
years. In March 1996, the Defense Acquisition Board (DAB) approved the 
Navy's long term aircraft carrier acquisition strategy which provided 
the Navy an opportunity to fundamentally review design options from a 
clean sheet of paper for the future carrier, CVX. The design review now 
being conducted includes analysis of all aspects of the carriers 
concept of operations, airwing types and sizes, aircraft carrier launch 
and recovery development, ship type and size, and numerous other ship 
systems development. CVX will be similar to our current aircraft 
carriers in that it will maintain the core capabilities of naval 
aviation (high-volume firepower, survivability, sustainability, 
mobility, and responsiveness). CVX will be different in that it will 
introduce new technologies, systems, designs, and processes that will 
significantly reduce total ownership costs as compared to a Nimitz 
class ship, and incorporate flexibility for change within the design of 
the ship.
    In the fiscal year 1998 President's Budget, there is $125.1 million 
funded to start the development of key technologies for CVX and to 
continue concept studies and analyses of CVX design alternatives. Some 
of the efforts planned to commence in fiscal year 1998 are development 
of an Advanced Technology Launcher (ATL), assessment of ski-jump 
options for integration with catapults, dynamic armor and other passive 
protection systems, Zonal Electric Distribution Systems, assessments of 
technologies to reduce manpower requirements, and assessment of 
technologies to develop an adjunct multi-function radar system to 
perform control and landing guidance functions.
    Question. What would be the impact of delaying the CVX R&D program 
for one year?
    Answer. A delay in the CVX R&D program for one year would adversely 
impact development of time-critical technologies for CVX. In the Fiscal 
Year 1998 President's Budget request, the time-critical technology 
initiatives planned to start are propulsion systems, alternative 
aircraft launchers, advanced armor systems, manning reduction, topside 
design, advanced computing, aviation weapons handling, and alternative 
flight deck design. All of these initiatives are intended to reduce 
onboard manning, reduce required maintenance over the life of the 
carrier and maintain warfighting capability into the future. Any delay 
in the funding of these R&D technologies for the future carrier design 
would seriously jeopardize the Navy's ability to deliver in time the 
new technologies needed to improve CVX performance while at the same 
time reducing life cycle costs.
    Question. What would be the impact of providing only half of what 
you requested in 1998 for CVX?
    Answer. A reduction in the funding of these R&D technologies for 
the future carrier design would seriously jeopardize the Navy's ability 
to deliver in time the new technologies needed to improve CVX 
performance while at the same time reducing life cycle costs. A 
reduction in the CVX R&D program by one half would adversely impact 
development of time-critical technologies for CVX and result in a one 
year delay in the program. In the Fiscal Year 1998 President's Budget 
request, the time-critical technology initiatives planned to start are 
propulsion systems, alternative aircraft launchers, advanced armor 
systems, manning reduction, topside design, advanced computing, 
aviation weapons handling, and alternative flight deck design. All of 
these initiatives are intended to reduce onboard manning, reduce 
required maintenance over the life of the carrier and maintain 
warfighting capability into the future.
    Question. The Navy has already demonstrated its inability to fully 
fund its carriers by dropping $120 million of critical features from 
the Nimitz overhaul in 1998. What critical features have already been 
dropped from CVN-77?
    Answer. The Navy plan for USS Nimitz includes incorporation of all 
critical warfighting improvements, including ship self defense 
capability. Following the Refueling Complex Overhaul (RCOH), Nimitz 
will undergo a Post Shakedown Availability/Selected Restricted 
Availability (PSA/SRA), as is typical after an overhaul of such scope. 
Critical modernization items not included in the RCOH budget are 
planned for execution during the PSA/SRA. Upon completion of the RCOH 
and the PSA/SRA, USS Nimitz will rejoin the Fleet as a modernized, 
recapitalized, fully capable asset prior to her first post-RCOH 
deployment.
    CVN 77, the last Nimitz Class carrier, will replace an aging Kitty 
Hawk Class carrier after 47 years of service life in fiscal year 2008, 
and it will be a ``Smart Transition'' carrier that will introduce new 
technologies to improve affordability and reduce life cycle costs for 
CVN 77. In addition, these technologies could be backfit into the 
existing Nimitz class carriers to reduce life cycle costs. It would 
also mitigate risks for selected new technologies to be fully 
implemented in CVX. Initial funding for CVN 77 R&D is scheduled to 
begin in fiscal year 1998. The range of options on critical features 
for CVN 77 remains to be evaluated.

                        Submarine Technology R&D

    Question. In the late 1980s, the Congress insisted that the Navy 
spend more on submarine technology R&D and the Navy fought it. 
Eventually, the Navy saw the wisdom of this approach, but unfortunately 
was so slow to act that little of the $500 million investment actually 
resulted in equipment for the Seawolf or New Attack Submarine. The Navy 
now claims that we should start investing in submarine technology 
again. Admiral Pilling, why does the Navy now think an increased 
investment in submarine technology R&D is worth making?
    Answer. Historically, submarine technology development, maturation, 
and transition have been performed on a cyclical base in conjunction 
with building the ``next'' class of submarine. This cyclic approach was 
generally successful when there was overlapping development of multiple 
submarine classes and block upgrades. The current situation of low 
production rate of submarines coupled with high rate of technology 
turnover, dictate a more steady funding profile for technology 
development, maturation and transition. Therefore, the Navy intends to 
pursue a funding approach to submarine R&D to ensure technologies 
continue to transition to NSSN. As NSSN moves to production phase, the 
development dollars in the NSSN program are declining. The Navy has 
programmed increased money into its two primary program elements for 
submarine R&D-PE 0603504N (Advanced Submarine Combat Systems 
Development) and PE 0603561N (Advanced Submarine Systems Development). 
The increased funding in these program elements will maintain a funded 
R&D program at an appropriate level to support exploration of promising 
technologies and development to maturity.
    Question. How much more is in the Navy's outyear budget plan for 
submarine technology R&D compared to last year?
    Answer. Following the lead of the $60 million congressional plus-up 
in fiscal year 1997, the President's Budget for fiscal year 1998 
sustains the $60 million level of increased funding through fiscal year 
2000, for a total of $180 million. Funding for fiscal year 2001 and 
later will be addressed in the Navy's upcoming budget review cycle.
    Question. In what areas does the Navy now plan to invest, and why 
are they deemed important?
    Answer. The Navy's near term and long term submarine technology 
investment plans are outlined in the first annual update to the 
Secretary of Defense report on Nuclear Attack Submarine Procurement and 
Submarine Technology. This report was forwarded to the Congress on 
March 14, 1997. An excerpt from this report describing the Navy's 
technology investment plans is attached.
2.1 Background
    Historically, several nuclear submarine development programs 
proceeded in parallel. Each new submarine program drew extensively from 
the previous program, and general research and development (R&D) 
programs. Technology funding was increased in the early years of a 
submarine program, and reduced to a subsistence level during serial 
production. This cyclic approach worked in the past because there was 
an overlap of multiple submarine design, production, and modernization 
programs. This approach was successful for the New Attack Submarine 
(NSSN) design, which incorporates advanced technology to meet all 
projected military requirements, and has the flexibility to accept 
emerging technologies that will reduce life cycle costs or enhance 
capabilities.
2.2 Current Submarine Technology Development
    Today, extremely low submarine production rates, coupled with the 
rapid pace of technological advancement, dictate a more steady funding 
profile for technology development, maturation, and transition. This 
approach requires a change in technology management. Accordingly, the 
Department of Defense (DoD) established the Submarine Technology 
Oversight Council (SUBTOC) to advise submarine technology integrated 
product teams (IPTs). This increases the opportunity to identify and 
select innovative technology for insertion in the NSSN to maintain its 
margin of warfighting superiority. A description of this approach can 
be found in the Under Secretary of Defense (Acquisition and Technology) 
Report on Advanced Submarine Technology issued in October 1996. 
Subsequently, a new flag officer position, the Office of the Director, 
Submarine Technology (ODST), has been created in the Naval Sea Systems 
Command to be the single point of contact for submarine R&D.
2.3 Submarine Technology Management
    To help improve submarine technology management and coordination, 
the Navy recently established the ODST. Accountable to Assistant 
Secretary of the Navy (Research, Development, and Acquisition) 
(ASN(RDA)) and the Chief of Naval Operations, ODST is the single point 
of contact for all submarine R&D programs in the Department of the 
Navy, and is key to coordinating submarine technology efforts between 
the NSSN Program Manager and the submarine R&D community. Specifically, 
ODST's mission is to:
          coordinate and integrate all submarine R&D activities among 
        the DoD, Navy, and industry;
          identify new technologies to meet changes in warfare 
        requirements;
          ensure that Navy technology plans support and are in 
        accordance with DoD and national strategies for science, 
        technology, and national security objectives;
          articulate Navy warfare requirements to industry technology 
        providers;
          develop technology transition plans for incorporating 
        improved technology into submarine hulls;
          ensure submarine shipbuilders participate fully in the Navy's 
        submarine technology development program; and
          co-chair the Flag Chaired IPT responsible for integrating 
        major technology providers within the Navy.
    As co-chairman of the Flag Chaired IPT, the Director, Submarine 
Technology oversees the activities of the working level teams in 
support of the SUBTOC. The SUBTOC ensures that the efforts to advance 
submarine technology from initial concept to production are coordinate 
within the DoD. The SUBTOC is co-chaired by the Under Secretary of 
Defense (Acquisition and Technology) and ASN(RDA). It has regularly met 
to provide top-level guidance to submarine technology managers. The 
major issues it has addressed include strategic areas for submarine 
technology investment, Defense Advanced Research Projects Agency 
(DARPA) participation in submarine technology development, insertion of 
technology in NSSNs, and the development of effective dialog between 
shipbuilders and the Navy on technology issues.
    The Flag Chaired IPT integrates and prioritizes inputs provided by 
the System Oriented IPTs (SOIPTs), and provides recommendations to 
resource sponsors. The Flag Chaired IPT, in conjunction with the 
SOIPTs, completed a seven-month process in February 1997 that 
established the integrated submarine technology strategic goals and 
plans described in Sections 2.5 and 2.6. The SOIPTs developed consensus 
on technology goals, evaluated on-going projects, and developed 
investment recommendations for the Flag Chaired IPT. Objectives of the 
Flag Chaired IPT include improving the definition of requirements and 
objectives for the technology development community, and balancing 
performance, schedule, and cost for potential technology improvements.
2.4 Submarine Technology Investment Strategy
    The NSSN is designed to provide a capable, technologically robust 
warship that meets all military requirements at an affordable price. It 
is important to recognize that incorporation of future technologies 
into the NSSN platform will be made feasible, in large measure, due to 
the innovative ``design and build'' process. The extensive use of 
computer-aided design and engineering tools permitted the Navy to 
incorporate state-of-the-art technologies into the baseline design, 
while providing sufficient flexibility into the ship necessary to 
permit the insertion of technologies that may be developed in the 
future. Figure 2.1 identifies the advanced technologies that have been 
incorporated into the base design of the NSSN.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    The fiscal year 1998 (FY98) budget contains funds to support 
insertion of advanced technologies to further enhance the stealth, 
affordability, and capability reflected in the NSSN. The Congress 
strongly supported this approach by providing an additional $60 million 
to accelerate the insertion of selected technologies. Table 2.1 
provides the spending plan for the additional $60 million of R&D funds 
provided by Congress.

Table 2.1

Technology Development and Maturation Plan

                                              FY97 Funds ($ in millions)
Insertion Opportunities:
    Fiber Optic Sensors (LWWA)....................................  $8.8
    Advanced Hybrid Propulsor.....................................   3.2
    Elastomeric Ejection System...................................   1.5
    Advanced Acoustic Sensors.....................................   1.1
    Advanced Acoustic Sensor Processing...........................  10.0
Core:
    Rim Driven Motors.............................................   4.4
    Structural Acoustics..........................................  13.0
    Hydrodynamics.................................................   5.0
    Propulsion....................................................   7.0
    Design Improvement Evaluations................................   5.0
Congressional Direction:
    Doppler Sonar Velocity Log....................................   1.0
                                                                  ______
        Total....................................................\1\60.0

\1\Of the above, each shipbuilder received $9.4 million

    In addition, the Congress redirected $50 million of FY96 funds from 
the National Defense Sealift Fund to pursue design and construction of 
a second Large Scale Vehicle (LSV-II). Newport News Shipbuilding (NNS) 
and Electric Boat Corporation (EB) have agreed to collaborate on the 
development of the LSV-II. The Navy plans to have the LSV-II under 
contract in the summer of 1997. LSV-II will provide a key capability 
for future technology development.
    The President's Budget for FY98 sustains the $60 million level of 
increased funding in submarine R&D through FY00 in order to provide 
mature technologies that will be available for insertion into early 
NSSNs. Additional funding to enable the insertion of these technologies 
during the construction of NSSNs will be addressed as maturing 
technologies are evaluated through the design improvement process 
described in the accompanying report. This additional funding will be 
prioritized within the DoD's program and budget review process. The $60 
million provided by Congress for FY97, along with the additional 
funding the Navy has committed to submarine technology, will help 
enable the DoD to advance the development and maturation of submarine 
technologies, and invigorate the technology pipeline.
    Based on the available funding and the efforts of the management 
team, technology focus areas have been established and the technology 
insertion plan has been refined. These focus areas have enabled the DoD 
to establish a balanced investment strategy employing a steady funding 
stream to achieve substantial gains in submarine military performance 
and affordability.
2.5 Submarine Technology Focus Areas
    Advanced submarine technology R&D programs will focus on achieving 
large step improvements in connectivity, payload (which includes power 
projection), stealth, and sensors and processors. Incremental insertion 
of these maturing technologies into the NSSN, as was done with the LOS 
ANGLELES class, will ensure the US maintains submarine superiority.
    Connectivity: Technologies that provide secure command and control 
connectivity between the National Command Authorities and the on-scene 
commander. Effective real-time two-way communication with the National 
Command Authorities, combined with a total area situational awareness 
capability is vital to submarines in support of joint warfighting 
missions. As international crises change rapidly, a submarine must 
provide and receive updates on tactical situations in its assigned area 
to achieve maximum advantage.
    Investments in rapidly developing fields of connectivity span the 
entire range of information warfare and battlefield dominance 
technologies. The ability to receive, transmit, and comprehend ever-
increasing volumes of data while remaining stealthy are a vital part of 
this investment. Advanced displays will be developed using the best 
commercial, open system architecture offered by industry, as will off-
board vehicles that will greatly expand the submarine sensor's reach.
    Payloads: Technologies that enhance maritime support of land 
forces, in-theater fire support, and reconnaissance capabilities. As 
with the NSSN, flexibility of mission assignment is a vital attribute 
for future submarines. Payloads possess the warfighting capabilities 
for submarines, and a varied selection of payloads will provide maximum 
flexibility to national and theater commanders, whether the mission is 
reconnaissance, interdiction at sea, or strike in support of land 
forces.
    Advanced strike weapons such as Navy Tactical Missile System 
(NTACMS) expand the range of stealthy strike options for the battle 
force commander. Submarine launched and controlled Unmanned Undersea 
Vehicles (UUVs) will expand the battle force horizons.
    Stealth: Technologies that improve covertness and minimize 
vulnerability. Since its invention, the principle military value of the 
submarine has been its inherent stealth; i.e., its ability to control 
an area without being detected by the enemy. The submarine has the 
capability to operate in an assigned area with impunity, and conduct 
intelligence and surveillance missions in advance of a battle group, 
launch special operations forces, or support deployed forces ashore. 
Hence, stealth is the one essential element that distinguishes 
submarines from all other warfighting platforms. During the Falklands 
war, for example, the threat posed by British submarines in the area 
after the Belgrano was torpedoed and sunk forced the Argentinean navy 
to sit in port. This had a strategic impact on the course of the 
conflict since Argentinean ground forces in the Falklands were 
prevented from being re-supplied.
    Continued technology investment in stealth is vitally important to 
the sustained advancement of submarine warfare. Stealth investments 
represent efforts to become undetectable to acoustic, infra-red, 
optical, radar, and electromagnetic sensors. Both SEAWOLF and NSSN 
represent major advances in stealth. Past stealth investments such as 
quiet nuclear reactor coolant pumps and propulsors originated from 
long-term efforts, and are just now entering the fleet aboard the 
SEAWOLF class submarines. In the future, electric drive propulsion and 
hydrodynamic advances will be necessary to provide substantial 
improvement in submarine acoustic quieting, which will be needed to 
maintain our margin of superiority. These long-term efforts must be 
coupled with a steady investment.
    Sensors and Processors: Technologies that enhance battlefield 
preparation and interdiction. Coupled with our strategy for enhancing 
the military value of submarines in connectivity, payloads, and 
stealth, the extraordinary flexibility of NSSN open architecture allows 
for the rapid and affordable integration of industry-driven leaps in 
advanced sensors and processors. These advances will be vital to 
sustaining battlefield awareness and tactical control, and to meet 
targeting requirements for advanced weapons.
    Technologies to be pursued include high-frequency sonar imaging, 
wake detection, advanced electronic countermeasures, advanced sonar 
synthetic aperture processing, and the application of fiber optic 
technology to sonar sensors. In particular, the advanced hull sonar 
program, if successful, has the potential for substantially altering 
the design of the submarine's hull by eliminating the need for a 
conventional sonar sphere in the bow section.
    Inherent to all focus areas is the commitment to affordability by 
pursuing technologies that will reduce submarine design, construction, 
and life cycle costs.
2.6 Technology Investment Plan
    Near-Term Technology Insertion Opportunities: The near-term 
emphasis to develop those technologies that will enhance joint force 
interoperability and real-time communications, and ensure sustained 
dominance of littoral (coastal) engagements. While achieving this goal 
will require technologies from each of the areas discussed above, the 
focus will be connectivity and payload. Near-term technologies in 
connectivity that have potential for insertion include situational 
awareness, data fusion, acoustic communications, and NTACMs. Near-term 
technology opportunities are also driven by industry advances, 
especially in the area of sensors and processing. The DoD will continue 
to use methods such as rapid insertion of commercial-off-the-shelf 
(COTS) equipment into NSSN open architecture systems to capture 
industry advances.
    Appendix A provides a list of technologies that have the potential 
to enhance affordability to capability of early NSSNs. Many of these 
technologies were previously reported as Category I and II 
technologies.
    Core Technology Development: The long-term emphasis is to assure 
our continued dominance in stealth, which is the single most important 
attribute for submarines operating in either the open ocean or littoral 
waters. Stealth allows submarines to operate in any ocean in the world 
with virtual impunity. Existing propulsion and hydrodynamic 
technologies have limited potential for growth.
    Many new technologies and novel approaches must be pursued. Though 
many of the new concepts for achieving the necessary technological 
breakthrough exist, their development will entail a moderate level of 
technical risk, and an unprecedented degree of integration over a broad 
range of disciplines.
    Foremost among these efforts is the commitment to electric drive as 
a replacement for steam turbine propulsion. Electric drive, with its 
accompanying flexibility in electric plant architecture and component 
design, is expected to provide the necessary acoustic growth potential 
for the propulsion plant. Equally important are fundamental and 
synergistic changes to submarine hydroacoustic and hydrodynamic 
architectures. This includes significant changes to the sail, 
propulsor, hull shape, sonar, appendages, and other items pertinent to 
maneuvering and acoustics.
    The wide range of core technologies being developed or evaluated 
are listed in Appendix B. This reporting category includes technologies 
previously reported as Core and Category III technologies.
    Question. Can you assure us that this time ``we won't get burned 
again,'' and that the results of this R&D will actually go into a 
future Navy submarine?
    Answer: Many of the technologies developed from the R&D infusion of 
the 1980s (Advanced Vibration Reducer, Non-Penetrating Periscope, EM 
Silencing Equipment, etc.), have transitioned to submarines at sea 
today or are in use as vital development tools (Hydroacoustic/
hydrodynamic Technology Center, Intermediate Scale Measurement System).
    The Secretary of Defense Report on Nuclear Attack Submarine 
Procurement and Submarine Technology dated March 1997, identifies 
several promising technologies for development. For those technologies 
identified in the 1997 update as having the greatest potential for 
insertion, the Navy has budgeted the necessary R&D funds to mature them 
to the point of transition to a submarine design. At this point, 
potential design improvements will be evaluated based on a variety of 
criteria, including military requirements, technical feasibility, total 
ship impact, risk elements, impact on the mission effectiveness, cost 
impact and relative maturity of the technology. The Secretary of the 
Navy Report on Shipbuilder Design Improvements for the New Attack 
Submarine dated March 1997 provides a detailed description of the 
formal process the Navy will use to ensure continued improvement of 
submarines through insertion of technological innovations.
    Question. How did the Navy use the $60 million additional funds 
that Congress appropriated in 1997 for advanced submarine technology?
    Answer. The Navy plans to spend the $60 million provided by 
Congress in fiscal year 1997 as follows:
Insertion Opportunities:                                  ($ in million)
    Fiber Optic Sensors (LWWAA)...................................  $8.8
    Advanced Hybrid Propulsor.....................................   3.2
    Elastomeric Ejection System...................................   1.5
    Advanced Acoustic Sensors.....................................   1.1
    Advanced Acoustic Sensor Processing...........................  10.0
Core:
    Rim Driven Motors.............................................   4.4
    Structural Acoustics..........................................  13.0
    Hydrodynamics.................................................   5.0
    Propulsion....................................................   7.0
    Design Improvement Evaluations................................   5.0
Congressional Direction:
    Doppler Sonar Velocity Log....................................  $1.0

        Total..................................................... $60.0

\1\Of the above, each shipbuilder received $9.4 million

    In addition, the Congress redirected $50 million of fiscal year 
1996 funds from the National Defense Sealift Fund to pursue design and 
construction of a second Large Scale Vehicle (LSV-II). Newport News 
Shipbuilding and Electric Boat Corporation have agreed to collaborate 
on the development of the LSV-II. The Navy plans to have the LSV-II 
under contract in the summer of 1997. LSV-II will provide a key 
capability for future technology development.
    Question. Has the entire $60 million, other than pro-rata fair-
share of undistributed reductions, been made available for obligation 
for advanced submarine technology? If not, why would you need any 
additional funds in 1998?
    Answer. Yes.
    Question. DARPA had a world-class operation in submarine technology 
development, which apparently has been dismantled by the current DARPA 
director as being a ``low priority.'' Do you agree with that approach?
    Answer. Both the Navy and DARPA believe that DARPA should be 
involved in high impact, revolutionary technology programs. DARPA's 
role in submarine technology development is under review by the 
Submarine Technology Oversight Council (SUBTOC). This Council is co-
chaired by the Under Secretary of Defense (Acquisition and Technology) 
and the Assistant Secretary of the Navy (Research, Development and 
Acquisition) and its membership includes submarine technology 
stakeholders in the Department of Defense, including the Director of 
DARPA, and both submarine builders. The SUBTOC has produced encouraging 
results, including the possible pursuit of a joint Navy/DARPA small, 
minimally manned submersible project.

                      AEGIS Ship Follow-On (SC-21)

    Question. The 1998 budget and accompanying outyear budget plan 
envision spending at least $750 million to develop a follow-on ship to 
the DDG-51 destroyer. Admiral Pilling, what is the Navy's requirement 
for a follow on to the DDG-51?
    Answer. DDG-51 is the most capable destroyer in the world. There 
will be no requirement for a follow-on to the DDG-51 class until they 
retire at the end of their service life. A follow-on is required to 
replace the retiring FFG-7s and soon the DD-963s and DDG-993s. The 
Mission Need Statement (MNS) for a 21st Century Surface Combatant, 
signed in September 1994, provides the requirement for a follow-on for 
those classes of ships. SC-21 is not a follow-on to DDG-51, but an 
entirely new class being designed to perform land attack warfare, to 
accommodate new capabilities through advanced technology, and to 
incorporate cost reduction measures that can not be integrated on a 
mature platform such as DDG-51.
    Question. Why is this urgent now?
    Answer. Beginning in 2008, surface combatant force levels are 
projected to begin a long period of decline as the last DDG-51 is 
delivered and the aging FFG-7, DD-963 and DDG-993 class ships retire. A 
new class must begin delivering at that time in order to maintain 
adequate force levels. Due to the long lead time required to design and 
construct a major new surface combatant class, maintaining the current 
development schedule is urgent.
    Question. The Navy can't afford to put cooperative engagement, 
infrared sensors, theater ballistic missile defense, or advanced guns 
on the destroyers it is building today and for the foreseeable future. 
Why is it that the Navy can't adequately equip its current ships, yet 
it hungers for a new ship?
    Answer. The option that provides the Navy the most rapid deployment 
of Cooperative Engagement Capability (CEC) and Theater Ballistic 
Missile capability is via backfit. Under the current Navy plan the 
first ships to receive Area Theater Ballistic Missile Defense 
capability in conjunction with CEC, will be two Aegis cruisers in 
fiscal year 2000. Additional cruisers will be backfit in fiscal year 
2002 and fiscal year 2003. The first DDG-51 class destroyer will be 
backfit in fiscal year 2003 with additional ships scheduled in fiscal 
year 2004 and out. Under the current plan, ships appropriated in FY 
2002 will receive the first forward fit configuration, in production/
construction.
    Additionally, the Navy has planned to introduce DDG-81 and follow 
with the MK 62 gun in conjunction with the Extended Range Gun Munitions 
(ERGM) rounds. All ships in the DDG-51 class Multi-Year Procurement 
(MYP) for fiscal years 1998 through 2001 will have this gun.
    What the Navy can't afford is to not attempt to capture the latest 
technology and acquisition initiatives, increase warfighting 
capability, increase automation, and reduce manning to thus to reduce 
the cost of procuring and maintaining Surface Combatant force structure 
as exemplified most recently by Operation Desert Strike. The Navy can 
not afford to maintain force structure levels without building new 
ships.
    Question. What are the deficiencies of the DDG-51 that require the 
development of a follow-on ship? Describe each in detail for the 
record.
    Answer. Procurement Cost: It is anticipated that the Navy and the 
Nation will be little able to afford to continue procuring Surface 
Combatants at a cost of $800 million to $900 million a piece, well into 
the future, and at a sufficient rate to maintain Surface Combatant 
force structure for the future.
    Cost of Manpower: At an annual cost of between $30,000 to $75,000 
per crew member, the Navy is compelled to reduce manning, while at the 
same time increase levels of warfighting capability and complexity in 
addressing the future threat facing its Surface Combatants. New 
missions, including TBMD, CEC, and enhanced Naval Surface Fire Support 
(NSFS) in conjunction with an evolving threat, are drivers for change 
in ship and combat systems design.
    Cost of Maintenance: The Navy is compelled, via Congressional 
direction, and to technically keep pace, to go to procurement of 
Commercial Off the Shelf (COTS) based computing systems. We must 
``break with the past'' in the costly procurement of MILSPEC equipment, 
and the costs associated with upgrade and maintenance.
    Question. If the Congress were to deny funds for a new ship 
development, why couldn't you keep producing DDG-51s?
    Answer. If the Congress were to deny funds for a new ship 
development, the Navy could continue to procure DDG-51's, but given 
cost, and a fiscally constrained environment, procurement would be 
reduced to such an extent that Surface Combatant force structure could 
not be maintained. Additionally, the Navy would miss the opportunity to 
take advantage of advanced technology initiatives, and acquisition 
reform, to help reduce cost of procurement, manning and maintenance.
    Question. In what year does the Navy project that a potential 
adversary country would field a ship as capable as today's DDG-51?
    Answer. The Navy can not currently predict when any potential 
adversary could possibly field a ship with the same capabilities as 
today's DDG-51. But in examining recent events, the Navy can look with 
some concern to the arranged sale by the Russians to the Chinese of 2 
Sovremenny class DDGs with their accompanying SS-N-22 missiles ------. 
While this development is of concern, it was not unanticipated. A 
series of improvements to ships and weapon systems including AN/SPY-
1D(V) on ships in the Multi-Year Procurement, CEC and SM-2 Block IV, 
will go a long way in keeping our Surface Forces ``pacing ahead of the 
threat.''
    The Navy will strive in continued improvements to DDH-15s and in 
development of future Surface Combatants to maintain this goal.

           Intercooled Recuperative (ICR) Gas Turbine Engine

    Question. Two years ago, the Committee recommended that the 
Intercooled Recuperative gas turbine engine program be terminated, but 
did not prevail in conference. The fiscal year 1998 budget requests $32 
million for continued development. How much have we spent on ICR 
development so far?
    Answer. To date we have spent or obligated $273 million in U.S. 
funds plus $31 million provided by France and the United Kingdom. The 
United Kingdom has also provide another $22 million in testing 
services. This totals $326 million.
    Question. Does it work?
    Answer. The testing shows that the ICR concept does work. We have 
demonstrated 21% fuel efficiency improvement and predict at least 28% 
improvement for the final fully developed configuration. The 
demonstrated performance is based on a variety of different tests which 
total 680 hours of engine operation, including 374 hours of operation 
with the redesigned recuperator (known as the Limited Operational 
Unit). Two 500 hour tests and a 3000 hour endurance test remain to be 
conducted. These tests will help determine the reliability and 
maintainability of the ICR engine.
    Question. How much more is contained in the outyear budget plan for 
additional development of the engine?
    Answer. $93.8 million for fiscal year 1998 through fiscal year 
2001.
    Question. How much more is required above the amount in your 
outyear plan in order to achieve development of an engine that could 
actually be installed in a ship?
    Answer. The Navy estimate is that there is an additional $124 
million required to complete full qualification testing, at-sea testing 
and logistics support.
    Question. Explain the Navy's plan to ask Britain to foot more of 
the bill for this program, which is based on a British Rolls-Royce 
turbine engine. What has been your success so far?
    Answer. The ICR engine is a U.S. Navy program. Under a 1994 
Memorandum of Understanding (MOU), the UK and France have provided some 
funding, testing support and services. To date, they have provided $53 
million in funds or testing services, which is 16% of the obligations 
thus far. The British Navy has been very interested in the development 
of the ICR engine and would like it accelerated to be available as a 
propulsion alternative for the Horizon Frigate, a joint project 
involving the UK, France and Italy. We are discussing the possibility 
of the UK providing additional funding (or in-kind services) to help 
offset the estimated $124 million required to complete the full 
qualification and at-sea testing. In addition, we have proposed that 
they also make suitable arrangements for sharing any future cost 
overruns. These discussions have just recently begun. While not 
accepting these terms, the UK has indicated a willingness to pursue 
further agreements, after receipt of our formal proposal. The UK 
recently provided $7 million toward the $124 shortfall via an amendment 
to the MOU. The French have also expressed interest in continuing the 
program, and similar discussions are underway with them.
    Question. Explain why, after spending $.3 billion on this program 
so far, the Navy recently decided to drop the engine as a candidate for 
installation on the DDG-51 destroyers?
    Answer. It is not cost effective to amortize the class unique non-
recurring costs given the few remaining candidate ships in the DDG-51 
class.
    Question. If we agree to your plan, which will eventually costs $.5 
billion, will ICR be the ``engine of choice'' for installation on new 
Navy ships such as the Arsenal ship or the DDG-51 follow on ship (SC-
21)?
          Are you testifying that it will be installed if it works?
          Or are you testifying that it just must be one of the 
        candidate engines?
    Answer. The ICR engine will be one of the candidate engines.
    Question. Under what conditions would the Navy terminate this 
program?
    Answer. The Navy would recommend termination if the U.K. and French 
MOU partners don't:
          a. pay at least 50% of the shortfall for full engine 
        qualification (in cash or in kind-services)
          b. make suitable arrangements for sharing future cost growth.
    Question. Admiral Pilling, would you say the technology merits a 
$.5 billion R&D investment in this program? Do fleet CINCs agree with 
you?
    Answer. This technology and others that save fuel costs are 
important to the Navy. Although the ICR testing is currently on track, 
earlier problems with the recuperator severely impacted the cost and 
schedule of the program. As a result, key efforts to fully qualify the 
engine for fleet transition (for example, shock testing, logistics 
development) are no longer funded. The Navy can not affort to pay for 
all these transition items, so we have entered into discussions with 
the U.K. and France to see if they can share the costs.
    The fleet CINCs support technologies that save fuel and support our 
approach of getting the U.K. and France to share more of the costs. 
Given the severe fiscal constraints that we are operating under, the 
CINCs are concerned about the cost effectiveness/payback of the ICR 
technology.
    Question. When all costs, including $.3 billion in sunk cost are 
considered, how many years will it take to reach a payback of the 
taxpayer investment in this program?
    Answer. The OSD Cost Analysis Improvement Group (CAIG) recently 
prepared an analysis of the payback. Based on the current estimate to 
complete the program, the CAIG predicted the earliest payback period 
for the remaining investment (not counting sunk costs) to be on the 
order of 30 years. All analyses are based on assumptions about fuel 
inflation rates and the number of candidate ships. Over a range of 
assumptions, the payback periods average 30 to 40 years.

                             New Model F-18

    Question. The 1998 budget includes $2.5 billion for the F/A-18 E/F 
aircraft, of which $268 million is for R&D and $2.2 billion is for 
production of 20 aircraft. Mr. Douglass, your statement says that the 
F/A-18 E/F Super Hornet program is on track, within cost, below weight, 
and meeting all performance criteria. F/A-18 E/F aircraft cost $79 
million each for a total program cost of $79.5 billion. What is the 
status of the F/A-18 E/F development program?
    Answer. The F/A-18E/F entered E&MD (Engineering and Manufacturing 
Development) in June 1992. To date, the airframe E&MD contract with 
McDonnell Douglas (St. Louis, MO) is 88.9% complete, and the engine 
contract with General Electric (Lynn, MA) is 94% complete. The Super 
Hornet completed Initial Sea Trials aboard the USS JOHN C. STENNIS 
(CVN-74) in January 1997, successfully conducting 64 catapult launches 
and arrested landings, as well as demonstrating its flight stability 
during carrier approach. All seven flight test aircraft are currently 
flying in support of the flight test effort, and have flown in excess 
of 441 flights and nearly 713 hours to date. The first year of flight 
test has cleared nearly all of the aircraft's clean (without weapons) 
flight envelope. Stores separation work was initiated in February 1997. 
By February 1998, a significant portion of the loads envelope will have 
been flown and the test team will know a great deal about the precise 
characteristics weapons exhibit as they are launched from the aircraft. 
The F/A-18E/F flight test program will continue through November 1998.
    Question. Please explain what difficulties have been experienced in 
the test program with the F414 engine.
    Answer. The F414 engine experienced failure of a compressor 
component which had been recently redesigned to increase engine 
efficiency and enhance already existing performance margin. The problem 
was addressed by returning to the previous, proven configuration. With 
only two ground tests remaining--Engine Gyroscopic Test and Fan 
Containment Test, the F414 team anticipates completion of Limited 
Production Qualification within the established program schedule. 
Although overall impact to the flight test program was a two month 
slip, all flight test assets have been reconfigured, and the team is 
working to recover margin by closely managing test assets and 
capitalizing on test efficiencies.
    Question. Please explain what difficulties have been experienced in 
the test program with the landing gear.
    Answer. Generally there have been no issues with the landing gear 
in flight test. The only incident noted so far was an indicator switch 
miss rig that caused a planing link warning light to illuminate on one 
flight. However, there were no problems with the gear itself.
    Question. What problems have been discovered with the structure and 
flying qualities of the aircraft?
    Answer. Extensive ground test on the Static Test article and 
aircraft E-3, the loads aircraft, has been conducted with test results 
generally matching analysis, With regards to flying qualities, the 
flight control software has remained the same since first flight and 
has been praised by test pilots, especially in the powered approach 
flight regime around the carrier.
    Question. Aircraft weight affects range, speed, payload, and 
carrier recovery payload. Although the aircraft remains below its 
weight goal--which is good--aircraft weight has been steadily 
increasing. Is there a weight problem when all known potential weight 
increases and structural redesigns are considered?
    Answer. No. Even with all potential weight increases accounted for, 
aircraft weight still remains well below the specification weight 
requirement. However, with three years remaining in the test program, 
additional design changes will likely be identified which will require 
use of some of that weight margin.
    Question. What effect will McDonnell Douglas' recent loss on the 
Joint Strike Fighter competition mean to its overhead, and indirectly 
to the F/A-18E/F cost?
    Answer. Short-Term Impact--McDonnell Douglass submits proposals 
excluding potential contracts that they may be competing for, so the 
effect of the loss will have little or no effect on our contracts. In 
addition, the JSF work would have been extensively engineering with 
little relation to our manufacturing dominated contracts.
    Long-Term Impact--McDonnell Douglass will have fewer programs to 
spread its overhead rates across; however, overhead cost should 
stabilize/slightly increase if McDonnell Douglass optimizes its 
infrastructure to meet the needs of its programs.

                          Joint Strike Fighter

    Question. The 1998 budget requests $931 million for concept 
development of the Joint Strike Fighter which could become the largest 
acquisition in the history of the Department of Defense in terms of 
total costs. Mr. Douglass, what is the status of the Joint Strike 
Fighter development program?
    Answer. The Joint Strike Fighter Program (JSF) plans to develop and 
deploy a family of aircraft that affordably meets the next-generation 
strike needs of the Air Force, Navy, Marine Corps and allies. JSF 
Program activities are centered around three distinct objectives that 
provide a sound foundation for start of Engineering and Manufacturing 
Development (E&MD) in 2001:
          (1) facilitating the Services' development of fully 
        validated, affordable operational requirements;
          (2) lowering risk by investing in and demonstrating key 
        leveraging technologies that lower the cost of development, 
        production and ownership; and
          (3) demonstrating operational concepts.
    A multiyear $2.2 billion JSF Concept Demonstration effort commenced 
in November 1996 with competitive contract awards to Boeing and 
Lockheed Martin for Concept Demonstration programs. These competing 
contractors will build and fly concept demonstrator aircraft, conduct 
concept unique ground demonstrators, and continue refinement of their 
ultimate delivered weapon system concepts. Specifically, Boeing and 
Lockheed Martin will demonstrate commonality and modularity, STOVL 
hover and transition, and low speed handling qualities of their 
respective weapon system concepts. Pratt and Whitney is providing 
propulsion hardware and engineering support for both Boeing's and 
Lockheed Martin's on-going JSF Concept Demonstration efforts. The JSF 
Alternate Engine Program, with General Electric, continues technical 
efforts related to development of an alternate engine for production in 
order to reap the financial and operational benefits of competition.
    Early warfighter and technologist interaction continues as an 
essential aspect of the JSF requirements definition process, and is key 
to achieving JSF affordability goals. To an unprecedented degree, the 
JSF Program is using cost-performance trades early as an integral part 
of the weapon system development process. The Service's completion of 
the Joint Operational Requirements Document is planned in Fiscal Year 
2000 to support the Milestone II decision in Fiscal Year 2001 for start 
of E&MD.
    A sizable technology effort is underway to reduce risk and life 
cycle cost (LCC) through technology maturation and demonstration. The 
primary emphasis is on technologies which have been identified as high 
payoff contributors to affordability, supportability, survivability and 
lethality. Numerous demonstrations have been accomplished and others 
are in process to validate performance and LCC impact to component, 
subsystem, and the total system.
    Question. Last year, concern was expressed by the House National 
Security Committee over the viability of the ASTOVL variant of the 
aircraft for the Marines (to replace AV-8B Harriers). Please discuss 
the issue and how it was resolved, and please verify for us that the 
Defense Department is committed to developing an ASTOVL variant of the 
aircraft.
    Answer. Last year the House Authorization bill stated that no JSF 
funds could be spent for ASTOVL development. Neither the House 
Appropriations bills contained that language. In fact the House 
Appropriations bill contained language stating that the JSF STOVL 
variant must be developed ahead of or concurrently with the other 
variants. Neither of the final Fiscal Year 1997 Defense Authorization 
and Appropriations bills contained STOVL prohibitions. We hope that 
support for ASTOVL development continues to be strong both on the 
committee, and in the House.
    The Defense Department is fully committed to development of a STOVL 
JSF variant for the Marines. The JSF program is fully funded within the 
FYDP and STOVL is an integral part of it.
    As you know, we are in the Program Definition and Risk Reduction 
phase (PD&RR) of JSF now. The Concept Demonstration portion of PD&RR 
requires each industry team to build two flying demonstrators, one 
conventional and one STOVL. Demonstration of STOVL hover and transition 
is a key aspect of this phase and is required by the Single Acquisition 
Management Plan. The Concept Demonstration program provides two 
different STOVL approaches and aerodynamic configurations, and 
maintains a competitive environment between contractors prior to E&MD. 
Additionally propulsion development continues during this phase with a 
byproduct of STOVL development being significant improvements in single 
engine durability and reliability for all variants. In short, we feel 
that we have a strong STOVL development program within JSF and we are 
committed to maintaining it.
    Question. Most of us remember the Air Force's ``Great Engine War,'' 
where a billion dollars were spent to bring a second contractor into 
the fighter engine business and which resulted in better engines at 
significantly lower cost. The Navy recently signed a $97 million 
``alternate engine'' contract for the Joint Strike Fighter. Please 
explain your strategy and your plans to use $10 million provided by 
Congress for risk reduction to facilitate this effort.
    Answer. During the JSF Concept Development Phase, all three 
competing weapon system contractors chose the Pratt and Whitney F-119 
or derivative as the primary propulsion system for the Concept 
Demonstration Phase. Recognizing the financial and operational benefits 
of competition, the JSF Program is pursuing the development of a 
competitive engine for production.
    Phase I of this effort began in fiscal year 1996 with a General 
Electric study effort to determine the comparative Life Cycle Cost and 
performance of the GE F110 and YF120 derivative engines in each of the 
preferred weapon system concepts. Based on the study results, the 
government selected the YF120 engine derivative for continued 
development. Phase I initiated preliminary design risk reduction 
studies, systems design/integration, cycle refinement, and component 
design and associated technology maturation for the YF 120 derivative 
engine. Phase II, which commenced in fiscal year 1997, will continue 
detailed design and begin hardware testing of the YF120 engine, 
culminating in core testing beginning in fiscal year 1999.
    Conress appropriated an additional $10 million for fiscal year 1997 
competitive engine efforts. This funding will be used for a variety of 
risk reduction efforts including: turbine rig test and analysis, core 
integration, core supportability, material characteristics, weapon 
system concept integration, and diagnostics.
    Question. Please discuss your plans for cooperation with other 
nations in this program, and what they bring to the table in terms of 
capabilities and financial contributions.
    Answer. The JSF Program Office has established a framework to 
accommodate international participation during the concept 
demonstration phase of the program. Currently, the United Kingdom is on 
board as a full collaborative partner, with emphasis on the JSF STOVL 
variant. The UK is contributing $200 million to the program for this 
phase. The Netherlands, Norway and Denmark will soon join the program 
as associate partners, with primary interest in the JSF CTOL variant. 
The total planned financial contribution for this effort is $32 million 
with signature of the multilateral agreement planned in April 1997. The 
Canadians have formally requested to join the program and negotiations 
are expected to commence in April 1997. Numerous other countries have 
received briefs on the program and are interested as well.
    Benefits to be derived from international participation in the 
program include a harmonization of the requirement with our allies 
which will lead to improved interoperability, strengthened 
international ties and lower overall program cost as a result of future 
anticipated international buys of the JSF (i.e., lower unit cost).
    Firm financial contributions and associated efforts are 
incorporated in JSF Program plans and funding and are reflected in the 
fiscal year 1998 President's Budget request.
                              V-22 Aircraft
    Question. The 1998 budget requests $530 million in R&D and $542 
million in procurement for production of 5 V-22 aircraft. Mr. Douglass, 
your statement says that MV-22 is the highest priority for Marine Corps 
aviation and that the current acquisition profile for the MV-22 will 
complete the projected aircraft procurement in 25 years. At this rate, 
V-22 cost $87 million each for a total program of $45.5 billion Last 
year, the Committee directed that the V-22 program achieve a production 
rate of 36 aircraft per year by the year 2000. Why did the Navy ignore 
us?
    Answer. We have increased the procurement of V-22s by 16 aircraft 
over the request from last year, increasing to 24 aircraft per year by 
the end of the FYDP. We fully recognize the need to get the rate up and 
to replace the current fleet of medium lift helicopters. In the final 
analysis, we had to take a hard look at balancing all of the 
Department's requirements with the available resources.
    Question. Last year, all 4 Committees in the Defense budget process 
provided advance procurement funds for 12 aircraft in 1998. Yet, only 5 
aircraft are now budgeted. Why did you not take advantage of this 
opportunity?
    Answer. We share the Committees' commitment to increasing the 
production rate of the V-22, and we have made significant progress with 
the current request. In reviewing the additional funds required to 
procure the additional 7 aircraft, we simply were not in a position to 
pursue it this year. Since the Conference Report made provisions for us 
to request reprogramming of the $70 million, we have made that request 
and ask for your prompt approval.
    Question. Is a 25 year production profile acceptable to the 
Commandant or the theater CINCS?
    Answer. I cannot speak for the CINCS, but for the Commandant, based 
on the Fiscal Year 1998 President's Budget, a 22 year procurement 
profile is not desirable. The last MV-22 aircraft would be received in 
fiscal year 2000. Given the current MV-22 procurement profile, our CH-
46s will be approaching 50 years of age at retirement. I would much 
prefer a higher production ramp to 36 MV-22's per year that would 
replace our aging CH-46E fleet aircraft 5 years earlier while providing 
a significant savings of up to $6 billion.
    Question. So, how do we get out of this dilemma?
    Navy Answer. In this declining DoD budget era, equipment must be 
procured at less than optimum rates in order to achieve a balance that 
supports total Department of the Navy warfighting requirements. The 
only way to modernize more quickly is to obtain additional fiscal 
resources, either from another program or from a Congressional 
Enhancement.
    Marine Corps Answer. In this declining DoD budget era, equipment 
must be procured at less than optimum rates in order to achieve a 
balance that supports total Department of the Navy warfighting 
requirements. The only way to modernize more quickly is to obtain 
additional fiscal resources, either from another high priority program 
or from a Congressional Enhancement.
    Question. Mr. Douglass, please explain the new plan to pursue a 
Special Operations Forces variant of the V-22 aircraft. What are the 
costs and what are the benefits?
    Answer. A major contract modification was awarded in December 1996 
to develop the SOF variant. The plan includes the modification of E&MD 
aircraft #8 to integrate the terrain following/terrain avoidance radar 
and avionics equipment and the remanufacture of E&MD aircraft #9 to a 
full CV-22 configuration. The RDT&E costs are approximately $560 
million and procurement costs are about $4.3 billion. The benefits will 
be a unique aircraft that will accomplish the long range SOF mission 
with the minimum of assets. The 50 CF-22 aircraft to be procured will 
replace approximately 100 H-53, H-60 and C-130 aircraft currently being 
used by USSOCOM.

                            Navy Helicopters

    Question. The Navy's helicopter master plan consolidates missions 
and reduces the types of helicopters used by the Navy. The Navy will 
reduce the types of helicopters from seven to two. The plan, which will 
be complete by 2012 is aimed at reducing manpower and logistics support 
costs. Based on the plan, the Navy will procure a Blackhawk derivative, 
the CH-60, to replace current logistics and combat helicopters; 
remanufacture SH-60B/SH-60F/HH-60H helicopters to a multi-mission 
helicopter, the SH-60R; and outscore military sealift requirements to a 
private contractor.
    The Navy plans to retire its logistics and cargo helicopters and 
replace them with a Blackhawk derivative, the CH-60. In fiscal year 
1997, Congress provided an additional $7.5 million to begin the CH-60 
program. This year the Navy is requesting $31 million for the CH-60. 
The Navy will begin procuring the CH-60 in fiscal year 1999.
    During the fiscal year 1998 budget build, DoD accelerated the 
schedule and increased the procurement quantities of the CH-60. What 
was the rationale for accelerating the CH-60 program? Do you believe 
that this is an ambitious schedule? Why or why not?
    Answer. The schedule was accelerated for two reasons. First, to 
replace the combat logistics aircraft as rapidly as possible to 
minimize the investment in components required to keep these aircraft 
safely flying. Second, to minimize the potential increased costs 
associated with allowing the production line of Sikorsky aircraft to 
``go cold'' prior to the initiation of the previously planned CH-60 
production. The program acceleration is currently executable, without 
incurring unnecessary risks.
    Question. What is the program cost and schedule?
    Answer. The CH-60 program is currently scheduled to enter full-rate 
production in fiscal year 2000, with a production rate of a minimum of 
18 aircraft per year through completion of minimum of 134 aircraft in 
fiscal year 2006 to support the combat logistics and combat SAR 
requirements. The Navy is reviewing potential revisions to the rotary 
wing infrastructure which may adjust the total number of required 
aircraft upwards. The total procurement cost of the program, as 
currently planned, is $2.6 billion in instant fiscal year 1997 dollars.
    Question. It is our understanding that the fiscal year 1998 budget 
request does not include advance procurement funds. Are advance 
procurement funds required in fiscal year 1998 in order to begin 
production in fiscal year 1999? If so, how can you begin production in 
1999?
    Answer. Advance procurement (AP) for the CH-60 program was removed 
from the fiscal year 1998 budget by the Navy, in response to the 
interpretation of OSD direction to remove AP when not required or 
economically justified. The CH-60 had planned to benefit by the pricing 
provided by the contractor in the current Army H-60 contract. The lack 
of Navy H-60 production or advance procurement funding in fiscal year 
1998 will result in a production break of approximately nine months at 
the contractor's facility, with a resulting increase in ``production 
start-up costs'' and a requirement to enter into a new and distinct 
contract. The program office has recognized and briefed that without 
advance procurement the production schedule will increase from the 
currently planned 12 to 18 months, to between 21 and 27 months. There 
will be no change in production start (manufacturing of components), 
but there will be a 9-month delay in production completion of fully 
assembled aircraft.
    Question. Last year, the Army requested funds and the authorization 
for a Blackhawk multi-year contract for fiscal years 1997 through 2001. 
In the fiscal year 1998 budget request, the Army has reduced the 
funding and production schedule of Blackhawks. What is the impact on 
the Navy CH-60 program, in terms of per unit and total program cost, by 
the Army's decision not to go forward with the multi-year contract?
    Answer. The current program pricing is based upon commitment by 
Sikorsky aircraft to maintain the previously provided pricing for a 
sustained rate of 36 per year as long as the Navy maintains a minimum 
production rate of 18 aircraft per year. As a result, the Navy does not 
expect a change in per unit or total program cost.
    Question. It is our understanding that DoD has released the fiscal 
year 1997 funds for the CH-60 program; however, the Army has not 
provided the Blackhawk helicopter for CH-60 development and testing. 
Could you explain what the problem is? When will it be resolved?
    Answer. The requisite Memorandum of Agreement (MOA) between the 
Army and Navy for transfer of a UH-60L to the Navy for demonstration of 
the CH-60 capabilities in fiscal year 1997 has been signed. The MOA was 
delayed as both Components' counsel ensured it to be in accordance with 
Congressional direction and law. (Congressional support (i.e., waiver 
of statute) is believed to be required to allow the Navy to replace the 
UH-60L ``in-kind'' from the production line in fiscal year 1999). The 
UH-60L is at Sikorsky, and the CH-60 modification effort has begun.
    Question. To reduce costs and infrastructure associated with its 
anti-submarine and surface warfare platforms, the Navy will 
remanufacture Seahawk (SH-60B/SH-60F/HH-60H) helicopters to a multi-
mission helicopter, the SH-60R. For fiscal year 1998, the Navy is 
requesting $71 million for the SH-60R development program. What is the 
acquisition strategy for the SH-60R? What is the cost of the 
acquisition program?
    Answer. The Navy is using cost-type contracts to conduct 
Engineering and Manufacturing Development (EMD). Fixed price contracts 
will be used for production phases of the SH-60R program. Total 
procurement is expected to be $4.7 billion (FY93$).
    Question. According to the Navy, flight hours for Seahawk 
helicopters are exceeding planned operational usage--H-60s are wearing 
out faster than anticipated. Given the increased optempo of the 
Seahawk, are you satisfied with the delivery schedule of the SH-60R? 
Why or why not?
    Answer. The current SH-60R schedule will satisfy the Navy's 
requirement. The increasing operational demands on the HSL community 
caused by the introduction of additional LAMPS MK III capable surface 
combatants makes the number of available HSL aircraft in the fiscal 
year 2001 through fiscal year 2004 critical. Bureau number by bureau 
number management of aircraft undergoing re-manufacture as well as 
those undergoing standard depot level maintenance will be used to 
mitigate impacts to the operational forces.
    Question. Although it is called a ``remanufacture'' program, the 
SH-60R is really an integration of improved sensor and system 
improvements to ensure the viability of the helicopter for the next 20 
years. Last year, the Navy was considering a service life extension 
program that would increase the life of the platform from 10,000 to 
20,000 hours. Are you still planning to do a service life extension 
program? If so, is the program funded in your budget--what is the cost 
and schedule? If not, why?
    Answer. A SLEP, extending the useful aircraft service lives from 
10,000 flight hours to 20,000 flight hours, remains part of the 
remanufacture program. The Service Life Assessment Program (SLAP, which 
identifies the SLEP requirements) has not been completed. However, 
preliminary assessment indicates an approximate labor and material cost 
of $5 million per aircraft. This amount is included in the existing 
funding request.
    Question. The Navy believes it will reduce logistics and 
infrastructure costs by developing identical avionics and cockpits for 
the SH-60R and the CH-60. The CH-60, which is primarily a transport 
helicopter, will receive the same sophisticated avionics required by 
the multi-mission SH-60R helicopter. The SH-60R will perform anti-
submarine and -surface warfare. The unit cost for the CH-60 could 
increase as a result of commonality; however, the Navy believes that 
the life cycle cost savings will outweigh production costs. Which 
components will have an increased unit cost as a result of commonality? 
What is the estimated increase?
    Answer. The Navy Helo Master Plan resolves the Navy's entire 
current and anticipated rotary-wing needs in a well formulated and 
thought-out plan, with consideration for minimizing the future 
procurement, support and infrastructure costs. Within this plan, the 
CH-60 directly addresses the near-critical availability, age, and cost 
of ownership of the CH-46 Combat Logistics Support aircraft, and the 
requirements for air-station, amphibious, and Combat Search and Rescue 
(SAR) aircraft. Additionally, because the CH-60 replaces HH-60H that 
will be remanufactured into SH-60R, the CH-60 helps address the 
identified shortfall of available Light Anti-Submarine Warfare 
Helicopter (HSL) assets to support existing and future surface 
combatants, and the need to update the reserve HSL components with 
capability equivalent to the active forces.
    The CH-60 and SH-60R are intended to include nearly-identical 
cockpit and flight avionics, but not sensors and mission avionics, to 
reduce supply requirements, maintenance costs, and operator training 
costs. The common cockpit for these platforms is still in design. 
However, the two prime contractors have been given guidance that the 
entire cockpit and flight avionics suite is not to exceed $1 million 
per aircraft. The flight avionics for the last lot of HH-60H aircraft 
cost approximately $635 thousand; the maximum expected procurement cost 
increase to support commonality approximates $250 thousand per 
aircraft. Components that may increase in procurement costs to support 
the benefits of commonality are: programmable keysets vs. Control/
Display Navigation Units (CDNUs), 6 x 8 inch flat panel flight displays 
vs. 4\1/4\ x 4\1/4\ inch situational displays, and inertial navigation 
vs. doppler based navigation. Each of these changes would still be 
required as ``kits'' for those CH-60 performing the Combat SAR mission 
if not already provided in the baseline aircraft.
    Question. What is the estimated life cycle cost savings as a result 
of commonality? When will the Navy realize those savings?
    Answer. While the total anticipated life cycle cost reduction to 
the Navy is the ``cornerstone'' of the Navy Helo Master Plan, any 
numbers presented now would be incomplete. We continue to identify and 
refine projected cost reductions using the model developed by US 
AIRWAYS to support their decision to reduce type/model/series aircraft 
across their organization in order to increase their profits. Although 
final organizational performance measures are different for the Navy 
(e.g. readiness vs. profits), the areas for reducing expenses are 
strongly similar. The Navy will realize the anticipated cost reductions 
as type/model/series helicopters are removed from the active Naval 
inventory.
    Question. Many of the avionics components for the SH-60R are 
currently in development. Integrating these new components may result 
in a schedule slip and increased cost for the CH-60 program. Which 
components are currently under development? When will those components 
be available for integration on the CH-60? Which components are most 
likely to cause a schedule slip?
    Answer. The design of SH-60R flight avionics is under revision, due 
to the potential reduction in cost of ownership through use of 
available commercial technology. All major components for revised 
flight avionics are existing commercial or ``ruggedized'' commercial 
components. While the potential always exists for a schedule slip, the 
plan to reduce dependence on technology development by using hardware 
and software available in the open market leads the program office to 
believe there will be no schedule slip for either aircraft. The costs 
of flight avionics designs have been predominantly allocated to the SH-
60R program, so the integration costs to the CH-60 revolve around 
wiring modification, drawings, and generation of installation technical 
directives; the estimated cost to the CH-60 program is approximately 
$6.5 million. No further cost growth is anticipated. Both the SH-60R 
and the CH-60 programs will need the designs completed, and hardware 
flight qualified and available by first quarter fiscal year 1998; this 
is achievable, with low to moderate risk. The components or activities 
most likely to cause a schedule slip would be the integration of cards, 
``cardsets'', backplane and the operating system that would make up the 
scaleable mission computer.
    Question. The Navy is conducting a demonstration for outsourcing 
military sealift requirements. The Navy believes it may be more 
operationally and economically effective to allow commercial helicopter 
operators to transport equipment from shore to ship. When will this 
demonstration be completed?
    Answer. The demonstration of outsourcing of MSC requirements is 
expected to be completed in mid September 1997.
    Question. When will the Navy make a decision on outsourcing?
    Answer. The Navy will make a decision after demonstration 
completion, and submission of the associated report to the Smith 
Appropriations Committee (about third quarter Fiscal Year 1998).
    Question. If the Navy decides that outsourcing is not operationally 
and economically feasible, how will you satisfy your helicopter 
military sealift requirements? Will this require an increased 
procurement of helicopters? If so, how many helicopters will be needed 
and what is the estimated cost of such a procurement?
    Answer. If the Navy decides that outsourcing is not operationally 
and economically feasible, the helicopter MSC requirements will be 
reviewed. Additional procurement of helicopters may be required.

                        Marine Corps Helicopters

    Question. The helicopters in the Marine Corps fleet were fielded in 
the mid 1980's. The Marine Corps developed a ``Rotary Wing 
Modernization Plan'' as the guideline to modernize its current 
helicopter fleet. According to the plan, the Marine Corps will replace 
heavy and medium assault support helicopters with the MV-22 and upgrade 
Huey utility and Cobra attack helicopters. In fiscal year 1998, the 
Marine Corps is requesting $529 million to procure MV-22's and $80 
million to begin a Huey/Cobra helicopter upgrade program. Is the Marine 
Corps ``Rotary Wing Modernization Strategy'' adequately funded in the 
budget? If not, what are the shortfalls?
    Answer. The Marine Corps is adequately funded within the 
constraints of the Department of the Navy's budget. Additional funding 
would allow an accelerated replacement of our aging aircraft with 
modern, technologically advanced, and Joint Strategy Review/National 
Military Strategy aircraft.
    The helicopters in the Marine Corps fleet were fielded in the mid 
1980's. The Marine Corps developed a ``Rotary Wing Modernization Plan'' 
as the guideline to modernize its current helicopter fleet. Accordingly 
to the plan, the Marine Corps will replace heavy and medium assault 
support helicopters with the MV-22 and upgrade Huey utility and Cobra 
attack helicopters. In fiscal year 1998, the Marine Corps is requesting 
$529 million to procure MV-22's and $80 million to begin a UH-1N Heuy/
AH-1W Cobra helicopter upgrade program (4BN/4BW).
    Question. The Marine Corps ``Rotary Wing Modernization Strategy'' 
outlines a plan for replacing helicopters currently in the fleet. Some 
of the aircraft will be over 40 years old when they are retired. Is the 
``Rotary Wing Modernization Stragey'' based on fiscal restraints or 
operational requirements? Are you comfortable with the helicopter 
replacement schedule--should it be accelerated? Why or why not?
    Answer. Our modernization program is based on our long standing 
neckdown strategy of: the V-22, the 4BN/4BW and the CH-53E. We are 
concerned with the paced of this modernization effort; however, fiscal 
constraints prevent the Marine Corps from modernizing at a faster rate.
    Question. The MV-22 will replace the CH-46E and CH-53A/D 
helicopters. The CH-46E provides medium assault support; the CH53A/D 
provides heavy assault support. Based on the Marine Corps budget, it 
will take 29 years to replace the CH-46E and CH-53A/D with the MV-22. 
What is the anticipated structural life expectancy for the CH46E and 
CH-53A/D?
    Answer. In February 1996, Naval Air Systems Command extended the 
structural life of the CH-46 to 15,000 hours. The estimated airframe 
fatigue life limit for the CH-53D is 10,000 hours. The CH-53A is no 
longer in service.
    Question. When will the CH-46E and CH-53A/D reach their anticipated 
structural life expectancy? How many of each type of helicopter will be 
in the inventory at that time?
    Answer. The first CH-46E will reach the 15,000 hour service life 
limit in fiscal year 2010. Based on the current MV-22 acquisition plan, 
the estimated CH-46E inventory in fiscal year 2010 will be 43 aircraft.
    Based on an estimated airframe fatigue life limit of 10,000 hours, 
operational CH-53Ds begin to reach their fatigue life limit in fiscal 
year 2000 with an inventory of 46 aircraft. The CH-53D will require a 
Service Life Assessment Program (SLAP) to determine future life 
extension requirements. The CH-53A is no longer in service.
    Question. Are the actual operational hours exceeding the planned 
hours for the CH-46E and CH-53A/D? If so, please explain.
    Answer. Actual utilization is not exceeding budgeted utilization. 
Budgeted versus actual utilization is shown for the CH-46E and the CH-
53D. The CH-53A is no longer in service.

                               Utilization
------------------------------------------------------------------------
                                                           CH-46E\1\
                                                     -------------------
                                                      Budgeted   Actual
------------------------------------------------------------------------
FY 95...............................................      25.5      24.3
FY 96...............................................      25.6      21.9
FY 97*..............................................      25.4      18.2
------------------------------------------------------------------------


 
                                                           CH-53D\1\
                                                     -------------------
                                                      Budgeted   Actual
------------------------------------------------------------------------
FY 95...............................................      21.5      19.3
FY 96...............................................      22.4      18.0
FY 97*..............................................      22.3      11.1
------------------------------------------------------------------------
\1\Reflect 3 months of reporting.


    CH-53D transition to Hawaii prevented achievement of budgeted 
utilization during FY 95/96.
    Question. For the record, please provide the planned retirement 
schedule for the CH-46E and the CH-53A/D based on the current MV-22 
acquisition plan.
    Answer. The lengthy 24-year ``procurement-to-delivery'' profile of 
the MV-22 prevents a rapid transition and retirement of the aging CH-
46E and CH-53D fleet. Current plans call for a ``one-for-one'' 
transition of our CH-46E and CH-53D aircraft. Based upon current 
delivery schedules, we will initiate the transition of our first CH-46E 
Squadron during fiscal year 2001 and transition the last Medium Lift 
Squadron during fiscal year 2015.
    Question. The fiscal year 1998 budget request includes funds to 
improve the CH-46E and the CH-53D. The upgrades include installing the 
global positioning system and new radios on the helicopters. For the 
record, please provide a list of the budgeted improvements/upgrades for 
the CH-46E and CH-53A/D. Do you believe making only those improvements, 
which are currently funded, will make the CH-46E and CH-53A/D 
operationally safe until after the year 2015? Why?
    Answer. These aircraft will be safe to operate. The Marine Corps' 
modernization program ensures that medium helicopters will be safe to 
operate until planned replacement by the MV-22.
    The CH-46 fleet is undergoing a Dynamic Component Upgrade Program 
which replaces rotor heads, critical components in the flight control 
system, and certain drive train and transmission components. This 
upgrade will remove all the burdensome operating limitations now in 
place on the CH-46.
    The CH-53D will undergo a service life assessment to determine 
future life extension requirements. Accelerating the V-22 procurement 
will help us to avoid a Service Life Extension Program on either the 
CH-46 or the CH-53D.
    Budgeted improvements/upgrades for the CH-46E and CH-53D are as 
follows:
CH-46E
Global Positioning System
AN/ARC-210 SINCGARS capable radios
Dynamic Component Upgrade
Night Vision Goggle Head Up Display (NVG HUD)
CH-53D
Global Positioning System
AN/ARC-210 SINCGARS capable radios
Night Vision Goggle Head Up Display (NVG HUD)
Night Vision Goggle Compatible Exterior Lighting
    Question. The CH-53E is a heavy cargo helicopter. Originally 
fielded in the mid-1980's, the CH-53E will remain the Marine Corps 
inventory until after 2015. The CH-53E will be replaced with the 
``National Rotorcraft Transport.'' What is the anticipated structural 
life expectancy of the CH-53E?
    Answer. The H-53E Service Life Assessment Program (SLAP) interim 
report determined that the H-53E airframe fatigue life is 6,750 hours. 
The SLAP is scheduled for completion in May 1997 at which time Sikorsky 
will release the final report.
    Question. When will the CH-53E reach its anticipated structural 
life expectancy?
    Answer. At the current utilization rate, the first CH-53E will 
reach the 6,750 hour airframe fatigue life limit in the fiscal year 
2000 timeframe with the last CH-53 planned to reach its fatigue life 
limit in the fiscal year 2017 timeframe.
    Question. Are the actual operational hours (of CH-53E) exceeding 
the planned operational hours? If so, by how much?
    Answer. Recent execution in our tactical heavy lift squadrons have 
not exceeded our budgeted hours. Actual utilization versus budgeted 
utilization since fiscal year 1995 is as follows:

------------------------------------------------------------------------
                                                 Utilization
                                   -------------------------------------
                                          Budget             Actual
------------------------------------------------------------------------
FY95..............................               20.5               21.8
FY96..............................               20.6               16.6
FY97\1\...........................               20.4              13.8
------------------------------------------------------------------------
\1\Based upon 3 months of reporting.


    The fiscal year 1996/1997 decline in utilization can be directly 
attributed to our swashplate maintenance problem. This problem is being 
corrected and we should see a utilization increase in the future.
    Question. The Marine Corps ``Rotary Wing Modernization Plan'' 
proposes a Service Life Extension Program (SLEP) for the CH-53E 
beginning in 2000. For the record, please describe the proposed SLEP--
include the anticipated cost, schedule, and proposed upgrades. Also 
include the new structural life expectancy of the SLEP CH-53E.
    Answer. As presently funded, the proposed SLEP for the H-53E will 
correct critical airframe structure components identified in the 
interim Service Life Assessment Program (SLAP) report. Correction or 
modification of these critical areas will extend the service life out 
to 12,000 hours. Within the Future Years Defense Plan, $38 million is 
applied to the H-53E SLEP. The SLAP is scheduled for completion in May 
1997. At that time, the SLAP report will be reviewed in order to 
determine program content. Subsequently a firm schedule and funding 
profile will be developed.
    Question. The ``National Rotorcraft Transport'' (NRT) will replace 
all of the services heavy cargo helicopters sometime after 2015. To 
date, no funds have been requested to begin the development of the NRT. 
Since the Marine Corps and the Army's heavy lift cargo helicopters are 
aging, both services are planning service life extension programs. What 
is the anticipated cost of the NRT program? Would it make more 
economical and operational sense to accelerate the NRT rather than 
extend the life of the Marine Corps' CH-53E and the Army's cargo 
helicopter? Why or why not?
    Answer. Estimated costs for the NRT are unknown at this time since 
the program is still in the requirements definition phase. However, 
acceleration of the NRT would not affect the Marine Corps' requirement 
to extend the service life of the CH-53E. Based on historical program 
development, any economical delivery of the NRT would occur after the 
first CH-53E reaches its airframe structural limit of 6,750 hours in 
fiscal year 2000.
    Question. The fiscal year 1998 budget request includes $80 million 
to begin an upgrade program for the Marine Corps Cobra Attack and Huey 
Utility helicopters. In October 1996, the GAO issued a report stating 
the Marine Corps program to upgrade HUEY utility aircraft may not be 
cost effective. The report stated that greater savings may be achieved 
if the Marine Corps replaced HUEY's in the fleet with new Black Hawk 
helicopters. DoD is assessing the Marine Corps HUEY upgrade program and 
will issue a report later this month. It is our understanding that the 
DoD requested that all of the services attempt to use common 
helicopters. The Navy, Air Force, and Army all use Black Hawk 
derivatives. The Marine Corps evaluated using Black Hawk for its 
utility mission but decided it would be too costly to buy and support. 
Therefore, the Marine Corps has decided to upgrade 100 HUEY utility 
helicopters. What are the unique Marine Corps requirements that can not 
be met with the Black Hawk?
    Answer. Although both the UH-1N and the Blackhawk meet our 
operational requirements, the Blackhawk costs more to procure, costs 
more to operate over the life of the program, requires more manpower to 
support, and has a significantly larger logistics footprint. The larger 
logistics footprint and manpower requirements would have a negative 
impact on our ability to deploy aboard amphibious ships and move our 
squadrons via strategic airlift.
    Question. What is the coast of the HUEY upgrade program? Is it 
adequately funded? If not, what are the shortfalls?
    Answer. The UH-1N upgrade program recently singed an Engineering, 
Manufacturing, and Design (EMD) contract for $134 million and 
anticipates the procurement cost to be $1003.1 million for 100 upgraded 
aircraft. The program is fully funded.

                                                     Funding
                                              (Then Year $ Million)
----------------------------------------------------------------------------------------------------------------
          H-1 upgrade            FY97    FY98    FY99    FY00    FY01    FY02    FY03   To complete     Total
----------------------------------------------------------------------------------------------------------------
RDT&E.........................      70    80.7    90.3     152   108.3      51      20         12.6        584.9
APN...........................       0       0       0       0       0    73.7   216.3      2,595.5      2,885.5
----------------------------------------------------------------------------------------------------------------


    Question. What is the current procurement schedule for the HUEY 
upgrade program?
    Answer.

                                                Delivery Schedule
----------------------------------------------------------------------------------------------------------------
                                             FY04   FY05   FY06   FY07   FY08   FY09   FY10   FY11   FY12   FY13
----------------------------------------------------------------------------------------------------------------
4BN#......................................      5     12     12     12     12     12     12     12     11  .....
4BW#......................................      0      5     12     24     24     24     24     24     24     19
----------------------------------------------------------------------------------------------------------------

    Question. What is the per unit cost of the HUEY upgrade? What are 
the estimated operating and support costs?
    Answer. The UH-1N upgrade program recently signed an Engineering, 
Manufacturing and Design (EMD) contract for $134 million and 
anticipates the procurement cost to be $1003.1 million for 100 upgraded 
aircraft. According to the Institute for Defense Analysis (IDA) the 
operating and support costs for the UH-1N are $2.375 billion over 28 
years. The per unit cost for the upgraded UH-1N is $10.49 million (OSD 
PA&E report dated September 16, 1996.
    Question. What was the estimated unit cost of a Black Hawk? Is the 
estimated cost based on a multiyear contract or single year? What are 
the estimated operating and support costs?
    Answer. The estimated unit cost of the Blackhawk is $14.04 million 
(OSD PA&E report dated September 16, 1996. This cost was based on a 5 
year multiyear contract with a procurement schedule of 36 aircraft per 
year. According to the Institute for Defense Analysis (IDA) the 
operating and support costs for the Blackhawk are $3.018 billion over 
28 years. This compares with a $2.375 billion cost for the 4BN.
    Question. What is the anticipated structural life expectancy of the 
upgraded Huey? What is the anticipated structural life expectancy of 
the Blackhawk?
    Answer. The anticipated structural life expectancy of the upgraded 
Huey will be 10,000 flight hours. The anticipated structural life 
expectancy of the Blackhawk is 10,000 flight hours.
    Question. For the record, please provide the logistic support costs 
and manpower requirements for the HUEY and the Black Hawk.
    Answer. The Institute for Defense Analysis, in the conduct of the 
DOD Helicopter Commonality Study, estimated the operations and support 
(O&S) costs for the upgraded UH-1N to be $2.375 billion as compared to 
$3.018 billion for the Blackhawk. The Naval Air Systems Command's 
HARDMAN maintenance manpower requirements model estimates an additional 
288 Marines are required to maintain the UH-60/AH-1W combination over 
the requirement for the upgraded UH-1N/AH-1W mix. The O&S costs include 
manpower and logistics costs and are calculated using fiscal year 1996 
constant dollars for the period of fiscal years 2004 to 2032.
    Question. What is the cost impact on the Cobra upgrade program if 
the Huey upgrade program is canceled?
    Answer. The cost of the Cobra upgrade program will increase by $90 
million in procurement costs if the Huey upgrade is canceled.

          Marine Corps Ground Systems Research and Development

    Question. The Marine Corps fiscal year 1998 budget request for 
ground systems research and development is $230 million. This is $43 
million--or 18% less than last year's appropriated amount. These funds 
are used to develop and test countermine systems, assault vehicles, and 
command, control and communications system. Marine Corps Advance 
Concept Technology Demonstrations are also funded in this account. 
General Oster, is the Marine Corps ground systems research and 
development program adequately funded? If not, what is the risk to 
future readiness?
    Answer. No, our research and development account is not adequately 
funded. With our fiscal year 1998 topline down by 4.5% from fiscal year 
1997 in terms of real spending power, striking a balance was no easy 
task. In order to fund our top priorities--maintaining near-term 
readiness and sustaining momentum of quality of life initiatives, we 
were forced to shift funds from investment accounts. In order to ensure 
the future readiness of the Corps, however, we must adequately fund the 
timely development of combat capabilities. If additional funds were 
available, I would accelerate the development of the following 
programs:

                                                           $ in Millions
Program:
    Commandant's Warfighting Lab.................................. $19.8
    Marine Enhancement Program....................................   0.6
    Advanced Amphibious Assault Vehicle...........................  10.1
    Light Weight 155MM Howitzer...................................   3.6
    Tactical Remote Sensor Systems................................   1.5
    Marine Common Hardware Suite Mgmt & Development...............   0.7
    Tactical Electronic Reconnaissance Processing & Evaluation 
      System......................................................   1.0

    Question. Advanced Concept Technology Demonstrations (ACTD) and DoD 
sponsored initiatives developed to accelerate and facilitate the 
application of mature advanced technologies to solve military problems 
and provide new operational capabilities to the filed sooner than the 
normal acquisition process. For the record, please provide the ACTD's 
planned for fiscal year 1998. Please include prior year funding, 
planned funding for fiscal year 1998, and future funding requirements. 
Also include any Defense-wide Research, Development, Test and 
Evaluation funds which have or will be provided for each ACTD.
    Answer. The only Marine Corps funded ACTD is Extending the Littoral 
Battlespace (ELB ACTD). This ACTD is jointly sponsored by the USMC and 
the USN. Marine Corps funding is contained in RDT&E, N, PE 0603640M, 
Advanced Technology Demonstrations, Project C2223, Advanced Technology 
Demonstrations. Funding for this ACTD is as follows: fiscal year 1997, 
$5M; fiscal year 98, $10M; fiscal year 99, $10M; fiscal year 00, $10M; 
fiscal year 01, $10M; fiscal year 02, $1M; fiscal year 03, $1M.
    The Marine Corps participates generically in the Joint Countermine 
ACTD. The total cost of this ACTD includes direct funding from OSD as 
well as generic support from the Army, Navy and Marine Corps RDT&E 
accounts. This ACTD ends in fiscal year 1998. USN funding is as 
follows: fiscal year 1997 $0.9 million, fiscal year 1998 $0.8 million.
    Question. What process is in place to determine which ACTD 
technologies should be fielded? How do you ensure that the technology 
will be reliable and operable in military operations?
    Answer. ACTD's have a User Sponsor assigned as part of the 
management structure. The User Sponsor is responsible for assigning an 
Operational Manager who is charged, in conjunction with the 
Demonstration Manager, with the execution of the System Demonstration. 
Additionally, the User Sponsor is responsible for identification of the 
ACTD's Measure's of Effectiveness (MOE's) and ultimately the evaluation 
of the technology's military utility and suitability.
    ACTD's are chartered to look at both mature and emerging 
technologies that can contribute to significant new operational 
concepts. Thus, ACTD's are as operationally oriented as they are 
technology oriented. Technologies selected for demonstration are 
evaluated for their potential contribution to the concept and will 
still go through a series of limited objective demonstrations in order 
to assess their maturity, interoperability, safety, and reliability, 
availability and maintainability with the objective of a major system 
demo as a culminating event.
    The User Sponsor will incorporate Operational Test activity 
personnel as part of his evaluation team. After the major system demo, 
successful technologies will be transitioned to the formal acquisition 
process for procurement and other further development.
    Question. How do you ensure that operating and logistics costs for 
successful ACTD technologies can be supported in the budget?
    Answer. After a successful ACTD, technologies determined to have 
military utility will be left with the operating forces as residuals. 
The ACTD office has budgeted for the support of residuals for two years 
until the formal acquisition process can assume management 
responsibility for these items. Transition planning must be started 
early in the ACTD to ensure that necessary funds are programmed and 
budgeted for operating and logistics costs. Once budgeted and upon 
transition to Milestone III, Approval for Production, systems which 
commenced development as Advanced Technology Demonstrations are funded 
individually in the Operation & Maintenance, Marine Corps and 
Procurement Marine Corps appropriations budget requests.
    Question. For the record, please provide a list of the technologies 
fielded as a result of the ACTD process. Please include testing, 
fielding and support costs for each system.
    Answer. The Marine Corps has not had any technologies fielded as a 
result of the ACTD process. The only ACTD to which the Marine Corps has 
committed fiscal year 1998 funding is the Extending the Littoral 
Battlespace (ELB) ACTD. The ELB ACTD is tied closely to the Marine 
Corps' Commandant's Warfighting Laboratory and the Navy's Fleet Battle 
Experiments. This ACTD process for the Marine Corps began in January 
and technologies and concepts demonstrating military utility and 
suitability will be transitioned into acquisition.
    Question. What are your views as to how the present ACTD program is 
structured? How can it be improved?
    Answer. The ACTD program is managed by the Deputy Under Secretary 
for Defense (Acquisition and Technology) ((DUSD (AT)). The program 
provides the Services and the Commanders in Chief (CINCs) with an 
alternative approach to streamline the acquisition cycle while 
concurrently demonstrating new operational concepts for enhanced 
warfighting. The ACTD process allows for more informed acquisition 
decisions based upon greater user community involvement early in the 
process. ACTD's provide much greater understanding for technology and 
concepts prior to a committed acquisition program.
    The Extending the Littoral Battlespace (ELB) ACTD has been underway 
for approximately 2 months. Due to inexperience in this area over a 
reasonable length of time, the Marine Corps can not adequately assess 
the ACTD process or structure. As the ELB/ACTD program evolves and 
matures, there will be numerous lessons learned which will be applied 
to future ACTD programs.
    Question. The Marine Enhancement Program (MEP) is an initiative 
which provides non-developmental, commercially available equipment 
which can be quickly tested, evaluated and fielded for the Marine 
Infantryman. The Marine Corps is requesting $4 million for MEP in 
fiscal year 1998; $2.5 million for research and development and $1.5 
million for procurement. What is the average acquisition timeline for 
programs funded in MEP?
    Answer. The goal of the MEP acquisition cycle is to take advantage 
of procurement reform legislation and initiatives to field meaningful 
and important items in shorter than normal timeframes. The average goal 
is comprised of one to two years for research, development, testing, 
and evaluation and one to three years for procurement. Of additional 
importance is the occasional opportunity to test and procure items in 
the same year funds are appropriated.
    Question. What MEP systems will be tested and evaluated in fiscal 
year 1998? When will those systems be fielded?
    Answer. The MEP systems to be tested and evaluated in fiscal year 
1998 are as follows: Improved Extreme Cold Weather Clothing System; 
Improved Medium Pack with Assault Pack; Family of Body Armor; Rifle 
Combat Optics; Hardened Day/Night Sight; Lightweight Helmet; Improved 
Sun/Wind Goggles; Fire Fly Marking System; Assault Snow Shoe; Cold 
Weather Sled; Multi-Purpose Cart; and, Expedient Portable Shower Bag. 
These systems will be fielded in the fiscal year 1999-2003 timeframe.
    Question. The Army has a similar initiative, the Soldier 
Enhancement Program. What process is in place to ensure that there is 
no unnecessary duplication between the two programs?
    Answer. A Memorandum of Agreement delineates Army and Marine Corps 
responsibilities. Also, Marine Corps personnel just attended a Joint 
Conference with the Army during March 3-6, 1997. Further, continual 
coordination exists between the Marine Corps and Army personnel to 
ensure unnecessary duplication does not occur.

               High Mobility Multipurpose Wheeled Vehicle

    Question. The High Mobility, Multipurpose Wheeled Vehicle (HMMWV) 
is the light tactical vehicle for all of the services. The HMMWV has 
been in production since the 1980s. The Army is planning a service life 
extension program (SLEP) for the HMMWV. Does the Marine Corps have a 
requirement for a HMMWV SLEP? If so, please provide the anticipated 
acquisition cost of the program and optimal fielding schedule for the 
Marine Corps HMMWV SLEP?
    Answer. We have not yet determined whether we will remanufacture 
our existing fleet or buy new HMMWVs. However, in order to make a fully 
informed decision, we recently completed (January, 1997) a Life Cycle 
Cost Estimate (LCCE) for a HMMWV remanufacture (SLEP). The LCCE 
estimated the SLEP cost for 17,626 USMC HMMWVs to be $642 million in 
fiscal year 1998 constant budget dollars. Optimal remanufacture and 
fielding quantities are 10% to 15% of the USMC HMMWV fleet each year 
(1,763 to 2,644 vehicles per year).
    Question. Would it be more cost effective to procure new, rather 
than remanufacture old HMMWV'S? Please explain.
    Answer. Based on the current life cycle cost estimate, the 
remanufacture of the existing fleet appears to be the most cost 
effective acquisition approach to meet the needs of the Marine Corps. 
The decision to either buy new HMMWV's or remanufacture existing 
HMMWV's will be based on responses to the U.S. Army's future ``Request 
for Proposal'' (due to be published during fiscal year 1997) for HMMWV 
remanufacture. Based on the costs bid in these future proposals, a 
fully informed procurement decision can be made regarding the overall 
cost effectiveness of either ``remanufacturing or buying new.''
    Question. What is the economic life expectancy of a remanufactured 
HMMWV? Of a new HMMWV?
    Answer. The service life expectancy of both a remanufactured HMMWV 
and a new HMMWV is 14 years.
    Question. The Army plans on terminating HMMWV production in fiscal 
year 1999. According to Army officials, the HMMWV is a ``world class 
off road vehicle''; however, ``supportability'' is becoming an issue. 
Furthermore, the Army believes that the HMMWV is ``only marginally 
meeting new requirements.'' Do you agree with the Army's assessment of 
the HMMWV program? If so, what supportability issues are you 
experiencing?
    Answer. The existing HMMWV meets the current and projected Marine 
Corps requirements for the ``Light Tactical Vehicle Fleet.'' It is our 
understanding that the Army has a heavier payload requirement for its 
light fleet than the Marine Corps does. This may explain the statement, 
``only marginally meeting requirements.'' Parts and logistics support 
for USMC HMMWV fleet are considered adequate.
    Question. What new requirements will not be met by the current 
HMMWV? Could those deficiencies be resolved by modifying the current 
vehicle? If not, why?
    Answer. No new requirements will be unfilled by the current HMMWV.
    Question. Given the cost and development schedule of other tactical 
vehicles program, do you think it makes sense to develop a new HMMWV? 
Why or why not?
    Answer. The USMC does not have a current or projected requirement 
for a newly developed HMMWV.

                  Advanced Amphibious Assault Vehicle

    Question. The Marine Corps is developing the Advanced Amphibious 
Assault Vehicle (AAAV). The AAAV will replace the Amphibious Assault 
Vehicle which was fielded in the 1970's The AAAV will transport Marines 
from a ship to the beach and will also used as a land fighting vehicle. 
Mr. Douglass, last year you identified the AAAV as a program that could 
be accelerated by one year if additional funds were made available. 
According to your testimony, the accelerated program required 
increasing the budget request by $20 million in fiscal year 1997 and 
$23 million from 1998 to 2002. Congress provided the additional $20 
million in fiscal year 1997. The fiscal year 1998 program schedule 
shows a Milestone II decision in 2001, a low rate production decision 
in 2004, and an initial operating capability in 2006. Ironically, this 
is the same schedule you included with your fiscal year 1997 budget 
request. Last year you testified that each one of these events would 
occur one year earlier if the additional funds were provided. Why is 
there no change in the AAAV schedule?
    Answer. In our Fiscal year 1997 Report to Congress on AAAV we 
provided the funding required to accelerate development one year and 
restore the program to its original funding level. The report 
identified the need for $20 million in fiscal year 1997 which would 
contribute four months of the 12 month acceleration. This is now being 
accomplished. The remaining funds displayed would be required to 
achieve the additional eight months.
    Since the submission of the fiscal year 1997 report, the AAAV prime 
contractor has been selected and as such, has afforded us an 
opportunity to relook at other ways to accelerate AAAV.
    Question. The fiscal year 1998 schedule does show that Full 
Operational Capability has been accelerated by one year, from 2014 to 
2013. Since the Future Years Defense Plan includes budgets for only 
five years when will the accelerated program take place, after 2003? 
What is the anticipated cost of the ``accelerated'' AAAV program from 
2004 to 2013?
    Answer. In April of this year we will submit to Congress a revised 
plan and its associated costs.
    Question. Since the Navy did not provide the additional funds 
required to accelerate the AAAV, what impact, if any, did the 
congressional add have on the AAAV program?
    Answer. All acceleration plans deal with the AAAV's development 
schedule leaving production resources beyond fiscal year 2004 
unaltered.
    Question. As discussed earlier, the AAAV will replace the 
Amphibious Assault Vehicle (AAV) which was fielded in the 1970's. Based 
on the AAAV procurement schedule which ends in 2030, some AAV's will be 
almost 60 years old when they are retired. What is the anticipated 
economic life for the AAV?
    Answer. Current plans call for an AAAV Initial Operational 
Capability (IOC) in fiscal year 2006 and Full Operational Capability 
(FOC) in 2013. The hull life of the AAV was designed for 50 years which 
would indicate a useful life until approximately calendar year 2022. A 
depot inspection to repair only as necessary is scheduled for each AAV 
every four to five years. With the exception of some normal surface 
cracking, which is quickly and easily repaired, no structural defects 
have yet been detected and the AAV hull life will likely exceed its 50 
year design parameter.
    The cost to repair in the field and during scheduled depot 
inspections is increasing, but adequately funded at this time. Studies 
have been conducted to reduce the expected cost growth with age 
(vehicle rebuilding and component replacement). These efforts should 
maintain AAV affordability until replacement by the AAAV begins in 
fiscal year 2006. Through a combination of continuing improved 
reliability and maintainability changes and cost reduction efforts 
within the depot, the economic life of the AAV should reliably extend 
through the final fielding of the AAAV.
    Question. When will the AAV reach its anticipated economic life?
    Answer. The cost of maintaining the AAV is increasing with its age. 
Projections indicate that by the time the replacement AAAV reaches Full 
Operational Capability (FOC) in fiscal year 2013, we will spend over a 
billion dollars maintaining the current AAV fleet through cyclical 
repairs in the depot. Yet, this maintenance solution remains less 
expensive than buying replacement AAVs. The marine Corps systems 
Command and marine Corps Logistics Base in Albany, GA have jointly 
investigated a number of ways which would reduce the cost of ownership 
from between 20% to 40% and ensure the affordability of the AAV until 
it is completely retired.
    Question. Since it was fielded, what upgrades have been made to the 
AAV?
    Answer. The procurement schedule for the production of 1013 AAAV's 
ends 2012, with FOC in 2013. Additional procurement appropriation 
funding is required beyond 2012 to sustain the AAAV through its 
remaining life cycle. Since fielded the following upgrades have been 
made to the AAV:
          Service Life Extension Program (1984-86)
          Replaced Engine
          Added P-900 Armor
          Incorporated Electric Drive Gun Turret
          Enhanced Applique Armor
          UpGunned Weapons Station
          Automatic Fire Sensing and Suppression System
          Rotary Bow Plane
          Improve Reliable and Maintainable Transmission
          Improved Radiator
          SINCGARS Radios
    Question. Has the AAV gone through a service life extension 
program? If so, when and was the vehicle ``remanufactured'' or were 
just specific components replaced? Please explain.
    Answer. Yes. The service life extension program (SLEP) was 
conducted from 1984-1986. The vehicle was stripped down to the hull. 
Hull modifications were made to the AAV to improve water dynamics and 
to incorporate a new engine. All other components were removed and 
either new or rebuilt replacements were installed. The procurement 
schedule for the production of 1013 AAAV's ends in 2012, with FOC in 
2013. Additional procurement appropriation funding is required beyond 
2012 to sustain the AAAV through its remaining life cycle.
    Question. The Marine Corps is not considering a service life 
extension program for the AAV. Last year the committee was told there 
are no anticipated cost estimates for such a program and you believe 
that the AAV can remain operational over the next few decades. What are 
the potential problems that may arise when using a 30, 40, or 50 year 
old amphibious assault vehicle?
    Answer. The Marine Corps is not considering a service life 
extension program (SLEP) for the AAV. To address the increasing cost to 
maintain the aging AAV fleet, a study has been completed for rebuilding 
the AAV and applying reliability and maintainability modifications. The 
Marine Corps is evaluating the results of that investigation for 
affordability.
    Some problems associated with the aging AAV asset are as follows: 
the diminishing manufacturing resources for parts, normal wear and 
fatigue on mechanical and electrical components, compliance with 
changing environmental constraints, old technology not easily 
compatible with latest innovations, and many years exposure to the 
harsh climatic elements in which the Marine Corps normally operates.
    The procurement schedule for the production of 1013 AAV's ends in 
2012, with FOC in 2013. Additional procurement appropriation funding is 
required beyond 2012 to sustain the AAAV through its remaining life 
cycle.

                        Marine Corps Ammunition

    Question. The Marine Corps is requesting, $98.8 million for 
ammunition. Last year, the Congress provided $132.1 million. Does the 
fiscal year 1998 President's budget adequately fund the marine Corps' 
requirement for ammunition and sustain the capabilities of the 
industrial base? If not, what are the shortfalls?
    Answer. The fiscal year 1996 Marine Corps ammunition requirements 
study significantly lowered Marine Corps War Reserve (WR) Requirements. 
This reduction in the WR has allowed the Marine Corps to prudently 
shift assets that had previously been earmarked for WR to training. The 
Fiscal Year 1998 President's Budget for ammunition funds the annual 
training requirement and funds the combat requirement in the program 
years. The residual readiness requirement and strategic readiness 
requirement are not completely funded for some ammunition items. The 
status and impact of the Fiscal Year 1998 President's Budget on the 
industrial base can only be determined by the US Army Industrial 
Operations Command (IOC).
    Question. Does the fiscal year 1998 budget request fully fund the 
Marine Corps combat training requirements for ammunition? If not, what 
is the shortfall and what is the impact on your war reserve?
    Answer. The Fiscal Year 1998 President's Budget adequately funds 
the Marine Corps ammunition requirements. The budget funds the annual 
training requirement and meets the combat requirement in the program 
years. It reflects an acceptable balance between ammunition 
requirements and other high priority Marine Corps requirements. 
Nonetheless, some ammunition shortfalls do exist. These can be caused 
by adjustments in geographical positioning, production delays, new 
training items and changes in training requirements, or when large 
quantities of ammunition are relegated to an unserviceable condition 
code. At this time the Marine Corps has identified the following 
shortfalls:
    a. Ctg, 40mm practice Linked M918 (DODIC B584) will be at 16% of 
the Approved Acquisition Objective (AAO) at the end of fiscal year 1998 
Funded Delivery Period (FDP).
    b. Charge, Demolition Assembly M183 (DODIC M757) will be at 33% of 
the AAO by the end of the fiscal year 1998 FDP.
    c. Ctg, 5.56mm Training Rounds M200 (DODIC A080) will be at 42% of 
the AAO at the end of the fiscal year 1998 FDP.
    d. Ctg, 5.56mm Training Rounds M200 Linked (DODIC A075 will be at 
32% of the AAO at the end of the fiscal year 1998 FDP.
    War reserve ammunition is used to satisfy training requirements 
only in isolated situations where procurement deliveries are not 
keeping up with training demands and the item has such high training 
priority that a case-by-case decision is made to support limited 
training with war Reserve ammunition.
    The fiscal year 1996 ammunition requirements study significantly 
lowered Marine Corps War Reserve requirements. This has allowed the 
Marine Corps to shift assets that had previously been earmarked for War 
Reserve to training. These former war Reserve assets are not considered 
as excess since they support training. This drawdown of the former War 
Reserve supports near term readiness. When these assets are drawndown, 
ammunition procurement levels will have to be increased to support the 
long term readiness requirement.
    As stated above, the Marine Corps does drawdown War Reserve to meet 
training, but only in isolated cases. This affects short term readiness 
since the assets are replaced as soon as possible (typically when 
delivery of ordered ammunitions occurs).
    Question. In fiscal year 1998, the Marine Corps conducted a study 
to reevaluate ammunition requirements. The result of the study was a 
$1.4 billion drop in war reserve requirements. Based on the study, the 
Marine Corps determined that $621 million budgeted for war reserve 
ammunition could be applied toward training ammunition. Briefly 
describe the Marine Corps ammunition study. What were the assumptions, 
the methodology and the conclusions.
    Answer. The decrease in the War Reserve Requirement was based on 
improvements to the Marine Corps' ammunition model and scenario 
changes. In fiscal year 1996, the model looked at 2 near simultaneous 
Major Regional Contingencies (MRCs), lasting approximately 90 days each 
as per the Defense Planning Guidance. Marine Forces were based on Joint 
Strategic Capabilities Plan (JSCP) allocation. Input to the study was 
provided by Marine Battalion Commanders, Executive Officers, Operations 
Officers, and by the Marine Corps Intelligence Activity. Direct study 
oversight was provided by a Marine Corps study group with periodic 
briefings to a General Officer Steering Group for recommendations and 
concurrence. The study input was run through two computer models, which 
were improved to better represent the way Marines fight. The model 
incorporated superior integration of the effects of Naval Surface Fire 
Support and Naval Aviation into our methodology, and provided more 
realistic attrition algorithms. The Scenario changes involved smaller 
enemy forces and a shorter combat time frame. The study concluded with 
the War Reserve Requirement for POM 98.
    Question. The ammunition study resulted in a drastic change in the 
ammunition requirements for the Marine Corps. It is our understanding 
that the change in requirements was based on a change in Marine Corps 
doctrine. Please explain the changes in Marine Corps doctrine.
    Answer. The decrease in the War Reserve Requirement was based on 
improvements to the ammunition modelling capability and scenario 
changes rather than doctrinal changes. The model improvements better 
represent the way we fight. They incorporate superior integration of 
the effects of Naval Surface Fire Support and Naval Aviation into our 
methodology, and provide more realistic attrition algorithms. The 
scenario changes involved smaller red forces allocated to the Marine 
Corps ground forces and a shorter combat time frame.
    Question. The study determined that $833 million of artillery war 
reserve requirements were not necessary based on current inventory 
levels. For the record please provide a break-out of the type of 
artillery round, the acquisition requirement type, and the current 
inventory levels for artillery rounds currently in the inventory.
    Answer.

------------------------------------------------------------------------
                                                              Sept. 30,
            DODIC               Nomenclatuore      TM/AAO        1996
                                                              Inventory
------------------------------------------------------------------------
D003.........................  Charge,                6,935       72,236
                                Spotting
                                Projectile.
D501.........................  PROJ, 155MM            5,971       27,697
                                APERS ADAM-L.
D502.........................  PROJ, 155MM           20,502       56,045
                                APERS ADAM-S.
D505.........................  PROJ, 155MM           13,697      196,142
                                ILLUM.
D510.........................  PROJ, 155MM            1,827        2,474
                                COPPERHEAD.
D514.........................  PROJ, 155MM           15,653       62,758
                                RAAM-S.
D515.........................  PROJ, 155MM            5,189       30,245
                                RAAM-L.
D528.........................  PROJ, 155MM           13,497     1089,362
                                SMOKE WP.
D532.........................  CHG, PROP 155MM      247,461      306,675
                                RED BAG.
D533.........................  CHG, PROP 155MM      101,326      586,916
                                WHITE BAG.
D539.........................  CHG, PROP 155MM            3          123
                                DUMMY.
D540.........................  CHG, PROP 155MM       76,701      592,425
                                GREEN BAG.
D541.........................  CHG, PROP            288,904      865,476
                                15L5MM WHITE
                                BAG.
D544.........................  PROJ, 155MM HE.      234,161      698,440
D550.........................  PROJ, 155MM           28,657       60,689
                                SMOKE WP.
D563.........................  PROJ, 155MM           70,676      909,022
                                HEDP (ICM).
D579.........................  PROJ, 155MM          157,041       12,729
                                HERA.
D864.........................  PROJ, 155MM DP-       65,421      171,424
                                ICM BASEBLEED.
------------------------------------------------------------------------

    Question. The Marine Corps ammunition study did not define 
industrial base issues. When will you evaluate the impact of the 
ammunition study recommendations on the industrial base?
    Answer. The Office of the Secretary of Defense has not defined how 
regeneration of the industrial base is to be addressed in the budget 
process for items which can not be produced within the Defense Planning 
Guidance timeframe. Industrial base regeneration requirements following 
a major regional conflict have been provided to the US Army Industrial 
Operations Command for use in accurately sizing the munitions 
industrial base.
    Question. Did the ammunition study aggregate old munition 
quantities with modern munitions quantities to determine the levels of 
ammunition on hand? If so, which modern munitions would need to be 
procured to replace old munitions?
    Answer. The Marine Corps ammunition study established the War 
Reserve Requirement for Preferred Munitions only. The Marine Corps 
ammunitions. Older munitions are drawn down as substitutes for training 
where applicable. This process ensures Preferred Munitions are 
available for combat, while making efficient use of current assets for 
training.
    Question. Last year, the Committee requested that the Marine Corps 
submit a report regarding the type and acquisition objective for 
kinetic energy tank rounds. What is the status of the report?
    Answer. Information regarding the type and acquisition objective 
for kinetic energy tank rounds was submitted in the response to a 
Congressional Data Request (CDR). That CDR included the following 
statements:
    Based upon Congressional direction, the Marine Corps has reviewed 
the requirement for kinetic energy tank ammunition and made the 
following determinations:
    a. The current War Materiel Requirement (WMR) for 120mm kinetic 
energy rounds for the M1A1 main battle tank is 15,481 model M829A1 
rounds (DODIC C380). The model M829A2 round is not included in this 
requirement nor is there a specific Marine Corps requirement for the 
M829A2.
    b. The currently fielded M829A1 is capable of defeating the 
majority of targets. The added capability of the M829A2 does not 
provide enough of a performance advantage over the M829A1 to justify 
making the M829A2 the preferred munition.
    c. The Marine Corps believes that there is a greater cost benefit 
in waiting for the significant performance improvements expected to be 
offered by the M829A3 (currently undergoing testing).
    Question. It is our understanding that there has been a significant 
increase in the cost of explosives manufactured at the Holston 
Ammunition Plant--up to a 500% increase. Last year, Congress provided 
funds to procure items which use explosive material manufactured at 
Holston. Briefly describe the situation at the Holston Ammunition 
Plant. How does the Marine Corps proposed to resolve the issue?
    Answer. The ammunition item prices for explosives produced at 
Holston were significantly increased based upon the new anti-terrorist 
legal requirement to ``tag'' the explosive material portion of the 
ammunition called C4. Exact technical explanations are available from 
the U.S. Army Industrial Operations Command. Re-utilization of old C-4 
components by melting and inserting ``tags'' is one alternative to 
reduce the increase in price. Additionally, the Marine Corps will begin 
to search for competitively priced off-shore tagged C4 and ammunition 
sources.
    Question. Will you use fiscal year 1997 funds to procure the items 
which require explosives manufactured at Holston? If not, will you 
reprogram the dollars?
    Answer. Yes. The Marine Corps intends to procure items requiring 
explosives manufactured at Holston. Some funds will be used to tag and 
reutilize the existing C-4 explosive material in order to lower the 
cost of the Mine Clearing Line Charges and the Demolition Charges.
    Question. For the record, please provide a listing of the items 
which require explosive material manufactured at Holston. Please 
include the amount appropriated for each item.
    Answer. The amounts appropriated in fiscal year 1997 for items 
which require explosive materials manufactured at Holston are as 
follow:
          M183 Demolition Charges, $19. 6 million
          M59A1 Mine Clearing Line Charges, $16.7 million
          M58A4 Mine Clearing Line Charges, $8.0 million
          M830A1 120mm HEAT-MP-AA Cartridges, $6.9 million
    Question. The DoD established the Conventional Ammunition Working 
Fund (CAWF), a working capital fund, to standardize ammunition 
procurement. Since a large number of conventional ammunition items 
share common components and materials, DoD believed that it made 
economical sense to have a single manager buy the conventional 
ammunition for the all services. The initial order it funded by the 
CAWF; upon receipt of the ammunition the service reimburses the CAWF. 
It is our understanding that the CAWF will be eliminated in fiscal year 
1999. What do you believe will be the impact of that decision?
    Answer. The Marine Corps cannot yet ascertain the impact of closing 
the CAWCF in fiscal year 1999. The replacement procedures have not yet 
been approved by the Office of the Secretary of Defense. The potential 
loss of fixed standard pricing for ammunition concerns the Marine 
Corps. This loss could result in increased price changes during the 
execution of the budget which would cause a lower quantity of rounds to 
be procured. In practice, orders are not processed within the CAWCF 
until funding is received from the Service requiring the ammunition.
    Question. What are your views of the CAWF? How can it be improved?
    Answer. The Marine Corps has supported the CAWCF with proposed 
improvements in financial tracking, discipline and control over support 
costs. These support costs are commonly referred to as surcharges, 
i.e., engineering, industrial stocks, and quality assurance. The Marine 
Corps also supported the CAWCF in acquisition reform to reduce lead 
times and to better determine actual costs of ammunition.
    Question. DoD has not made a decision on what acquisition process 
should replace the CAWCF. What is the Marine Corps position?
    Answer. The Marine Corps is an active member of the Ammunition 
Process Improvement Team (APIT) that has joint Service membership. The 
APIT is chaired by OSD and tasked with proposing the follow-on funds 
and procedures for ammunition procurement after the CAWCF is closed. A 
final recommendation has not been forwarded for review.

              Chemical Biological Incident Response Force

    Question. Last year Congress provided $10 million to establish the 
Chemical Biological Incident Response Force (CBIRF). This year, the 
Marine Corps is requesting $1 million to continue the effort. The 
CBIRF's mission is to respond to terrorist chemical and biological and 
toxic industrial chemical incidents. What did the fiscal year 1997 
funds provide?
    Answer. Purchase of certified commercial off the shelf state of the 
art equipment for detection, decontamination, force protection, 
medical, communications and general support. Fiscal year 1997 funds 
will provide the following to CBIRF: Level ``A'' Suits, Level ``A'' 
(Durable) Suits, Level ``A'' Gloves, Protective Sleeves, Level ``B'' 
Suits/Coveralls, Self Contained Breathing Apparatus, Portable Air 
Compressor, Multi Gas Monitor, Personal Gas Detectors, PH Tester, 
Autovent System, Automatic Chemical Agent Director Alarm, Biological 
Detector, Photoionization Tester, Air/Liquid Detector Tube System, 
Handheld Pulse Oximeter, and Portable Defibrillator. In addition, over 
200 other items authorized in the Table of Authorized Material will be 
procured during fiscal year 1997.
    Question. For fiscal year 1998 you are requesting $1 million for 
CBIRF research and development activities. Please explain what 
initiatives are funded in fiscal year 1998.
    Answer. Technologies being looked at include the following: Phase 
Change Cooling Garment, Hand-washing Portable Decontamination System, 
Advanced Handheld Chemical/Industrial Hazard Detector Plume modeling, 
Bio-Sensors, Chem/Bio Mass Spectrometer. Additionally, live agent and 
testing on commercial equipment to ensure acceptability for CBRIF 
mission will be performed.
    Question. According to your budget documents the CBRIF will be 
equipped with off-the shelf equipment, yet your budget includes no 
procurement dollars until 2000. What research and development 
initiatives are in your future year defense plan? Does your budget 
include adequate funds to field those systems you will be developing? 
If not, what is the shortfall?
    Answer. Last year's funds were used to procure those end items 
deemed urgent in providing a reasonable CBIRF response capability. If 
an additional $15 million were provided, the remaining ``off-the-
shelf'' end items would be procured, thereby completing the outfitting 
of CBIRF.
    The CBIRF R&D budget supports the following technology capabilities 
that will be developed and tested in the fiscal year 1999-2003 
timeframe: Bio Samplers with Ultra Violet Long Wave Lamps, Gas 
Chromatographer, Spill Control Systems, Decontamination Apparatus 
(Trailers, Shelters, and Vehicles), Field Deployable Labs, Chemical/
Biological Protective Shelters, Medical Microscopic Isolator, Tele-
medicine Capability (Mini Camera, Mobile Video Tele-Conferencing), and 
Fiber Optic Wave Guide Biological Detectors (Testing), Lightweight 
Portable Decontamination System, and an ability to interface with Joint 
Warning And Reporting Network Communication links.
    Accordingly, the procurement dollars budgeted in fiscal year 2000-
2003 represent purchase of the above items as they transition out of 
development and into production.
    Question. Given their mission, it is essential to provide the CBIRF 
with equipment that provides protection from chemical and biological 
weapons and toxic industrial chemicals. To date, what equipment have 
you provided to the CBIRF? What equipment is still required? Is funding 
for that equipment provided in the budget? If so, please provide the 
type of equipment, acquisition schedule, and cost.
    Answer. Protection procured to date for CBIRF includes: Level ``A'' 
Suits, Level ``A'' Boots, Self Contained Breathing Apparatus, Portable 
Air Compressor, Level ``B'' Suits, Level ``A'' (Durable) Suite, Level 
``A'' Gloves, Protective Sleeves.
    The following items have not yet been procured: Saratoga Suits, 
Quick Donning Masks, Bio Hazard Suits, additional C2 Canisters, 
Toxicological Agent Protective Aprons, Skin Decon Kits, Chemical 
Footwear Covers, Chemical Protective Gloves, Chem-Bio Protective Mask 
(M40) helmet covers, and First Aid Kits. Funding for these items is not 
included in the FY98 Budget due to topine constraints. However, if an 
additional $15 million was provided, these remaining CBIRF procurement 
items would be procured.
    Question. The proposed unit strength for the CBIRF will be 350 to 
400 marines. What is the current strength? When will you achieve your 
planned unit strength?
    Answer. The current strength for CBIRF is 345. A total manpower 
strength of 374 is scheduled to be achieved during fiscal year 1998.

                              Mine Warfare

    Question. Mine warfare was identified as a major deficiency during 
Operation Desert Storm. Mr. Douglass, please describe the Navy's mine 
warfare strategy.
    Answer. Navy has developed a mine warfare strategy based on 
progressive introduction of mine countermeasures (MCM) capabilities 
developed to become an integral element of fleet operations. The vision 
is to provide MCM functionality to the commander with a mix of 
dedicated and organic capability, rather than relying solely on our 
current force of dedicated MCM assets. The immediate focus is defined 
by a Near-term Campaign Plan which encompassed 1996 and 1997 programs 
and initiatives. This plan identified shortfalls in mine warfare 
capabilities and programs which could resolve these deficiencies in the 
shortest period of time with the greatest increase in capability. The 
next element, the Mid-term Campaign Plan, is defined by the budget 
years, fiscal years 1998 to 2003. This Plan continues the initiatives 
and expands on the programs of the Near-term Plan. These investments 
stress the steady improvement of mine countermeasures readiness and 
sustainability, and progressive funding of initiatives to eliminate 
capability gaps and integration of MCM into the fleet. The final 
element, the Far-term Campaign Plan, focuses beyond the current budget 
with an emphasis on those science and technology developments which 
have the most promise for solving capability shortfalls. The Navy's 
mine warfare strategy is an evolutionary effort that has demonstrated 
over the past two years stability in its planning and commitment for 
its successful execution.
    Question. What major mine warfare programs are in your budget, and 
are they fully funded?
    Answer. Most mine warfare programs do not fall within the ``major'' 
acquisition program category. Mine warfare capabilities are being 
developed as many minor acquisition efforts managed by the Program 
Executive Office for Mine Warfare. The largest mine warfare acquisition 
program we have, the mine countermeasures ships (MCM and MHC classes) 
are nearing completion with only three MHCs remaining to be delivered 
within the next year.
    Funding for mine warfare programs receives attention at the highest 
levels of Navy, the Joint Staff and OSD. In accordance with Public Law 
102-190 Section 216, both Navy and the Chairman, Joint Chiefs of Staff 
determine that the programs contained in the Mine Countermeasures 
master plan have sufficient funds in the President's Budget. The 
Undersecretary of Defense (Acquisition and Technology) also reviews the 
plan before certifying to Congress that Navy has sufficient resources 
for its execution.
    Question. What mine warfare funding shortfalls remain?
    Answer. In the formulation of the fiscal year 1997 Mine Warfare 
Plan, the resource sponsor for Mine Warfare, Director, Expeditionary 
Warfare Division (N85) identified some funding shortfalls that required 
resolution to execute initiatives in the Near-term Campaign Plan. As 
part of the fiscal year 1997 budget submission, offsets were identified 
for the RDT&E and OPN shortfalls. The only remaining funds to be 
resolved are $6.155 million of OMN for the Near-term Campaign Plan 
initiatives of: readiness and substainability; route survey and 
database development; and the Mine Warfare Readiness/Effectiveness 
Measuring (MIREM) Program. Since OMN is one year money, this shortfall 
is being addressed in the on-going mid-year budget review.
    With regard to the fiscal year 1997 budget, there are ongoing 
efforts to coordinate the release of Congressional plus-up funds for 
fiscal year 1997 for specific mine warfare programs. These funds are 
intended to accelerate the delivery and development of our more 
promising programs such as the Integrated Combat Weapons System (ICWS) 
and the field evaluation of Advanced Technology Demonstration (ATD) 111 
and Magic Lantern® for the Airborne Laser Mine Detection System 
(ALMDS).
    Question. Under current plans, when will modern mine warfare 
equipment actually be delivered to the field?
    Answer. Our Mine Countermeasures ships (MCM and MHC classes) are 
among the most modern in the world. We have completed the MCM class 
construction program and have only three MHC class ships remaining to 
be delivered.
    As an indication of our vision to transition MCM capabilities to 
the fleet, the Remote Mine-hunting System (RMS) is being developed to 
provide our surface conbatants the capability to conduct independent 
mine hunting operations. RMSs is progressing towards accelerated fleet 
introduction. The prototype unit, RMS(V)2, completed an at-sea exercise 
with the Kitty Hawk Battle group in the Persian Gulf in January 1997. 
The low rate initial production (LRIP) version, RMS(V)3 will be 
introduced in Fiscal Year 1999 with the final operational version, 
RMS(V)4, reaching initial operational capability IOC) in fiscal year 
2003.
    From the airborne MCM perspective, we have provided a contingency 
airborne Light Detection and Ranging (LIDAR) capability to detect 
floating and moored mines in the near surface region using the Magic 
Lantern (Deployment Contingency) (ML(DC)) system. The Reserves received 
the first of three ML(DC)) units this past December. A restart of 
Airborne Laser Mine Detection System (ALMDS) is being planned for the 
1999 budget.
    The submarine force is actively pursuing an MCM role through the 
development of a clandestine mine reconnaissance system with tethered 
Near-term Mine Reconnaissance System (NMRS). This system is on schedule 
for a limited capability introduction 1998. The operational autonomous 
version, the Long-term Mine Reconnaissance System (LMRS), is planned 
for IOC in 2003.
    Other programs, such as the Distributed Explosive Technology (DET) 
and the Shallow Water Assault breaching System (SABRE) are on schedule 
to provide our amphibious forces the capability to counter landing zone 
mines ``in stride.'' Both of these systems passed Milestone II this 
past year, and will achieve Milestone III in 1999.

                        Manufacturing Technology

    Question. The Navy's manufacturing technology program provides 
funding to improve the way in which Navy weapon systems are 
manufactured, thereby lowering their cost. The Congress has added 
between $30 to $50 million to the Navy's manufacturing technology 
budgets in each of the last three fiscal years. It would not have been 
hard for the Navy to guess that this is a Congressional interest item. 
Mr. Douglass, is the Navy's manufacturing technology program a good 
program?
    Answer. Yes, Manufacturing Technology (MANTECH) is the only process 
technology development program we have. MANTECH has historically 
provided a significant return on investment, (average of about 20:1).
    Question. Why does the Navy traditionally underfund it each year in 
budgets to Congress?
    Answer. Few programs get all the money they believe is necessary. 
Process technology does not compete well against product technology, 
especially in a declining budget scenario. Process technology is 
perceived to benefit industry rather than weapons systems--a 
misconception.
    Question. Please explain why there are no funds requested for 
manufacturing technology in your 1998 budget, and whether you 
personally believe this is wise.
    Answer. Historically, the Congress has appropriated funds in excess 
of the President's Budget request, and such was the case in fiscal 
yearr 1997. While the Department does support a robust MANTECH program 
linked to our acquisition program, fiscal realities have required that 
difficult choices be made to balance competing valid requirements. This 
was the basis for using $36 million of the fiscal year 1997 
appropriations to ``forward fund'' MANTECH in fiscal year 1998. During 
the coming year, we will be conducting an assessment to determine just 
what the most appropriate sustainable funding level for MANTECH should 
be for fiscal year 1990 and following years.
    Question. The Committee understands that industry has submitted 
about $300 million of proposals to the Navy for manufacturing 
technology projects that may offer high payback to the Navy. How would 
you implement these proposals if there are no funds in the budget?
    Answer. MANTECH issues come from both industry and the Navy. Our 
data base currently contains over $300 million in issues (not 
proposals).
    Our Executive Steering Committee has prioritized these issues and 
found that just over $100 million have truly significant impact in 
terms of return on investment on the affordability of our weapon 
systems.
    The forward funding strategy would provide $36 million for 
execution in fiscal year 1998. Funding levels for fiscal year 1999 and 
future years will be reappraised during the coming year.

                          University Research

    Question. The Navy is the Defense Department's executive agent for 
university research. The Office of Naval Research (ONR) negotiates and 
administers DOD research contracts with universities. A few years ago, 
abusive overhead charges to government contracts (for example, at 
Stanford) was a major issue. Mr. Douglass, where do we stand today on 
the issue of reform of the Defense Department's university research 
contracts?
    Answer. The problem was not with the awarding of research 
contracts, but with the indirect costs that were charged to these 
contracts. The Navy revised its indirect cost rate setting procedures 
by consolidating the negotiation function at its headquarters and 
establishing an expert negotiation staff.
    Question. How many DoD contracts with academic institutions still 
have unresolved, prior-year overhead rate issues?
    Answer. Over the last three years, DoD has resolved over 125 open 
prior-year overhead rate issues and is current at all our cognizant 
universities, except for one.
    Question. What is being done to simplify the procedures used to 
determine indirect overhead rates charged to government contracts?
    Answer. The Navy is using more predetermined rates, on a multi-year 
basis, where business conditions permit.
    Use of multi-year predetermined rates reduces the overall audit and 
negotiation costs to both the Government and universities. DoD's policy 
to rely on A-133 audits, prepared by independent public accountants, 
will also reduce the Government's auditing costs.
    Question. What is being done to streamline the number of government 
personnel who negotiate, administer, and audit our currently cumbersome 
systen?
    Answer. The Navy has six people assigned to the negotiation of 
indirect cost rates and audit resolution matters at universities. These 
functions were previously handled by 14 Field Offices.
    Question. How much is contained in the Navy's fiscal year 1998 
budget for contracts with universities for any purpose, and how does it 
compare to the 1997 level?
    Answer. Within the total Fiscal Year 1998 RDT&E, Navy Budget 
request, we plan to spend approximately $365 million at educational 
institutions, of which approximately $132 million will go to UARCs 
(APLs/ARLs). This is approximately $16 million lower than fiscal year 
1997, with UARCs being approximately $22 million lower.
    Question. Admiral Pilling, we discussed with you today many severe 
shortfalls in equipment for Navy combat ships. You are head of Navy 
requirements. What is the Navy's requirement for this level of annual 
spending with universities?
    Answer. The Navy long-term strategy has relied on maintaining a 
technological superiority over potential adversaries. This is even more 
important as we reduce and modernize our fleet assets. New enabling 
technologies for developing superior warfighting systems are dependent 
upon new knowledge and concepts produced by basic research, largely 
conducted in universities. Basic research in the initial and 
fundamental step in the process of scientific discovery and has a 
considerable impact on the development cycle time and operational 
capability of a broad range of military systems. The maintenance of our 
technological superiority in the long term is directly dependent on our 
sustaining a robust program of basic research focused on naval relevant 
issues.

                            A-12 Litigation

    Question. DOD terminated the A-12 aircraft (a fighter-sized B-2 
shaped aircraft) years ago, and has been in court with its contractors 
ever since. Mr. Douglass, what is the status of A-12 litigation?
    Answer. We expect that a judgment in the amount of approximately 
$1.1 billion plus interest will be entered against the United States in 
the near future, which will then provide the opportunity for appellate 
review in the United States Court of Appeals for the Federal Circuit.
    Question. What legal decisions were made last year, and what do 
they mean to the Navy?
    Answer. On June 12, 1996, the Court of Federal Claims ruled: 1) 
that only incurred costs remain to be determined in deciding the amount 
of plaintiffs' termination for convenience recover, and 2) that in 
determining the monetary relief for the plaintiffs, the Court will not 
consider a loss adjustment, or plaintiffs' entitlement to equitable 
adjustments, or profit. On December 13, 1996, the Court issued an 
opinion elaborating upon the June 12, 1996, Order. It said that the 
issues under ``2)'' above will not be considered because one party or 
the other would be unfairly prejudiced due to limitations on discovery 
by the Executive for national security reasons, and that plaintiffs' 
damages will be limited to incurred costs with certain adjustments. On 
February 5, 1997, the parties stipulated that allowable incurred costs 
for purpose of any judgment will be $3.749 billion, with various 
adjustments resulting in a net judgment to be entered in the amount of 
$1,071,365,444.
    Question. What events lie ahead?
    Answer. A judgment will probably be entered in the near future and 
the case will be appealed by both parties to the United States Court of 
Appeals for the Federal Circuit.
    Question. When do you expect court proceedings to end?
    Answer. We expect a final judgment to be issued by the Court of 
Federal Claims in the near future, and we expect that appeals will be 
filed by both parties. It will probably be at least a year before the 
Court of Appeals issues an opinion. We expect that the case will then 
be remanded to the Court of Federal Claims for further proceedings in 
accordance with the decision of the Court of Appeals. It is difficult 
to speculate when all court proceedings will end.
    Question. Should a judgment be made against the government, what is 
the range of likely dollar values involved and how would these be paid?
    Answer. A judgment will likely be entered against the United States 
in the near future in the amount of approximately $1.1 billion plus 
interest as computed under the Contract Disputes Act. When the 
accumulated interest through March 31, 1997 is added to the principal 
amount of the judgment, the total will be approximately $1.49 billion. 
The government is not required to pay a judgment until after all 
judicial proceedings have been completed, including further proceedings 
in the Court of Federal Claims after any remand. We expect that the 
judgment will be reversed on appeal.
    In general, a judgment under the Contact Disputes Act involving a 
Navy contract is paid in the first instance from the judgment fund, 
which is administered by the Department of the Treasury. Treasury then 
seeks reimbursement from the Navy. Any reimbursement must be made from 
funds currently available for obligation at the time of the judgment or 
from funds appropriated by Congress in the future. No judgment in this 
case will be paid until all judicial proceedings are completed.
    Question. What would be the effect on Navy modernization budgets if 
a court judgment were rendered and upheld against the Navy?
    Answer. We do not know when a court judgment would be rendered or 
upheld against the Navy. Therefore, it is too speculative to determine 
what effect, if any, such a judgment would have on Navy modernization 
budgets.

                             TSSAM Lawsuit

    Question. The government terminated the A-12 contract for 
``default'', but terminated the TSSAM (Tri-Service Standoff Attack 
Missile) for ``the convenience of the government''. Both programs 
suffered similar problems in terms of cost, schedule, and poor 
performance after expenditure of billions of dollars each. Termination-
for-default means that the contractor is held liable for overruns, 
while under a termination-for-convenience the contractor is not 
penalized for its poor performance. Secretary Douglass, the Committee 
is surprised to learn that the TSSAM contractor (Northrop-Grumman) has 
filed suit against the government to recover $750 million of 
``uncompensated performance costs, investments, and a reasonable 
profit'' on this terminated program. What are your views on the merit 
of this lawsuit?
    When the contract was originally terminated for convenience, didn't 
the government and the contractor reach agreement on a fair settlement 
cost? If so, what has changed now?
    How do you characterize the contractor's performance on the Navy 
portion of the program?
    Did the government get its money's worth from the $3 billion 
investment made in this program?
    How much could the government have to spend to defend itself in 
court against this lawsuit?
    Answer. While the Department of the Navy (Navy) is a participant in 
the TSSAM program, TSSAM contract administration is a matter under the 
cognizance of the Air Force. With respect to the litigation, the 
Department of Justice, working with the Air Force, represents the 
United States in this case.
    Accordingly, although the Navy will cooperate in any way possible 
to assist the Air Force and Department of Justice with this matter, I 
must defer to the Air Force and Department of Justice with respect to 
answers to these questions.
    Question. Where would the Navy get its share of $750 million if it 
had to pay additional TSSAM costs under a court penalty? Would it 
likely come from weapons modernization funding?
    Answer. Generally, a court judgment against the United States is 
paid from the judgment fund, and an agency is required to reimburse the 
judgment fund from its available funds or by obtaining additional 
appropriations.
                         UNFUNDED REQUIREMENTS
    Question. What are the top ten unfunded requirements in each R&D 
and procurement account in your service?
    Navy Answer. Navy's fiscal year 1998 budget, in my view, reflects 
our commitment to sufficiently fund critical long-term recapitalizaiton 
programs while protecting the near-term readiness of our forces. I 
remain concerned, however, about overall procurement levels. 
Accelerating procurement of certain platforms and systems would be 
desirable if we are to maintain a ready force into the next century. We 
also recognize that we must continue to decrease our maintenance 
backlogs in ships, aircraft and real property. Additional funds 
provided by you last year enabled us to do just that.
    This year, in addition to our maintenance backlog, a number of 
long-range programs would benefit from increased funding, should such 
resources be made available. Along with the Integrated Ship Self-
defense and Cooperative Engagement Capability Programs discussed in my 
previous answer, I would like to accelerate procurement of ships (DDG-
51 and LPD-17), aircraft (F/A-18 E/F and E-2C), and weapons systems 
(Navy Area Theater Ballistic Missile Defense, Tomahawk, and Joint 
Standoff Weapon). High-priority RDT&E investments such as CVN-77, Navy 
Theater-Wide TBMD, Naval Surface Fire Support, and MANTECH could also 
benefit. A prioritized list detailing how we would use any additional 
funds is attached.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Marine Corps Answer.
    (Note: In some cases Official Marine Corps Unfunded Lists include 
less than ten items.)
    The top unfunded requirements in R&DT&E (Ground) in millions of 
dollars are:

          $19.8--Commandant's Warfighting Lab.
          $0.6--Marine Enhancement Program.
          $10.1--Advanced Amphibious Assault Vehicle.
          $3.6--Light Weight 155MM Howitzer.
          $1.5--Tactical Remote Sensor Systems.
          $0.7--Marine Common Hardware Suite Development & Management.
          $1.0--Tactical Electronic Reconnaissance Processing & 
        Evaluation Syst.

    The top unfunded requirement in RDT&E (Aviation) are:

          $3.9--AV-8B Safety, Reliability and Operational Enhancement.

    The top unfunded requirements in Procurement, Marine Corps are:

          $42.6--Base Telecommunications Infrastructure.
          $17.0--Javelin Medium Antitank Weapon System.
          $65.1--Light Tactical Vehicle Replacement Program.
          $18.2--Items Less Than $10 Million.
          $(9.2)--Combat Vehicle Appended Trainer.
          $(6.2)--International Standards Organization Bed.
          $(0.4)--Improved Direct Air Support Center PIP.
          $(1.6)--Combat Rubber Reconnaissance Craft.
          $(0.8)--Light Armored Vehicle--Reliability & Maintainability.
          $15.1--Chemical/Biological Incident Response Force Equipment.
          $22.1--Power Equipment, Assorted.
          $11.1--MX 11620 Generation III 25 mm Image Intensification 
        Tubes.
          $24.3--Items Less Than $10 Million.
          $(0.4)--Close Quarters Battle Weapon.
          $(3.2)--M2 Flatrack.
          $(3.5)--Logistics Information Systems.
          $(2.4)--Defense Message System.
          $(1.2)--Underwater Breathing Apparatus.
          $(1.7)--Marine Enhancement Program.
          $(1.5)--Special Effects Small Arms Marking System.
          $(3.3)--Military Motorcycle Replacement.
          $(3.0)--Advanced Demolition Kit.
          $(4.1)--Tactical Electronic Reconnaissance Processing & 
        Evaluation Syst.
          $12.2--Shop Equipment Contact Maintenance.

    The top unfunded requirements in Procurement of Ammunition, Marine 
Corps are:

          $5.0--Ctg, 40mm practice Linked M918 (DODIC B584).
          $15.0--Charge, Demolition Assembly M183 (DODIC M757).
          $2.0--Ctg, 5.5mm Training Rounds M200 (DODIC A080).
          $1.0--Ctg, 5.56mm Training Rounds M200 Linked (DODIC A075).

    Question. Identify all production programs for which funds are 
included in the fiscal year 1998 budget request where fiscal 
constraints have prevented acquisition of sufficient quantities in 
either fiscal year 1998 and/or the accompanying FYDP to meet validated 
military requirements/inventory objectives.
    Navy Answer. These procurement items are listed in the previous 
copy of the CNO's Priorities List for fiscal year 1998 Additional 
Congressional R&D and Procurement Program list.
    Marine Corps Answer. FY 1998 fiscally constrained procurement 
programs (PMC, PANMC and APN) which could benefit from additional 
funding (to procure additional quantities to meet validated military 
requirements/inventory objectives) are listed below. All items are in 
the FYDP which accompanies the FY 1998/1999 President's Budget.

Procurement Marine Corps:
                                                         ($ in Millions)
    Base Telecommunications Infrastructure....................      42.6
    Javelin Medium Antitank Weapon Systems....................      17.0
    Light Tactical Vehicle Replacement Program................      65.1
    Combat Vehicle Appended Trainer...........................       9.2
    International Standards Organization Bed..................       6.2
    Improved Direct Air Support Center Pip....................       0.4
    Combat Rubber Reconnaissance Craft........................       1.6
    Light Armored Vehicle-Reliability/Maintainability.........       0.8
    Chemical/Biological Incident Response Force...............      15.1
    Power Equipment Assorted..................................      22.1
    MX 11620 Gen III 25mm Image Intensification Tubes.........      11.1
    Close Quarters Battle Weapon..............................       0.4
    M2 Flatrack...............................................       3.2
    Logistics Information Systems.............................       3.5
    Defense Message System....................................       2.4
    Underwater Breathing Apparatus (UBA)......................       1.2
    Marine Enhancement Program................................       1.7
    Special Effects Small Arms Marking System (SEASAMS).......       1.5
    Military Motorcycle Replacement...........................       3.3
    Advanced Demolition Kit...................................       3.0
    Tactical Electronic Reconnaissance Processing and 
      Evaluation System (TERPES)..............................       4.1
    Shop Equipment Contact Maintenance (SECM).................      12.2
Procurement Ammunition, Navy and Marine Corps:
    Ctg. 40mm Practice Linked M918 (DODIC B584)...............       5.0
    Charge, Demolition Assembly M183 (DODIC B584).............      15.0
    56mm Ctg. 5.56mm Trng Rounds M200 (DODIC A080)............       2.0
    Ctg. 5.56mm Training Rounds M200 Linked (DODIC A075)......       1.0
Aviation:
    AV-8B (1 A/C, 22 T-AV8B Engines, Simulators)..............     236.5
    V-22 (11 A/C, Spares and AP for Additional 9).............   1,094.0
Shipbuilding and Conversion, Navy:
    LPD 17 (1 Ship)...........................................     746.0

    Question. What initiatives are currently approved in an outyear POM 
which could either be done cheaply and/or be fielded earlier by 
initiating them in fiscal year 1998?
    Indicate program by appropriation account along with an estimated 
funding stream for each of the five subsequent fiscal years (assuming a 
fiscal year 1998 start) along with potential savings that could be 
achieved.

    Navy Answer. The previous copy of the CNO Priorities List contains 
the top Navy investment areas where additional fiscal Year 1998 funding 
would be of benefit, to both accelerate the pace of new equipment 
purchases, and to save money in the outyears of the fiscal year 1998-
2003 Future Years Defense Plan (FYDP). Savings would accrue in fiscal 
years 1999-2003 years because of increased acquisition quantities, 
higher learning curves, or earlier completion of total program buys. 
Specific funding streams for each fiscal year depend, however, on such 
things as contract re-negotiations, adjustments in research & 
development and procurement profiles, and other decisions that would 
have to be worked as part of the fiscal year 1999 Program Review this 
summer and fall
    Marine Corps Answer. There are many items, both ground and 
aviation, that could be fielded earlier. These items are listed in the 
table below. The second column of the table represents the amount of 
the program that can be accelerated into fiscal year 1998. Columns 
three through seven represent the current funding stream of each 
program. The items that could be fielded more quickly are as follows:

----------------------------------------------------------------------------------------------------------------
                PMC                   Enh. Amt      FY 99        FY 00        FY 01        FY 02        FY 03
----------------------------------------------------------------------------------------------------------------
Base Telecom Infrastructure.......         42.6         16.8         16.7         17.3         17.5          0.0
Javelin Medium Antitank Weapon....         17.0         83.4         81.7         28.8          0.0          0.0
Lt. Tac. Veh. Replacement.........         65.1          0.0         57.4         56.6         65.0         80.9
CVAT..............................          9.2          0.0         13.0         13.8         21.8         30.1
ISO Beds..........................          6.2          0.0          0.0          0.0          0.0          0.0
IDASC PIP.........................          0.4          1.4          1.6          1.6          1.6          1.6
Combat Rubber Reconn Craft........          1.6          2.6          1.0          1.0          1.1          1.1
LAV-RAM...........................           .8          1.4          1.7          1.3          1.7          2.0
CBIRF.............................         15.1          0.0          1.0          1.6          1.4          1.0
Power Equipment, Assorted.........         22.1          4.1          4.3          4.6          4.7          4.9
MX11620 Gen III Tubes.............         11.1         10.9          0.0          0.0          0.0          0.0
Close Qtrs Battle Weapon..........           .4          0.0          0.0          0.0          0.0          0.0
M2 Flatrack.......................          3.2          3.2          0.0          0.0          0.0          0.0
Logistics Info System.............          3.5          5.9          2.9          3.0          3.0          3.1
Defense Message System............          2.4          4.6          7.7          3.4          0.0          0.0
Underwater Breathing App..........          1.2          1.1          0.5          0.5          0.5          0.5
Marine Enhancement Program........          1.7          2.1          1.8         11.3         11.6          1.8
Sp. Effects Small Arms Mk.........          1.5          0.4          0.0          0.0          0.0          0.0
Military Motorcycle...............          3.3          2.3          0.0          0.0          0.0          0.0
Advanced Demolition Kit...........          3.0          3.0          0.0          0.0          0.0          0.0
TERPES............................          4.1          0.0          4.0          0.0          3.0          0.0
Shop Equip Contact Maint..........         12.2         11.4          0.0          0.0          0.0          0.0
            PANMC
Ctg. 40mm Prac. Linked (B584).....          5.0          9.7          9.7          6.7          6.7          7.8
Ctg. Demo Assembly (M757).........         15.0         20.0          0.0          0.0         10.0          0.0
Ctg. 5.56mm Trng Round (A080).....          2.0          7.7          5.3          5.3          5.3          5.3
Ctg. 5.56mm Trng Lnkd (A075)......          1.0          4.6          3.0          3.0          3.0          3.0
            APN
AV-8B (1 A/C, 22 T-AV8B Engines,          236.5  ...........  ...........  ...........  ...........  ...........
 Simulators)......................
V-22 (11 A/C, Spares & AP for           1,094.0        676.1        739.5        976.2      1,302.3      1,561.5
 (additional 9)\1\................
VH-3/60 Simulators................         10.0  ...........  ...........  ...........  ...........  ...........
F/A-18D (2 A/C and Spares)........         93.8  ...........  ...........  ...........  ...........  ...........
            RDT&E (AVN)
AV-8B Safety, Reliability and               3.9  ...........  ...........  ...........  ...........  ...........
 (Operational Enhancement)........
----------------------------------------------------------------------------------------------------------------
\1\The additional funds added in Fiscal Year 1998 for the V-22 would accelerate the program more rapidly towards
  the most efficient production rate of 36 aircraft per year. This rate would save the total program
  approximately $1.2 billion (a unit cost savings of $2.7 million per aircraft) and, combined with estimated
  inflation savings of $4.8 billion, would enable the program to save approximately $6 billion.


    Question. Provide a list of R&D or production programs or projects 
for which funding is included in the fiscal year 1998 budget that are 
stretched out beyond technically attainable schedules primarily due to 
lack of funding in fiscal year 1998 and/or the outyears.
    Navy Answer. The R&D and procurement programs included in the 
President's Fiscal Year 1998 Budget request are adequately funded to 
meet current schedule goals.
    Marine Corps Answer. There are no Marine Corps systems acquisition 
programs stretched out beyond ``technically attainable schedules'' 
primarily due to a lack of funding in the Fiscal Year 1998 budget and/
or the outyears. However, many programs are budgeted at minimum 
sustaining rates or are budgeted in subsequent years due to fiscal 
constraints. Programs which could benefit, if additional fiscal year 
1998 funds were provided are as follows:
PMC:                                                                ($M)
    Base Telecommunications.......................................  42.6
    Javelin Medium Antitank Weapon................................  17.0
    Light tactical Vehicle Program................................  65.1
    Combat vehicle Appended Trainer (CVAT)........................   9.2
    International Std Organization (ISO) Bed......................   6.2
    Improved Direct Air Support Center (IDASC) PIP................   0.4
    Combat Rubber reconnaissance Craft (CRRC).....................   1.6
    Light Armored Vehicle--LAW-RAM................................   0.8
    Chemical/Biological Incidence Response ForcePower Equipment, 
      Assorted....................................................  22.1
    MX 11620 Gen III 25MM Image Intensification Tubes.............  11.1
    Close Qtrs Battle Weapon......................................   0.4
    M2 Flattrack..................................................   3.2
    Logistic Information System...................................   3.5
    Defense Messaging System......................................   2.4
    Underwater Breathing Apparatus (UBA)..........................   1.2
    Marine Enhancement Program (MEP)..............................   1.7
    Special Effects Small Arms Marking System (SESAMS)............   1.5
    Military Motorcycle Replacement...............................   3.3
    Advanced Demolition Kit.......................................   3.0
    Tactical Electronics Reconnaissance Processing and Evaluation 
      (TERPES)....................................................   4.1
    Shop equipment Contract Maintenance (SECM)....................  12.2
PANMC:
    Ctg. 40 mm practice Linked M918...............................   5.0
    Charge Demolition Assembly M183...............................  15.0
    Ctg. 5.5mm Training Rounds M200...............................   2.0
    Ctg. 5.56mm Training Rounds M200 Linked.......................   1.0
R&D (GRND):
    Commandant's Warfighting Lab (CWL)............................  19.8
    Marine enhancement Program (MEP)..............................   0.6
    Advanced Amphibious Assault Vehicle (AAAV)....................  10.1
    Light Weight 155 MM Howitzer (LW155)..........................   3.6
    Tactical remote Sensor System (TRSS)..........................   1.5
    Marine Comman Hardware Suite (MCHS) Development and Management   0.7
    TERPES........................................................   1.0
APN:
    AV-8B (1 A/C, 22 T-AV-8B Engines, Simulators)................. 236.5
    V-22 (11 A/C, Spares, and AP for Additional 9)...............1,094.0
    VH-3/60 Simulators............................................  10.0
    F/A-18D (2 A/C and Spares)....................................  93.8
R&DT&E (AVN):
    AV-8B Safety, Reliability & Operational Enhancement...........   3.9
SCN:
    LPD-17........................................................ 746.0

    Question. Indicate all programs for which procurement funding is 
included in your fiscal year 1998 budget that would be good candidates 
for multiyear procurement funding, assuming additional funding were to 
be available in fiscal year 1998 and the outyears. Provide for these 
programs a comparison of the current acquisition funding stream 
compared to a potential multiyear profile (assuming a fiscal year 1998 
start), along with the additional up-front investment that would be 
required and the potential savings that would be likely.
    Navy Answer. At this time, the Department of the Navy has no 
candidates for multiyear procurement funding. However, we are 
continually evaluating programs to assess potential benefits of a 
multiyear procurement strategy and may propose candidates in future 
years.
    Marine Corps Answer. There are no ground equipment programs for 
which procurement funding is included in the fiscal year 1998 budget 
that would be good candidates for multiyear procurement (MYP) funding 
assuming additional funding were to be available in fiscal year 1998 
and the outyears.
    For my aviation programs, the most likely candidates for MYP 
contracts are the MV-22 and the AV-8B.
    The ideal time to begin multiyear procurement for the MV-22 is with 
the first full rate production lot (fiscal year 2001). OPEVAL completes 
in the first quarter of fiscal year 2000 which would allow initiation 
of MYP in fiscal year 2001 in a fully evaluated, stable configuration. 
Initiation prior to fiscal year 2001 could result in subsequent 
significant configuration changes, based on OPEVAL results.
    MYP for the MV-22 is expected to save between 4-10% of the cost of 
the aircraft. This could be in addition to the 23% savings already 
realized and the $2.7 million savings (fiscal year 1994 constant 
dollars) per aircraft we will realize with an increase to a more 
economic rate of 36 MV-22s per year.

                                                     Annual
                                                 [$ in millions]
----------------------------------------------------------------------------------------------------------------
                  Fiscal year                      FY02       FY03       FY04       FY05       FY06      Total
----------------------------------------------------------------------------------------------------------------
Quantity......................................         18         24         24         24         24        114
Gross P-1.....................................     1279.8     1587.3     1689.3     1609.3     1528.8     7694.5
Less AP.......................................      -99.2     -121.6     -115.8     -148.4     -145.8     -630.8
Advance Procurement...........................      121.6      115.8      148.4      145.8      144.6      676.2
                                               -----------------------------------------------------------------
      Total Annual............................     1302.3     1561.5     1721.9     1606.6     1527.6     7719.9
 
                                                    Multiyear
 
Quantity......................................         18         24         24         24         24        114
Gross P-1.....................................     1279.8     1523.6     1647.8     1569.0     1489.4     7509.6
Less AP.......................................      -99.2     -154.3     -270.1     -270.1      -77.2     -870.9
Advance Procurement...........................      154.3      270.1      270.1       77.2      175.8      947.5
                                               -----------------------------------------------------------------
      Total Annual............................     1335.0     1639.3     1647.8     1376.1     1588.0     7586.2
                                               =================================================================
      MYP SAVINGS.............................      -32.7      -77.8       74.1      230.5      -60.4      133.7
----------------------------------------------------------------------------------------------------------------

    In the AV-8B Remanufacture contract is an eight percent cost 
savings. The AV-8B current and multiyear profiles are:

                                                     Annual
                                                 [$ in millions]
----------------------------------------------------------------------------------------------------------------
                       Fiscal year                            FY98       FY99       FY00       FY01      Total
----------------------------------------------------------------------------------------------------------------
Quantity.................................................         11         12         12          9         44
Airframe/CFE.............................................      192.4      210.2      214.1      173.1      789.8
Gross P-1................................................      300.1      334.4      322.8      297.6     1254.9
Less AP..................................................      -22.4      -18.9      -19.4      -15.0      -75.8
Adv Procurement..........................................       18.9       19.4       15.0        0.0       53.3
                                                          ------------------------------------------------------
      Total annual.......................................      296.6      334.9      318.4      282.6     1232.5
 
                                         Multiyear
Quantity.................................................         11         12         12          9         44
Airframe/CFE.............................................      177.0      193.4      197.0      159.2      726.6
Gross P-1................................................      284.1      316.9      304.1      282.6     1187.7
Less AP..................................................      -22.4      -37.3      -52.7      -43.6     -156.0
Adv Procurement..........................................       62.2       53.6       17.8        0.0      133.6
                                                          ------------------------------------------------------
      Total Annual.......................................      323.8      333.2      269.2      239.0     1165.2
                                                          ======================================================
      MYP SAVINGS........................................      -27.3        1.7       49.2       43.6       67.3
----------------------------------------------------------------------------------------------------------------

    The AV-8B Multiyear option will require Congressional approval to 
enter into a contract with an unfunded liability which may result if 
the program is either prematurely canceled or the Navy is otherwise 
unable to meet its contractual obligations.
    Question. Identify any procurement programs in the fiscal year 1998 
budget where provision of additional procurement funds in fiscal year 
1998 would have a very favorable impact on production unit prices.
    Navy Answer. Provision of additional procurement funds in fiscal 
year would have a favorable production unit price impact on the 
following programs:
          F/A-18E&F
          E-2C
          DDG-51
          Tomahawk
          Info Technology-21
          Acoustic Rapid COTS Insertion
    Marine Corps Answer. The Marine Corps can identify no ground 
equipment programs where additional fiscal year 1998 procurement funds 
would have a significant impact on budgeted production unit prices. 
However, in the case of the Javelin program, the additional $17 million 
contained in the fiscal year 1998 Budget Enhancement List provides a 
significant capability enhancement. These funds procure 186 missiles 
for six Marine battalions earlier than scheduled in the fiscal year 
1998 President's Budget. No additional cost savings are realized in the 
Javelin multi-year contract containing three years of level pricing.
    In the area of aviation support, additional funds in FY 1998 for 
the V-22 would allow for acceleration of the program more rapidly 
towards the most efficient production rate of 36 aircraft per year. 
This rate would result in total program savings of approximately $6 
billion ($1.2 billion as a result of unit cost savings of $2.7 million 
per aircraft, and $4.8 billion in estimated inflation savings).
    Question. Identify each production program in the fiscal year 1998 
budget whose main rationale is to sustain a minimal industrial base.
    Navy Answer. The Navy has no production programs in the fiscal year 
1998 budget whose main rationale is to sustain a minimal industrial 
base.
    Marine Corps Answer. There are no Marine Corps procurement programs 
in fiscal year 1998 whose main rationale is to sustain a minimal 
industrial base.
    Question. Please indicate in total and for the top 20 largest 
weapon systems both the peacetime operating requirement (separately) 
for spare parts funded either as initial spares in procurement accounts 
or as consumable spares in NWCF, and the percentage of requirement met 
through the fiscal year 1998 budgeted level of funding. Project how 
this would change by the end of the FYDP.
    Navy Answer. Peacetime Operating Stocks and War Reserve material 
for operating forces are managed in the wholesale supply system and 
carried in the Navy Working Capital Fund (NWCF). The spares requirement 
for fiscal year 1997 associated with the Navy's top 20 weapon systems, 
expressed by obligation, are listed below. Table values are in millions 
of dollars.
SYSTEM:                                                          FY 1997
    F/A-18....................................................     550.4
    Helos (H-46, H-53, H-60, AH1W) (Considered as 4 systems)..     393.2
    F-14......................................................     188.2
    Avionics RADARS--common (Considered as 2 systems).........     153.9
    P-3.......................................................     137.2
    AV-8B.....................................................     119.0
    E2/D2 (considered as 2 systems)...........................     112.5
    S-3.......................................................      77.5
    CASS (Consolidated Aviation Support System................      75.4
    MK 15 Close-In Weapon System..............................      39.3
    General Purpose Test Equipment............................      36.3
    Carrier Planned Equipment Replacement (CARPER)............      34.6
    AEGIS.....................................................      22.2
    Elec Suspended Gyro Navigation............................      13.9
    LM2500 Engine.............................................       8.0

(Source: Fiscal Year 1998/1999 President's Budget, Exhibit 3B)

    Supply System Inventory Requirement:
    War Reserve...............................................    $369.0
        Total Wholesale Inventory Requirement.................  11,212.9

Source: (SSIR, 30 Sep 96)

    Navy combines peacetime operating support and war reserve 
requirements for these and all installed equipment/components into 
onboard spare parts allowances termed Consolidated Shipboard Allowance 
Lists (COSAL) for ships and submarines, and Aviation Consolidated 
Allowance Lists (AVCAL) for aircraft embarked on air-capable ships.
    Allowances discussed above provide demand or readiness-based parts 
support with insurance items to support a set endurance period, 
nominally 90 days, without resupply. The wholesale systems stocks 
material to support the consumption and replenishment of allowance 
material and other anticipated maintenance requirements. The Supply 
System Inventory Requirement represents the total wholesale supply 
system requirement in support of the Navy and includes $369 million for 
war reserve material.
    Financed as part of the Navy Working Capital Fund (NWCF) account, 
the wholesale supply system provides outfitting and replenishment 
spares to support Navy customers. This investment account fully funds 
program requirements and is balanced to Navy's overall requirement. 
Maintenance of weapon systems and stock replenishment of parts used by 
operating forces are supported in the OM&N appropriation through the 
Flying Hour/Steaming Hour Programs which are similarly balanced to the 
overall requirement.
    Initial spares to support new weapon systems or upgrades to 
existing systems being introduced into the operating forces are 
budgeted and funded as initial spares in Navy's three investment 
accounts. Through fiscal year 1998, these accounts are fully funded.
    Marine Corps Answer. The fiscal year 1998 funding contained in the 
President's Budget for the Procurement Marine Corps budget line item 
titled ``Spares and Repair Parts'' is sufficient to meet peacetime 
operating requirements.
    Question. Please indicate any potential FMS sales that are being 
discussed that could influence production unit prices once consummated, 
not including those whose impact is already factored into the 
production unit prices portrayed to Congress in the fiscal year 1998 
budget.
    Navy Answer. Sales are projected for the below listed weapon 
systems:
    Harpoon; Standard Missile; P-3 Upgrade; MK-41 (VLS); MK-48 (GVL); 
CIWS; AEGIS; E-2C Upgrade; F/A-18 C & D; LAC (AAV); LAV (Variant Kits); 
Predator; AH-1W; SH-60B; AEWC; ASPJ; MK-46 Torpedo; AIM-7M; HARM; AIM-
9L/M/S.
    Marine Corps Answer. Currently the United States Marine Corps 
(USMC) has 103 foreign military sales (FMS) agreements with twenty two 
(22) countries. To the extent that the USMC was aware of FMS, for these 
efforts, the associated unit cost impacts are reflected in the fiscal 
year 1998 President's Budget. There will continue to be opportunities 
for additional FMS agreements in the future but there are no potential 
sales known over those included in our budget.
    Question. Please indicate what policy your service uses for major 
R&D and production programs, such as ``budget to contract target cost'' 
or ``budget to ceiling contract cost'' or ``budget to most likely 
cost'', and identify which of your major programs in the fiscal year 
1998 budget deviate from this policy and the attendant rationale.
    Navy Answer. The Department of the Navy budgeting policy for major 
R&D and production programs is to budget to the most likely cost. This 
budget quality estimate is developed through detailed review and 
analysis of costs of the engineering characteristics and requirements 
associated with the item under development or production. There are no 
programs which deviate from this policy.
    Marine Corps Answer. When budgeting for a program for which a 
contract has been awarded, the maximum liability, including award/
incentive fees, is initially budgeted. Adjustments are made as 
appropriate throughout the life of the contract. For a program where a 
contract has not been awarded, a ``most likely cost'' approach is 
generally used.
    Question. Please indicate what your service uses to provide a 
budget within R&D and production programs for unknown allowances and/or 
economic change orders, and identify any programs in the fiscal year 
1998 budget which deviate from this policy and the attendant rational.
    Navy Answer. The Department of the Navy budgeting policy for major 
R&D and production programs relative to unknown allowances and/or 
allowances for engineering change orders is directly related to the 
maturity of the program in the acquisition process. Maturing 
productions are afforded a small allowance for emergent engineering 
change orders based upon the specific historical acquisition and 
engineering analysis experience of that program. New start endeavors 
for which this experience is absent but for which a reasonable estimate 
can be determined based upon the acquisition history of similar 
programs are afforded a somewhat larger allowance incorporating lessons 
learned. The fiscal year 1998 budget was prepared in accordance with 
this policy.
    Marine Corps Answer: Marine Corps acquisition programs are managed 
to an Acquisition Program Baseline Agreement (APBA) with objective and 
threshold values which permit limited cost/program growth. Changes in 
excess of the established thresholds require reporting and action by 
the Milestone Decision Authority. Tradeoffs within the program 
consistent with the principles of Cost as An Independent Variable 
(CAIV) are further used to reduce risk and manage cost. Engineering 
Change Orders (ECOs) or any other cost elements are budgeted at levels 
consistent with the most likely values indicated by the program life 
cycle cost estimate or other documents. A limited number of recurring, 
level-of-effort programs such as power generation equipment and 
environmental control equipment are currently being baselined to also 
conform to the APBA approach to program management. Additionally, minor 
modification budget lines used primarily to address emergent readiness 
and safety issues are not amenable to baselining.
    Question. Please identify any R&D or production program which as a 
contract for which all or a portion is budgeted in fiscal year 1998 for 
a contract award fee larger than $10 million. Provide amount budgeted 
for the award fee, the basis on which the amount was calculated (e.g. 
100% fee based on the contract), and the historical performance of the 
contractor in terms of percentage of award fee awarded during prior 
award fee periods under the same contract.
    Navy Answer. The following programs have contracts in which all or 
a portion is budgeted in fiscal year 1998 for a contract award fee 
larger than $10 million.
    The budget for the Joint Strike Fighter Program includes $24.2 
million in fiscal year 1998 for award fee under the Concept 
Demonstration Program contract with Pratt and Whitney. The available 
award fee amount for each period of the contract was determined as a 
percentage of the total available award fee, based on the amount and 
importance of work to be performed in each period. The key events for 
the fiscal year 1998 award fee determinations are first engine to test 
and first lift system and nozzle to test. This is a new contract and no 
award fee payments have been made yet.
    A portion of the fiscal year 1998 RDT&E budgeted amount for the F/
A-18E/F program is for contract award fees larger than $10 million. 
Award fee amounts are budgeted in fiscal year 1998 for both the F/A-
18E/F airframe and engine engineering and manufacturing development 
contracts in the amount of $21.7 million and $22.8 million, 
respectively. Pursuant to contractual obligations, the budgeted amounts 
are based upon 100 percent of the available contract award fee pool 
which is due to be paid in fiscal year 1998. The following table 
illustrates the percentages of award fee awarded under each contract 
thus far.

                              [In percent]
------------------------------------------------------------------------
                                                  Airframe      Engine
------------------------------------------------------------------------
Lowest percentage.............................           85           84
Highest percentage............................           97           96
Cumulative Average to Date....................           94           90
------------------------------------------------------------------------

    The V-22 program's airframe engineering and manufacturing 
development contract is a cost plus award fee contract. The program 
budgets for 100 percent of the award fee liability incurred each year. 
In fiscal year 1998 the award fee liability is $29 million over two 
award fee periods. Historically, the contractor has been awarded 
approximately 85-100 percent of the award fee available pool.
    Marine Corps Answer. There are no fiscal year 1998 Marine Corps 
ground allocation of RDT&E,N or Procurement Marine Corps programs which 
have a contract award fee larger than $10 million.
    Question. Please identify all R&D and production programs/projects 
for which Congress appropriated funds in fiscal year 1997 which since 
the Appropriations Act was enacted have been either terminated or 
significantly down-scoped. For each, indicate the status of the fiscal 
year 1997 and any earlier active fiscal year funds where funds have 
been diverted to another purpose.
    Navy Answer. There has not been any significant downscoping of 
budgeted programs or new program terminations since submission of the 
Fiscal Year 1997 President's Budget in March 1996. Program adjustments 
reflected in our current estimates are due to rebalancing of resources 
consistent with rephrasing of requirements and revision of production 
and delivery schedules. Accordingly, since so terminations or 
significant downsizings have occurred, no prior year funds have been 
diverted.
    Marine Corps Answer. The only Fiscal Year 1997 program that has 
been terminated since the Fiscal Year 1997 Appropriations Act is the 
Marine's Off-Route Smart Mine Clearing System (ORSMC). This action was 
taken due to fiscal constraints. This adjustment is in line with 
briefings provided to your staff subsequent to this action as well as 
submission of the Fiscal Year 1998 President's Budget.
    Question. Identify all ACTD funding in the RDT&E, Navy 
appropriation account in each fiscal year 1997 through the FYDP. 
Indicate total cost of each listed ACTD and whether other service 
appropriations are contributing funds for it.
    Navy Answer. The Department of the Navy has RDT&E funding related 
to three ACTD's, the Precision Signal Intelligence (SIGINT) Targeting 
System (PSTS); the Joint Countermine ACTD, and Extending the Littoral 
Battlespace ACTD.
  Precision Signal Intelligence (SIGINT) Targeting ACTD--(funding in 
                               thousands)
    FY 97--12,299;
    FY 98--7,467;
    FY 99-03--4,766.
    The total cost of this ACTD and related core funding is 
$24,532,000. No funds from other services or DOD are included in this 
total cost.
             Joint Countermine ACTD--(funding in thousands)
    FY 97--90,738;
    FY 98--76,810;
    FY 99-03--ACTD ends in FY98.
    The total cost of this ACTD includes direct funding from OSD as 
well as generic supporting ``core funding'' from Army, Navy and Marine 
Corps RDT&E accounts.

OSD...........................................................    68,900
Military services.............................................   585,330
                    --------------------------------------------------------------
                    ____________________________________________________

                                                                 654,238

    Extending the Littoral Battlespace ACTD--(funding in thousands)
    There is no funding in the current Navy FYDP for this ACTD. A 
program plan and funding levels for future years is being developed.
    The Marine Corps has funding in the FYDP as follows:
    FY 97--5,000;
    FY 98--To be determined;
    FY 99-03--To be determined;
    Total cost projections for the ACTD are pending development.
    Marine Corps Answer. The only Marine Corps funded ACTD is Extending 
the Littoral Battlespace (ELB ACTD). This ACTD is jointly sponsored by 
the USMC and the USN. Marine Corps funding is contained in RDT&E,N, PE 
0603640M, Advanced Technology Demonstrations, Project C2223, Advanced 
Technology Demonstrations. Funding for this ACTD is as follows:

----------------------------------------------------------------------------------------------------------------
                                        FY97       FY98       FY99       FY00       FY01       FY02       FY03
----------------------------------------------------------------------------------------------------------------
ELB ACTD...........................        $5M       $10M       $10M       $10M       $10M        $1M        $1M
----------------------------------------------------------------------------------------------------------------


    The Marine Corps participates generically in the Joint Countermine 
ACTD. The total cost of this ACTD includes direct funding from OSD as 
well as generic support from the Army, Navy and Marine Corps RDT&E 
accounts. This ACTD ends in Fiscal year 1998. U.S. Navy funding is as 
follows: fiscal year 1997 $0.9 million, fiscal year 98 $0.8 million. 
The one program where extra investment could provide the highest 
payback is additional dollars for the V-22.

    [Clerk's note.--End of questions submitted by Mr. Young.]
                                         Wednesday, March 12, 1997.

                     AIR FORCE ACQUISITION PROGRAMS

                               WITNESSES

ARTHUR L. MONEY, ASSISTANT SECRETARY OF THE AIR FORCE FOR ACQUISITION
LT. GENERAL GEORGE K. MUELLNER, PRINCIPAL DEPUTY ASSISTANT SECRETARY OF 
    THE AIR FORCE FOR ACQUISITION, U.S. AIR FORCE

                              Introduction

    Mr. Young. The Committee will come to order.
    We are pleased to welcome Mr. Arthur Money, the Assistant 
Secretary of the Air Force for Acquisition, and Lt. General 
George Muellner, Principal Deputy Assistant Secretary of the 
Air Force for Acquisition.
    Gentlemen we thank you for being with us today and we 
appreciate all the good testimony that you have given us over 
the years.
    Yesterday I made a fairly lengthy opening statement at the 
hearing with Secretary Widnall and General Fogleman. I am not 
going to repeat that this morning, but I think you basically 
know what it was about.
    We are concerned about our aviation programs. We are 
concerned about the fact that we are not really making as much 
of an investment in new tactical airplanes as maybe we should. 
And so you know that and I am not going to bore you with that 
statement all over again.
    [Chairman Young's prepared statement follows:]

    This morning we are pleased to welcome Mr. Arthur L. Money, the 
Assistant Secretary of the Air Force for Acquisition, and General 
George K. Muellner, Principal Deputy Assistant Secretary for 
Acquisition. Gentlemen, thank you for coming today.
    The Air Force's fiscal year 1998 budget continues the trend of 
emphasizing near-term readiness to carry out contingency missions, but 
unfortunately at the price of delayed modernization of Air Force weapon 
systems. The Air Force's 1998 budget requests $29.8 billion for 
procurement and R&D. Though this is $600 million higher than fiscal 
year 1997, when inflation is taken in to account it is once again lower 
than last year's appropriated amount. In fact, from fiscal year 1990 to 
1998, the Air Force modernization accounts have declined 51% in real 
terms. And as we have noted for some time, we are concerned that 
continued delayed modernization of your weapon systems will lead to a 
long-term readiness problem, potentially resulting in unnecessary 
casualties in some future conflict.
    The decline in Air Force modernization leads to some starting 
observations about your budget:
     The 1998 Air Force budget funds only 3 tactical aircraft, 
the lowest quantity in the 50 year history of the Air Force.
     The Air Force budget allocates less for aircraft 
procurement than the Navy--for the second year in a row!
     And we see that already inefficient production rates have 
been reduced further: For example, the budget proposes a cut in JSTARS 
production from 2 aircraft per year to just 1 in fiscal year 1998.
    Even the Air Force's highest priority, the F-22 stealth fighter, 
does not escape reductions. F-22 production over the FYDP has been cut 
approximately in half compared to last year's plan.
    The Committee is also interested in hearing about programs that are 
new in this budget, or that are just now taking shape. For example, 
starting in 1998, the Air Force and Army budgets include $318 million 
over a two year period to provide upfront US funding for a NATO JSTARS 
program. The Committee is concerned that NATO has not yet decided to 
buy JSTARS and that the program could be underfunded by as much as a 
billion dollars. Also, this program comes at a time in which the Air 
Force has cut the US JSTARS program.
    The Committee would also like to hear more about the Airborne Laser 
program. Though the Air Force was still working out the scope of the 
program last year, we went ahead and provided funds to begin 
development. This year we learn that it will cost $11 billion to 
develop, procure, and operate 7 aircraft.
    Finally, the Committee is very interested in hearing about the 
reported cost growth to the F-22 program. The R&D program has increased 
by $2 billion and as I already mentioned, production quantities have 
been cut approximately in half over the Future Year Defense Plan. We 
know the Air Force is working hard to eliminate a potential $13 billion 
cost growth in production, and we look forward to hearing how that will 
be accomplished.
    So, I have outlined the issues we need to discuss today. As I have 
said too often since becoming Chairman, it appears that we are on the 
road to a severe long term readiness problem in the Air Force. 
Hopefully, you can convince us that the situation is better off than 
your acquisition budget would indicate. We want to work with you to 
identify and remedy the most pressing shortfalls, and to eliminate 
programs in your budget where budget growth is not needed.

    Mr. Young. Mr. Murtha, do you have any opening commitments? 
Then what we would like for you to do is proceed any way that 
you would like. Your statements in their entirety will be 
placed in the record, and just feel free to summarize them any 
way you wish, and then we will have some questions for you.

                     Summary Statement of Mr. Money

    Mr. Money. Mr. Chairman, Congressman Murtha and committee 
staff, General Muellner and I are in fact delighted to be here 
with you again to speak about the Air Force Modernization 
Program. We welcome this opportunity to continue the frank and 
open discussion that we have had over the past years concerning 
the Air Force program.
    As you are keenly aware, the Air Force RDT&E and 
procurement program is an important part of the fiscal year 
1998 budget request. It consists of a time-phased approach that 
is coupled with aggressive acquisition reform initiatives, all 
designed to ensure that the Air Force is properly postured to 
provide the Nation a global engagement capability at an 
affordable price as we move into the 21st Century.
    Today we plan to provide you a thorough review of the 
overall program, highlight key activities and events, and 
discuss, explain, and clarify any issues and concerns you may 
have.
    As we did last year, General Muellner will walk and, in 
fact, talk you through the presentation using the poster boards 
here, and together he and I will answer any questions and 
discuss any key issues that you may have.
    We will talk about the TACAIR modernization and highlight 
the importance of this program to the Nation and to the Joint 
Force Commanders. We will explain how the F-22 and the Joint 
Strike Fighter both fit as crucial pieces into this plan, and 
will address the affordability issues.
    In addition, we will include a discussion on the F-22 Joint 
Estimate Team, the JET review results, the program 
restructuring, and explain how this proactive initiative is 
patterned after a similar review, one we used to pull out the 
C-17 program. However, I might point out here that these issues 
on the F-22 are being addressed much earlier in time than they 
were on the C-17 program.
    We will talk about our space superiority program and show 
you how we will continue to modernize in these areas. We will 
discuss the bomber force and highlight our efforts and 
enhancements in this area. We will include a discussion on the 
precision weapon program and we will address for you the 
timelines for integrating these systems on the weapons program. 
On those weapons platforms, excuse me. We will discuss our 
Information Superiority Program and show what efforts we have 
under way to ensure that the joint team is ready to achieve 
dominant information awareness.
    We will also discuss our Global Mobility programs, address 
the S&T, science and technology investments and show you how we 
are expanding our acquisition reform efforts moving beyond the 
Air Force Lightning Bolts all designed to help us move into the 
21st Century. It is our intent to spend as much time as you may 
desire in these areas and to ensure you are fully comfortable 
with these issues.
    We truly feel that the budget request balances investments 
across this entire range of combat and support capabilities 
while sustaining the technology base. We are committed to 
provide the Joint Force Commanders with the best capabilities 
possible in the shortest time practical at the most affordable 
price, providing effective weapons systems and services in the 
most efficient process.
    This overall plan provides the warfighters the entire 
spectrum of combat capabilities and at the same time maintains 
and sustains the critical technology base. Working together, 
partnering with you in Congress, the warfighter, industry, the 
administration, as we execute this plan, we can and will 
proceed into moving the Air Force and this Nation into the 21st 
Century.
    So, Mr. Chairman, that is all I wanted to say at the 
beginning, we will proceed with the plan.
    Please ask questions as we go.
    Mr. Young. Okay. Thank you very much.
    Mr. Young. General, we will be happy to hear from you.
    [Clerk's note.--The charts referred to by General Muellner 
are printed on page 340.]

                 Summary Statement of General Muellner

    General Muellner. My intent is again to lead you through 
the program, and I encourage any questions you might have.

                     MEETING THE WARFIGHTERS' NEEDS

    (CHART 2) The focus of my discussion today will be on what 
we call our Air Force core competencies, these are the 
capabilities or abilities that we provide to the joint 
warfighting elements to execute our National Strategy as 
captured in Joint Vision 2010 and as mentioned in the Air Force 
piece of that, which is global engagement.
    I point these out only in that we will be talking to each 
of these areas and our programs all fall within them.
    They are fed, as Mr. Money just defined, an acquisition 
program that is based upon a time-phased modernization. What 
that means is that we are right now fielding C-17s, airlift 
capability, finishing up the bomber modernization efforts and 
then we will be starting our TACAIR modernization phase. So 
these are time-phased in the budget process.
    Nurturing this is a streamlined acquisition approach and we 
are driving for ever-increased efficiency in our 
infrastructure. Same is true, as I will point out, in providing 
additional agility to our sustainment operations so that we can 
operate more expeditionary and do so in a more efficient 
manner. The end result of this, as Mr. Money just pointed out, 
is that we believe this time-phasing, along with the 
streamlined acquisition and sustainment, is what gives us an 
affordable program.

                            AIR SUPERIORITY

    (CHARTS 3 AND 4) Let me start with the Air and Space 
Superiority side. Air Superiority, and you all have seen this 
chart before, obviously, we assemble one of the most important 
elements and it is the first thing that the Joint Force 
Commander asked us to provide. When you have it, you can have 
freedom of action on the battlefield and prosecute the campaign 
as you want it. When you don't have it, then you are at the 
mercy of your adversary. So clearly we believe air superiority 
is something that is very, very important to this Nation or as 
Secretary Perry coined, air dominance, something that we really 
like to have, and clearly we are focused on keeping that record 
alive.
    As we look at our Air Superiority Programs, the two that I 
am going to spend most of the time talking about will be the F-
22 program and the Airborne Laser. Just on the relationships 
side we have two key programs that will persist into the 
outyears, the Advanced Medium Range Air-to-Air Missile, AMRAAM, 
program is executing very well. It is meeting or exceeding all 
of the warfighter's requirements, in some cases, by significant 
amounts, and the cost itself continues to come down.
    Just this year we had a down-select for our next-generation 
infrared, IR, missile, a joint program under Navy helm. That 
contract was won by Hughes and that program is in execution. So 
we will have two frontline missiles on our force in the 
outyears, as will the Navy.
    What I would like to do now is address the F-22 program, 
please.

                             F-22 Aircraft

    (CHART 5) As you know, this is a revolutionary step forward 
in that it combines the first highly maneuverable low-
observable platform, one that can operate at high supersonic 
speeds on the battlefield efficiently for the first time and 
has an integrated avionics suite that really brings all the 
off-board and on-board information to the decisionmaker, which 
is the operator. This provides them dominant battlefield 
awareness.
    Right now we are in the engineering and manufacturing 
development phase of that program. And we are ahead of schedule 
for first flight, which will occur in the last part of May of 
this year. The official rollout of that airplane is on the 9th 
of April, and we would certainly encourage your attendance at 
that in Marietta. That airplane is actually in the fuel barn as 
we speak. So that program is executing out very well and all 
performance parameters are exceeding the warfighter's 
requirements.

                            F-22 RESTRUCTURE

    (CHART 6) As a result of the importance of this program, we 
put together a Joint Estimating Team to go out and look not 
only at the EMD program to ensure that we had confidence that 
we could execute it, that we understood the various risk areas 
and we have adequately resourced it, but also to look ahead at 
the production program to ensure that we understood the 
production costs and what the cost drivers were. And we have 
used this very effectively, as Mr. Money pointed out, on the C-
17, also on the Joint STARS program, and so we put it in place 
here. And an issue came about a year ago at this time when we 
started that particular program.

                    C-17 AND F-22 SOFTWARE PROBLEMS

    Mr. Murtha. Have you had the software problems with the F-
22 that you had with the C-17?
    General Muellner. With the C-17?
    Mr. Murtha. Yes.
    General Muellner. We have not seen any of the software 
problems to date. We are still growing the software. The flight 
control software for the first flight airplane has actually 
been flown already in the Vista F-16. We are still, at the 
most, 30 percent through the entire software build for the 
entire weapons system. But first flights off, we are actually 
ahead of schedule, sir.
    Mr. Murtha. What is the difference between the way you did 
this and the way you did the C-17 that will eliminate that 
problem?
    General Muellner. We did this the way we ended up doing the 
C-17, which was in a very structured standpoint of A-level, B-
level, C-level specs and flow-down and such.
    Mr. Murtha. You remember in the C-17, you had one 
contractor that only had a few people working on it? You had to 
fire that contractor and hire a new one, so you have a 
flowchart that recognizes that problem and you solved it.
    General Muellner. Yes, sir, and I will tell you one of the 
stressing elements in this program and one of the areas that we 
managed very closely and in all of the programs is the access 
to software programmers. They are a shortfall across the 
industry. And these companies and the government manages those 
assets very, very carefully.
    Mr. Money. Let me just add to that, Congressman Murtha, and 
foot-stomp two things here. We are obviously learning from one 
program to another. Having all the flight control software 
tested already on an F-16 Vista, so all the software needed for 
the first flight and, in fact, for the first three vehicles, is 
already done, been tested. The next major step, if you will, in 
software, the General will talk about in a minute, is in the 
avionics area. That doesn't enter until aircraft 4, and that is 
a major issue, and we are putting all the heat we can, all the 
attention we can into that area. But it is a significant issue, 
about 1.6 million lines of code.
    Mr. Murtha. But if you change any way you do the 
procurement--we visited a couple of times with McDonnell-
Douglas on the C-17, and they said part of the problem is we 
have to go clear back to the Pentagon in order to get changes 
made. It was really an unbelievable paperwork problem. Is that 
all eliminated?
    General Muellner. Yes, sir, I guarantee you our office in 
the Pentagon is the last place we have them come to for changes 
on their software. We have a structure in the field that 
incorporates those changes. We have a very extensive test 
process, as indicated with the Vista F-16, to wring those out, 
and there is an Independent Review Team that reviews all of 
these actions prior to first flight and every successive 
milestone. There are people separate from the program office 
and separate from the contractors that are doing this.
    Mr. Murtha. These cost estimates ought to be fairly 
realistic at this point because you have taken care of the 
problems early on, is that what you are saying?
    General Muellner. You are absolutely right.
    Mr. Murtha. Unless the numbers that you asked for go down.
    General Muellner. Certainly rate and quantity will affect 
the unit costs, but we have more definitions of these costs now 
at the early stage in the program than we ever had in the past.
    Mr. Money. Lockheed is the prime contractor and we hold 
them responsible and accountable for all of that, so the paper 
trail doesn't need to come to the Pentagon. We do review that 
periodically, monthly, in fact, with Lockheed.
    The second point is regardless of the quantity, the 
software isn't changing. That same amount of software is 
required if we have 100 units or 400 units.

               F-22 JOINT ESTIMATING TEAM RECOMMENDATIONS

    (CHART 7) General Muellner. Sir, the JET team came back 
with several recommendations, and one is they looked at the EMD 
program and their recommendation was that we needed to add 
additional resources to that EMD program to assure that we had 
the risk under control before we stepped forward in the 
production.
    The second part of that--and they focused on the avionics 
as we have been talking about. This is the first aircraft where 
we have had an integrated avionics suite rather than individual 
federated things. So in this case they focused additional 
attention to how we integrated avionics.
    As a result of this, we added a total to the EMD program, 
of about $2.1 billion. That was made up of two elements. We 
added a $1.45 billion transfer by slowing the production ramp, 
moving some of that money out of the total program top line 
back into the development side. And at the same time, we 
restructured our test program which freed up $706 million. So 
the end result is that we had to add to the EMD program that 
amount of money significantly reducing the risk from the 
standpoint of getting the production side of the airplane ready 
to go before we set forward into production.
    Contractors and the government sat down and looked at 
production cost estimates. The production cost estimates said 
that if we did not effectively manage those production costs, 
there could be upwards of a $13 billion increase in cost.
    As a result of that, the contractors and government sat 
down, put a plan in place. And that plan which was agreed to by 
Norm Augustine, Karl Kropek, are the two primary CEOs, 
definitizes how they took that cost out of the program. And on 
the next chart I will give you some examples of that.
    Mr. Money. So by doing this restructuring now, I believe we 
have a much more executable program. We are putting in money 
early to lower those production costs later. So I think you 
will see that it makes more sense than what we had planned a 
year or so ago.

                      F-22 COST SAVING INITIATIVES

    (CHART 8) Mr. Young. General, as you go through that chart, 
will you point out realistically what are the paper savings and 
what are the real savings?
    General Muellner. I would offer to you on this chart, as 
well as in our production cost estimate, of course they were 
all paper at this point because we are talking about something 
in the 2004-2005 time frame that we are dealing with. But in 
reality everything on this chart in both columns are 
initiatives that have been put in place in other programs and 
implemented. So from that standpoint, they are not conjecture. 
They are issues that we have hard data on.
    In fact, Alan Mulally, who is the new President of Boeing 
Military, when he sat in our CEO meeting here the other day he 
said we have all of these things in place right now in the 777. 
So they are not indeed conjecture; they are proven techniques 
that we have used in other programs, that is why we brought 
them into this program, sir.
    Specifically, the ones that we already have well-
definitized is specific process improvements and the insertion 
of technologies to deal with obsolescence of parts and things 
of that nature on the production line and in the production 
vehicles. A multiyear approach similar to what we use in the F-
16, and by that is that the contractor does not go out and ask 
for his subtier vendors to price a lot of 6 airplanes or 12 
airplanes, but rather they look ahead and try to get economies 
of scale in the way they do that, the way to deal with the 
warranties. It turned out that we were overbooking what we were 
requiring for warranties because of the way we were supporting 
the weapons system during its initial fielding, and the same is 
true on the subcontracts and material management.
    For instance, across the entire Lockheed company now they 
are able to buy as a company as opposed to one division. As a 
result of that, they get much better economies of scale in 
their material management programs. Those things have now been 
incorporated in the program.
    As we look at as other activities out here, again looking 
at the F-16, the F-16 average, a 10 percent savings by using a 
rotating 3-year, multiyear approach from the standpoint of 
buying stock and programming ahead.
    Lean Enterprise, we just consummated a Lean Aircraft 
Initiative. It is similar to what the auto industry had and MIT 
has been leading with the aerospace industry. We have 
incorporated those benchmarking procedures into this particular 
program.
    And the last part of it is that we have rolled in the 
acquisition reform techniques that we have been nurturing and 
developing in other programs like JDAM, where we go to 
performance-based contracting and we get out of the business of 
telling the contractor how to do something and just tell them 
what it is we want them to do. The end result of this gives us 
very, very high confidence that what the contractors committed 
to with the government, that is that there would be no 
production cost increase, indeed is realizable, and that is 
what we expect out of the program.
    Mr. Dicks. Mr. Augustine signed this, correct?
    General Muellner. That is correct.
    Mr. Young. I want to have that chart placed in the record 
to go along with your commentary so that we will have a record 
of the chart.
    Mr. Money. Let me just foot-stomp and give the General a 
chance to grab a little drink here. Two things when we met with 
the CEOs on the 19th of December and reviewed the JET team 
output, the production costs at that time, if no actions were 
taken, if business as usual, was going to be in the $60 billion 
area. We said this is totally unacceptable. We need to work 
this back to the original budget, the $48 billion production 
number.
    The work that has gone on between December and now--we just 
this Monday had a 5-hour meeting with the CEOs that the General 
referred to. What has come out of that is we in fact have plans 
in place with meat on the bones to get that cost back down to 
$48 billion.
    Now, you undoubtedly hear a lot of things that are going on 
in the Pentagon, a group in the Pentagon called the Cost 
Analysis Improvement Group, CAIG, is still at the $60 billion 
number. My answer to why there is a difference is that they are 
looking at historical models of what has happened in the past. 
Clearly we are looking forward to what can be done, and this 
comment that Mr. Mulally made came out of the commercial side 
of Boeing: My God, there is nothing new here, we have been 
doing this on the commercial side.
    This is good government. We have taken the initiative to 
get the costs down and have meat on the bones and plans. Those 
plans obviously have to be executed, and you can watch that 
over the next 20 years. But I am very confident here, sitting 
here saying with clear conscience that the most probable cost 
for the production cost of this aircraft will in fact be $48 
billion, and we are not stopping there, we are continuing to 
drive efficiencies into the program.
    Mr. Dicks. On that point, isn't it true that when you 
compare the C-17 and the F-22, there is a universe in 
difference. In fact, one of the things we had to do in the C-17 
program was go back and insert technology.
    As I understand it, we are using commercial practice. CAD/
CAM or Computer Aided Design/Computer Aided Manufacturing, all 
of this is part of this program from the inception. So it is 
really very different than the problems we faced with C-17, in 
my judgment.
    Mr. Money. Absolutely right. And all the things that we are 
talking about, the difference between the 60 number and getting 
back to 48, is well beyond the normal learning curves. These 
are new initiatives, new practices, modern technology being 
applied and so forth.
    Mr. Murtha. I hope that you will get a better savings than 
we got on the C-17. An awful lot of us thought that the savings 
that you folks were so anxious to get the ball here that you 
caved. I hope you worked the pencil. All the services want to 
get a multiyear, that they--we got a little bit better with 
ours, but we still--I think you could have gotten better.
    Mr. Money. Yes, sir, I hear you, and thank you for your 
help on C-17. And we will do a better job on this before we 
come to you for the multiyear. We won't come to you for the 
multiyear until this design is stable and we have a good 
program. We have a lot of work to do yet, so we are a year or 
two away from talking to you about that.
    Mr. Hobson. I am not sure, I have a lot of respect for you 
guys, I think you do a good job, but I don't understand all of 
this at this point.
    I have one question on this particular problem. As I 
understand it, people talked about a $15 billion cost overrun. 
Does that take you from the $48 to the $60 billion?
    Now, I understood that about half of that was due to 
expected inflation rates. And the problem I have is that you 
never find out where all of this came from and how it got 
started. Everybody gets promoted and retired and are gone and 
we all live with it. I want to know you are telling me things 
that are going to be put in so it doesn't happen again, or it 
didn't happen that way, or there are other savings out there? 
So you are going to work this back in? You are still going to 
have $8 no matter what you do--$8 billion.
    Mr. Money. No, sir.
    Mr. Hobson. What you are telling us on paper, anyway, and 
there is a commitment being made. I want to go through this 
again. I hope to be here a little longer.
    You have taken the action that you guys are comfortable 
with. And as I say, you have a lot of integrity with me. That 
all of this stuff is handled--I mean, if Baxter understands it 
is handled, and you guys understand that it is handled, you 
still have some problems with your other people down in your 
shop getting them to agree that that is where you are. Is that 
what is being said here today?
    General Muellner. Yes, sir, indeed.
    Let me explain the inflation issue for you. The $15 billion 
that you described, about $8 of that--$8 billion of the $13 
billion on the production side and on the EMD side, $743 
million of the $2.1 billion was due to the fact that we in the 
government program inflation about 2.2, now 2.1 percent.
    This segment of industry is experiencing an inflation rate 
up in the order of about 3.2 percent. When the cost-estimating 
team went out and looked at what the projected costs were based 
upon forward cost projections based on labor contracts, 
material costs and everything else, they used the 3.2 percent 
number. As a result of that, that gave you the delta between 
what we in the government can program based upon the OMB-
provided rates.
    The commitment by the contractors that Kropek and Norm 
Augustine signed was to take the cost out of the program to 
account for that inflation difference also. So the answer is 
that $15 billion, $13 of that $15 billion has been taken out of 
the program by those cost-saving initiatives you saw on the 
previous chart that is correct.
    Mr. Hobson. Okay.
    Mr. Money. We had very candid discussions with the 
contractors and said we cannot handle a cost growth due to 
inflation if there is a different rate here. That is all 
incorporated, so we talk about then year dollars here.
    Mr. Hobson. I assume they do; these are smart people. They 
cannot come back here and say, folks, you know, this is a 
different ball game. I think you all have to remember that the 
other way they get you on this is the same old way in building 
contracts. That is if you all change the specs and what you 
want this airplane to do and not do, they got you.
    General Muellner. Yes.
    Mr. Hobson. And that is what happens every time we do this, 
the gotcha's get you.
    General Muellner. Sir, our warfighters understand that 
well, and those are the ones that generally have the 
requirements creep. They are very sensitive to that. And, 
indeed, they have been willing to trade to ensure that we 
preserve the affordability of the program.
    Mr. Money. Let me just add one thing just to emphasize what 
General Muellner--just at that time, General Hawley, the 
Commander of Air Combat Command, ACC and General Hawley, the 
Director of Requirements, have been involved with every step we 
have taken here. So the warfighter is totally on board with 
this. We have a stable requirement. We have a stable program, 
so we are going forth with that--and let's finish this here--
but all of those things have been taken into consideration so 
we won't come back to Congress and say we need more money. $48 
billion is what is needed to produce 438 airplanes, and that is 
where the program is.
    Mr. Young. General, why don't you proceed with your charts 
and presentation, and then we will come back to more questions.

                            F-22 UNIT COSTS

    (CHART 9) General Muellner. When you aggregate that all 
together, and to agree with the point that Congressman Hobson 
just made, is the commitment of this airplane--this is a chart 
similar to the one that we showed you last year, and that is 
the reason I used it again--this is indeed the flyaway cost in 
constant-year dollars similar to what we showed you last year. 
This is indeed the unit procurement cost in then year dollars, 
again similar and what you see is some very, very small changes 
up and down here. But the bottom line is that they have 
remained constant, consistent with what we just said.

                         AIRBORNE LASER PROGRAM

    (CHART 10) Now, sir, let me move on to the other element in 
the Air Superiority that I think is a new and important 
capability, and that is the issue of the Airborne Laser. The 
Airborne Laser is again a revolutionary way of dealing with 
theater ballistic missiles. All the other approaches we have 
got are what we call catcher's-mitt approaches, where we try to 
shoot them down in the incoming phase.
    The important thing here is to try to shoot them down when 
they are in the launch phase, the boost phase. When you do 
shoot them down, if they have warheads that have either 
chemical, biological or nuclear content, that warhead then 
falls on the enemy rather than on us.
    What the Airborne Laser gives us is the ability to reach 
out with a speed-of-light weapon, intercept these things in the 
boost phase. These capabilities have been maturing for years.
    This is the first program where we have really tried to 
field these on an airplane. The airplane, as you can see, is a 
747-400 aircraft. We had a source selection earlier this year 
to select between two contractors, Boeing won that contract and 
they are indeed the integrator to integrate this laser on that 
airplane.
    We are in a phase of the program right now called Program 
Definition and Risk Reduction. This will result in an airborne 
demonstration against a boosting missile out in the 2002 time 
frame. Eventually resulting in a seven-aircraft fleet; Interim 
Operational Capability, IOC of about 2006.
    Again, several important technologies have come along, not 
only the laser technology, but even more important than that, 
the ability for adaptive optics and atmospheric compensation to 
ensure that we do indeed get a good energy on the target. An 
event-driven, milestone-driven program. And we have exceeded 
every one of our demonstration milestones along the way, so we 
have a lot of confidence in this program, and right now, as I 
said, it has entered the demonstration phase.

                           SPACE SUPERIORITY

    (CHART 11) Sir, if I could, I would like to now move into 
the Space Superiority side, and I would like to talk about the 
key programs. There are a lot of other success stories here, 
and we are making good progress, not the least of which is that 
we are using acquisition reform to save upwards of $500 million 
over the five year defense program in the last block of GPS 
satellites we put on contract.
    The two programs I would like to talk about are keystones, 
one of them is the Space-Based Infrared Program. This is a 
keystone not only for continuing our threat-warning 
capabilities that the Defense Support Program now provides, but 
also a significant underpinning in the outyears to theater and 
national missile defense. I will talk about this more.
    And then I would like to talk about where we are going in 
launch vehicles, because we have to drive down the cost per 
pound of getting things into orbit, and that is the keystone 
for doing that.

                      SPACE BASED INFRARED SYSTEM

    (CHART 12) The Space Based Infrared System SBIRS program, 
constitutes two major elements: A high element composed of 
geosynchronous and high-earth orbiting, six of those in that 
constellation, and then what has been referred to as the space 
and missile tracking system, or the SBIRS low concept is a low 
constellation of satellites which provides increased tracking 
coverage and accuracy.
    So if you look at these high ones as providing threat-
warning intelligence characterization, these are the low ones 
that really constitute what you need to intercept theater 
ballistic or ballistic missiles launched at the CONUS.
    The key part of this program is we are in the engineering, 
manufacturing development phase for the high constellation. 
With help from the Hill, we have accelerated the SMTS or SBIRS 
low portion and are in the program definition and risk 
reduction phase. It was originally going to have capability up 
in 2006. We have accelerated that to 2004. That program remains 
technically and from a schedule standpoint, high risk, and the 
reason is we have accelerated that technology, and some of the 
sensors technology in particular, is going to need that length 
of time to play out. So we do have a 2004 capability on the 
books right now. We laid the money into the budget to 
accelerate that program and we are off executing it right now.

                   EVOLVED EXPENDABLE LAUNCH VEHICLE

    (CHART 13) On the EELV side, again we just finished a 
competition. We went from four contractors competing for this 
very important mission area, down to two that are now remaining 
in the competition. As you can see, they are McDonnell Douglas 
and Lockheed Martin. The important part of their concepts, they 
are a family of systems, if you will, that give us full 
coverage up from the small-medium category, all the way up to 
the heavy-lift capability. And if we look at our mission models 
all the way out in the outyears, we need to have capability 
across that whole range of potential lift, and orbit placement 
capabilities.
    The key focus of this program is to decrease the cost to 
orbit by anywhere from 25 to 50 percent, depending on what 
orbit and what payload you are talking about. A significant 
reduction in what it is going to cost us as we expand in the 
case of the Air Force, from an air-and-space force to a space-
and-air force as we see ourselves doing in the future. And, 
again, this program is now in the competition between these two 
contractor teams.

                             GLOBAL ATTACK

    (CHART 14) Sir, if I could I would like to move into the 
Global Attack area here. In this particular area I am going to 
focus on the fact that in our fighter force we are necking down 
in the outyears the primary fighters and the attack aircraft 
that we will be using will be the F-22 and the JSF. But also, 
of course, the bomber force. And I will describe for you what 
we are doing in both the case of the B-1 and the B-2, in many 
cases with your help, to accelerate the conventional capability 
on those platforms.

                               B-1 Bomber

    (CHART 15) Sir, in the case of the B-1, again with your 
help, we have accelerated a Joint Direct Attack Munition, JDAM 
capability coupled with an ALE-50 towed decoy. We will have 
eight airplanes that have moved up a year and a half, into the 
first quarter of 1999, to get that capability fielded on the 
airplane. So we will have those eight airplanes that will be 
capable of carrying Joint Direct Attack Missions with the ALE-
50.
    They already have improvements to the on-board 161 program, 
so these airplanes now have reasonably good survivability. Not 
as good as they will have downstream when we get the defensive 
systems upgrade, but they can go out and prosecute attacks 
within most of our theaters with some packaging help.
    The other key capabilities that we are bringing on board 
brings along the whole family of attack weapons systems that 
use GPS-aided information; the Joint Standoff Weapon, JSOW, 
which is a Navy program which now gives us 40 to 50 mile 
standoff; the wind-corrected munitions dispenser, which allows 
us to drop at medium and high altitude, again, with high 
accuracy and not worry about winds and other issues like that.
    And finally, the Joint Standoff Missile. This is a very, 
very important one because it is a highly survivable long-range 
standoff weapon that allows us to go after precision targets 
with a thousand-pound penetrating warhead. These capabilities 
are all programmed for fielding on the airplane. We see no 
technical risk in doing that.
    Probably the most significant technical challenge, and it 
is an integration challenge as opposed to a technology itself, 
is the Defensive Systems Upgrade Program. This program, the 
content of it will be two major elements: One of them will be 
the IDECM, the Integrated Defensive Electronic Countermeasure 
program, the Navy-developed program that is going on a wide 
range of platforms. That coupled with the ALR-56, which is a 
very proven radar homing and warning system which we have on a 
lot of our systems now, an upgraded version of it, will 
constitute this Defensive Systems Upgrade Program. That is the 
program that is structured to go on the B-1, and we are off in 
the process of executing that right now.
    Mr. Young. General, I am interested in the ribbon at the 
bottom that says B-1 is the backbone of the bomber force. Tell 
us how many combat missions the B-1 has flown?
    General Muellner. It hasn't flown any yet, sir.
    Mr. Young. That is what I thought. When I came to this 
Congress in 1971, the B-1 was a big issue. I was one of the 
very strong supporters of the B-1. And I have always wondered 
why we talk about the B-1 but we have never done anything with 
it, I am sure this is not in your shop or in your area of 
jurisdiction, but you tell a very positive story here--but the 
B-1 has never been used in a combat role, strategic or 
conventional.
    General Muellner. Sir, when I was Director of Requirements 
at Air Combat Command when we stood up that command and we 
brought the bomber force in from then Strategic Air Command 
into Tactical Air Command, and merged the two together, we put 
heavy focus on making the B-1 a strong conventional player, 
because it has really good capability if you can get the 
weapons on board in support of conventional warfighting.
    It was an airplane that prior to that had been focused on 
the strategic aspect of delivering nuclear weapons. We have 
spent the time since then, and we used to say the airplane was 
in the penalty box for a long time. We weren't able to do some 
of the things necessary to it because of its previous history.
    Since then we have brought weapons on board and upgraded 
the computer systems and upgraded defensive systems so that it 
can be an active participant in theater warfighting and 
conventional warfighting, and I think we are on a good track to 
do that.
    Mr. Young. How old is the oldest airframe?
    General Muellner. Sir, we will have to take that one for 
the record. I do not know offhand. I do know when I was at 
Edwards in the late 1970s and the 1980s--of course, we were 
testing the airplane then, so obviously----
    Mr. Dicks. It has got to be early 1980s.
    General Muellner. Yes, sir, that is my guess.
    Mr. Dicks. Early 1980s is when we started getting the B-1.
    [The information follows:]

    No B-1A airframes are flying nor were any converted to B-
1Bs. The oldest operational B-1B was delivered to the Air Force 
at Dyess AFB in June 1985.

    Mr. Young. Just one second, I just wanted to say that I 
still remain a strong supporter of the B-1, and I hope that all 
of these good stories that we hear about the B-1 happen some 
day.
    General Muellner. Sir, they are happening, as we speak, in 
exercises. You know, I think you have seen some of the 
exercises, two B-1s launches out of Dyess, refuel en route, 
join up with the carrier battle group in the Med, and drop on 
Corsica, and then return to Dyess. Those sorts of global power 
missions are being flown. They are flown as part of Green Flags 
and Red Flags, the things you need to normalize this capability 
in conventional warfighting.
    Mr. Dicks. Just on this point, many of us in this Committee 
and on the Armed Services Committee have been very concerned 
about the pace of getting these weapons on the B-1s and the B-
2s. Could you put in the record for us when we are going to get 
these weapons on all of the B-1s, and all of the B-2s, so we 
can have a real clear picture of what the plan is, how much 
money is in there?
    General Muellner. Absolutely, sir.
    [The information follows:]

    The B-1 present and future weapons capability is as follows:

------------------------------------------------------------------------
             Weapon              Carriage        RAA            FOC
------------------------------------------------------------------------
Mk-82..........................        84  Current.......  Current.
Mk-62 Naval mine...............        84  Current.......  Current.
CBU-87/89/97...................        30  Current.......  Current.
JDAM...........................        24  FY99..........  FY01.
WCMD...........................        30  FY02..........  FY04.
JSOW...........................        12  FY02..........  FY06.
JASSM..........................        24  FY02..........  FY06.
------------------------------------------------------------------------
RAA--Required Assets Available (3 aircraft plus support infrastructure).
FOC--Full Operational Capability (all 95 B-1s modified).

    The total cost to integrate CBUs, JDAM, WCMD, JSOW and JASSM on the 
B-1 is $1.65 billion. Included in this cost is upgrade of the mission 
planning system, simulators, and upgrade to the aircraft infrastructure 
necessary to integrate and employ GPS-aided and other future weapons. 
The infrastructure upgrade includes GPS, secure communications, 1760 
smart data bus, and a new computer suite. The computer suite upgrade 
will enable the B-1 to employ multiple types of smart weapons on a 
single sortie and provide for future growth. The computer upgrade will 
also improve the cost of ownership of the B-1 by reducing the annual 
sustainment cost of the system by $40 million a year after FOC.
    An additional $0.94 billion is funded to improve the survivability 
of the B-1. These upgrades are essential for the B-1 to employ weapons 
in the low to medium threat environment. The ALE-50 towed decoy 
provides interim protection against certain threats. The Defensive 
System Upgrade Program (DSUP) reuses components of the ALE-50 system, 
but will provide a more robust self-protection capability against a 
multitude of threats. DSUP will also improve the cost of B-1 ownership 
through a sustainment savings of $60 million a year after FOC. The 
fielding dates of the survivability enhancements are:

------------------------------------------------------------------------
                                           RAA                FOC
------------------------------------------------------------------------
ALE-50 Towed Decoy................  FY99.............  FY03.
DSUP..............................  FY02.............  FY08.
------------------------------------------------------------------------

    The B-2 present and future weapons capability is as follows:

------------------------------------------------------------------------
             Weapon              Carriage        LOC            FOC
------------------------------------------------------------------------
Mk-84 (2000 lb)................        16  Current.......  FY99.
GAM............................        16  Current.......  N/A.
GAM-113 (4700 lb)..............         8  FY98..........  FY99.
Mk-82 (500 lb).................        80  FY98..........  FY99.
Mk-62 Naval mine...............        80  FY98..........  FY99.
CBU-87/89/97...................        34  FY98..........  FY99.
M-117 (740 lb).................        36  FY98..........  FY99.
JDAM...........................        16  FY98..........  FY99.
JSOW...........................        16  FY99..........  FY99.
JASSM..........................        16  FY03..........  FY03.
------------------------------------------------------------------------
LOC--Limited Operational Capability (initial capability).
FOC--Full Operational Capability.

    The total cost to integrate GAM-113 and JSOW on the B-2 is $13 
million and $72 million respectively. These funds were part of the FY 
97 Congressional plus-up. Cost to integrate JASSM is estimated at $137 
million. Included in this cost is upgrade of the mission planning 
system, simulators, and upgrade to the aircraft infrastructure 
necessary to integrate and employee these weapons. The B-2 is also 
developing a generic weapon interface system in conjunction with JSOW 
integration to facilitate integrating future weapons. the remaining 
weapons are part of the B-2 baseline program.

    Mr. Dicks. We have added money in the past because of our 
concern. But you have this platform that has been around since 
the early to middle 1980s and it is now going to be 2002 before 
we get real capability on the airplane. And I worry that by the 
time we get there, the plane is going to be pretty darn old.

                              PGM OVERVIEW

    (CHART 15a) General Muellner. Sir, you have this chart in 
your backups, if you would like to look at it closely. What 
this shows you is the fielding schedule on these weapons on 
each of the weapons systems that you see here.
    In some cases that fielding schedule is driven by 
capabilities of the airplane that are needed. For example, a 
new computer, a new database. In some cases it is driven by 
availability of the weapon. The JASSM program and the JSOW 
program are still in development; those weapons have not been 
fielded yet. And some of the early capability will go on the 
bomber force, in the case of the JASSM in particular. And we 
will add to that the costs associated with each one of them. 
They are not on those charts.
    Mr. Dicks. I think one of the revolutionary aspects of this 
weapon is the cost. For example, JDAM is $13,000 a weapon 
compared to Conventional Air Launched Cruise Missile, CALCM at 
$3 million, or Tomahawk at $1.2 million. Even though these 
platforms are expensive and have had difficulties, you have 
still got the potential of putting them together with smart 
weapons at a lower cost than standoff weapons, and they are 
much more effective. You have got the ability to go against 
fixed targets, mobile targets, advancing armor and relocatables 
and underground targets. That is pretty impressive.
    How many B-1s are we going to do this on? Is it 70 you are 
talking about?
    General Muellner. Yes, sir, we are going to modify the 
whole fleet. We have 95 total aircraft available; 95 B-1s.
    Mr. Dicks. Do we plan to keep 91 B-1s in the inventory?
    General Muellner. Ninety-five Total Active Inventory, TAI. 
I am not sure what the primary weapons code will be. We will 
have to find that out for you. But it is something less than 
that.
    We always have attrition reserves in that built-in. But 95 
total aircraft is what the inventory is for that, and our 
intent is to modify the entire inventory so we have attrition 
reserve and TAI airplanes built in. We will find out what the 
exact number is.
    [The information follows:]

----------------------------------------------------------------------------------------------------------------
 
----------------------------------------------------------------------------------------------------------------
B-1B........................................................        98-1         98-2         98-3         98-4
PTAI........................................................          16           16           16           16
PMAI........................................................          51           52           53           54
BAI.........................................................           7            7            7            7
AR..........................................................          19           18           17           16
TEST........................................................           2            2            2            2
                                                             ---------------------------------------------------
      TOTAL.................................................          95           95           95           95
----------------------------------------------------------------------------------------------------------------

    Mr. Dicks. One show-stopper was the necessity of getting a 
certain kind of bomb racks authorized. Are the bomb racks part 
of this program now?
    General Muellner. When we talk about capability, that means 
everything is on the airplane, including the software, which we 
were talking about early, the racks, the necessary support 
equipment so you have combat capability there. It is not just 
the availability of a weapon and an airplane. That is combat 
capability which is reflected on these charts.
    Mr. Hobson. When would you have the capability if the 
President called you tomorrow and said we have got to go to 
war, you are not going to take B-1s now; you are going to take 
B-52s first?
    General Muellner. No, sir, it would depend on what the 
President asked for. In the case of the ALE-50, we just tested 
that and demonstrated it. The B-1 can drop hard bombs and drop 
Cluster Bomb Units, CBUs and can penetrate in doing that. But 
the answer is we would use a mix, depending on what the 
specific targets are.
    Mr. Dicks. But are there no smart weapons on the B-1B as of 
today? The B-2 has smart weapons with the Global Positioning 
System Aided Targeting System/Global Positioning System Aided 
Munitions, GATS/GAM, which have been tested and certified to 
drop.
    Mr. Murtha. This wasn't all the Air Force's fault. Remember 
the deal was we put a limitation of $20.5 billion, which I was 
against, I knew we should have improved it as we were building 
it. And instead, we stuck with the $20.5 billion, and many of 
the improvements that would have added cost, but were 
eliminated because of this cost limitation.
    General Muellner. Yes, sir, that was one of the great 
benefits we had at Air Combat Command. About the same time we 
took over the airplanes, the folk on the conventional side, we 
came out of that penalty box that you just described for us.
    Mr. Dicks. I think the other point is as frustrated as a 
lot of us are about the pace of getting the smart conventional 
weapons on the B-1 and the B-2, the reality is that these 
weapons are just coming into the inventory. So they have been 
in development. The marriage of the platform is now occurring 
because we are now getting these weapons. It isn't like we had 
these weapons sitting around and JDAMs and JSOW just appeared.
    General Muellner. We are going to start our first initial 
production on JSOWs this year. We are--JSOW is in the same 
state and JASSM is downstream. The Wind-Corrected Munitions 
Dispenser is a brand-new contract, we just had a down-select 
recently and, in fact, under protest now. We haven't been able 
to kick that off, but these weapons, as the Congressman pointed 
out, are just coming on board. So we are moving rapidly in this 
area to be able to exploit both the global range and the 
ability to range the battlefield all-weather that the bomber 
force gives us. These are all-weather munitions, as opposed to 
laser-guided bombs, which require favorable weather conditions.
    Mr. Money. The defensive systems were not there with the 
ALE-50. And it was just tested in the last week; we have a 
better defensive system that will enable the operational folks 
to use that if needed, and that we are continuing to upgrade 
the defensive system. Just one more point. The chief of staff 
called both General Muellner and I in and said this needs to be 
fixed. This is high on our list, and we are fixing it.

                              B-2 AIRCRAFT

    (CHART 16) General Muellner. Moving on to the B-2, what you 
see is just one of the B-2 GAM/GATS tests. As was pointed out, 
the B-2 has near-precision capability on it with the GAM/GATS, 
which is the GPS-aided munition, and a special targeting scheme 
that allows it to improve over just the basic JDAM-like 
capability.
    Mr. Lewis. General, could I interrupt you for just a 
moment. Excuse me, Mr. Chairman. I have to chair a Committee 
down the hall, so I won't be able to be here. I would almost 
like to yield my time to Mr. Dicks. I was watching C-SPAN the 
other night, and there were those Members of Congress making a 
presentation regarding the fact that the Department of Defense, 
the greatest pool of discretionary money we have, continues to 
spend three times more on the procurement side than any 
potential enemy is spending. There is quite an elaborate 
display that lays the foundation for what is going to be 
arguments presented to us on the Floor regarding whatever we 
propose. I suggest all of us review that tape that must be 
available, just because it provides interesting information.
    Having said that, there are those of us who would suggest 
that there is a different window out in front of us presently. 
That window involves Russia being in very, very serious 
economic difficulty. While she continues to spend huge portions 
of her total available capital on defense, a very, very 
significant piece of that is going just to try to meet the 
payroll of their personnel that they have in such large numbers 
around the country.
    It is suggested that as we look to the new millennia that 
China is the big target in terms of our interest that we are 
concerned about concerning peace. But there is a window of 
opportunity perhaps.
    The question that swirls in my mind, is do we have an 
opportunity here for a shifting of gears that would cause us, 
to move forward with conventionality of B-1, but, more 
importantly, to move more quickly towards that aircraft with 
such a tremendous reach that is so important to us? 
Conventional capability of the B-2 is what I am suggesting.
    Are you internally thinking through the feasibility of a 
major shift in gears that might say, you know, if this window 
is really here, if our intelligence, and I don't know what they 
say, indeed, should we be pushing the B-2 button harder and in 
terms of results, more effectively than we have?
    General Muellner. Sir, we have indeed taken a hard look at 
that. I think you have heard the Chief and the Secretary talk 
about our long-range planning activities that we are just in 
the later stage of that. It has been going on for the last year 
and a half. As a part of that, we look at varied options for 
the future, and, as a result of that, backed that down into 
what our force structure needs.
    If you look at all those options for the future, though, 
regarding whether it is a China as a peer competitor or some of 
the other potential coalitions that could pose that sort of 
threat, you still end up with a major regional contingency 
focus and a lot of these lesser regional contingencies.
    There are still out in the future, as we see it, a lot of 
potential engagements similar to what we had to go through with 
Iraq here back in the early 1990s time frame. So as a result of 
that, we need a balanced force structure that gives us not only 
the enablers, which is certainly what the B-2 is, we need some 
of those enablers to be able to go in and rip apart the 
integrated air defense system. We also need a more affordable 
element of the force structure in larger numbers, which is 
going to allow us to deliver the mass of weapons that we need 
across the whole range of the battlefield.
    Mr. Lewis. You talk about 95 aircraft, all conventional 
over time, rethinking what we do with the last 35 of those, 
whether there is reprogramming potential. It is that sort of 
question that I don't know if you are prepared to answer in 
some other forum.
    General Muellner. Well, sir, we would be glad to sit down 
and discuss with you how we went through our rationale and what 
our force structure demands were driven by those various 
options in the future. QDR is obviously looking at that issue, 
and General Ralston probably highlighted that or will when he 
comes over. That is exactly the focus, to look at the range of 
options for the future and see where we have headroom to move 
in other areas.
    Mr. Money. Secretary Cohen is also with his new team at the 
Pentagon addressing the issues, and the strategy of what will 
come out of that--being quick, decisive and flexible--what will 
come out of that will be more apparent over time. We will match 
the force with that.
    Mr. Dicks. We just received a letter from the President 
again reassuring us that they will in the Deep Attack Weapons 
Mix Study and in the quadrennial review look at all these 
comparisons between various capabilities, B-2 versus other 
capabilities. I have been reassured again that that is going to 
be done before the quadrennial defense review is completed. So 
we are finally going to get the kind of analysis that I think 
all of us on this Committee at least feel we ought to do.
    General Muellner. One comment about the B-2, an interesting 
weapon, I will point this out again later, is that the GPS 
munition I talked about earlier, they found a very effective 
way to take that same guidance kit and put it on the BLU-113 
weapon. This is the 4,700 pound weapon developed for Desert 
Storm, a high-penetrator weapon. It is the one that grew out of 
the artillery tube. It turns out that that same GPS-guidance 
capability will give us the ability in the case of the B-2 to 
carry eight of these weapons internally and go after high-value 
hard targets.
    We are well along the way. In fact, we are using the 
additional funds you all helped us with this last year to bring 
that capability on board and that weapon is in development. In 
fact, we have done our first separation tests already.

                          JOINT STRIKE FIGHTER

    (CHART 17) If I could just briefly comment on the Joint 
Strike Fighter. From the Air Force's standpoint, this is the 
low end of the infamous hi-lo mix, like the F-16 is to us. It 
is the truck, if you will, of the fighter force in the out 
years. There is competition now head to head between Lockheed 
Martin, and Boeing. It is a tri-service program, of course, the 
U.S. services, with a variant of this airplane satisfying the 
Air Force, the U.S. Navy, and the U.S. Marine Corps' needs.
    This program is in the concept definition phase right now 
where each of these contractor teams will build flying 
demonstrators of their variants of the airplane. Those will fly 
just prior to the turn of the century. It is very, very 
important to this airplane from the U.S. Air Force's standpoint 
not only for it to be effective on the 2010 battlefield, but 
also for it to be affordable. So there is heavy emphasis on 
that, not only from the Air Force, but from all three of the 
services.
    I might add right now the United Kingdom, the Royal Navy is 
already part of this program. There are three other of our NATO 
allies that have indicated intent in bringing money to the 
table to join the program also. Canada is expected to join here 
within the next couple of weeks.

                         RAPID GLOBAL MOBILITY

    (CHART 18) We talk about global mobility. Obviously, the 
mainstay of our focus in global mobility is indeed the C-17 
program. I will give you a quick update on that program as it 
is, indeed, executing out very, very well.

                             C-17 AIRCRAFT

    (CHART 19) Indeed, with your help, we did indeed get the 
multiyear. That multiyear saved us in excess of $1 billion when 
you look at the airplane and the engine. The airplane has been 
performing very, very well. We have 30 aircraft operational out 
in force. It is just finishing and is waiting for final 
certification for its necessary airdrop certification.
    The program right now is hard at work with the new 
requirement that the Army brought forward to be able to operate 
and deliver Army armor in the semi-prepared fields and what 
have you. We expect to have certification to be able to do that 
by the mid-summertime frame.
    Mr. Money. I might point out here, Mr. Chairman, that the 
last 17 C-17s have all been delivered early and with great 
quality, excellent quality. So this program, albeit it has had 
a hell of a start, is now clicking on all cylinders, and we are 
meeting every milestone. I appreciate Congressman Murtha's 
comment about the multiyear, but clearly the program is on a 
great path.
    Relating this back to the F-22, we see the F-22 emulating 
this in a general sense, but we have addressed the F-22 issues 
much earlier in the program.

                         PRECISION WEAPONS PLAN

    (CHARTS 20, 21, and 22) General Muellner. To look at the 
weapons themselves, and we have already talked about a lot of 
these, so I can step through them quickly, we are still 
procuring and fielding our laser family of weapons. The GBU-28 
is that big 5,000 pound weapon I just described. There is a GPS 
version called the GAM-113. This will be a B-2 weapon only 
initially because it is primarily focused on the GAM/GATS 
capability and the ability to carry it internally is important 
for signature control. Obviously Mavericks persist and we have 
just upgraded those for improved reliability.
    JASSM is improved and will be our primary standoff weapon 
in the future. That, coupled with the JDAM and the wind-
corrected munitions dispenser, that allows us the direct attack 
that we have talked about, which is a very effective way to 
prosecute attack, especially with things like the Wind 
Corrected Munitions Dispenser, WCMD against advancing armor 
formations and things of that nature, where you have to deal 
with a large array of armor or other vehicles on the 
battlefield.
    Of course, with the Navy we are participating with the 
Joint Standoff Weapon. That will be an important weapon 
specifically for our bomber force. It gives it that 40-50 mile 
stand off with a wide array of munitions, both anti-armor and 
anti-personnel type weapons.
    Mr. Dicks. Could I ask one question on that point. Does 
JASSM give you enough range to deal with the SA-10 problem?
    General Muellner. Yes, it does. If you look at the 
signature of something like say, the B-2, it clearly does. With 
most of our other high-value weapons systems, you can get in 
within the 40 to 50 miles. You can't, for instance, though, 
against a SA-10 take a conventional airplane in an SA-10 netted 
environment. You still need some stealth to get into that 
range, because the SA-10C is a very effective air defense 
system.
    Mr. Dicks. So initially you need some standoff.
    General Muellner. Yes, sir, you need an enabler like the B-
2 and the F-22 to take down the defense to now where you can 
deal on it with a one-on-one basis.
    Mr. Money. Or go to a JASSM.
    Mr. Dicks. Which is better once we get it.
    General Muellner. Again, the GPS has been a great success 
story for the contractor-government team in that they have put 
this program together very, very rapidly. Indeed, it has 
demonstrated really good capability in the initial test to 
date.
    We will have some demonstration capability within the next 
several months of actually dropping a live weapon against a 
target that we have used the entire system to metric against.
    JASSM competition again is ongoing. The two contractors 
that are in that heated competition are McDonnell-Douglas, who 
builds the JDAM, by the way, and Lockheed Martin here, who 
builds at least one wind-corrected munitions dispenser 
contract. They are both focusing on this area.
    I might add, both of them are highly leveraged in 
commercial content, Global Positioning System/Inertial 
Navigation System (GPS/INS), and so are straight out of the 
commercial production line to keep the price down on these 
systems.
    They are in a competition right now. The initial fielding 
of this will be on the B-52 just because we are going to use 
that for a test aircraft, and then the rest of the bombers flow 
according to the plan you saw on the previous chart.
    I might add one thing on the cost of that. Right now the 
estimated cost of that is under $400,000 a round. At the time 
of cancellation, the Tri-Service Standoff Attack Missile, 
TSSAM, the program it replaced, the estimate was up around $1.3 
million a round. So that is what commercial focus, commercial 
content, and getting rid of all those mil specs and mil 
standards does for you.

                  JOINT DIRECT ATTACK MUNITION (JDAM)

    (CHART 23) JDAM, of course, is probably the best success 
story. It is indeed $14,000 a round, as we talked about.
    Mr. Dicks. That is cost growth. It is up from $13,000 to 
$14,000.
    General Muellner. It depends on what round you are talking 
about.
    Mr. Money. When we get to round 84,000, it will be at 
$13,000.
    General Muellner. It depends on which round you are talking 
about. The end result of this is they brought in a lot of 
commercial content and they have made this program work.
    The one problem they are having with it right now is they 
are about 60 days behind just because we have accelerated the 
program so rapidly. Some of the second tier vendors are having 
difficulty delivering the GPS Inertial Measurement Units, IMUs, 
as rapidly as they can. Other than that, the accuracy has 
exceeded all of our requirements on all of the tests, and we 
have a very large database here already.

                            PGM CAPABILITIES

    (CHART 24) Mr. Money. Congressman Dicks, here was your 
favorite chart from last year.
    Mr. Dicks. Good.
    General Muellner. Again, what this chart just shows you is 
from the Air Force perspective what our family of weapons is 
going to be in the outyears and they reflect that same thing. 
This is a function of standoff formation. This is as a function 
of either a submunition all the way up to precision accuracy.
    The next chart, please.
    Mr. Young. Gentlemen, we have a vote now. Mr. Hobson will 
chair the Committee until we get back. It won't take us long.
    Mr. Hobson. Why don't you continue on, General.

                        INFORMATION SUPERIORITY

    (CHART 25) General Muellner. We are going to get into the 
information superiority area. I would comment that what we show 
on here are primarily platforms, but I would like to preface 
this comment with the fact that we are also working those 
information superiority issues very, very hard that do not 
involve platforms, and that is protection of our databases from 
a standpoint of a defensive standpoint, and also building 
offensive capability to use information warfare. It is an 
effective warfighting tool.
    There is heavy emphasis on protection of our weapons system 
databases and systems primarily focused by Electronic Systems 
Center up at Hanscom, where they go through every weapons 
system and provide a vulnerability assessment back to the 
program office, and a detailed definition of what has to be 
done to indeed have robust Information Warfare, IW 
capabilities.
    We look at the platform, the primary contributors to 
situational awareness are, of course, the Airborne Warning and 
Control System, AWACS and Joint STARS aircraft from an air and 
ground surveillance standpoint.
    ------. What you see here and will see in the program I 
described are efforts to maintain and improve these 
capabilities on these weapons systems, but also a new focus of 
moving into the world of unmanned aerial vehicles to pick up 
some of these loads, especially in areas where we want to have 
persistent long-standing surveillance over a portion of the 
battlefield.
    You see the Predator which we currently have fielded, and I 
will describe it in a little more detail. We have the Global 
Hawk and the Dark Star, both of which will fly again this year.

                          JOINT STARS AIRCRAFT

    (CHART 26) First I will talk a little about the Joint 
STARS. We have two production aircraft on the ramp. They are 
being employed on a daily basis. As you know, they employed 
again in Joint Endeavor. They performed as well there, 
performed very well there, as they had in Desert Storm. So the 
warfighters love this weapons system.
    Right now we are in the midst of negotiations with our NATO 
allies. There is a program called NATO AGS, or alliance ground 
surveillance, over there, where they are evaluating the Joint 
STARS to make a decision this fall in the November time frame 
as to whether to start up a Joint STARS program in NATO similar 
to the AWACS program that they have in NATO.
    We are moving to a fleet of 19 aircraft. In this last year, 
we have put major investment in the program to get commercial 
content on board to ease the transition of technologies, 
commercial work stations, commercial computers, and, as a 
result of that, that helps us deal with the out year issues of 
obsolescence of key parts and so on.
    Mr. Money. General Muellner can speak with firsthand 
knowledge, flying 50 sorties of JSTARS in the desert.

                              PREDATOR UAV

    (CHART 27) General Muellner. Sir, on the Predator, we are 
operating that today in Hungary. It is providing good support 
of the warfighter. We have had challenges doing that in the bad 
weather months, because the system was not capable of flying 
under icing conditions and also because of the low ceiling.
    We are working on the icing problem. We have an aircraft 
that is up, either is or today or will be flying in the next 
week or so, up in Duluth, Minnesota, doing the icing test in 
order to certify the deicing mod and new engine on the airplane 
that will give it the ability to operate.
    The training and sustainment operations are set up at 
Indian Springs outside of Las Vegas, and it is currently 
supporting these deployments.
    Mr. Money. I might point out here Secretary Perry moved the 
operation and maintenance of the Predator to the Air Force 
starting 1 July, and subsequent to that the program has an Air 
Force officer in charge reporting through a Navy Program 
Executive Office, PEO, but directly to me. So all the high 
altitude, long-enduring Unmanned Aerial Vehicles, UAVs are 
within one spot within the Air Force.
    Mr. Hobson. I might say I was there, and that was their 
real problem with it. They liked it when they could use it, but 
they couldn't use it when they should be using it.
    General Muellner. Unfortunately, that program, of course, 
is an Advance Concept Technology Development, ACTD, part of the 
initial ACTD all-weather support operations, and were not part 
of what demonstrated. As we transition that from an ACTD to a 
long-standing combat capability, we had to build in that 
capability and also build in the procedures to be able to 
operate it under lower weather conditions and also to give it 
the capability to climb through weather to get out to its 
target area. That was the big problem.
    Mr. Money. We have gone to school on that in that the other 
two high altitude, long enduring, Dark Star and Global Hawk, 
are still in ACTD. But we stood up a System Program Office, SPO 
at Wright Patterson, 2 years in advance of that program 
transferring to the Air Force so we can alleviate transition 
problems from an ACTD into an operation.

                          AGILE COMBAT SUPPORT

    (CHART 28) General Muellner. To talk about the last of the 
core competence, I would like to talk a minute about what we 
are doing in the combat support area because this is a 
different way of doing business from our standpoint.
    We are focused on really getting down our deployment tail 
for our weapons systems. By that I mean that when we deploy an 
F-15 squadron somewhere, it takes upwards of 17 C-141s to get 
those 24 airplanes, necessary people, and equipment to where 
they can operate.
    Mr. Dicks. How long does that take, General?
    General Muellner. A normal squadron will move out--our 
squadrons are on a one, two, three basis. So the first wing, as 
you know, was deployed to Dhahran. Within 24 hours they were on 
the ground. So we have mobility commitments that would move 
those folks out over a 3-day period.
    Mr. Dicks. If you had to move 1,000 airplanes from CONUS 
out to the Gulf, just roughly how long would it take? A month? 
A month and a half?
    General Muellner. The TPFD, which is the time-phased force 
deployment staff, which the Joint Staff puts together, has for 
each theater an integrated plan to do that. Under a different 
forum we could run through that with you. But it is a long 
time. Not for the air side. We tend to be fairly ready to go 
immediately.
    Mr. Dicks. You have to get all the equipment out there, 
don't you, in order to fight?
    General Muellner. Absolutely. But remember, when I said the 
17 C-141s, that took that 24 aircraft squadron and put them on 
the ramp at Dhahran ready to fight. Now, they had missiles when 
they got there and there were other missiles brought in. There 
were the people and support.
    Mr. Dicks. That is 24 airplanes.
    General Muellner. Twenty-four airplanes for the 17 C-141s.
    In the case of the F-22 and the JSF, we are talking about 
bringing that from 17 141s to 8 141s. We have cut the airlift 
requirement in half, and it is going to go down even more in 
the case of the JSF.
    Mr. Young. Let me ask, General, basically on management of 
our time here, how many more charts do you have and how much 
more time do you have in that presentation?
    General Muellner. We have six more, and they are pretty 
quick.
    Mr. Young. Okay. Because I want to give Mr. Nethercutt 
time. He has not had any opportunities at all today. Why don't 
we go ahead and proceed with the charts, and then let Mr. 
Nethercutt have the first round of questioning.
    General Muellner. The other key elements of this obviously 
are modernizing our loaders to support the airlift operation, 
and of course the C-17 is a key part of that. The other key 
part of it is improving our transportation and information 
systems so we can track spare parts. This is the Federal 
Express, call up, know exactly where your part is at approach.

                         SCIENCE AND TECHNOLOGY

    (CHART 29) Well, sir, underpinning this whole thing is our 
science and technology, S&T program. That total program in the 
1998 budget is about $1.2 billion. As you can see, it is pretty 
well balanced against the 6.1, 6.2, and 6.3 areas, with the 
heavy focus in the 6.2 area, but still a significant amount out 
in the 6.3.
    These are the transitional technologies starting to take 
place, mostly contracted out, which has been the focus of our 
Air Force operations. We are continuing to do this while we are 
continuing to draw down our work force to the tune of about 30 
percent.
    These are the key focus areas in the President's 1998 
budget. You can see the shifting focus of where we think we 
need to invest in the future and also dealing with some things 
with aging aircraft. We clearly have and will have aging 
aircraft which is also a big problem for the conventional 
airline industry in the civil end of it.
    On the S&T, these are major focus areas in the future that 
you see.

                           ACQUISITION REFORM

    (CHART 30) Acquisition reform continues to do well. I have 
given you a couple of examples already. Right now just from the 
Air Force perspective, we have freed up $17 billion that would 
have had to be invested in other things, that is either savings 
or cost avoidance, as a result of things like JDAM, like the 
multiyear and C-17 and so on. So that is money we can invest to 
keep from having a modernization bow wave.
    A key part of that also is we are doing that and a key part 
of that is we are also drawing down our work force. This is the 
efficiency part that Mr. Money talked about of efficiently 
producing effective weapons systems.

                   WIND CORRECTED MUNITIONS DISPENSER

    (CHART 31) Here is a good example. This is a contract that 
was just recently won. I might add it is in protest right now, 
so I can't go into a lot of detail about it. It was won by 
Lockheed Martin. It is for the wind-corrected munitions 
dispenser. This is the tail kit that goes on the munition. That 
was expected to cost upwards of $25,000 a round. The actual bid 
price that they came in with is just under $9,000. So, again, 
streamlining, commercial content, which there is a lot of in 
here, really pays off. Getting rid of those mil specs and 
standards and letting the contractor go off and figure how to 
do it, not us telling him how to do it, $850 million saved 
across the expanse of that program.
    Mr. Money. Actually I think the money is greater than that 
in that we have a 20-year warranty on that so the depot and 
those issues are not going to be there. We go back to the 
manufacturer with that warranty.

                                SUMMARY

    General Muellner. Bumper to bumper. If it breaks, they take 
it back and give us a new one.
    (CHART 32) In summary, the bottom line is, one, we are 
keeping a high focus on modernization. We believe it is our 
future and we have to do that for our warfighters. We are 
trying to do that by freeing up investment through acquisition 
streamlining and also at the same time our warfighters 
understand it is important to keep those weapons systems 
affordable, so they are learning how to understand the cost of 
their requirements and they are factoring that into their 
decisions. Thus far, we have been successful in using the 
combination of those things to keep our key programs on track.
    Sir, that completes all the charts. I would be glad to take 
any other questions, sir, that you might have.
    [The joint statement and Charts of Mr. Money and Lt. 
General Muellner follow:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Mr. Young. Okay. Thank you very much for a very interesting 
presentation this morning.
    I would like to yield now to Mr. Nethercutt, who has not 
had an opportunity to ask any questions.

                         AIRBORNE LASER PROGRAM

    Mr. Nethercutt. Thank you, Mr. Chairman, and members of the 
Committee. Welcome, General, and Secretary Money. I was at 
another hearing, I am sorry, that is the story of our lives 
around here. I apologize for missing your presentation. I was 
glad to hear a little of it and I look forward to reading the 
materials.
    To the extent you have talked about the airborne laser 
already, I apologize. Let me just follow with a question, if 
you could, please answer, either or both.
    I think this is a good program. I am supportive of the 
development of ballistic missile defense generally, and I think 
this is a good component of the Pentagon's missile defense 
architecture.
    I sense, at least my understanding is, that the airborne 
laser is funded and managed by the Air Force. The other missile 
programs are managed by the Ballistic Missile Defense 
Organization, BMDO. What is the reason for that and why was the 
program transferred?
    General Muellner. Well, sir, the reason it was initially 
transferred out of BMDO is on the advice and recommendation of 
the Congress. In 1992, the Congress directed that those 
programs that were more than 10 years out from a transition 
standpoint should be transitioned back to the services. That 
was done, and the Air Force picked up that responsibility, and 
the BMDO transferred an amount of money when that occurred.
    Post-Desert Storm, as we looked at the need to deal with 
the ballistic missiles, the one area that was not being covered 
was the boost phase.
    There was at that time one approach that surfaced, which 
was to use a kinetic kill, an Advanced Medium Range Air-to-Air 
Missile, AMRAAM, if you will. What we found when we looked at 
doing that, we were going to have to have so many orbiting 
interceptors so close to where the missile was launched that 
you needed very good intelligence. The reason was because of 
the time of flight of the missile. You had to get your airplane 
pointed, detect the launch, launch this AMRAAM, and then it had 
to close very rapidly, because you had an accelerating missile.
    As we looked at that, it became obvious that wasn't a 
viable solution. We couldn't get enough velocity out of the 
missiles.
    What had matured in previous demonstrations and was coming 
along rapidly was a speed-of-light weapon. So, indeed, we 
solved the velocity issue and at the same time came up with a 
solution that allowed us to stand off and not have to put all 
those airplanes orbiting in enemy territory.
    As a result of those key technologies that make it up, the 
laser technology, the adaptive optics, the atmospheric 
compensation, we put together demonstration milestones which 
they successfully completed that allowed us to go through this 
phase of the program.
    Mr. Money. I was just out on the West Coast last Friday. We 
had a program review and that program is off to a great start. 
We are past the physics. The physics in this are proven. It is 
a packaging job, an engineering job of getting it on an 
airplane. With time, we will get there. Ultimately, then we 
will have a weapon that, as the General said, reacts at the 
speed of light and roughly $1,000 a round. It gets the missile 
while it is up and it will fall on whoever launched it. For all 
those reasons, I think we have a winner here, and it is just a 
matter of getting through the program and to the engineer.

                          JOINT STRIKE FIGHTER

    Mr. Nethercutt. I think you are right, it is a winner. I 
was briefed this week and informed it has had great success, 
and there are exciting developments to come. So I encourage you 
to keep going.
    General, I noted in your testimony when I was here a little 
while ago that the Joint Strike Fighter appeared to be 
affordable, I wrote down your words. I think that is a great 
testament to this idea that we need to initiate serious 
procurement reforms, certainly in the Air Force and the other 
services, and this Joint Strike Fighter is really a good 
example of that.
    I am wondering if after the reform legislation in 1994 and 
1995, you have any other recommendations about what Congress 
can do to streamline the procurement process and make it more 
efficient? Are there any regulations that are holding you back 
that are unnecessary that we should pay attention to? If you 
can answer either now or for the record, I would be grateful.
    General Muellner. I think we will take that for the record 
for you.
    I would just offer to you, I had the opportunity to start 
the Joint Strike Fighter program and work that hard. I can tell 
you that the vast majority of the encumbrances we had before 
have already been removed. Our problems really right now are 
the institutionalizing of that and the behavior of the service 
acquisition folks, and even with the contractors. The 
contractors really need to change the way they accommodate and 
do business. We are seeing that change.
    The comment I made earlier from Alan Mulally from Boeing 
that says what we are doing, everything we have been doing in 
the commercial field we are now bringing into the defense 
world. That is an important issue which I think we are now 
incorporating. We will be happy to provide you additional 
information.
    [The information follows:]

    The legislative relief Congress provided in 1994 and 1995 
has improved our flexibility to streamline the Air Force 
procurement process. We believe that the previously provided 
legislative relief is adequate for now. Our challenge is to 
change the acquisition culture, and to institutionalize the 
increased flexibility.
    However, there are still areas for which legislative change 
is necessary to improve the efficiency of the process. For 
example; The Davis-Bacon Act, which was enacted in 1931, is 
applicable to construction type (construction, alteration/
repair) contracts in excess of $2,000. What this means is that 
the Contracting Officer is required to do labor checks to 
ensure the applicable minimum wages/benefits are being paid by 
the contractor. This imposes a significant administrative 
burden on Contracting personnel. Congress, through FASA, 
provides for acquisitions to be made via commercial procedures; 
yet for construction type contracts, the Davis-Bacon Act still 
applies. Therefore, true efficiency has not been achieved. 
There are other laws, such as the Service Contract Act, Walsh-
Healy Act, and Copeland Act, which, like the Davis-Bacon Act, 
are still applicable to commercial item contracts. Therefore, 
we would recommend that commercial item contracts be exempt 
from these Acts.
    As part of our ongoing Lightning Bolt initiatives, we 
recently had a team look at reducing the cycle time between 
requirements identification and contract award. The team's 
final report was just published in February 1997. The final 
report listed 63 proposed best practices and suggested 14 
possible areas for legislative relief. We are currently 
reviewing these suggestions to determine if they should be 
included in any future requests for legislative relief.

    Mr. Money. The only other thing I would just add to that, 
Congressman, is funding stability is paramount. We are in this 
phase now over the next 4 years of two contractors building two 
models, one model each that will be tested in two 
configurations, and then we will down select. The more stable 
that program is now and in the early parts of production, will 
pay off great benefits.
    On F-22, when we disrupted that program, for every dollar 
we took out, we had to put three back in. So funding stability 
is very, very important.
    Mr. Nethercutt. We are trying up here.
    Mr. Money. You bet. We appreciate that.

                        UNMANNED AERIAL VEHICLE

    Mr. Nethercutt. I just have one final question, if I may. I 
had the chance to go to California last August and look at 
Global Hawk, as it was being constructed. I missed your formal 
presentation, but I think unmanned aerial vehicles have great 
potential. To the extent you can in this hearing, give us some 
idea of what you see as the future of UAVs, either by design or 
capability, and what your view is from the Air Force 
standpoint?
    General Muellner. We certainly endorse your views, not only 
on Global Hawk but that whole family. There are a lot of these 
persistent surveillance missions, Inverse Synthetic Aperture 
Radar (ISAR) type missions, where a persistent UAV is an ideal 
solution for it. Clearly as Global Hawk matures, as Dark Star 
matures, which gives us better survivability deep and so on, 
they can pick up a big segment of what we have to do with 
manned flights, or cover an area where we are unable to do 
anything right now.
    We are going beyond that in our focus. We had a summer 
study last year from the Air Force Scientific Advisory Board 
that has recommended other areas to focus UAVs. One of the ones 
that seems to jump out at you is the area to deal with a 
persistent suppression of enemy air defenses, to be able to put 
a platform up over the enemy air defenses so that if you come 
up on the net, we are going to kill you right now. And right 
now we are off working a program with Defense Advanced Research 
Project Agency, DARPA, put together a demonstration program, to 
stem off aggressively in that program.
    Another area is the area of com relays. Right now we are 
moving to where we are going to depend totally on satellites 
for an awful lot of our--even in theater bandwidth 
requirements. It is not clear why you can't take a Milstar-like 
package and rather than putting it on a bus up in space, put it 
on a Global Hawk and put it up at high altitude over the 
battlefield to give the commanders on the battlefield that same 
sort of connectivity.
    We are moving off in that direction with a joint 
demonstration, again with DARPA and the Army to go off and 
demonstrate that potential. So we see a lot of benefit in the 
UAV field opening up.
    Mr. Money. I will add to that and put the chart up to 
remind us we are very much enthused about that. That manifests 
itself in the Air Force a couple ways. I mentioned earlier we 
stood up a SPO in Wright Patterson to handle Global Hawk and 
Dark Star 2 years before they transferred to the Air Force.
    The Air Force is also initiating a battle lab down in 
Eglin, and the main reason for that is how to incorporate 
CONOPS, concept of operations, deconfliction, those types of 
things, so we can integrate UAVs into the force.
    In the long term, we too see, especially in the long 
enduring mode, we will far exceed what a man can do, and 
probably overtime, but it is way too early, this Global Hawk 
might be an U-2 replacement. But I just want to caution people, 
we need to prove this, have that technology mature so maybe 10 
years from now we can be addressing that issue.
    [Chart follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    
    Mr. Nethercutt. You mentioned the issue of satellite 
vulnerability--you may have seen the report last week about the 
revelations regarding satellite vulnerability. So to the extent 
that Global Hawk is consistent with trying to reduce these 
vulnerabilities, I think it is well worth doing.
    General Muellner. It opens up the envelope to give us much 
more robust and probably more affordable solutions.
    Mr. Money. I don't see one replacing the other in toto. It 
is a combination, then, of getting the maximum optimizing the 
mix, if you will.
    Mr. Nethercutt. I understand. Thank you for your work and 
thank you for your testimony.
    Mr. Young. Has Global Hawk flown yet?
    General Muellner. No, sir.
    Mr. Young. You had the roll-out of the vehicle?
    General Muellner. The roll-out was several weeks ago out in 
San Diego. Both it and Dark Star after its accident will fly 
this summer and fall time frame.
    Mr. Money. August.
    Mr. Young. Where do you plan to fly it?
    General Muellner. Global Hawk I think is flown out of--will 
be flown out of Edwards. Dark Star is also flown out of 
Edwards. It is being jointly managed by NASA, Dryden and the 
contractors; and the Global Hawk is Air Force Flight Test 
Center and the contractor teams.

                           ACQUISITION REFORM

    Mr. Young. As we proceeded throughout your presentation 
today, for those of us that have been following these issues 
for a long time, we detect some improvement in the way that we 
are approaching some of these acquisitions. It looks like you 
are getting a little more for the money because of the changes 
in the way you are letting the contracts.
    A person in the Pentagon who is quite important when it 
comes to the area of money and purchasing, et cetera, and I 
will not identify the person, said that there are a lot of 
other improvements that could be made in acquisition. One 
improvement deals with very small contracts that could actually 
be purchased with a credit card rather than going through the 
whole contracting procedure, which in some cases he said 
actually costs more than the product that you were purchasing.
    What can we do about that? What can we do to be able to do 
a smart approach to this type of acquisition reform that would 
let us eliminate the bureaucracy that really isn't necessary 
and that is costing more than the product?
    General Muellner. Sir, I will give you an example as an 
answer. What it shows is the problem is culture; it is not 
regulation right now.
    A couple of months back I gave an award to an outstanding 
young scientist in the Air Force, a Ph.D. out at Edwards who 
just invented a new high-temperature plastic. In talking to him 
and his wife at lunch, I asked him what his greatest challenge 
was. I thought he was going to give me some exotic technical 
issue. He said, I can't get chemicals.
    This plastic compound he invented was with off-the-shelf 
chemicals. You can buy it in almost any store. I said, why 
don't you use your credit card to go buy them, your 
International Merchants Purchase Authority Card, (IMPAC) Card? 
He said, well, they won't let me use it. This is a Ph.D. 
inventing this new high-temperature plastic for rocket motors.
    So when we ran the audit trail, somebody up the chain of 
command made the decision, well, we can't entrust this 
individual out there in the field with these credit cards. So 
now that individual has a credit card. He literally drives into 
Lancaster and buys the chemicals he needs or sends somebody in 
to get them when he needs them.
    The ability to do that is out there right now. It is 
difficult in some cases to get over many, many years of writing 
out purchase orders, getting them validated and stamped by four 
or five levels, which in reality added little value to the 
whole process and certainly added cost. So I think we have made 
a lot of progress.
    John Hamre has been pushing that really hard down at the 
services. The services I think are responding very positively 
to that approach.
    Mr. Money. I might add, the IMPAC Card has made an impact. 
I don't know off the top of my head, but I think we are in 
the--30,000, 40,000 people are using them. I was over in Europe 
this last June. It hadn't got there. It is there now. There are 
some problems with paying the bills and all that kind of stuff, 
but it is being fought through. If you would like for the 
record I can get you back the magnitude of purchases that are 
now ongoing, and we are working through the culture and the new 
way of doing business.
    [The information follows:]

    Approximately 78% of micropurchases (actions under $2,500) 
are now being done using IMPAC in the Air Force. The statistics 
for fiscal year 1997 as of the end of February, show 352,699 
actions valued at about $119 million have been procured by the 
Air Force. Currently, the Air Force has 23,724 cardholders.

    Mr. Money. I might add, Mr. Chairman, that I have been here 
confirmed in this job a little over a year now, and what I have 
seen just in the last year has been remarkable. But we are not 
there yet. It is clearly a cultural shift. I am still asked the 
questions about, well, do you want me to do my job or do you 
want me to do this acquisition reform stuff. When we get that 
being that is my job, we will be there. We have a ways to go. 
Every day I see a positive sign.
    This wind-corrected munition, there are examples coming in 
every day. I don't hear that this is an all uphill--we have 
some negatives to work through as well. But I think back to 
what Goldwater-Nichols, the thought and the insight Congress 
had back there, put in an acquisition executive with industrial 
experience in place, but then augmenting that with a general 
here like General Muellner that has 8 years of test, Purple 
Heart, been around, fought wars and so forth, bringing that 
together. Then with a person like Darleen Druyun, a 
professional, been in the business a long time. That 
combination of events is clicking on all cylinders.
    I appreciate you saying that, and we keep trying every day 
to improve the system. I am really serious about the warfighter 
sets the requirements. That ensures the effectiveness of the 
weapons system. My job, our job, then is to ensure the 
efficiency of the process, the getting there. This whole thing 
about better, faster, cheaper, and smoother, we live every day. 
So I appreciate that comment.

      INTERNATIONAL MERCHANTS PURCHASE AUTHORIZATION CARD (IMPAC)

    Mr. Young. Mr. Money, tell us about the IMPAC Card. Is that 
a credit card through a commercial bank, much like a Visa or 
MasterCard, or is it like an American Express card, or is it a 
government institution of one type or another?
    Mr. Money. It is in fact a credit card. I am going to fall 
off real quick.
    General Muellner. It is a credit card. I think it is a 
commercial bank, if my recollection is correct. I think it is 
one in Denver. We will find out the specifics for you.
    [The information follows:]

    Since January 1989, the General Services Administration 
(GSA) has been contracting for purchase cards for Federal 
agencies. The government-wide purchase card is called the 
International Merchants Purchase Authorization Card (IMPAC), 
which is a VISA charge card program managed by Rocky Mountain 
Bank Card System, Inc. (RMBCS) through contract with GSA.

    General Muellner. The intent was to get out of the business 
of managing those accounts, get the government out of that 
business. So it is indeed a commercial application that is used 
and the entire tracking and auditing system that is used with 
it is commercial in nature also, i.e., not done by the 
government.
    Mr. Young. Give us a summary, if you would for the record, 
we won't take the time to do it now, as to how many of these 
credit cards have been issued, what type of person in the 
process is authorized to use it, what kind of audit trail there 
is to make sure that there are no abuses. We would like to know 
more about that, and any suggestions that you might have as to 
whether it should be expanded or where it might be used to save 
additional money.
    The Speaker has challenged me as Chairman of this 
subcommittee to find a way to turn the Pentagon into a 
triangle. That indicates to me you take two legs out of five. 
That is 40 percent. I don't know if we can do 40 percent. But 
we do have that challenge, to find ways to get more for the 
dollar. A lot of the cost in the Pentagon is bureaucratic.
    We were told at a hearing just recently that there are more 
shoppers in the Pentagon than there are soldiers in the entire 
United States Marine Corps. I don't know if that is true or 
not, but the source that came up with that information I think 
is a very reliable source.
    One of our witnesses said maybe we can make it a square, 
maybe not a triangle. But anyway, the idea is to try to squeeze 
out the additional bureaucracy that we really don't need. I 
think this IMPAC Card is an example of the fact that it can be 
done if we look hard enough and work hard enough to do it.
    Mr. Money. I apologize again for not having those numbers 
off the top of my head. We will get those to you.
    [The information follows:]

    Currently, the Air Force has authorized 23,724 IMPAC 
cardholders to procure goods and services under $2,500 directly 
from vendors. The cardholders can be anyone in a given 
functional area appointed by an Approving Official which is 
usually a supervisor who is in the same chain of command. When 
appointed, the cardholder is trained in IMPAC procedures by the 
Installation IMPAC Program Coordinator who is a contracting 
expert. Purchase activities are monitored and verified that the 
transactions are valid. Various oversight mechanisms to include 
Installation Program Coordinators, Inspector Generals, and 
Auditors are active at all levels in the Air Force to ensure 
integrity in the system is maintained. Management reports are 
issued by RMBCS to assist program management officials in 
tracking and monitoring card usage. Various internal reviews 
and audits have indicated there are no significant deficiencies 
or abuses of the Air Force's management of the IMPAC Card 
Program. We do support expanded use of the credit card. 
Currently, we focus on the legislatively established micro-
purchase limit of $2,500.

    Mr. Money. In fact, let me just chain on to what you said. 
We have, in fact, brought down the acquisition work force 28 
percent. We are getting closer to the 30, the commitment 
mandate of getting to 35. We are getting there. We have limited 
the size of SPOs to roughly 50 people. There are a few still 
above that, but they are coming down. So all that, we are 
marching to, and as you eliminate people and so forth and 
fewer, there is less mischief in my mind that can be created, 
less low or no-value added work going on. So we are approaching 
that. We still have a ways to go. I appreciate that comment.

                            INDUSTRY MERGERS

    Mr. Young. Let me ask another question along the same line 
of streamlining, modernizing and acquisition. This might appear 
to be a negative, but we are seeing an awful lot of mergers in 
industry. What is that going to do in the long run to the 
competitive nature of the business, the availability, the 
maintaining of the industrial force? What are these mergers 
doing now and what do you see them doing in the future?
    Mr. Money. Up until now I frankly think the mergers have 
been good. We are still overcapacity in a lot of areas and by 
bringing down the industry that sorts that out for itself, 
albeit up until now we still have two competitors in every 
general field. We are rapidly approaching that with the 
tentative Raytheon-Hughes-TI. That could bring down the U.S. to 
one air-to-air missile maker. Frankly, that is not going to 
disturb us for roughly 10-plus years.
    AMRAAM, we have already worked those against Hughes and 
Raytheon together and gotten from $1.87 million per copy down 
to roughly $292,000 per AMRAAM. So, so far it hasn't been an 
issue.
    We are still overcapacity in a lot of areas, so in this 
sense the marketplace is sorting itself out and predetermining 
or determining where it ought to be. So a long-winded answer 
that it hasn't been a problem yet, although when we get down to 
only one U.S. manufacturer in a particular area, then to have a 
competition obviously, you open it up to overseas. Then we 
haven't had to address that issue yet.
    General Muellner. One additional comment, if I could, in 
that area.
    When we look at industrial base, we tend to focus on 
manufacturing capability. I would offer to you that the 
technological edge that we have on the battlefield is not only 
based upon manufacturing but the ability to innovate original 
designs, develop them and field them. We had reached a stage, 
at least in the basic aircraft industry, we had so many 
competitors, and there were so few new starts that that initial 
design capability was atrophying out.
    So in a lot of respects, necking down of the industry to 
two main competitors now in this area or three main competitors 
is productive for maintaining those design capabilities, 
because we probably have starts, enough demonstrators to keep 
those design teams intact, keep them productively employed 
doing what they do best.
    Mr. Young. But you have got to keep enough competition in 
the industrial base to have an incentive to think ahead and 
create these new designs. If you don't have the competition, 
then, why hire a big expensive design team or team of creators 
to go out there when there is nobody competing with you anyway?
    I think I tend to agree that the mergers have been good to 
this point, but I am concerned about what the future might be 
in eliminating the competition that has been really very good 
for the industry and very good for the national defense effort.
    Mr. Money. Absolutely. Secretary Perry mentioned several 
years ago that we are overcapacity and in fact encouraged 
industry to downsize. That is happening.
    As you just pointed out and we talked about, when it gets 
down to only one in the U.S., then we have a different issue 
and we have to work through that. We are about to have to 
address that issue.
    Mr. Young. Mr. Dicks, do you have further questions?

                          Remarks of Mr. Dicks

    Mr. Dicks. The only point I would say on this question is 
that when you do merge these companies, you do get rid of a 
substantial amount of overhead, which does help make this work. 
If you have Boeing and McDonnell Douglas and Lockheed Martin, 
you have two very strong competitors in most areas, as we have 
seen by the charts you put up.
    One of the reasons that I have been so strongly committed 
to the B-2 is because of the charts you put up earlier today. 
Those charts demonstrate the capability you get once all these 
smart weapons are on this long-range aircraft.
    The thing that really drives this home in my mind is this 
question, and General Peay of CENTCOM, alluded to this at 
breakfast this morning, that one of the crucial detriments in 
getting forces equipment or TACAIR into the theater of 
operations in the event of hostilities was the availability of 
overflight access through the airspace of several countries, or 
the loss of overflight permission or the loss of use of even 
one en route base--all of which could drastically affect his 
ability to introduce TACAIR and troops to the Gulf region.
    So, again, we are always premising our strategy here on 
being able to immediately move men and weapons and airlift into 
an area. What if the country says, we don't want you to come 
in, like the Saudis did recently when we had the problem in 
Iraq and we had to negotiate with them for some time frame?
    That is why some of us believe that a long-range stealthy 
bomber with all these smart weapons gives you a revolutionary 
capability. What we worry about is that the studies that have 
been done by RAND and Jasper Welch and others that indicate 
that 21 B-2's simply don't allow you the sortie rate necessary 
to really take maximum use of the potential.
    What I worry about from your perspective is this is a big 
industrial base issue now. There are a lot of people who are 
not nearly as sanguine about our ability to go back and start a 
new stealthy bomber at some point in the future. Now, if you 
keep this industrial base open, this line we have keeps the 
costs down, and you can continue to get a number of these B-2s 
over the next several years and improve your capability, 
especially in the early going.
    This is where I think people are not really looking at the 
potential of this bomber. If you can leave Whiteman Air Force 
Base and with one aerial refueling, with wind-corrected 
munition dispenser and sensor fuzed weapon, and attack Saddam, 
moving from Iraq into Kuwait, that is a revolutionary 
capability. You can't do that with TACAIR, in my judgment. You 
will not have enough normally in theater. You have some in 
theater. If you have to move 1,000 airplanes, that, as you 
suggested, that is going to take a considerable period of time. 
In the early going, the first 14 days, especially when you have 
zero warning, as we did in World War II, in Korea, and in the 
Gulf War, we had zero actionable warning time, having a long-
range bomber with these capabilities seems to me to be exactly 
what you would want to have.
    And what I worry about is that we seem to have missed this. 
General Fogleman and I talked about this yesterday. Even 
without lockout, even if you don't worry about chemical or 
biological weapons contaminating these fields, you have still 
got the political problem of are you going to have these fields 
accessible or is the conflict going to be in an area where you 
even have fields available to you.
    So there is this potential of time delay. It seems to me 
that is where there is a period here in the first several weeks 
of any of these engagements where long-range stealthy bombers 
that can operate autonomously would have enormous importance. 
That is why we keep bringing this issue up. It isn't that we 
don't like the Air Force. We love the Air Force. But this is 
just one area where we think you guys need to take another look 
at this.

                ENHANCED GROUND PROXIMITY WARNING SYSTEM

    Since my time is limited, I want to get one question on 
another subject, and that is the safety of our people. I am 
told if Secretary Brown had the enhanced ground proximity 
warning system on this plane, the plane would not have flown 
into a mountain.
    Now, the Secretary of Defense has ordered the Air Force to 
go out and procure this equipment. We wouldn't have the lost C-
130, and if American Airlines had the enhanced ground proximity 
warning system on it, it wouldn't have flown into the mountain 
down in South America.
    To me, the fact that American Airlines on all 7,000 of its 
airplanes is going to put the system on, says something.
    I was under the impression you were going to put $264 
million in this budget to carry out the recommendations under 
phase one, including flight data recorders, cockpit recorders, 
ground point warning system, emergency locator, transmitter on 
the 89th Air Wing, for the distinguished visitor and 
operational support aircraft.
    Has that happened? Is that in this budget? Nobody can seem 
to find it.
    General Muellner. Yes, sir. Navigation safety upgrades, 
which are the ones you are talking about, are indeed in this 
budget. We added that in last year. As you recall, we came in 
for some reprogramming authority to get that started.
    Mr. Dicks. Could you help my staff by locating that for us?
    General Muellner. We have got the numbers now. I don't know 
what the exact number is.
    [The information follows:]

    Yes, funds for Phase One of the Navigation & Safety 
Equipment Baseline were included in the budget request. The Air 
Force requested approximately $10 million to accelerate GPS 
integrations and $31 million for safety equipment. This funding 
was an increase from the FY97 President's Budget. No single 
line item exists for these funds. The funds are requested in 
the individual weapon systems and are included in the aircraft 
procurement modification requests for those weapon systems. The 
$264 million figure was composed of $59 million in FY95/FY96 
reprogrammings, $10 million FY97 Chief of Staff Plus-Up 
request, and $65 million added to the FY98 President's Budget 
(FY98-03). Congress approved the reprogramming request and 
appropriated $82 million of the FY97 Plus-Up request. The $57.3 
million FY97 shortfall was accommodated through force structure 
changes, revised acquisition strategies/cost estimates and 
safety program content revisions.

    Mr. Dicks. I have a few questions here, just to give us a 
sense of how you are going to deal with this problem which I 
will place in the record. Because to me, if we can just save 
one airplane, one crew, I am told these systems are $50,000 
apiece, and it seems to me we need to get them on the airplane. 
It is obvious that these systems work, and I am kind of 
curious. Is there some resistance or is it budgetary problems?
    General Muellner. No, sir. It clearly has been a budgetary 
issue in the past. The focus has been putting those systems on 
the airplanes that have the highest ground contact issue, and, 
i.e., those have tended to be in some cases fighters. Some of 
the fighters have had those. The Fourth Generation Ground 
Collision Avoidance System (GCAS), which is what American 
Airlines is putting on--as you know, the American Airlines did 
have GCAS on it. It wasn't predictive, though. It was a 
reactive GCAS and gave them a pull-up too late to respond to 
it. The Fourth Generation GCAS is indeed what we are putting on 
all of our airplanes. Indeed, we have an investment account 
that goes out to the FYDP to put those on all the airplanes.
    Mr. Dicks. Thank you. The gentleman has been very 
reasonable.
    Mr. Young. Mr. Hobson.

                           LAB CONSOLIDATION

    Mr. Hobson. I have a couple questions to ask you, one about 
lab consolidation. You are developing this long-range Vision 21 
plan to reorganize labs and test evaluation centers in the next 
century. You have got an option consolidating the four Air 
Force labs and the Office of Scientific Research in this single 
lab. It is not due until 1998. Are there going to be any lab 
changes between now and then?
    Mr. Money. Congressman Hobson, the whole idea here of going 
to a single laboratory does not have in it relocation 
geographically. The idea is much like Congressman Dicks 
mentioned a moment ago, when you are merging companies, you 
scrape off some of the overhead that is duplicative. That is 
what we are trying to do there. We see a fair amount of 
savings. Probably you are talking about a few tens of people 
moving, primarily in the planning function, to centralize that 
in Dayton, bringing that out of each of the other labs. But 
overall, we believe that will make a much more efficient 
operation.
    We are not disturbing the scientists and the engineers, if 
you will, but just the duplicative overhead functions, mostly 
centered around planning.
    We are not moving the labs. They are staying where they are 
geographically. As I said, there may be a few tens of people 
being relocated. We think it is the right thing to do. Frankly, 
it helps in the drawdown in the Dorn amendment and so forth. We 
are working on it. It is about to be started to be implemented 
in the next couple of months.

                           CONTRACT PROTESTS

    Mr. Hobson. It is going to be implemented. Okay. All right. 
I would like to talk to you sometime a little more about that.
    The other thing, just a comment, one area that I see as a 
potential problem, the increased cost and everything, is this 
protest system you have got. Somebody needs to look at that 
protest system. We don't have a lot of time here, but I just 
think if you look at that at some point.
    Mr. Money. I will be glad to get you back some more data on 
that. Actually the number of protests are going down. They are 
dropping roughly 100 a year from several hundred, albeit there 
are a few. I believe part of the reason for the reduction in 
that is that we do a much better job debriefing both the 
winners and the losers of why they won or lost.
    Mr. Hobson. Probably only hear from the guys that won.
    Mr. Money. The ones we hear about are the big ticket items 
and so forth.
    Mr. Young. As we have more mergers, there are less 
companies out there to make the protests.
    [The information follows:]

    Data on number of General Accounting Office (GAO) protests received 
against Air Force procurements for the last five years:

FY92..............................................................   440
FY93..............................................................   493
FY94..............................................................   358
FY95..............................................................   331
FY96..............................................................   246

    The Air Force attributes the downward trend in protests to more 
meaningful debriefings given to unsuccessful offerors. Debriefings 
conducted by the contracting officer explain to a contractor the 
strengths and weaknesses of its proposal. The contracting officer may 
also comment on the technical evaluation and overall strengths and 
weaknesses of the winning proposal.

                         INFORMATION TECHNOLOGY

    Mr. Hobson. In the information technology, Air Force 
Materiel Command, AFMC is considering some restructuring and 
development management technology stuff. You spent a lot of 
time talking to me about that. Is that stabilized now or what 
are we looking at?
    General Muellner. Yes, sir. If you are talking about the 
relationship between MSG, SSG, down at Gunter and Hanscom, I 
think that has stabilized. As we talked to you before, the work 
load doesn't change. That was just a case of how the management 
operation would proceed to MSG from Hanscom.

                          AIRCRAFT PROCUREMENT

    Mr. Hobson. Okay. I guess the last thing, Mr. Chairman, is 
that with all these three airplanes that you are looking at out 
there, we are talking about a combined cost of about $350 
billion, I think, someplace in there. Are you giving any 
thought to purchasing two airplanes, cancelling one of the 
three, or moving forward?
    General Muellner. Sir, I think from the Air Force 
perspective, we have taken a hard look, as you saw I think from 
the earlier chart, we are necking down from a large number of 
airplanes down to two. We will have in the outyears an F-22, 
and a variant of it, and a Joint Strike Fighter, JSF, and a 
variant of that, as the only airplanes on the ramp.
    We have focused on the affordability. We don't have a bow-
wave problem in the Air Force dealing with this. The reason is 
that our C-17 airlift funding is ending before we start this 
procurement. Our bomber force modernization will have occurred, 
and so we have time-phased this activity. And basically it is 
the fighter force's turn to be modernized to move away from 
what was bought and procured in the late-1970s and early 1980s 
and is now aging out and will be replaced. So this time-phased 
activity will make us have an affordable solution.
    Mr. Hobson. These two professionals here have been very, 
very refreshing and very refreshing to work with, and I 
appreciate their activity.
    Mr. Young. Mr. Hobson, I certainly would concur with the 
statement you have just made.
    And thank you for your interesting questions.
    Mr. Nethercutt.
    Mr. Nethercutt. No further questions.
    Mr. Young. With no further questions--we have reached our 
time limit. We do have additional questions that we would like 
to submit to you in writing and ask you to respond for the 
record, if you would.
    The Committee will be adjourned now until 10 o'clock 
tomorrow morning, when we will meet in an open hearing in Room 
2226, the Rayburn building, on the fiscal year 1998 budget 
request with the Secretary of the Army and the Chief of Staff 
of the Army. And then tomorrow afternoon, another open hearing 
in this room, H-140, on Army Acquisition Programs.
    And with nothing further, the Committee is adjourned.
    [Clerk's note.--Questions submitted by Mr. Young and the 
answers thereto follow:]

                             F-22 Aircraft

    Question. Mr. Secretary, the FY 1998 budget includes several 
changes to the Air Force's high priority F-22 stealth fighter program. 
The development program has increased in cost by $2 billion and has 
been stretched 9 months. Last year, the Air Force planned to procure 
128 aircraft including 4 pre-production vehicles during the period FY 
1998 to FY 2003. The current budget reduces this quantity by 58, almost 
a 50% reduction over the same period. Secretary Money, your statement 
touches on the cost growth of the program, but can you tell us more 
about what caused the program growth and changes to the program as a 
result?
    Answer. The Joint Estimate Team (JET) recommended a program 
restructure which added time and funding to the EMD program to ensure 
the achievement of a producible, affordable design prior to entering 
production. This resulted in the addition of $2.2 billion to the EMD 
program and an extension of nine months. This funding requirement was 
offset by eliminating three test aircraft ($706 million) and slowing 
the production ramp ($1.45 billion). The additional funding is 
contained within the F-22 total program budget through the FYDP. The 
primary drivers of the cost growth in EMD include better information on 
touch labor (actuals from the first EMD aircraft builds versus 
parametrics); additional flight test time based on historical rates 
from other programs; and a projection that more time will be required 
to complete avionics integration.
    For the production phase, the JET identified the possibility of a 
$13 billion costs growth, $8 billion of which is due to the 
identification of an industry unique rate of inflation in this high 
technology segment of the economy. The remainder of this potential cost 
growth is due to higher than expected touch labor and material costs. 
The CEOs and senior Air Force leaders signed a formal memorandum of 
agreement (MOA) in December 1996 committing the government/contractor 
team to, at a minimum, remain within the current production budget. 
Currently the contractor and government teams are implementing plans to 
maintain production unit cost at or below current levels.
    Despite the changes to the program, the warfighter will continue to 
receive the F-22's revolutionary capabilities on time at an affordable 
cost.
    Question. Secretary Money, the Air Force now plans to buy only two 
aircraft in the first year of production. Please compare using then 
year dollars flyaway cost of these first aircraft to that estimated 
last year for the first production aircraft.
    Answer. The FY98 President's Budget reflects an average unit 
flyaway cost for the first 2 production aircraft (Lot 1) of $392 
million compared to the FY97 President's Budget estimate of $149 
million for the first 4 production aircraft (Lot 1). The FY98 
President's Budget average unit flyaway would become $313 million if 4 
aircraft were bought in Lot 1 versus 2 aircraft.
    As documented by the Joint Estimate Team, the early production 
program is more costly than previously envisioned. The total potential 
production cost growth of $13 billion has been eliminated by the 
implementation of a number of cost avoidance initiatives. Payback from 
these initiatives begins in small increments in 2000, but significant 
payback does not occur until 2004.
    Question. Is two aircraft an efficient quantity to buy in the first 
year? Would it be smarter to buy more in the first year?
    Answer. Two aircraft is an efficient quantity to buy in the first 
year of production. This approach balances the higher early production 
program estimate with the production funds available. Purchasing more 
in the first year would contradict our plan to increase system maturity 
relative to the production ramp rate (6 fewer production aircraft at 
EMD end in the restructured program).
    Question. Please compare in then year dollars the flyaway cost of 
the first 128 aircraft in last year's budget plan compared to this 
year.
    Answer. The flyaway cost of the first 128 aircraft in last year's 
budget plan was $13.5 billion compared to this year's $16 billion. As 
documented by the Joint Estimate Team, the early production program is 
more costly than previously envisioned. Total potential production cost 
growth of $13 billion has been eliminated by the implementation of a 
number of cost avoidance initiatives. Payback from these initiatives 
begins in small increments in 2000, but significant payback does not 
occur until 2004.
    The Air Force/contractor team has high confidence that, at a 
minimum, production cost growth will be zero because: (1) team 
commitment to long-term affordability is documented in a formal 
memorandum of agreement signed by the Chief Executive Officers of 
Lockheed-Martin (Mr. Norm Augustine) and Pratt & Whitney (Mr. Karl 
Krapek); and (2) Lockheed-Martin, Boeing, and Pratt & Whitney are 
incentivized to improve efficiencies due to the Joint Strike Fighter 
competition.
    Question. The GAO reports that there was some disagreement within 
DOD about inflation indices and that as a result the current F-22 
budget could be significantly understated. Can you explain this issue 
to the Committee?
    Answer. There is no disagreement within DOD about inflation 
indices. The OSD Acquisition Decision Memorandum (ADM), issued 11 
February 1997 after the DAB review, directed the F-22 progrma to use 
OMB rates but take account of existing forward pricing agreements. The 
Air Force applied Forward Pricing Rate Agreements rates, which had 
already been negotiated, through FY01 and applied OSD rates in FY02 and 
beyond. These rates have been incorporated into the FY98 President's 
Budget.
    Question. How much could the F-22 production cost be understated 
from FY 1998 to FY 2003?
    Answer. F-22 production costs are not understated from FY 1998 to 
FY 2003. Beyond the FYDP, the potential for a difference in industry 
inflation projections versus DOD projections has been accounted for in 
the implementation of cost avoidance initiatives which maintain 
production costs at or below current levels. Of the potential $13 
billion in production cost growth, $8 billion is attributed to this 
potential difference in inflation projections.
    Question. Last year, the Committee appropriated $81 million for 
long lead components for 4 pre-production vehicles. The Air Force has 
eliminated the pre-production vehicles from the budget and now proposes 
to use the $81 million in FY 1997 to buy-out obsolete parts. Given that 
the F-22 is the most advanced aircraft ever developed and is still 7 
years from being operationally fielded, why does the Air Force need to 
buy obsolete parts before the aircraft even goes into production?
    Answer. Obsolete parts are an electronics industry fact of life, 
where parts availability life is approximately 2 to 5 years vice the F-
22 production duration of 13 years. The Out of Production Parts (OPP) 
issue is one affecting programs throughout the aerospace industry. 
However, the F-22 program has a plan to properly manage this potential 
cost and schedule driver.
    F-22 OPP funding requirements for FY97 and throughout production 
have been identified. No additional funding will be needed but the 
program requires congressional approval for use of FY97 appropriated 
funds for OPP. FY97 OPP requirements include: (1) cost for partial 
redesign, primarily avionics; (2) cost to procure parts for production 
aircraft when schedule is insufficient to redesign or to avoid multiple 
redesign costs. By allowing for redesign and incorporating a more open 
system architecture, the program will achieve greater reliability due 
to the incorporation of more modern, up-to-date technologies while 
making future obsolescence easier to correct.
    Loss of FY97 funding forces a one year slip in the production 
program. Avionics hardware would not be available for production when 
needed and the inflation effect alone equates to approximately $1 
billion.
    Question. Please tell the Committee what you see as the biggest 
risk areas remaining for the F-22.
    Answer. The biggest risk areas remaining for the F-22 are 
production cost containment and integrated avionics capability.
    Regarding production cost containment, the Joint Estimate Team 
identified the potential for $13 billion in cost growth. However, 
effective implementation of our Production Cost Reduction Business Plan 
will keep the cost of the F-22 at or below our current production 
budget of $48.3 billion.
    With respect to avionics, the F-22 will feature a capability not 
previously achieved in a fighter weapon system, the integration of 
numerous sensor inputs to provide the pilot a complete, unambiguous 
picture of the surrounding environment. The major development risks for 
F-22 avionics are well understood. In fact, the recent program 
restructure added development time, expanded ground test facilities, 
and added flight test time due to the anticipated complexity of the 
avionics effort.
    Question. Why is there no money budgeted for Engineering Change 
Orders in the First year of F-22 Production?
    Answer. The F-22 program has money budgeted for Engineering Change 
Orders (ECOs) in FY99, the first year of production. Approximately 
$51.3 million is allocated for the Air Vehicle ECOs and $8.2 million is 
allocated for Engine ECOs.
    The F-22 program used Air Force historical percentages to estimate 
overall ECO values, with Airframe totaling 4%, Avionics totaling 8%, 
and Engines totaling 3%. F-22 ECO data was unintentionally omitted from 
the FY98 President's Budget procurement documentation due to format 
changes from the coordination process.

                        Modernization Shortfall

    Question. The Air Force fiscal year 1998 budget requests $29.8 
billion for procurement and R&D. Though this is $600 million higher 
than FY 1997, in real terms it is once again lower than the fiscal year 
1997 appropriated amount. The funding provides for only 61 new aircraft 
though 75% are for Civil Air Patrol and pilot training. Only 3 are 
tactical aircraft. Secretary Widnall and General Fogleman, is the Air 
Force's fiscal year 1998 modernization budget adequate?
    Answer. The Air Force's FY98 modernization budget is adequate, 
though barely. The program the Air Force submitted reflects a very 
careful balance between sustaining our readiness for operations over 
the near term and building our forces for the demands we will face in 
the decades to come. The Air Force uses a time-phased modernization 
plan that synchronizes the size and timing of multiple programs to fit 
in the available budget authority. Consequently, there may be years 
when we wouldn't buy any tactical aircraft or we'd buy only a few, as 
we're buying other needed items.
    The FY98 modernization budget reflects this philosophy. In the 70s, 
we developed and built first the F-15, then the F-16. Today, after 
downsizing the number of wings as a result of the end of the Cold War, 
we're fully manned to our Primary Aircraft Authorization (PAA). The 
three F-15s we're buying fulfill a requirement for tactical attrition 
reserve aircraft, and they're the only tactical aircraft we're buying 
this year. Our continued ability, though, to provide command of air and 
space depends on maintaining our current course for the F-22. In FY98, 
we're funding development efforts for both F-22 and Joint Strike 
Fighter, and we begin buying F-22s in FY99. Though we're only buying 
three tactical airframes in FY98, we are making a strong commitment in 
this budget to preserve our tactical force.
    We are buying 18 Joint Primary Aircraft Training System (JPATS) 
aircraft and 27 general aviation aircraft for Civil Air Patrol search 
and rescue, which comprise the vast majority of the airframes we're 
purchasing. They, however, represent only 1% of aircraft procurement 
funding. The rest goes to buy other high priority needs in our 
modernization plan. We're buying nine C-17s for $2.3B (40% of aircraft 
procurement funding) to fill our highest near-term priority, airlift. 
We're also buying two large VC-X aircraft (Boeing 757s designated the 
C-32A), one E-8C JSTARS, and one C-130J--aircraft which help fulfill 
our balance program. We must also balance across other areas, such as 
munitions and space to fulfill our Global Engagement requirements. This 
mix of purchases reflects the best value for the Air Force needs, 
balances the funding between readiness and modernization, and meets the 
requirements for a time-phased modernization plan.
    Question. What is the risk to the future readiness of the Air Force 
of such low procurement rates of weapons?
    Answer. There is some risk to future readiness caused by low 
current procurement. The Air Force will face higher Operations and 
Support costs as the aircraft fleet ages which, to some extent, takes 
resources away from readiness. However, the relatively low procurement 
rates in fiscal year 1998 reflect the cyclical nature of tactical 
aircraft procurement and a fiscal year 1998 ``snapshot'' is a poor 
indicator of overall future readiness. Principally, it doesn't capture 
our time-phased modernization program which balances current readiness 
with future readiness (modernization) goals.
    In recent years, we've been able to take a ``break'' in 
procurement, especially with tactical combat aircraft. This is a direct 
result of the strong buildup of forces in the early to mid-eighties and 
the subsequent drawdown in forces in the early nineties after the end 
of the cold war. We were able to retire our oldest systems as part of 
the drawdown leaving ourselves a fairly young force. Now this ``break'' 
is over and we recognize we don't have the ability to build all the new 
systems we need at once. Consequently, we set out a time-phased 
modernization program that began by first addressing the most pressing 
near-term requirements, then the midterm, and finally the far-term 
needs. This sequenced modernization schedule avoids large overlaps in 
funding requirements between major procurement programs. The result is 
that we can modernize all parts of the force within a fairly constant 
investment share of our total budget authority. However, any delays in 
procuring aircraft per our modernization plan (e.g. F-22, Joint Strike 
Fighter) would have significant readiness impacts.
    Question. What major requirements are not funded in the fiscal year 
1998 budget?
    Answer. The budget the Air Force submitted is a balanced budget, 
fully supporting National Military Strategy requirements. We have fully 
funded all areas required to maintain and improve our capabilities. 
There exist, however, areas where we could realize cost savings and 
efficiencies by accelerating the procurement or increasing the quantity 
of some of our modernization/improvement programs. To this end, the Air 
Force has created a list of our FY98 Unfunded Priorities. This list is 
rank ordered by relative importance, with the number 1 item being our 
most critical issue. This 34 item list was provided to the House 
Appropriations Committee in the first part of March 1997. An additional 
copy is provided here for your review.

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




    Question. What are your top four modernization programs? Are they 
fully funded in fiscal year 1998? Are they optimally funded in the 
accompanying fiscal years of the Future Years Defense Plan (FYDP)?
    Answer. The Air Force uses a time-phased modernization plan that 
synchronizes the size and timing of multiple programs to fit in the 
available budget authority. Our modernization programs are divided into 
four major areas: near-term, near mid-term, later mid-term, and long-
term priorities. Near-term top priority is the procurement of the C-17 
Globemaster III airlifter. This program funds a multi-year procurement 
contract for desperately needed inter- and intra-theather airlift 
capability. Our near mid-term priority is Bomber Conventional Upgrades. 
This funds airframe modifications and procurement of Precision Guided 
Munitions that enhance reliability and capability of our current 
conventional bomber forces. Our later mid-term priority is air and 
space technology. This priority funds the Evolved Expendable Launch 
Vehicle (EELV), Space-Based Infrared System (SBIRS), and Airborne Laser 
(ABL). Our long-term priority is air superiority. This funds the 
Engineering Manufacturing Development (EMD) for F-22 and Joint Strike 
Fighter.
    All of these programs are fully funded in FY98. We do list a line 
item for Precision Guided Munitions on the FY98 Unfunded Priority List. 
This, however, reflects a desire to accelerate the procurement of these 
munitions and their integration rather than a shortfall in the existing 
program. By implementing the time phased modernization plan outlined 
above, we are able to include all these priorities within the available 
FYDP budget. We are able to achieve our modernization objectives 
without creating ``bow waves'' in out-year budgets. This plan ensures 
that the Air Force continues to provide global capabilities to meet 
National Military Strategy requirements.

                           Additional Funding

    Question. Last year, you were very candid about identifying your 
top unfunded requirements to the Committee and working with us to 
provide additional funding for many of them. I hope you will continue 
that cooperation with us. Would you please describe your top unfunded 
priorities and why the fiscal year 1998 budget is not sufficient in 
these areas?
    Answer. Our top unfunded priorities are described in the FY98 Air 
Force Unfunded Priorities List. The Air Force annually reviews all 
programs and priorities based on the available Air Force budget. Given 
current financial constraints, were could not afford the items on the 
FY98 Unfunded Priorities List and stay within the Air Force topline. As 
you can see, the FY98 Unfunded Priorities List accelerates critical 
modernization, readiness, and people programs.
    Question. What are the potential savings if the Congress were to 
provide additional funding in fiscal year 1998 for these items, either 
by buying them earlier than now planned or by lower production unit 
costs through procurement at higher quantities? Please put the costs 
and savings in the record.
    Answer. Our list of unfunded requirements is based principally on 
meeting modernization, readiness, and people requirements, not on 
potential savings. For example, Sensor to Shooter accelerates our 
ability to share digital data among combat platforms. If additional 
dollars are provided, we would fund item on the FY 1998 Unfunded 
Priorities List which may not result in direct financial savings. 
Purchasing these items earlier does afford some cost savings associated 
with inflation. In general, however, the emphasis was on capability 
rather than cost avoidance.
    Question. What are your highest unfunded O&M or personnel 
requirements?
    Answer. The Air Force FY98 Unfunded Priorities List is a 
combination of modernization, readiness, and people programs. Our 
highest O&M and personnel requirements on the list include:

------------------------------------------------------------------------
                    O&M                               Personnel
------------------------------------------------------------------------
Force Protection..........................  Community Support.
KC-135 Depot Maintenance..................  Dormitory Housing.
Real Property Maintenance.................  Family Housing.
                                            Recruit Advertising.
------------------------------------------------------------------------

    Question. Which of these items are on any of the CINC Integrated 
Priority Lists?
    Answer. For the FY98-03 Integrated Priority Lists, four CINCs 
(STRATCOM, PACOM, EUCOM, and SOCOM) listed Quality of Life as IPL 
requirements. Issue #9 (Community Support), issue #12 (RPM) and issue 
#21 (Housing O&M/Construction) on the FY98 Unfunded Priority List 
support these Quality of Life Initiatives.
    The Number 1 items on the FY98 Unfunded Priority List is Force 
Protection. Due to the bombing of Khobar Towers in June 1996, this 
issue was identified by 7 of the 10 warfighting CINCs on their FY99-03 
Integrated Priority Lists. Recognizing this recently arisen critical 
need, the Air Force has fully funded this requirement in the FY99-03 
APOM. CINC EUCOM has publicly stated that Quality of Life Improvements 
remain his Number 1 priority, both on and off his Integrated Priority 
List. EUCOM is the only remaining CINC (of the original four) to carry 
forward Quality of Life from the FY98-03 IPL to the FY99-03 IPL. The 
Air Force is diligently working to fund those programs which support 
this requirement.

             Joint Surveillance Target Attack Radar System

    Question. Secretary Money, last year you provided the Committee 
with a list of priorities for additional funds. On that list, the Air 
Force's number one priority was the procurement of an additional JSTARS 
aircraft. Ms. Secretary, your fiscal year 1998 budget cuts the JSTARS 
program from 2 aircraft to only 1. We now understand that the Air Force 
made this reduction in May of last year at the same time your priority 
list was circulating in Congress. Why did you ask Congress for 
additional funds for a program you were in the process of cutting?
    Answer. If you look at the single year of FY 1998, it appears we 
cut the program. However, a review of our actions across the Future 
Years Defense Program (FYDP) during the same period shows we took 
action to strengthen the program. Due to higher priority requirements 
and fiscal constraints the Air Force decreased FY 1998 procurement 
quantity from 2 aircraft to 1. However, the Air Force also fixed JSTARS 
outyear funding shortfalls caused by procurement cost increases in the 
FYDP as a whole. During FY 1998 Program Objectives Memorandum (POM), 
the Air Force decreased the FY 1998 procurement quantity from 2 
aircraft to 1 and funded all 19 aircraft in the FYDP. During FY 1998 
Budget Estimate Submission (BES), the Air Force de-funded the 
nineteenth aircraft in FY 2003 in anticipation of FY 1997 Congressional 
plus-up. During FY 1998 President's Budget, in consultation with the 
Air Force, OSD re-funded the nineteenth aircraft in FY 1999.
    Question. Would you describe a procurement rate of one as 
``efficient''?
    Answer. The Air Force realizes it is more efficient to buy more 
than one aircraft per year; however, budget constraints precluded that 
in FY 1998. The FY 1998 flyaway cost for one aircraft is $313 million 
and the FY 1999 average flyaway cost for two aircraft is $265 million. 
The average flyaway cost for the JSTARS fleet of 19 aircraft is $261 
million. Current contractor facilities support aircraft induction every 
five months.
    Question. For this coming year, how can we work with you to 
understand the priorities you are committed to sustaining in future 
budgets?
    Answer. Communication is the key to increased understanding of the 
Air Force's commitment to providing the most capable Air Force, both 
today as well as in the future, while operating within a constrained 
budgetary environment. The Air Force has always balanced its 
modernization versus readiness requirements, providing current and 
future capability to deter aggression. We are committed to maintaining 
and increasing our capabilities while minimizing the risk associated 
with modifying program funding profiles. Your awareness of this ``risk 
versus requirement'' dilemma will allow us the flexibility to continue 
to provide the most capable Air Force both now and in the future.

                              NATO JSTARS

    Question. The FY 1998 budget proposes a new start program to 
provide NATO with its own JSTARS aircraft. Since NATO has not decided 
it wants JSTARS, the administration decided to budget for much of the 
US cost share up front to keep the program on a fast track. Please 
explain the benefits of the NATO JSTARS program.
    Answer. Employment of Joint STARS to satisfy NATO's Alliance Ground 
Surveillance (AGS) requirements provides several political and military 
advantages. Politically, it provides a cooperative development 
opportunity, reinforcing Alliance solidarity, at a time when common 
military goals and defense needs in Europe are at a critical junction. 
Militarily, it provides NATO with a common ground surveillance 
capability building on US combat experience and concepts of operation. 
It reduces taskings on US force structure to operate in NATO areas of 
responsibility (AORs), such as Bosnia. At the same time, NATO's core 
capability would be interoperable with reinforcing US elements in a 
broader crisis. In addition to the political and military advantages, 
cooperative development of system improvements reduces the cost of 
upgrades to the US fleet.
    Question. Estimates of the US share for NATO JSTARS range from $800 
million to $1.3 billion. Secretary Money, what is your best guess of 
the final US share?
    Answer. US estimates will vary relative to number of NATO nations 
that participate in the program. The minimum cost estimate of $800 
million reflects the maximum number of participating NATO nations (16). 
The maximum cost estimates of $1.3 billion is based on the 
participation of approximately 12 NATO nations. Until a decision is 
made, we have no better estimate.
    Question. Why does the budget plan include only $318 million for 
the program, less than half of even the low estimate of the US share?
    Answer. The out-year US budget will be determined in the FY00 
Program Objective Memorandum (POM) after actual cost shares and program 
scope are determined. The Conference of National Armaments Directors 
(CNAD) will decide on the procurement of a fixed wing core capability 
in November 1997
    The US has budgeted the cost necessary to keep the Alliance Ground 
Surveillance (AGS) program on the ``fast track'' schedule to deliver 
NATO an AGS capability by 2000. The $318 million (Air Force and Army) 
in the US budget pays for all but $100 million of the total program 
effort in FY 1998 and 1999. We expect NATO to fund the remaining $100 
million in FY 1999. The $318 million the US invests up front would be 
credited to the total US contribution.
    Question. What are your plans to budget for the balance of the 
funding requirement?
    Answer. The Conference of National Armaments Directors (CNAD) will 
decide on the procurement of a fixed wing core capability in November 
1997. The out year US budget will be determined in the FY00 Program 
Objective Memorandum (POM) after actual cost shares and program scope 
are determined.
    Question. Are the efforts funded in FY 1998 unique to NATO 
requirements, or could they benefit the US JSTARS program?
    Answer. The $32.6 million of Air Force RDT&E funding is for NATO 
unique requirements with $3.5 million of that among for system program 
office operations. The FY 1998 efforts are focused on modifications to 
facilitate operations in NATO. These funds will benefit the US program 
indirectly by improving its interoperability with the NATO Command and 
Control System.
    Question. Is it prudent to initiate this costly NATO program at the 
expense of other modernization priorities, including the US JSTARS 
program?
    Answer. Initiation of this program benefits the US program because 
the cooperative development effort includes some radar upgrade work 
planned, but not funded in the US program. Reduced Operations Tempo 
(OPTEMPO) and Personnel Tempo (PERSTEMPO) demands on US forces and 
systems also provide cost avoidance.

                         Airborne Laser Program

    Question. Last year, the Air Force requested funds to initiate a 
program that will integrate a high power laser into 747 aircraft with 
the mission to destroy tactical ballistic missiles in the boost phase. 
The program will develop, procure, and operate 7 aircraft at a cost of 
$11 billion. Mr. Secretary and General Muellner, one of the major areas 
of risk on this program is taking existing laser technology and 
reducing its weight sufficiently for aircraft use. What is the current 
weight of the existing ground laser demonstrator?
    Answer. The weight of this ground demonstrator is 5,535 pounds. 
This was a ``non-flightweighted'' prototype laser module designed to 
demonstrate the Contractor's ability to meet power and chemical 
efficiency requirements.
    Question. What is the weight requirement for the laser module that 
will go on the aircraft? What are the Air Force weight reduction 
proposals for meeting this requirement?
    Answer. The flightweighted laser module weight requirement is 2,920 
pounds. The laser module design successfully met its weight requirement 
at the Critical Design Review an dis being manufactured now using 
composite, plastic, and milled-out metal components.
    Question. Another area of risk on the program is our lack of 
detailed understanding of atmospheric conditions in the regions of the 
world where we would expect to use the laser. How much does the 
atmospheric conditions affect the operation of the laser? How would you 
characterize our understanding of these conditions?
    Answer. Atmosphere does affect the Airborne Laser's (ABL) lethal 
laser range and laser dwell time performance. As atmospheric conditions 
worsen, the dwell time required to destroy theater ballistic missiles 
increases and additional laser fuel is consumed. The ABL will 
predominantly engage missile at co-equal or higher altitude, well above 
most of the earth's atmosphere. Therefore, a large majority of the 
potential atmospheric impact is eliminated by flying and engaging 
missiles at a high altitude. Currently, a wide range of ``real world'' 
atmospheric conditions are included in our models, simulations, and 
tests. Results of these efforts show ABL will meet the user's 
operational requirements with margin.
    We are confident we understand the environment and have collected 
sufficient atmospheric data to establish the ABL design point. To 
increase our knowledge of the atmosphere's variability, we will 
continue to expand the existing database by collecting atmospheric 
measurements worldwide.
    Question. Please outline the other areas of risk for this program 
and how you plan to manage these risks?
    Answer. Risk management is an integral component of the Airborne 
Laser (ABL) systems engineering process and documented in the 
Integrated Task and Management Plan. In addition to the risk management 
of issues associated with aircraft weight and the atmosphere, other 
risk areas identified include beam control and software development. 
The government/contractor team is mitigating beam control risk by 
performing: (1) scaled beam control tests at Phillips Lab and MIT's 
Lincoln Lab; (2) functional tests on the contractor's beam control 
brassboard; (3) active illuminator laser tracking of boosting missiles 
at White Sands Missile Range; and (4) integrated weapon system beam 
control tests at low and high power.
    The ABL team is mitigating software development risk by: (1) using 
best commercial practices; (2) emphasizing commercial and government 
off the shelf software reuse; (3) focusing on open systems 
architecture; (4) identifying software development as award fee 
criteria; (5) early rapid prototyping in the software integration lab; 
and (6) establishing an outside software risk reduction team for 
independent oversight.
    Question. The Ballistic Missile Defense Office is charged with the 
mission of prioritizing and funding tactical missile defense. yet, the 
Air Force has chosen to fund the Airborne Laser program internally 
independently of BMDO. Why is the Air Force committed to funding this 
ambitious program even at the expense of other Air Force priorities?
    Answer. In 1992, as a result of HR 5006, Congress directed all SDIO 
(now BMDO) programs that would not be fielded within 10 years be 
transferred to the appropriate service. The Airborne Laser (ABL) was 
subsequently transferred to the Air Force. The Air Force then fully 
funded the ABL in the FY98 Program Objective Memorandum.
    The Air Force is committed to the ABL program because it is a key 
element of the Air Force's 21st Century architecture and Join Vision 
2010. It is a truly revolutionary system which contributes directly to 
each of the Air Force's core competencies: air superiority; global 
attack; rapid, global mobility; precision engagement; information 
superiority' and agile combat support. ABL's maximum potential as a 
multi-role platform is still to be determined and, as a result, the Air 
Force is conducting studies to fully exploit its capabilities. These 
potential additional missions include cruise missile defense, 
suppression of enemy air defense, imaging surveillance, and high value 
airborne asset protection which includes self-defense.
    Question. As you are aware, DoD is pursuing several programs to 
counter the tactical ballistic missile threat. How do you respond to 
the concern that the next available missile defense dollar should go 
towards reducing the risk on these core systems rather than towards a 
new system?
    Answer. Funding Airborne Laser (ABL) will greatly enhance the Joint 
Theater Missile Defense (TMD) architecture. Although not designated one 
of the original core programs, ABL is now a fundamental component of 
the multi-layered TMD architecture and will provide many unique 
capabilities to the theater commander. By destroying missiles early in 
their boost phase of flight, ABL will become the first layer of active 
defense and will enhance the overall effectiveness of the 
architecture's ``system-of-systems.'' Destroying missiles early in 
their flight is an enormous deterrent against weapons of mass 
destruction as the theater ballistic missiles will potentially fall 
back on the enemy's own territory. ABL also provides the architecture a 
more robust capability against potential TMD countermeasures like early 
release of missile submunitions, decoys, and well coordinated mass 
raids. In addition, the ABL can self-deploy within hours to anywhere in 
the world, rapidly providing a force projection capability for our 
deploying forces.
    Question. Please discuss the other missions that could be performed 
with the Airborne Laser and which of these you are already committed to 
incorporating into the baseline system.
    Answer. The Airborne Laser (ABL) is currently being designed for 
the primary mission of Theater Missile Defense; however, the Air Force 
envisions the ABL will mature into a multi-role platform due to the 
inherent capabilities of the high energy laser. To maximize ABL's 
revolutionary capabilities, the Air Force is studying adjunct missions 
during the Program Definition and Risk Reduction (PDRR) phase for 
possible inclusion into the ABL baseline in the Engineering and 
Manufacturing Development (EMD) phase. The adjunct missions are imaging 
surveillance, cruise missile defense, suppression of enemy air defenses 
and high value airborne asset protection which includes self-
protection.
    Formal studies will evaluate weapon system modification risks, 
costs, and benefits of performing the adjunct missions. Modest efforts 
were begun on these studies in FY97; however, the bulk of the study 
efforts will be performed in FY98/FY99. The studies will be completed 
prior to PDRR Critical Design Review in 1999. Decisions will be made at 
the time for inclusion of any of the adjunct missions into the EMD 
baseline.

                 Acquisition Cycle vs. Technology Cycle

    Question. We are all too familiar with the accelerated pace of 
technological change these days. A home computer we buy today can be 
outdated in as little as 15 months. In some cases, software can be 
outdated in just 6 months. For the military, the problem is especially 
acute because of the years required to develop and field new weapon 
systems. Secretary Money, what is the Air Force doing to address this 
serious issue, especially in the area of computers that permeate our 
aircraft, missiles, and command and control systems?
    Answer. We are implementing Open Systems. The Open Systems approach 
encourages the use, where applicable, of commercial products, 
processes, specifications, and standards. By relying more on commercial 
products and standards, we expand the industrial base for acquisition 
and sustainment and we are better positioned to deal with obsolescence 
and the need to incorporate new technology.
    A key thrust of Open Systems is ``performance-based requirements.'' 
Emphasis on performance relies on the idea that we can reduce costs by 
eliminating government ``how to'' requirements up front in weapon 
systems acquisition. Management of performance at the interface level 
instead of detailed parts encourages the use of components across a 
wide range of systems and, when necessary, facilitates replacement with 
state-of-the-art (commercial) technologies.
    In addition, we are striving through various acquisition reform 
efforts to drive the acquisition cycle inside/within the technology 
cycle of computers, software and deploy thus enabling the Air Force to 
deliver equipment/capability in the same technology generation as it 
was conceived.
    Question. Your statement talks about fitting he acquisition cycle 
within the technology cycle. How do you propose to do this, especially 
with large and complex weapon systems?
    Answer. One of the primary tenets of acquisition reform has been 
cycle time reduction. Systems bound by over regulation and inefficient 
processes simply cannot get ``rubber on the ramp'' before the newly 
fielded equipment is technologically (or possibly operationally) 
obsolete. This past year, I announced ``Lightning Bolt #10,'' a reform 
initiative chartered to examine the acquisition cycle and look for 
innovative, ``out-of-the-box'' ways to reduce the time it takes to get 
from a defined need to fielded hardware. The Lightning Bolt #10 team 
focused on the critical time between receipt of a warfighter 
requirement and contract award. Their final report identified 63 best 
practices and 14 recommendations for statutory and regulatory relief 
that, when implemented, could reduce the time it takes to get on 
contract by as much as half. And this is only the beginning. Our 
strategic goals incorporate our desire to achieve cycle time reductions 
throughout all phases of a system's life. We are just beginning to get 
our hands around the crucial processes and practices that drive cycle 
time. Re-engineering these practices is our long-term goal.
    Let me illustrate with a specific example. Air Force Materiel 
Command's Electronic Systems Center (EXC), located at Hanscom AFB, 
Massachusetts, is rapidly moving forward in its implementation of a 
``spiral development process,'' a revolutionary concept in the 
acquisition of computer hardware and software. Spiral development is 
unique in that it is designed to respond to user requirements within 
the context of the commercial computer industry, where hardware can 
become obsolescent in less than two years. It became apparent to the 
managers and engineers at ESC that the standard, conservative way of 
doing business was ensuring that old hardware ended up in the 
warfighter's hands--better machines and software could be purchased on 
the open market. EXC is constructing a process which will move new 
equipment to the user in 18 months--a real-life example of ``fitting 
the acquisition cycle inside the technology cycle.''
    Question. Is it true that the F-22 will become operational in FY 
2004 with so-called ``486'' processors that are at least two 
generations older than the ``Pentium Pro'' processors available today 
for our kids to use at home?
    Answer. The F-22 does not use the 486 processor--the F-22 main 
processor is the Intel 80960, a 32 bit superscaler device more 
comparable to a Pentium processor than the 486. The current processor 
will meet the warfighters' needs at the lowest cost with acceptable 
technical risk when the F-22 becomes operational in FY 2005 (November 
2004). However, the F-22 plans to upgrade to a faster processor and 
decrease the number of processors in production Lot 6 (FY04) with a 
decrease in recurring cost. Significant nonrecurring cost is required 
to ``chase'' the latest technology, our mandate is to meet the 
warfighters' needs at the lowest total cost.
    Question. Is there some way we can field our most modern and 
sophisticated aircraft with modern computer technology?
    Answer. To minimize concurrency and avoid multiple redesign costs, 
a technology baseline must be established prior to critical design 
review. Moreover, significant nonrecurring cost is required to 
``chase'' the latest technology. The F-22 plans to upgrade to newer 
technology in an incremental fashion by grouping lot buys. The goal is 
to make all hardware within a group identical. Hardware across groups 
may not be identical, but will be form, fit, function and interface 
compatible and transparent to the warfighter. The F-22 mandate is to 
achieve a producible design that meets the operational need at the 
lowest cost with acceptable technical risk.

                Making the Air Force More Expeditionary

    Question. The Air Force is increasing its emphasis on expeditionary 
forces, able to deploy from the United States in a matter of days or 
even hours. Improving this capability requires changes in the way we 
organize, equip, and support our forces. Secretary Money, can you tell 
us what you are doing on the acquisition side to become more 
expeditionary?
    Answer. The acquisition community enhances the USAF's ability to 
become more expeditionary by addressing the first three components of 
the Air Force's four element modernization plan--time phased 
modernization, managing programs effectively, and revolutionizing 
current business practices. The warfighter depends on us to conduct 
fast-paced acquisitions which can seize upon developing technologies, 
enabling our forces to respond in near real-time to the exigencies of 
the moment. Our success or failure will be measured by our ability to 
re-create business practices that can respond quickly, flexibly, and 
cost effectively, and which can leverage the commercial marketplace for 
new technology to apply to both new and existing systems. Air Force 
acquisition's ability to bring tools to the warfighter ``faster, 
cheaper, and better,'' has already contributed significantly to this 
nation's ability to employ expeditionary air forces. Allow me to 
illustrate with three examples.
    The advanced concept technology demonstrators are one means of 
accelerating the technology development process and fielding 
applications more expeditiously. Predator UAV use in Bosnia is one good 
example of this approach.
    Our weapons' development programs are remarkable success stories in 
our quest for cost control through acquisition streamlining. The recent 
contractor downselect of the Wind Corrected Munitions Dispenser (WCMD) 
highlights this potential for cost avoidance. Originally projected to 
come in at $25,000 per tailkit, both competing contractors submitted 
proposals for under $10,000 unit cost, reflecting a total program 
savings of over $850M--money which could be used to support additional 
needs of the AEF.
    The F-22 will provide the battlefield air dominance prerequisite 
for successful joint expeditionary warfare in the 21st century. It is 
incumbent on the Air Force acquisition community to bring this 
revolutionary capability into the inventory on cost, on schedule.
    All that having been said, however, we must not lose sight of the 
fact that for an AEF to be effective, it must deploy rapidly--
minimizing airlift requirements is a key enabler of this capability. 
The Air Force has recently ``stood up'' an AEF Battle Lab at Mountain 
Home, who's charter includes exploring ways to reduce the logistics 
``footprint'' of all deployable weapons systems--new, as well as 
fielded. Acquisition's greatest air expeditionary impact will be felt 
by delivering products tailored to reduce deployment requirements. Here 
are several examples.
    Our newest platform development programs, the Airborne Laser (ABL), 
the F-22, the Joint Strike Fighter (JSF), and the CV-22 are all 
designed with supportability in mind. The ABL is a self-deployable 
weapons system which can arrive worldwide within 24 hours, providing 
ballistic missile defense for both-in-place and deploying allied 
forces. In the fighter arena, the F-22 and the JSF are both committed 
to reducing, by over half, the current number of aircraft C-141 
equivalents required to deploy a squadron of comparable earlier 
generation fighters. In support of special operations, the CV-22 will 
eventually replace 88 rotary and fixed wing aircraft of various types, 
simultaneously increasing capability as well as reducing the deployment 
logistics burden currently imposed by an aging and diverse fleet.
    For our fielded fighters, there are several notable examples of the 
progress being made in reducing ground support equipment. In both the 
F-15 and F-16 the Avionics Intermediate Shop (AIS) will soon by 
replaced by a more capable and consolidated array of avionics test 
equipment, resulting in an airlift-required reduction of over 2 C-141 
equivalents per squadron deployed. The F-16 is also migrating to an on-
board oxygen generating system (OBOGS) staring in 2001, which will 
entirely eliminate the current liquid oxygen (LOX) squadron deployment 
requirement and free up another one-half of a C-141 equivalent.
    The Conventional Mission Upgrade Program (CMUP), which is an 
ongoing effort to increase B-1 combat capability through lethality, 
survivability, and supportability, will make its logistics mark through 
a significant improvement in the defensive countermeasures system it 
upgrades. The current 17.5 hour mean-time-between-failure (MTBF) ALQ-
161 system of 120 line replacement units (LRUs), weighting over 5000 
lbs, will be supersedes by a more capable installation of only 34 LRUs, 
weighting 1000 lbs, with a MTBF of 112 hours--dramatically reducing the 
deployment requirements of this backbone of the bomber fleet.
    As you are well aware, the acquisition community was instrumental 
in facilitating multi-year procurement of the evolving core of our air 
expeditionary airlift capability, the C-17. This aircraft, with its 
high launch reliability, ease of maintenance, as well as its superb 
ground maneuverability and rapid onloading/offloading capability, can 
globally transport more people and equipment into austere or 
constrained airfields than any other airlifter.
    Finally, current weapons' developments are engaged in a two-pronged 
attack on deployment footprints. First, given the inherent adverse 
weather capability and improved accuracy of our newest Precision Guided 
Munitions, the number of aircraft sorties necessary, as well as the 
number of bombs expended, to destroy a given target will dramatically 
decrease. Depending on the CINC's campaign plan, this factor will allow 
him the flexibility to shift some of the airlift normally reserved for 
large quantities of (dumb) munitions to other priorities. Second, 
several in-development miniaturized munitions, such as the ``small 
smart bomb,'' have the potential to be as lethal as currently fielded 
counterparts 2 to 4 times their size. Such munitions could permit the 
Air Force to carry more weapons per platform, as well as significantly 
reduce the logistics footprint of the total number of weapons deployed 
to a given theater.
    Question. Are there areas that require further attention in your 
view?
    Answer. The acquisition community must continue to be proactive in 
sponsoring the supportability upgrades which contribute to the overall 
health and deployability of our maturing fleet. Even though initial 
fielding of our newest developmental weapons systems--those which have 
a reduced logistics footprint designed in--will commence in the not too 
distant future, we must remain conscious of the fact that a viable AEF 
will depend on our current aircraft inventory for a number of years to 
come.
    Question. Your statement mentions ``Agile Combat Support'' and 
``Focused Logistics''. Please explain these concepts as they relate to 
the Air Force.
    Answer. Agile Combat Support will improve transportation and 
information systems to allow time-definite resupply, reduce the lift 
requirement to get materials and troops to the field, and streamline 
the infrastructure providing parts and supplies to reduce cycle times. 
Agile Combat Support will yield the revolution in combat support 
discussed in Joint Vision 2010's tenet of Focused Logistics.
    Focused Logistics will be the fusion of information, logistics, and 
transportation technologies to provide rapid crisis response, to track 
and shift assets even while enroute, and to deliver tailored logistics 
packages and sustainment directly at the strategic, operational, and 
tactical level of operations. The operational concept of Focused 
Logistics will provide the Joint Force Commander with an Air Force that 
is more mobile, responsive, efficient, and significantly more potent. 
Future Air Force logistics will maximize both technology and resource 
management reinvention techniques to achieve and provide unparalleled 
combat power to the joint warfighter.

                           B-2 Bomber Program

    Question. Gentlemen, last year the Congress added funding to 
accelerate integration of advanced precision weapons on the B-2. Does 
the FY98 budget continue this integration at the accelerated pace?
    Answer. The accelerated weapons programs funded with the FY97 $116 
million Congressional Add are fully funded and require no additional 
funds in FY98. The Air Force will use the FY97 Congressional Plus-up to 
integrate:
           GPS Aided Munition (GAM) 113: Very Hard Target Kill 
        Capability;
           Joint Stand-Off Weapon (JSOW); and
           Generic Weapons Integration System (GWIS): Reduces 
        Cost and Schedule to Integrate Additional Weapons.
    Question. Compare the IOC for each advanced precision weapon on the 
B-2 between last year's Air Force budget plan this year's.
    Answer.

------------------------------------------------------------------------
          Precision weapon                FY97 PB            FY98 PB
------------------------------------------------------------------------
GAM (2000-POUND)...................  FY96.............  FY96
JDAM (2000-POUND)..................  FY98.............  FY98
GAM-113 (4700-POUND)*..............  N/A..............  FY98
JSOW (1000-POUND)*.................  N/A..............  FY99
JASSM..............................  FY02.............  FY03
------------------------------------------------------------------------
*Funded with FY97 $116 million RDT&E Congressional Plus-up.

    Question. Your budget plan this year cut $212 million from the B-2 
in fiscal year 1999 as compared to last year's plan. Please explain 
what was cut and why.
    Answer. Air Force reduced B-2 fiscal year 1999 RDT&E funding by 
$212 million during fiscal year 1998 PB deliberations to resolve Air 
Force funding shortfall. Impacts of this reduction:
           Eliminates Block 30 Upgrade of two EMD test 
        aircraft, and
           Delays JASSM IOC one year to FY03.
    Partial restoration of funding shorfall currently being worked in 
Air Force POM process:
           Accepts one Block 30 aircraft delivery on time, one 
        nine months late, and
           Accepts JASSM IOC of FY03.
    Question. Secretary Money, what is the Air Force's cost estimate to 
procure nine additional B-2 aircraft starting in FY 1998? For the 
record, please provide a funding profile, by year, reflecting the Air 
Force cost estimate.
    Answer. The Air Force has no government estimate since we have no 
requirement. We have never requested the Program Office to prepare an 
estimate. Such a detailed estimate would require in excess of 120 days 
(150 days and several million dollars).
    Question. From an acquisition standpoint, what are the pros and 
cons of buying additional B-2s starting this year?
    Answer. The Air Force does not plan to buy more than 21 operational 
B-2s:
           Funding for more B-2s is not practical within 
        current Air Force budget and force structure, and
           Additional B-2s would contribute significantly to US 
        combat capability--however, issue is affordability, not 
        capability.

                             C-17 Aircraft

    Question. Mr. Money, can you update the Committee on the status of 
the C-17 multiyear contract?
    Answer. The C-17 multiyear contract is on track, and will save 
$1.025 billion over seven years. The airframe contract was signed on 1 
Jun 96 for the last 80 C-17s. The associated engine multiyear contract 
option was awarded in December 96. It provides for 320 Pratt & Whitney 
engines, which are derivatives of the commercial Boeing 757 engine. The 
first multiyear contract aircraft is the P-41, which will be delivered 
summer of 1998.
    Question. The Committee is aware of concerns from the Army 
regarding the suitability of the C-17 for airdropping soldiers and 
equipment and landing on semi-prepared runways. Can you explain these 
issues and the status of their resolution?
    Answer. The C-17 airdrop issues are resolved. On 31 Jan 97, six C-
17s in formation airdropped 612 paratroopers, successfully completing 
the Air Force/Army formation personnel airdrop test effort. This effort 
validated the formation spacing required to prevent paratroopers from 
interacting with aircraft wake vortices.
    The Air Force will work with the Army to procure and field a 
universal static line and continue follow-on operational testing to 
further develop airdrop tactics. There is no issue with equipment 
airdrop--C-17s are routinely performing this mission. Minor 
modifications to airdrop systems and some changes to airdrop procedures 
resulted from operational experience.
    Joint test effort exists to characterize the C-17's capability to 
operate routinely on semi-prepared runways. Testing involves numerous 
measurements of semi-prepared surfaces to quantify their effect on C-17 
performance. This information is then input into the C-17 mission 
computer so the aircrew can predict aircraft performance. Testing also 
helps identify expeditionary runway design criteria, construction 
procedures, equipment requirements, and maintenance criteria. Data 
collection was accelerated. Planned capability release in the Summer of 
1997.
    Question. As you know, one of the criteria for multiyear 
contracting is stability in design. The budget this year includes 
additional funding for several configuration changes to the aircraft 
that were not planned last year including precision approach 
modifications, a new radio, dual row airdrop, and a CINC communications 
program called Silver Bullet. From FY 1998 to 2003, the same period as 
the multiyear, the Air Force plans to spend $882 million in research 
and development for the C-17. Gentlemen, is the C-17 configuration 
stable during the multiyear?
    Answer. The C-17 configuration is stable under the multiyear 
strategy, but a changing world and the aircraft's computer-intensive 
design result in new requirements and the need for upgrades. The 
environment in which the C-17 operates is not stable. Evolving 
requirements of the International Civil Aviation Organization and the 
Federal Aviation Administration concerning future air traffic control 
systems and air navigation system are forcing major avionics changes 
Air Force-wide. The Air Force is developing Global Access, Navigation & 
Safety roadmaps.
    CINCTRANS has identified the requirement for a precision approach 
capability for rapid deployment to austere airfields, based on 
operational limitations experienced in deploying to Bosnia last year. A 
modification is being developed to meet that requirement.
    Question. Why do we need to spend another $822 million in research 
and development on this aircraft?
    Answer. Operational experience continues to highlight areas for 
improvement as occurs with any new aircraft. R&D investment sustains 
computer-intensive aircraft (like F-15 and F-16) and integrates new 
required capabilities. Changes in avionics and tactics drive software 
changes. Software changes in one computer affect software in other 
computers because of the high degree of integration in the aircraft. 
All enhancements are retrofitted into delivered aircraft and 
incorporated in the production line to ensure the user a homogeneous 
fleet of aircraft.

                        Mission Planning Systems

    Question. The Air Force and Navy have developed separate aircraft 
mission planning systems that perform almost identical functions. To 
operate the two systems--the Air Force Mission Support System (AFMSS) 
and the Navy Tactical Aircraft Mission Planning System (TAMPS)--draw 
information from various databases including digital map databases, 
weather databases, threat databases, etc. Unfortunately, the Navy and 
Air Force use separate databases at tremendously added cost. Mr. Money, 
how much money is the Air Force spending on its mission planning system 
in FY 1998, including all funding from individual aircraft and weapon 
program?
    Answer. The Air Force is spending approximately $136.4 million in 
FY 1998 to support mission planning. Of that amount, $56.4 million 
funds the Air Force mission planning system core software and hardware 
in support of the AFMSS and sustainment of several legacy mission 
planning systems. This reflects continuation of new software 
development and procurement of ground and portable workstations, and 
hardware retrofit. It continues over 50 Aircraft/Weapons/Electronics 
(A/W/E) integration efforts, interoperability with Command, Control, 
Communications, and Intelligence Systems and major data base producers, 
and research and development for Global Command and Control System 
migration. This also includes annual operating and maintenance costs. 
Most of the dollars, nearly $80 million, funds over 50 A/W/Es which 
there is little overlap between USAF and USN. These A/W/Es are service 
unique, platform specific, require specialized system software, and 
discrete digital Transfer Devices. They are programmed in the 
individual aircraft and weapons system program elements.
    Question. Mr. Money, in your opinion, does it make sense for the 
two services to develop incompatible mission planning systems?
    Answer. The services recognize the value of a common mission 
planner. Since the 1993 initiation of the Interservice Mission Planning 
Working Group, the Air Force and Navy have pursued joint efforts to 
achieve compatibility. To date, joint efforts with proven success 
include: standard data for fuel planning, current development of stores 
planning/weaponeering application, shared Precision Guided Missile 
target sets, and a common data base for imagery and digital maps 
provided by the National Imagery and Mapping Agency. The Air Force and 
Navy are finalizing a memorandum of agreement which addresses a joint 
migration strategy to pursue a Defense Information Infrastructure, 
Common Operating Environment. The objective is to field a Global 
Command and Control System complaint, interoperable mission planning 
system which meets the requirements of each service.
    Question. Is there a plan in DOD to eventfully migrate the Air 
Force and Navy systems towards common modules and databases? If so, can 
you discuss the schedule? Can the schedule be accelerated? At what 
cost?
    Answer. The Air Force and Navy are currently developing a plan and 
acquisition strategy to jointly pursue Air Force and Navy mission 
planning system migration to the Global Command and Control System 
(GCCS). Our objective is to field a GCCS complaint mission system which 
meets the requirements of each service by 2002. The migration plan will 
focus on evolutionary development to a Defense Information 
Infrastructure, Common Operating Environment. A Joint Integrated 
Process Team was chartered to produce an acquisition strategy to 
develop common mission planning components. Discussions on schedule, 
costs, and programmatics started on 6 Mar 1997. It is too early in the 
migration process to establish a firm schedule and cost figures. Most 
importantly, planned migration efforts can not distract from our first 
priority, which is to keep the current Air Force and Navy programs on 
track to deliver an operational system that satisfies the users' 
current operational requirements.
    Question. Please characterize the amount of savings you would 
expect if these mission planning systems become more common?
    Answer. The migration plan and acquisition strategy currently under 
development will address the cost savings potential. Currently, it is 
premature at this stage in our migration study efforts to estimate cost 
savings. Our objective is to seek savings in software engineering and 
development, hardware procurement, and operations and maintenance.

                         F-16 and F-15 Aircraft

    Question. The FY 1998 budget includes just 3 tactical combat 
aircraft--all F-15E Strike Eagles. The budget includes no funds for 
additional F-16's. What is your total requirement for F-16's?
    Answer. Beginning with the FY 1998 budget, the Air Force 
requirement for F-16C aircraft is 1340. This number includes combat 
coded, test, training, backup, and attrition reserve. The Air Force has 
funded 1312 F-16C aircraft through FY 1997. There is no procurement of 
F-16C aircraft funded in the FY 98 President's Budget, leaving the Air 
Force 28 aircraft short of its requirement.
    Question. What is the funded inventory through FY 1997?
    Answer. The Air Force has funded 1312 F-16C aircraft through FY 
1997. There is no procurement of F-16C aircraft funded in the FY 98 
President's Budget, leaving the Air Force 28 aircraft short of its 
requirement.
    Question. Why didn't the Air Force budget for additional F-16s in 
FY 1998?
    Answer. The Air Force procured twelve F-16C aircraft in the FY 1996 
and FY 1997 budgets. In FY 1998, continued severe funding constraints 
forced the Air Force to fund other higher priority programs.
    Question. What is the current status of the media reported Saudi 
FMS interest in the F-16?
    Answer. There has been no formal request from the Kingdom of Saudi 
Arabia (KSA) for the purchase of F-16 aircraft. The Saudi Arabian 
Minister of Defense and Aviation announced publicly that he did not 
intend to discuss an aircraft sale when he visited Washington in 
February, and the issue was not discussed in his talks with the 
Administration, including Secretary of Defense Cohen.
    Question. What is the funded backlog of F-16s, including FMS?
    Answer. Please see the attached delivery schedule, representing the 
delivery of currently funded USAF and FMS F-16 aircraft orders. While 
the chart depicts expected deliveries of the FY97 USAF F-16 buy of six 
aircraft, please note all funding for the FY97 buy ($154.9 million) is 
currently on OSD withhold.
    [Chart follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    
    Question. What is the total F-15E requirement?
    Answer. Beginning with the FY 1997 budget, the total requirement 
for F-15E aircraft is 219. This number includes all combat coded, test, 
training, backup, and attrition reserve. The funded inventory of F-15E 
aircraft through FY 1997 is 213. There is funding for the procurement 
of three additional F-15E aircraft in the FY 98 President's Budget, 
leaving the Air Force three aircraft short of its requirement.
    Question. What is the funded inventory through FY 1997?
    Answer. The funded inventory of F-15E aircraft through FY 1997 is 
213. There is funding for the procurement of three additional F-15E 
aircraft in the FY 98 President's Budget, leaving the Air Force three 
aircraft short of its requirement.

                         F-16 and F-15 Engines

    Question. Defense Daily reported that General Hawley, head of Air 
Combat Command and General Donald Sheppard, head of the Air National 
Guard, have complained of constant, costly problems with thousands of 
F-15 and F-16 engines. Can you tell Congress about the problems with 
these engines?
    Answer. Statistically the F100 and F110 series engines have been 
the safest fighter engines in USAF history, but safety and maintenance 
problems continue during operations. The biggest concern is related to 
vibrational stresses in the fan area and high thermal and mechanical 
stresses in the turbines. Other parts of the engines have also had 
problems, but their impact has not been as serious. Corrective action 
plan are developed and executed as new failure modes are encountered. 
Root causes for all these problems have been identified, field risk 
management procedures are in-place, and corrective actions are being 
developed and implemented. Some hardware redesigns are being developed 
under the Component Improvement Program (CIP) and these changes are 
aggressively being qualified and incorporated. Until fixes are 
implemented, operational units are performing more frequent inspections 
and failure-prone parts are being replaced more often.
    Question. The (20 Feb Defense Daily) article suggested that engine 
components were not being installed in a timely manner because of 
budget problems. How do you respond to this?
    Answer. The budget is adequate to fix all engines safety problems, 
however, additional funding could be used to address reliability and 
maintainability (R&M) problems. The solutions to the majority of 
current safety problems require hardware redesigns and retrofits. All 
identified safety redesigns have been completed or are well on their 
way to completion. MAJCOMs have committed to the incorporation of these 
redesigned/improved parts by identifying funds required to retrofit 
their fleets. The strategy and pace for each hardware retrofit program 
represents a balance of risk, hardware availability, maintenance 
workload, readiness and funding. The impact of safety issues on scarce 
Component Improvement Program (CIP) and MAJCOM modification and 
operations and maintenance (O&M) funding is significant though, and 
severely limits our ability to fix non-safety R&M problems. Additional 
funding for the CIP program to support reliability and maintainability 
upgrades is currently #7 on the Chief of Staff of the Air Forces' FY98 
unfunded priority list.
    Question. Last year, the Congress added funds for the F-15C/D 
engine upgrade. The Committee was pleased to see that the Air Force 
continued this program in the FY 1998 budget. Will this upgrade program 
address the problems experienced by ACC and the Air National Guard? 
What else can be done to address this problem?
    Answer. The F-15 C/D engine upgrade is not currently planned for 
ACC or the Air National Guard. The engine upgrade program converts 
existing F100-PW-100 engines to the F100-PW-220E configuration on F-15 
C/D aircraft overseas (at PACAF and USAFE) where there is the highest 
payback. Meanwhile, every effort is being made to incorporate fixes for 
all F100-PW-100 safety issues. The Component Improvement Program (CIP) 
is used to fix safety and reliability and maintainability problems on 
existing engines. CIP is adequately funded to support all known safety 
problems, however, funding for non-safety reliability and 
maintainability is limited. Additional funding for the CIP program to 
support reliability and maintainability upgrade is currently #7 on the 
Chief of Staff of the Air Forces' unfunded priority list.

                 Joint Air-to-Surface Standoff Missile

    Question. JASSM is a highly accurate stealthy cruise missile that 
will be launched from Air Force and Navy strike aircraft and Air Force 
long range bombers. Please update the Committee on the status of the 
JASSM program.
    Answer. JASSM is finishing up the 9th month of the 25.5 month 
Program Definition and Risk Reduction phase. Both Lockheed Martin and 
McDonnell Douglas have completed their preliminary design and have 
entered the critical design phase on hardware and software items. In 
addition, both contractors are well into air vehicle development--to 
include extensive modeling and simulation efforts as well as wind 
tunnel testing on threshold aircraft (B-52H, F-16C/D, F/A-18E/F). The 
Air Force is generally satisfied with the contractors' progress on 
JASSM.
    Question. Now that the development contracts have been awarded, 
what is the total development cost currently projected? What is the 
total procurement cost?
    Answer. The total development cost currently projected for JASSM is 
$716.8 million of which $648.5 million is funded by the Air Force and 
$68.3 million is funded by the Navy. The Air Force funding for 
development includes the Program Definition and Risk Reduction (PDRR) 
contracts awarded to Lockheed Martin and McDonnell Douglas in June 
1996, the Engineering and Manufacturing Development (EMD) contract to 
one of those two contractors in July 1998, integration of JASSM on the 
Air Force threshold aircraft (F-16 Blk 50 and B-52H), all required test 
support (flight test, live fire test, aircraft modifications, target 
construction, etc), and associated program and mission support costs. 
The Navy funding for development includes integration on the Navy 
threshold aircraft (F/A-18E/F) and testing unique to the Navy 
requirement. The Air Force missile procurement budget is $1,793.4 
million for the programmed buy of 2400 weapons. The Air Force's 
requirement for production funding begins in FY00 for low rate initial 
production. The Navy currently has no funds in the FYDP for JASSM 
procurement.
    Question. What are the major areas of risk on the program?
    Answer. The Joint Program Office has identified the following two 
areas as potential schedule risks for the overall JASSM development 
effort:
    a. F-16 aircraft integration (moderate risk). The F-16 Operational 
Flight Program (OFP) which adds JASSM capability is scheduled for 
fielding in December 2003. January 2004 is the Acquisition Program 
Baseline threshold date for F-16/JASSM Required Assets Available (RAA). 
Thus the OFP tape is the primary schedule risk area for F-16 threshold 
aircraft integration. Developmental test tapes will be produced to 
support JASSM PDRR and EMD flight test to mitigate F-16 integration 
risk.
    b. Mission planning (moderate risk). The mission planning for a 
seeker is not easy and could pose a schedule risk. Mission planning 
performance is a critical component to the total system performance. 
Mission planning elements considered by the JASSM contractors include 
acquisition of target ``signature'' data, database preparation and 
distribution, integration of products into existing structure, 
weaponeering and aircraft sortie generation, and the final preparation 
of mission planning products. Additionally, the mission planning must 
be compatible with the air tasking order (ATO) cycle. The system must 
take advantage of existing Air Force and Navy intelligence, C41, and 
mission planning systems (Air Force Mission Support System (AFMSS) and 
Tactical Aircraft Mission Planning System (TAMPS)). A JASSM mission 
planning module will be incorporated into both the AFMSS and TAMPS.
    Question. What is the Air Force doing to manage these risks?
    Answer. F-16 Aircraft Integration: The JASSM Joint Program Office 
(JPO) chartered a Joint Interface Control Working Group (JICWG) to 
manage risk associated with missile/aircraft integration, including the 
F-16. The JICWG includes the JASSM JPO, host aircraft System Program 
Offices (SPOs)/Program Management Agencies, JASSM prime contractors, 
aircraft prime contractors, and other involved Government agencies. The 
JICWG along with Memoranda of Agreement (MOAs) and Associate Contractor 
Agreements (ACAs) among government agencies and contractors will be 
used to reduce risk during the Program Definition and Risk Reduction 
phase. In addition, developmental test tapes will be produced to 
support JASSM PDRR and EMD flight test to mitigate aircraft integration 
risk.
    Mission Planning: The JASSM mission planning effort, including risk 
reduction, is managed through the JASSM mission planning Intelligence 
Support Working Group (ISWG). The ISWG includes the JASSM JPO, the 
AFMSS SPO, TAMPS JPO, JASSM prime contractors, and Government 
intelligence and mission planning agencies. Formal agreements between 
participating organizations include: (1) Interface impact assessment, 
interface problem and integration resolution through the ISWG; (2) 
Documentation to establish, define, and control interface requirements; 
and (3) Higher level interface management under the purview of the 
Interface Control Steering Group and the Interface Management Board. 
MOAs are being established between appropriate organizations, and ACAs 
will be required between the mission planning, aircraft, and weapon 
contractors.

                    Large Aircraft Reengine Programs

    Question. In the past several years, there has been a lot of 
interest in both industry and the Pentagon in replacing old engines in 
many of the Air Force's large aircraft with modern, fuel efficient, 
highly reliable commercial engines. Congress has already funded 
reengine programs for the KC-135 tanker and the RC-135 Rivet Joint. 
Reengine programs for AWACS, B-52, and JSTARS are also under 
consideration. Secretary Widnall, has the Air Force developed a 
comprehensive strategy for dealing with the need to reengine these 
aircraft? If so, can you outline this strategy to the Committee?
    Answer. A study is being initiated to look at feasibility of a 
comprehensive program. The potential operational benefits are longer 
effective time on station, higher altitudes, higher reliability, 
improved fuel efficiency, and reduced noise. Cost analysis studies show 
independent reengining of aircraft types are not cost effective, 
however, a comprehensive reengining program could offer potential 
sayings from economy of large numbers; cheaper, more reliable engines; 
and new/innovative ideas.
    Question. Last year, reengining the AWACS was the sixth priority on 
the Air Force unfunded priority list and Congress provided funding to 
initiative the program. We now understand the Air Force completed a 
study in August 1996 and concluded that such a program might not be 
cost effective and so the Air Force did not fund the program in FY 1998 
and out. What is the basis of the study's conclusion that reengining 
AWACS is not cost effective? Why didn't the Air Force inform the 
Committee of this conclusion in August prior to the Appropriation 
Conference in September?
    Answer. The study found that the reduced operations and support 
costs for a re-engined AWACS fleet (increased fuel efficiency, 
decreased maintenance, etc.) did not recoup the large investment costs 
required for re-engining. There was no cost payback in O&S in either 
the lease or buy scenario for operations of the fleet through the 
expected life of the system (2025). A summary of the study findings 
will be submitted to Congress by 1 April 1997 per the FY 1997 
Appropriations Conference Language.
    The cost study results presented in late August 1996 showed there 
was no cost benefit to re-engine AWACS for operations through 2025. Re-
engining does, however, provide operational benefits such as increased 
surveillance volumes, improved time on station, and reduced noise. It 
was not until late CY 1996 (after the Conference actions closed) that 
the Air Force made the final decision not to pursue re-engining in the 
FY 1998 President's Budget.
    Question. Last year, the Congress asked the Air Force to evaluate a 
proposed B-52 engine lease program. Now that you have had a chance to 
evaluate the proposal, what are the pros and cons of such a lease 
program?
    Answer. The Air Force has completed its report on B-52 re-engining 
and will forward the report to Congress in the near future.
     The PROS of the new Allison/Rolls Royce RB211 engines include 
improved operational capability and improved maintainability. Some 
examples: solves the JP-8 cold start problem with the current TF33 
engine, reduces takeoff fuel loads for training; reduces scheduled 
engine removal rate, makes engine design more robust and resistant to 
foreign object damage, and provides an engine which is 33% more fuel 
efficient.
    The CONS include affordability, high termination liability, 
statutory issues and unknown future force structure. The estimated 
additional cost is over $1.3 billion. There is high termination 
liability; over $2 billion in FY08. the Air Force would need statutory 
relief to permit a contracting officer to lease ``equipment'' long-
term. Anti-Deficiency Act. 31 U.S.C. section 1341 prohibits obligations 
in advance or in excess of appropriations by Congress. A long-term 
lease would obligate the government to support the aircraft fleet as 
currently projected, not allowing for force structure changes which may 
occur from QDR or subsequent realignments.
    Question. How does the Air Force propose to proceed with respect to 
B-52 engines?
    Answer. Based on studies to date, the Air Force currently does not 
have plans to make any major changes to B-52 engines (TF33s).

                          Information Warfare

    Question. Information Warfare involves the disruption of an 
adversary's information systems. For example, instead of using a smart 
bomb to destroy a command and control center, we could instead use a 
computer virus to achieve the same end. The good news is that the 
United States, being on the forefront of information technologies, is 
in an excellent position to develop offensive capabilities. The bad 
news is that we are more dependent on information systems, and 
therefore, more vulnerable to disruption of these systems. John Deutch, 
as director of the CIA, assessed computer-based ``cyber'' attacks as a 
threat second only to nuclear arms and other weapons of mass 
destruction. There are numerous computers in our aircraft, our 
missiles, and our command and control systems. What are you doing to 
ensure the systems you are procuring for the Air Force will be safe 
from such ``cyber'' attacks?
    Answer. Efforts are underway within the Air Force Material Command 
(AFMC) to institutionalize an Information Warfare Vulnerability 
Assessment and Risk Management (IW VA/RM) process for all procurements 
as part of each Program Protection Plan. IW VA/RM addresses system 
security from program concept phase through the system procurement life 
cycle in risks versus system vulnerabilities, threat, vulnerability 
countermeasures, and cost benefit analysis. Current weapon systems that 
have been evaluated utilizing Vulnerability Assessment and Risk 
Management process with systems assessments are Joint STARS, F-15E, and 
the Theater Battle Management System.
    Question. Do you feel the Air Force is currently ahead or behind 
the threat as it relates to defending our systems from ``cyber'' 
attack?
    Answer. We are aggressively defending our systems from ``cyber'' 
attacks, but the threat is increasing. The Air Force is beginning to 
field the Base Information Protection (BIP) portion of the Combat 
Information Transport System (CITS) to address the following areas:
     Boundary Protection which prevents unauthorized external 
access of data and systems.
     Intrusion Detection which detects near-real-time security 
anomalies in computer network activity.
     Internal Control which prohibits mis-use of systems and 
data through posture reporting.
     Recovery Systems which recovers from damage caused by 
breach in network security.
     Denial of Service Attacks which protects from structured 
attacks inhibiting network services.
    The Air Force has a research and development program in place to 
address technology advances and keep ahead of future threats.
    Question. What are your suggestions for how we may best add 
resources to reduce our vulnerability to such attacks:
    Answer. The Air Force fully supports the funding for Information 
Warfare (IW) in the Presidents' budget as the minimum set of measures 
to protect and defend Air Force information systems against IW attack 
and to manage the risks associated with such attacks. The Air Force 
must, however, also address our vulnerabilities to evolving IW threats.
    We may best add resources to reduce our vulnerabilities to IW 
attacks as follows:
     Increase education and training in threat awareness and 
information system administration and protection.
     Implement the formal IW Risk Management and Vulnerability 
Assessment Program that the Air Force developed to provide programs 
with the skills and tools to conduct their own IW vulnerability 
assessment and support risk management decisions.
     Provide the capability to integrate IW protection across 
Air Force weapons and information programs and systems to ensure that 
critical mission functions are not interrupted.
    The Air Force would use added resources to emphasize support tools 
to IW warfighting units to monitor systems for IW attacks, and to 
provide IW situational awareness, C2 decision aids, and damage 
assessment/recovery. These tools are essential for counter information 
modernizing planning and requirements development. To achieve these 
objectives, the Air Force estimates that $2.0 million would be needed 
each year (FY99 to FY03) for a total of $10.0 million. The Air Force is 
examining ways to fund this offset through a realignment of internal 
Air Force resources.
    Question. How is the military's growing interdependence with 
civilian information infrastructure going to impact the vulnerability 
of the Air Force now and in the future?
    Answer. Air Force systems vulnerability will need to be evaluated 
due to their dependence on the civilian information infrastructure. 
Systems evaluations will need to address this dependence and ensure 
that they are protected and can contain damage and ensure that mission 
critical functions continue. This vulnerability impact is being studied 
by the Presidential Commission on Critical Information Protection 
(CIP). The DOD has a CIP working group with a sub-group for Information 
Assurance to address these issues.

              Tri-Service Standoff Attack Missile Lawsuit

    Question. The government terminated the A-12 contract for 
``default'', but terminated the TSSAM (Tri-Service Standoff Attack 
Missile) for ``the convenience of the government''. Both programs 
suffered similar problems in terms of cost, schedule, and poor 
performance after expenditure of billions of dollars each. Termination-
for-default means that the contractor is held liable for overruns, 
while under a termination-for-convenience the contractor is not 
penalized for its poor performance. Secretary Money, the Committee is 
surprised to learn that the TSSAM contractor (Northrop-Grumman) has 
filed suit against the government to recover $750 million of 
``uncompensated performance costs, investments and a reasonable 
profit'' on this terminated program. What are your views on the merit 
of this lawsuit?
    Answer. The TSSAM contractor filed a lawsuit against the United 
States in the United States Court of Federal Claims on 2 December 1996. 
The United States is being represented in the lawsuit by the Department 
of Justice. Because the matter is in litigation, I am not able to 
answer questions about this lawsuit.
    Question. When the contract was originally terminated for 
convenience, didn't the government and the contractor reach agreement 
on a fair settlement cost? If so, what has changed?
    Answer. There was no agreement at that time.
    Question. How do you characterize the contractor's performance on 
this program?
    Answer. I cannot comment since this matter is in litigation.
    Question. Did the government get its money's worth from the $3 
billion investment made in this program?
    Answer. I cannot comment since this matter is in litigation.
    Question. How much could the government have to spend to defend 
itself in court against this lawsuit?
    Answer. The Department of Justice is defending the United States in 
this case. I cannot comment since this matter is in litigation.
    Question. Where would the Air Force get its share of $750 million 
if it had to pay additional TSSAM costs under a court penalty?
    Answer. Generally, a court judgment against the United States is 
paid from the judgment fund, and an agency is required to reimburse the 
judgment fund from its available funds or by obtaining additional 
appropriations.
    Question. Would it likely come from weapons modernization funding?
    Answer. Generally, a court judgment against the United States is 
paid from the judgment fund, and an agency is required to reimburse the 
judgment fund from its available funds or by obtaining additional 
appropriations. It is my understanding that cases of this size may last 
for several years, and I cannot project into the future from what 
particular sources any ultimate judgment against the United States 
might be paid.

                      Joint Strike Fighter Program

    Question. The 1998 budget requests $931 million for concept 
development of the Joint Strike Fighter which would become the largest 
acquisition in the history of the Department of Defense in terms of 
total cost. Mr. Money, what is the status of the Joint Strike Fighter 
development program?
    Answer. The Joint Strike Fighter Program (JSF) plans to develop and 
deploy a family of aircraft that affordably meets the next-generation 
strike needs of the Air Force, Navy, Marine Corps and allies. JSF 
Program activities are centered around three distinct objectives that 
provide a sound foundation for start of Engineering and Manufacturing 
Development (E&MD) in 2001:
          (1) facilitating the Services' development of fully 
        validated, affordable operationally requirements;
          (2) lowering risk by investing in and demonstration key 
        leveraging technologies that lower the cost of development, 
        production and ownership; and
          (3) demonstrating operational concepts.
    A multi-year $2.2 billion JSF Concept Demonstration effort 
commenced in November 1996 with competitive contract awards to Boeing 
and Lockheed Martin for Concept Demonstration Programs. These competing 
contractors will build and fly concept demonstrator aircraft, conduct 
concept unique ground demonstrators, and continue refinement of their 
ultimate delivered weapon system concepts. Specifically, Boeing and 
Lockheed Martin will demonstrate commonability and modularity, STOVL 
hover and transition, and low speed handling qualities of their 
respective weapon system concepts. Pratt and Whitney is providing 
propulsion hardware and engineering support for both Boeing's and 
Lockheed Martin's on-going JSF Concept Demonstration efforts. The JSF 
Alternate Engine Program, with General Electric, continues technical 
efforts related to development of an alternate engine for production in 
order to reap the financial and operational benefits of competition.
    Early warfighter and technologies interaction continues as an 
essential aspect of the JSF requirements definition process, and is key 
to achieving JSF affordability goals. To an unprecedented degree, the 
JSF Program is using cost-performance trades early as an integral part 
of the weapon system development process. The Services' completion of 
the Joint Operational Requirements Document is planned in FY 2000 to 
support the Milestone II decision in FY 2001 for start of E&MD.
    A sizable technology maturation effort is underway to reduce risk 
and life cycle cost (LCC) through technology maturation and 
demonstration. The primary emphasis is on technologies which have been 
identified as high payoff contributors to affordability, 
supportability, survivability and lethality. Numerous demonstrations 
have been accomplished and others are in process to validate 
performance and LCC impact to component, subsystem, and the total 
system.
    Question. Last year, concern was expressed by the House National 
Security Committee over the viability of the ASTOVL variant of the 
aircraft for the Marines (to replace AV-8B Harriers). Please discuss 
the issue and how it was resolved, and please verify for us that the 
Defense Department is committed to developing an ASTOVL variant of the 
aircraft.
    Answer. Last year the House Authorization bill stated that no JSF 
funds could be spent for Advanced Short Take-Off/Vertical Landing 
(ASTOVL) development. Neither the House Appropriations bill nor the 
Senate Authorization and Appropriations bills contained that language. 
In fact the House Appropriations bill contained language stating that 
the JSF STOVL variant must be developed ahead of or concurrently with 
the other variants. Neither of the final FY97 Defense Authorization of 
Appropriations bills contained STOVL prohibitions. We believe that 
support for ASTOVL development to be strong both on the committee and 
in the House.
    The Defense Department is fully committed to development of a STOVL 
JSF variant for the Marines. The JSF program is fully funded within the 
FYDP and STOVL is an integral part of it.
    As you know we are in the Program Definition and Risk Reduction 
phase (PH&RR) of JSF now. The Concept Demonstration portion of PH&RR 
requires each industry team to build two flying demonstrators, one 
conventional and one STOVL. Demonstration of STOVL hover and transition 
is a key aspect of this phase and is required by the Single Acquisition 
Management Plan. The Concept Demonstration program provide two 
different STOVL approaches and aerodynamic configurations, and 
maintains a competitive environment between contractors prior to 
Engineering and Manufacturing Development (E&MD). Additionally 
propulsion development continues during this phase with a byproduct of 
STOVL development being significant improvements in single engine 
durability and reliability for all variants. In short, we feel that we 
have a strong STOVL development program within JSF and we are committed 
to maintaining it.
    Question. Most of us remember the Air Force's ``Great Engine War'', 
where a billion dollars were spent to bring second contractor into the 
fighter engine business and which resulted in better engines at 
significantly lower cost. DoD recently signed a $97 million ``alternate 
engine'' contract for the Joint Strike Fighter. Please explain your 
strategy and your plan to use $10 million provided by Congress for risk 
reduction to facilitate this effort.
    Answer. During the JSF Concept Development Phase, all three 
competing weapon system contractors chose the Pratt and Whitney F-119 
or derivative as the primary propulsion system for the Concept 
Demonstration Phase. Recognizing the financial and operational benefits 
of competition, the JSF Program is pursuing the development of a 
competitive engine for production.
    Phase I of this effort began in FY 1996 with a General Electric 
study effort to determine the comparative Life Cycle Cost and 
performance of the GE F110 and YF120 derivative engines in each of the 
preferred weapon system concepts. Based on the study results, the 
government selected the YF120 engine derivative for continued 
development. Phase I initiated preliminary design risk reduction 
studies, systems design/integration, cycle refinement, and component 
design and associated technology maturation for the YF120 derivative 
engine. Phase II, which commenced in FY 1997, will continue detailed 
design and begin hardware testing of the YF120 engine, culminating in 
core testing beginning in FY 1999. The JSF Engineering and 
Manufacturing Development program will continue development of an 
alternate engine, with production competition currently planned 
effective with Production Lot 5.
    Congress appropriated an additional $10 million for FY 1997 
competitive engine efforts. This funding will be used for a variety of 
risk reduction efforts including the following: turbine rig test and 
analysis, core integration, core supportability, material 
characteristics, weapon system concept integration, and diagnostics.
    Question. Please discuss your plans for cooperation with other 
nations in this program, and what they bring to the table in terms of 
capabilities and financial contributions.
    Answer. The JSF Program Office has established a framework to 
accommodate international participation during the concept 
demonstration phase of the program. Currently, the United Kingdom is on 
board as a full collaborative partner, with emphasis on the JSF STOVL 
(Short Take-Off and Vertical Landing) variant. The UK is contributing 
$200 million to the program for this phase. The Netherlands, Norway and 
Denmark will soon join the program as associate partners, with primary 
interest in the JSF CTOL (Conventional Take-Off and Landing) variant. 
The total planned financial contribution for this effort is $32 
million; signature of the multilateral agreement is planned in April 
1997. The Canadians have formally requested to join the program and 
negotiations are expected to commence in April 1997. Numerous other 
countries have received briefs on the program and are interested as 
well.
    Benefits to be derived from international participation in the 
program include a harmonization of the requirement with our allies 
which will lead to improved interoperability, strengthened 
international ties and lower overall program cost as a result of future 
anticipated international buys of the JSF (i.e., lower unit cost).
    Firm financial contributions and associated efforts are 
incorporated in JSF Program plans and funding and are reflected in FY 
1998 President's Budget requests.

                       Cheyenne Mountain Upgrades

    Question. Cheyenne Mountain is the Nation's strategic facility for 
warning of an incoming nuclear attack on our country. During the last 
two decades, the Air Force has had great difficulty effectively 
modernizing the computers within the facility. Mr. Money, what is the 
status of the computer upgrades at Cheyenne Mountain?
    Answer. To improve resource management and implement the remaining 
portions of the CMU program in an incremental acquisition, a four-
phased replan of the remaining CMU program were proposed and approved 
by the user community, SAF/AQ, and the Office of the Secretary of 
Defense's Command, Control, Communications and Intelligence (C3I) 
Systems Committee in August 1994.
    The first phase was scheduled for completion of basic Air, Space 
and Missile Warning efforts by 30 November 1995. This effort was 
successfully completed, installed, and operationally accepted by the 
User on 13 Sept 1995. A second (Missile Warning Mission) phase, closely 
integrated with the Space Command's Integrated TW/AA software releases, 
was to be completed by an objective date of June 1996. This effort was 
successfully completed, installed, and tested by AFOTEC by 16 August 
1996, and fully operationally accepted by CINCSPACE on 11 Oct 1996. A 
third (Air Warning Mission) phase, also closely integrated with the 
Space Command's Integrated TW/AA software releases, was to be completed 
by an objective date of June 1997. This effort was successfully 
completed, installed, and completed Operational Assessment on 28 Feb 
1997. Air Mission Operationally Acceptance and Approval is on schedule. 
A fourth (Space Warning Mission) phase is scheduled for completion by 
an objective date of June 1998. This effort is on schedule. An 
integrated system IOT&E will follow phase four and is scheduled for 
completion by March 1999. This effort is on schedule.
    Overall Status: The Cheyenne Mountain Upgrade Program is on 
schedule to be completed, installed and fully operational by 31 March 
1999.
    Question. What actions has the acquisition community taken to 
strengthen the management of these programs, and what success have you 
had?
    Answer. The Integrated TW/AA Community, including the acquisition 
community has taken a number of actions to strengthen the overall 
Cheyenne Mountain program. Many of these actions were taken as part of 
the 1994 replan of the Cheyenne Mountain Upgrade (CMU) program and have 
previously been reported to the Congress.
    Cooperative approach to CMU Implementation. The key, and most 
critical action has been the establishment of a mutually cooperative 
approach among the acquisition, user, and test communities in the 
completion, installation and test of the CMU program. The actions noted 
in our 1995 report to the Congress, and our successful actions since 
then are a result of all elements of the various communities working 
together.
    Integrated Tactical Warning/Attack Assessment System Program 
Office. To more effectively manage the support of the Integrated TW/AA 
network and the Cheyenne Mountain Complex, AFMC, and SAF/AQ established 
an Integrated TW/AA SPO under the Air Force Program Executive Office 
for Command, Control, and Communications. The SPO contains the CMU, 
Missile Warning and Space Surveillance Systems (MWSSS), and CINC Mobile 
Alternate Headquarters (CMAH) programs. This IWSM SPO is now 
responsible for the Integrated TW/AA C4, the Integrated TW/AA ground 
based missile warning and space surveillance sensors, and the mobile 
command centers. The Integrated TW/AA SPD is located in Colorado 
Springs and provides direct response and support for the NORAD/Space 
Command Users.
    Systems Engineering, Integration and Text (SEIT) Team. The 
establishment of an integrated team of experts from Electronic Systems 
Center (ESC), AFSPC, the CMU contractors, and the testers to identify 
and solve, on-site, CMU problems has been critical to the 
implementation of the replan. This team, working with the users, 
testers, and the contractors, ensures that the scheduled CMU work is 
understood, that all critical deficiencies have been corrected, and 
that the system is ready for testing. If problems are identified, the 
SEIT team priorities the solution effort with an action plan involving 
all stakeholders including the user and test communities, and expedites 
the solutions. The team also identifies and resolves Integrated TW/AA 
issues which must be worked with NORAD, USSPACECOM, AFSPC and other 
Integrated TW/AA organizations. The SEIT is also responsible for all 
CMU integration activities, including integrated test scheduling.
    Integrated Planning and Scheduling. The close integration of all 
the schedules for the contractors, System Program Office (SPO), and 
user events in Cheyenne Mountain has been key to deconflicting the 
development, test and operational work in the SWSC and Cheyenne 
Mountain. With CMOC in the lead, test accountability has been 
established through metrics and mandatory weekly/monthly updates. The 
Integrated Scheduling team now has a clear understanding of what time 
and resources are available, and what the user, developer and testers 
needs are for the system in any Phase. With this understanding, the 
scheduling team, the SEIT, the SWSC, and AFSPC can now rapidly respond 
to and reliably schedule corrective actions and testing.
    Test Management And Training. The SPO assigned a top-level test 
manager (senior O-5) to the CMU effort to provide senior on-site 
oversight and decision making of all development testing. As part of 
this enhancement of the CMU test capability the SPO also provided 
training to hundreds of SPO, contractor and user test managers, test 
monitors and test directors. This significantly expanded the number of 
people available to conduct development tests and resolves one of the 
major test resource contention problems.
    Interface Control Document (ICD) Development. Inadequate interface 
descriptions for the Integrated TW/AA programs and interfaces has been 
a continuing problem. While CMU is only a small part of this Integrated 
TW/AA system problem, ESC, Air Force Materiel Command (AFMC), the Space 
System Support Group (SSSG), and AFSPC have been working since 1992 to 
identify the interfaces and build a joint Integrated TW/AA ICD database 
containing the interface descriptions and data. Approximately 167 
interfaces in 68 Integrated TW/AA subsystems have been identified to 
date with system documentation on-going.
    AFMC Integrated TW/AA System of Systems Management. To improve 
overall Integrated TW/AA system management and engineering, AFMC has 
established a General Officer Broad Area Review (BAR) group to oversee 
the management of the entire Integrated TW/AA system. Under this group, 
AFMC has also established a Colonel level action group (O-6 AG) to 
provide a single AFMC Integrated TW/AA point of contact to address 
issues that cut across Integrated TW/AA systems. The group, chaired by 
the Integrated TW/AA System Program Director (SPD), is responsible for 
development and sustainment, from an interoperability perspective, of 
Air Force systems that are part of the Integrated TW/AA network. 
Membership is from Integrated TW/AA SPO (CMU, Missile Warning and Space 
Surveillance Systems (MWSSS) and CINC Mobile Alternate Headquarters 
(CMAH)), Atmospheric Early Warning Systems (AEWS), Space Based Infrared 
System (SBIRS), and NUDET Detection Systems (NDS) system program 
offices.
    SWSC Integration Into AFMC. We have completed the integration of 
the SWSC into the Cheyenne Mountain Complex program within the 
Integrated TW/AA SPO. This action puts all the software development and 
support capability for Cheyenne Mountain under the integrated direction 
of the Cheyenne Mountain Complex Integrated Weapon System Management 
(IWSM) program manager to more effectively respond to the operational 
needs of AFSPC.
    Oversight. SAF/AQ has continued a regular cycle of management 
reviews in Colorado Springs. These process reviews are jointly held 
with AFSPC and provide senior (SAD/AQ, AFSPC/CV, ESC/CC, AFOTEC/CC, 
AFPEO/C3 and CMOC/CC) review and assessment of the progress of the CMU 
effort. These reviews have been held about every four months. The next 
review is scheduled for 23 May 1997.
    Question. How much is in the 1998 budget for Cheyenne Mountain 
upgrades, by project and in total?
    Answer. R&D funding for Program Element 0305906F NCMC-TW/AA Systems 
in FY98 totals $7.362 million, broken out by project as follows: 
Project 3880 Cheyenne Mountain Upgrade $0.603 million, Project 3881 
Integrated TW/AA $5,132 million; and Project 4409 Legacy Interfaces 
$1.627 million. Procurement funding in the Cheyenne Mountain Complex P-
1 line totals $0.737 million, none of which is for the Cheyenne 
Mountain Upgrade. In the Comm-Electronics Modifications P-1 line, 
$5,261 million is allotted to Cheyenne Mountain Complex modifications, 
broken out as follows: Mod#S529382 Tech Control (Bytex) $4.000 million; 
#S604622 Electronic Warfare Workstation $0.575 million; and S604622 
Miscellaneous Low Cost Mods $0.686 million.
    Question. What is the current cost estimate of each of the projects 
within the Cheyenne Mountain Upgrade in then year dollars, and how does 
this compare to the last program funding baseline?
    Answer. The Acquisition Cost in the Acquisition Program Baseline 
for the Cheyenne Mountain Upgrade program has not changed from $1663.0 
million in change 2 to the APB, dated 09/03/92. The APB is not broken 
out by project, only by R&D ($1294.0 million) and Procurement ($369.0 
million). The current cost estimate (from the Cheyenne Mountain Upgrade 
31 Dec 96 SAR) is $1750.6 million, $1407.3 million in R&D and $343.3 
million in Procurement. The current estimate is $87.6 million or 5.3% 
higher than the 1992 APB estimate. By project, the R&D funds are: 
Project 3880 CMU $1297.1 million; Project 3881 Integrated TW/AA $62.7 
million; and Project 4409 Legacy Interfaces $47.5 million. The 
Procurement funds ($343.3 million) are all CMU. The Acquisition Cost 
Estimate in the SAR does not include post-CMU R&D funding in the 
Integrated TW/AA project (3881) from FY00 to FY03, totaling $16.1 
million, nor any of the Comm-Electronics Mod funding for the Cheyenne 
Mountain Complex, totaling $54.7 million from FY98 through FY03.
    Question. When will all the upgrades be completed, installed and 
fully operational?
    Answer. All the modifications to Cheyenne Mountain planned as part 
of the Cheyenne Mountain Upgrade Program will be completed, installed 
and fully operational by 31 March 1999.

                Evolved Expendable Launch Vehicle (EELV)

    Question. The Evolved Expendable Launch Vehicle (EELV) is being 
developed to replace the current fleet of medium and heavy lift class 
launch vehicles with a more affordable family of space launch vehicles. 
The fiscal year 1997 budget request for EELV is $63.3 million to 
support pre-EMD work prior to one contractor for development and 
production in June of 1998. What are the major goals of the EELV 
program in this year and in fiscal year 1998?
    Answer. The EELV Pre-Engineering, Manufacturing, and Development 
(Pre-EMD) contract was awarded in Dec 96. The Air Force goal during 
this fiscal year is the continued contractor development of the system 
design, demonstrate key technologies, update Life Cycle Cost estimates, 
and support of the Environmental Impact Analysis Process (EIAP). In 
FY98, the goal is to complete the Pre-EMD contract and downselect to 
one EMD contractor in Jun 98. The Pre-EMD contracts will mature the 
design and produce the EELV developmental, product, and interface 
control specifications. To award the EMD contract and downselect to one 
contractor, we will issue a Request For Proposal (RFP), conduct a 
Downselect Design Review (DDR), and seek Milestone II approval to enter 
EMD.
    Question. What are the current cost reduction goals for the EELV 
program vice the costs of the Titan, Atlas, and Delta launch programs?
    Answer. The EELV program goal is a cost reduction of 25-50% in Life 
Cycle Cost over current systems. This equates to approximately $5-10 
billion (constant FY95 dollars) in savings from 2002-2020.
    Question. Describe the Air Force's acquisition strategy for EELV 
after the downselect.
    Answer. After the downselect in approximately Jun 98, the Air Force 
will have one contractor execute the EMD phase of the program. At this 
time, the government anticipates a $1.6 billion, Cost Plus Award Fee 
contract, with a period of performance of 6 years. The winning 
contractor will conduct a tailored critical design review not later 
than Dec 98. The contractor will conduct two system test flights to 
collect payload environmental data, validate manufacturing processes, 
modify and activate launch facilities and support systems, and obtain 
the necessary environmental and operating permits. After the system 
test flight of the medium lift variant in FY01, and six medium 
operational launches in FY02, DoD will hold Milestone III review in 
FY03, where OSD will review progress and decide whether to approve the 
system for full rate production. In FY03, the Air Force will fly the 
test flight of the EELV heavy lift variant.
    Question. What percentage of total EELV development costs are 
related to the heavy lift variant?
    Answer. EELV is being developed as a system and each of the two 
contractor concepts satisfies a variety of payload requirements with 
different family configurations built around the common core and common 
upper stages. There is no clear distinction, other than perhaps a 
fairing unique to a heavy variant and the cost associated with the 
heavy test flight. Therefore, there is no separate, distinguishable 
amount related to development of the heavy capability.
    Question. Have there been any revisions to the national mission 
model being used by the Air Force to compute EELV program savings since 
last year? If so, what are they?
    Answer. Yes. The projected savings for the EELV program was based 
was on the Jan 96 National Mission Model (NMM) and in Dec 96, the NMM 
was updated. The launch vehicle quantities remained the same, however, 
some mission launch dates moved slightly to the right. These launch 
schedule changes had a negligible effect on the projected $5-10 billion 
cost savings for the EELV program.
    Question. Is it still economical for the government to develop the 
heavy lift variant of EELV given the extremely limited number of heavy 
launches assumed in the national mission model?
    Answer. Yes. Due to the high cost of the Titan IV program, the 
small marginal cost of developing the EELV heavy lift variant, and the 
estimated 25-50% cost reduction for heavy lift, it is still economical 
to develop the heavy lift variant of EELV.

                  Spaced Based Infrared System (SBIRS)

    Question. The Space Based Infrared System (SBIRS) is being 
developed as the follow on to the Defense Support Program (DSP) to 
provide initial warning of a ballistic missile attack on the United 
States, its deployed forces or its allies. The system will consist of 
satellites in geosynchronous, highly elliptical and low earth orbits. 
The low earth portion of SBIRS, the space missile tracking system 
(SMTS), will support theater missile defense requirements. Describe the 
present acquisition strategy for SMTS.
    Answer. SBIRS Low (formerly SMTS) supports all four mission areas 
of the overall SBIRS program: missile warning, ballistic missile 
defense, technical intelligence and battle space characterization. 
SBIRS Low contributes the unique capability of post boost mid-course 
track to both theater and national missile defense missions. SBIRS Low 
will enter a full and open competition for Pre-EMD in 2Qtr FY99. Two 
contractors will be selected and will complete a System Design Review 
and a System Functional Review with a down select to one EMD contractor 
in 2Qtr FY01. First launch is scheduled for 3Qtr FY04.
    Question. Why did the Air Force find it necessary to compete the 
SMTS flight demonstration system?
    Answer. To foster competition and to have technical alternatives 
given the high risk involved and relative immaturity of the system 
concepts.
    Question. Describe the results of the SMTS critical design review 
earlier this year.
     Answer. The TRW Flight Demonstration System contract conducted a 
successful CDR in December of 1996. All of the CDR entry and exit 
criteria were satisfactorily dispositioned. A complete FDS system 
design concept was presented. Based on simulations, analyses and 
measured component level data, the design's projected capability 
exceeds all threshold FDS key performance measures. Similarly, all 
lower level technical performance measures are being met or exceeded. 
The design is mature, but there are still significant challenges in 
fabrication, assembly and test. A payload pathfinder and spacecraft 
electrical mock-up will be put through rigorous ground tests to 
validate system interfaces and functional capability before completing 
fabrication and delivery of flight hardware and software. The planned 
on-orbit test program is designed to provide the data most critical to 
making a deployment decision in the first year of FDS test operations. 
The second year of on-orbit test will expand the demonstrated 
performance envelope and build confidence in the SBIRS Low concept. The 
ground system fabrication has begun and a demonstration of some of the 
expected control screen displays was provided.
    Question. What would you characterize as the principal technical 
and producibility risks for SMTS at this time?
    Answer. The primary technical risks include:
          --Long wave infrared sensors and cryocooler technologies to 
        support stressing cold-body targets;
          --Integration into an overall system;
          --Autonomous on-board processing and operations; and
          --Real-time command/control in support of multiple mission 
        areas.
    The main producibility risks include:
          --Obtaining the level of radiation hardening required at an 
        affordable price;
          --Production build up for rates required to support FY04 
        deployment; and
          --Achieving long-life and stressing capabilities at an 
        affordable price.
    Question. It is the Committee's understanding that the fiscal year 
1998 budget request for SBIRS supports a 2004 launch date for the first 
operational SMTS satellite. Is this accurate? Is any additional funding 
required to maintain this schedule?
    Answer. The FY1998 budget request did include the estimated funding 
required to support an FY04 first launch. The projected funding is 
based on a cost assessment conducted in early FY97. This is the best 
estimate available at this point in time. This estimate will be updated 
at a SBIRS FY97 DAB and again refined in FY99 during the SBIRS Low Pre-
EMD.

                       Acquisition Program Issues

    Question. Should extra funds be made available for the Defense 
Department this year, the Committee would like to know where some 
investments can be made which would have a potentially high payback. 
What are the top ten unfunded requirements in each R&D and procurement 
account in the Air Force?
    Answer.

------------------------------------------------------------------------
                    R&D                              Procurement
------------------------------------------------------------------------
1. Sensor to Shooter......................  1. Force Protection.
2. Engine Component Improvement Program...  2. Global Air Traffic
                                             Management.
3. Aging Aircraft.........................  3. Navigation Safety Phase
                                             II.
4. Precision Guided Munitions.............  4. Base Information
                                             Protection.
5. Range Standardization & Automation.....  5. Sensor to Shooter.
6. Global Command & Control System........  6. Bomber Modernization.
7. AWACS Extend Sentry....................  7. F-15C/D PW-220E Engine.
8. Spacetrack.............................  8. Precision Guided
                                             Munitions.
9. Nuclear Command and Control............  9. Range Standardization &
                                             Automation.
10. Threat System Modeling Vehicles.......  10. Mission Operations.
------------------------------------------------------------------------

    Note: Sensor to Shooter, Precision Guided Munitions, and Range 
Standardization & Automation are on both lists because they require 
both R&D and procurement appropriations.
    Question. Identify all production programs for which funds are 
included in the fiscal year 1998 budget request where fiscal 
constraints have prevented acquisition of sufficient quantities in 
either fiscal year 1998 and/or accompanying FYDP to meet validated 
military requirements/inventory objectives.
    Answer.
                            AIR SUPERIORITY
    Sensor to Shooter: Additional fiscal year 1998 procurement funds is 
ranked number five on the CSAF's FY98 Unfunded Priorities List. This 
initiative accelerates the ability to share digital data among combat 
platforms and ground control stations using Link 16, a standard 
datalink message format and waveform. The initiative requires $24.0 
million for Link 16 procurement on the B-1, $5.2 million for Link 16 
procurement on the F-15C/D, and $7.5 million for Link 16 procurement 
for Ground Tactical Control Stations (GTACS).
    Bomber Modernization: The B-52 modernization program includes an 
Electro-optical Viewing System (EVS) Reliability and Maintainability 
(R&M) upgrade. This program consolidates electronic hardware increasing 
Mean Time Between Failure Rates. Additional fiscal year 1998 
procurement funds ($2.9 million) will accelerate this upgrade to 
increase maintainability of aging equipment. It is number 10 on CSAF's 
Unfunded Priorities List.
    F-15C/D PW-220E Engine: The PW-220E engine modification provides 
improved safety, performance, reliability, and operability, reduced 
maintenance and logistics support and reduced life cycle cost. Funding 
an additional $73.2 million in fiscal year 1998 will accelerate the 
upgrade of 1.5 squadrons (27 PAA) and will result in a savings of 
approximately $28.3 million across the life cycle of the weapons 
system. This initiative is number 13 on CSAF's Unfunded Priorities 
List.
    Precision Guided Munitions: Current inventories of GBU-28 and CALCM 
weapons are below established requirements. These weapons are force 
multipliers, allowing better mission effectiveness while reducing 
attrition, sorties required, conflict duration, and collateral damage. 
An additional $35.6 million in fiscal year 1998 will accelerate 
procurement of these weapons and IOC dates of each by one year. This 
initiative is number 14 on CSAF's Unfunded Priorities List.
    HH-60G FLIR: There are currently tow different FLIR systems for the 
HH-60G in the Air Force inventory. The Q-16 Forward Looking Infrared 
(FLIR) is designed for full HH-60 integration. The Q-22 is a less 
expensive and less capable substitute purchased with drug enforcement 
funds by the Reserve Component. Additional funds in fiscal year 1998 
will allow procurement of the remaining 43 Q-16 sets to equip the total 
force HH-60 fleet planned for acquisition in FY04-05. The current 
Hughes assembly line is scheduled to close in FY98. Acquisition in 
fiscal year 1998 will avoid line shutdown/startup costs in FY04. These 
additional FLIRs will also preclude having to transfer existing FLIRs 
between units and aircraft to meet current operational requirements. 
Because the HH-60s have already been wired for accepting this FLIR, no 
additional installation costs are required. This initiative is number 
18 on CSAF's Unfunded Priorities List.
    F-15E Attrition Reserve Aircraft: The F-15E is the sole platform 
which can employ the GBU-15/AGM-130 data-link weapons and GBU-28 
hardened/buried target weapons. It also maintains air-to-air 
capabilities. The current Air Force planned inventory is three aircraft 
short of the requirement. An accelerated buy of these three aircraft in 
fiscal year 1998 ($100.8 million) will result in a savings of $165 
million in fiscal year 1999. This initiative is number 26 on CSAF's 
Unfunded Priorities List.
    F-16 Support Equipment: The Avionics Intermediate Shop (AIS) is 
used for test, repair, reprogramming, and modification of F-16 avionics 
LRU's. Older systems are no longer transportable and will have parts 
obsolescence problems within three years. The Air Force has procured 32 
Improved Avionics Intermediate Shops (IAIS) with several multi-year 
contracts, with a requirement to procure 17 additional IAIS sets. An 
additional $31.5 million in fiscal year 1998 will fund 7 Improved 
Avionics Intermediate Shops. This initiative is number 28 on CSAF's 
Unfunded Priorities List.
                                MOBILITY
    GATM: New start, only funds previously identified include $8.5 
million in FY98 for VC-25 initial capabilities. FY98 request includes 
$67.7 million for initial funding of Global Air Traffic Management 
(GATM) as mandated by ICAO/FAA.
    Nav Safety Phase II: The FY98 request includes $126.3 million in 
funding for SECDEF directed aircraft safety modifications. Equipment 
procurement for Phase II includes Global Positioning System (GPS), 
Enhanced Ground Proximity Warning System (EGPWS), Emergency Locator 
Transmitter (ELT), Flight Data Recorder/Cockpit Voice Recorder (FDR/
CVR), and Terminal Collision Avoidance System (TCAS) for mobility 
aircraft not currently equipped. The phase II Nav/Safety request 
initiates installation of fourth generation Enhanced Ground Proximity 
Warning Systems on all passenger aircraft and starts the installation 
of safety components on other than DV/OSA passenger aircraft. The Air 
Force is updating program requirements, executability, costs, and 
identifying aircraft retirements to more accurately define the cost. 
Air Force will provide Congressional notification of SECAF waiver for 
aircraft retiring within 5 years prior to obligation of funds.
    KC-135 DPEM: No procurement funding is tied to this issue. DPEM is 
funded from O&M accounts (3400). The FY98 request for $54.6 million 
funds the short fall of KC-135 Depot Maintenance.
    C-130 Support: The FY98 request includes $48.0 million for C-130J 
interim contractor support (ICS), support equipment and spares which 
were not fully funded by FY96 and FY97 Congressional adds of C/EC/WC-
130Js. This initiative is ranked number 22 on CSAF's FY98 Unfunded 
Priority List.
                             SPACE/NUCLEAR
    Range Standardization and Automation (RSA) Program: Fiscal 
constraints prevent timely development and acquisition of key 
components of the integrated Spacelift Range System. These fiscal 
constraints delay attainment of improved operational capabilities and 
defer operations and maintenance savings essential to the continuing 
viability of the Air Force space program.
    SCAMP terminals: Due to fiscal constraints on military satellite 
communications (MILSATCOM) terminals program, the FY98 budget request 
does not include the $9.5 million required for the installation and 
integration of 14 Extremely High Frequency (EHF) Single-Channel Anti-
jam Man-Portable (SCAMP) satellite communication terminals to provide 
Milstar connectivity to the tanker bases (6.0 million) and electro-
magetic pulse (EMP) hardened input/output devices (laptops and 
printers) for 87 EHF SCAMP terminals for CINCSTRAT ($3.5 million). The 
SCAMP terminals will provide Milstar connectivity to the tanker bases 
for secure, survivable Emergency Action Message (EAM) dissemination to 
ensure survivable force direction and reportback to strategic airborne 
assets.
    MEECN: Due to fiscal constraints on the Minimum Essential Emergency 
Communications Network (MEECN) Defense Improved Emergency Messaging 
Automated Transmission System (IEMATS) Replacement Command and Control 
Terminals (DIRECT) program, the FY98 PB request does not include $8.5 
million in procurements costs. DIRECT has a validated requirements to 
be fielded no later than 2Q FY 99 to match the scheduled AUTODIN 
closure. The FY98 PB delivers two (2) of the required eight (8) suites 
by 2Q FY99 and the remaining six by 2QFY00, one year late. By funding 
$8.5 million of procurement funds in FY98, all eight DIRECT systems can 
be delivered in FY99.
                               LOGISTICS
    Vehicular Equipment: The Vehicular Equipment procurement account in 
the Other Procurement, Air Force (3080) Appropriation has a requirement 
to replace over 40,000 vehicles; the fiscal year 1998 budget request 
asks for funds to buy only 2,370. An additional $95 million would be 
readily executable in fiscal year 1998 and would permit much needed 
modernization by funding procurement of an additional 3,000 vehicles. 
Among other vehicles, $95 million would buy over 300 flight line 
tractors, 150 forklifts, 90 construction vehicles, and 80 law 
enforcement vehicles; all critical to day-to-day Air Force operations.
    Deployable Radioscopic X-ray Devices: The FY98 budget includes $0.2 
million for nine X-ray devices for use by Explosive Ordnance Disposal 
(EOD) teams during contigency operations. Another 51 X-ray devices at 
$1.1 million are required and are unfunded in FY98. These unites 
provide a more reliable, real-time analysis of unexploded ordnance 
devices and, therefore, reduced risk to EOD personnel.
    M16A2 Modification Kits: Fielding of the improved M16A2 
modification kits for M16 rifles can be accomplished earlier and 
potentially cheaper if funds are provided in FY98.

------------------------------------------------------------------------
                                                              FY98
                 Appropriation 3011*                  ------------------
                                                       Millions    Kits
------------------------------------------------------------------------
Current Program......................................      $6.0   22,414
Unfunded Requirement.................................       2.0    7,242
Total Requirement....................................       8.0   29,656
------------------------------------------------------------------------
*Appropriation 3011 is munitions.

    The kits modify existing equipment to fire steel-jacked bullets 
with greater accuracy, range and penetration; they provide three-shot 
burst firing (vice full-automatic), modern sights, new handguards and 
stock.
                             COMMUNICATIONS
    National Airspace System: Additional fiscal year 1998 procurement 
funds in the amount of $7.0 million has been ranked a number two 
priority on the Air Force's FY98 unfunded priority accelerated list. 
This effort to procure an additional 9 digital voice switches will 
accelerate replacement of analog voice switches. This acceleration will 
improve availability and reliability of air traffic control operations.
    Additional procurement funds are required in the FYDP to meet 
validated military requirements/inventory.

----------------------------------------------------------------------------------------------------------------
                                                                      1999      2000     2001     2002     2003
----------------------------------------------------------------------------------------------------------------
Current FYDP......................................................     54.6      56.3     58.9     66.6     51.5
Plus Up...........................................................     32.78     44.9     42.3     66.9     39.4
----------------------------------------------------------------------------------------------------------------

    This plug up would allow the Air Force portion of the NAS 
modernization program to complete approximately 54 unfunded sites 
located in the CONUS and Europe. This equipment will provide complete 
interoperability between the FAA and all CONUS and European sites. 
These procurements can be accomplished with existing contracts. In 
addition, this equipment will have a positive impact on the cost of 
maintaining the existing air traffic control equipment currently in 
use.
    Question. What initiatives are currently approved in an outyear POM 
which could either be done more cheaply and/or be fielded earlier by 
initiating them in fiscal year 1998? Indicate program by appropriation 
account along with an estimated funding stream for each of the five 
subsequent fiscal years (assuming a fiscal year 1998 start) along with 
the potential savings that could be achieved?
    Answer.
                            AIR SUPERIORITY
    Sensor to Shooter: This initiative accelerates the ability to share 
digital data among combat platforms and ground control stations using 
Link 16, a standard datalink message format and waveform. Required 
procurement funding for FY 98 and beyond is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                  Title                     APPN     FY98     FY99     FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
F-15C/D (160)...........................     3010      5.2     17.1     33.6      1.3      0.0      0.0     57.2
B-1 (6).................................     3010     24.0      0.0      0.0      0.0      0.0      0.0     24.0
GTACS (20)..............................     3080      7.5      0.0      0.0      0.0      0.0      0.0      7.5
                                         -----------------------------------------------------------------------
      Total.............................  .......     36.7     17.1     33.6      1.3      0.0      0.0     88.7
----------------------------------------------------------------------------------------------------------------

    This initiative accelerates a much needed combat capability, and 
therefore may not reflect specific cost savings in procurement, 
however, the force enhancement provided by Link 16 will create a 
synergistic effect which will result in higher combat effectiveness and 
shorter combat duration.
    Bomber Modernization: The B-52 modernization program includes an 
Electro-optical Viewing System (EVS) Reliability and Maintainability 
(R&M) upgrade. This program consolidates electronic hardware increasing 
Mean Time Between Failure Rates. Required procurement funding for FY98 
and beyond is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                  Title                     APPN     FY98     FY99     FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
B-52 EVS R&M............................     3010      2.9      0.0      0.0      0.0      0.0      0.0      2.9
----------------------------------------------------------------------------------------------------------------

     This initiative will result in potential savings of $42.5 million 
over a 40 year life cycle of the weapons system.
    F-15C/D PW-220E Engine: The PW-220E engine modification provides 
improved safety, performance, reliability, and operability; while 
reducing maintenance and logistics support. Required procurement 
funding for FY 98 and beyond is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                  Title                     APPN     FY98     FY99     FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
F-15A/B/C/D.............................     3010     73.2      0.0      0.0      0.0      0.0      0.0     73.2
----------------------------------------------------------------------------------------------------------------

    This additional funding in fiscal year 1998 will accelerate the 
upgrade of 1.5 squadrons (27 PAA) and will result in a savings of 
approximately $28.3 Million across the life cycle of the weapons 
system.
    Precision Guided Munitions: The GBU-28 and CALCM weapons are force 
multipliers, allowing better mission effectiveness while reducing 
attrition, sorties required, conflict duration, and collateral damage. 
Additional funding in fiscal year 1998 will accelerate procurement of 
GBU-28 and 10 CALCM Block II penetrator missile kits. Required 
procurement funding in FY98 and beyond is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                  Title                     APPN     FY98     FY99     FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
CALCM (10)..............................     3020     18.8     25.4     25.0     30.0      0.0      0.0     99.2
GBU-28 (152)............................     3011     16.8    150.0    150.0      0.0      0.0      0.0    316.8
----------------------------------------------------------------------------------------------------------------

    Additional funding of $18.8 million in fiscal year 1998 will 
accelerate CALCM Block II IOC by one year, and an additional $16.8 
Million will accelerate procurement of the GBU-28, which is well below 
its required inventory.
    HH-60G FLIR: Additional funds in fiscal year 1998 will allow 
procurement of the remaining 43 Q-16 sets to equip the total force HH-
60 fleet planned for acquisition in FY04-05. Required procurement 
funding in FY98 and beyond is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                  Title                     APPN     FY98     FY99     FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
HH-60 FLIR (43).........................     3010     33.6      0.0      0.0      0.0      0.0      0.0     33.6
----------------------------------------------------------------------------------------------------------------

    These additional FLIRs will preclude having to transfer existing 
FLIRs between units and aircraft to meet current operational 
requirements. Because the HH-60s have already been wired for accepting 
this FLIR, no additional installation costs are required. Acquisition 
in fiscal year 1998 will avoid line shutdown/startup costs in FY04.
    F-15E Attrition Reserve Aircraft: The Air Force is currently three 
short of the F-15E requirement. Unfortunately, fiscal constraints 
prevented funding of these aircraft in the FY98 budget. Required 
procurement funding in FY98 and beyond is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                 Title                    APPN     FY98      FY99      FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
F-15E.................................     3010    100.8     -165.0      0.0      0.0      0.0      0.0    100.8
----------------------------------------------------------------------------------------------------------------

    This initiative will result in approximately $65 million cost 
savings in economy of scale, and also avoids approximately $25 million 
in shutdown/overhead costs due to concurrent production with Saudi F-
15s.
    F-16 Support Equipment: The Avionics Intermediate Shop (AIS) is 
used for test, repair, reprogramming, and modification of F-16 avionics 
LRU's. Older systems are no longer transportable and will have parts 
obsolescence problems within three years. The Air Force has procured 35 
Improved Avionics Intermediate Shops (IAIS) with several multi-year 
contracts, with a requirement to procure 14 additional IAIS sets. 
Required procurement funding for these sets is ($ in millions):

----------------------------------------------------------------------------------------------------------------
                  Title                     APPN     FY98     FY99     FY00     FY01     FY02     FY03    Total
----------------------------------------------------------------------------------------------------------------
F-16....................................     3010     31.5     36.0      0.0      0.0      0.0      0.0     76.5
----------------------------------------------------------------------------------------------------------------

    This initiative will result in significant decreases in shipping/
depot costs and will also significantly reduce the deployment 
requirements of F-16 units. Deployment savings have been confirmed at 
approximately $2 million per year for every 12 aircraft that deploy. 
Manpower requirement have decreased from 18 to 8 for the Improved AIS 
kits, and airlift requirements have decreased from over 30 pallets down 
to just 2.
                        INFORMATION SUPERIORITY
    AWACS Extend Sentry: The effort (PE 27417F), currently #22 on the 
CSAF FY98 Plus-Up Priorities List, is a candidate for earlier and 
cheaper ``fielding''. Extend Sentry is an aggressive sustainment effort 
which takes the AWACS program into the 21st century, decreases air 
aborts, and addresses Reliability, Maintainability, and Availability 
(RM&A) issues. Extend Sentry is not a program per se, but a 
comprehensive list of individual projects with a common goal of 
increasing aircraft availability through reduced maintenance/depot 
downtime and addressing long-standing operational deficiencies.
    The additional funding requested (by appropriation) is as follows:
                                                                    FY98
3600..............................................................  28.1
3010..............................................................  27.0
3400..............................................................   4.1
                                                                  ______
    Total.........................................................  59.2

    These funds will be used to fund several currently unfunded Extend 
Sentry projects. Savings achieved will be in reduced maintenance man-
hours, reduced on-equipment maintenance hours, reduced number of 
aborts, and reduced Programmed Depot Maintenance (PDM) flow days, thus 
increasing overall RM&A of the AWACS fleet.
    It is important to note that, as a collection of individual 
projects, Extend Sentry can be implemented on an incremental basis 
consistent with available funding, thus any increase in funding will 
allow the incremental achievement of program objectives at an earlier 
date.
                                MOBILITY
    GATM: NA--GATM is not currently funded.
    Nav Safety Phase II: NA--Nav Safety Phase II is not currently 
funded.
    KC-135 DPEM: NA--DPEM is not an acquisition program.
    C-130 Support: NA--This unfunded priority is not an acceleration, 
but fixes unfunded ICS, support equipment, and spares for aircraft 
already in the USAF program. The concepts of fielding the weapon system 
cheaper or earlier do not apply.
                 SPACE/NUCLEAR COMMAND AND CONTROL (C2)
    Range Standardization and Automation (RSA) program: The upgraded 
communications, range safety, remote control, status display, and 
mobile telemetry systems could be fielded earlier and more cheaply by 
adding $36.8 million of RDT&E and procurement funding in FY 1998 to 
accelerate the program to the original schedule. The added RDT&E and 
procurement funding would increase the estimated FY 1998 RDT&E and 
procurement funding total to $157.7 million. The estimated RDT&E and 
procurement funding stream for FY 1999 through FY 2003 averages $140.2 
million per year. This estimate includes potential RDT&E and 
procurement savings averaging $14.0 million per year in FY 2000 through 
FY 2002. Beginning in FY 2003, the estimate includes operations and 
maintenance savings of $20.0 million per year.
    Spacetrack: Providing an additional $39.1 million for program 
activities saves $7.5 million over the FYDP. Given the additional $39.1 
million, the outyear funding required, by appropriation, is as follows.

----------------------------------------------------------------------------------------------------------------
                                                        FY98      FY99      FY00      FY01      FY02      FY03
----------------------------------------------------------------------------------------------------------------
RDAF Adjustment.....................................     +22.6  ........  ........  ........  ........  ........
Total RDAF Required.................................      51.2      14.1      12.5       0.0       0.0       0.0
OPAF Adjustment.....................................      +1.3  ........  ........  ........  ........  ........
Total OPAF Required.................................       8.7       1.5       1.3       4.0       4.0       4.0
OMAF Adjustment.....................................     +15.2  ........  ........  ........  ........  ........
Total OMAF Required.................................      59.0      48.0      50.1      60.6      57.3      62.7
----------------------------------------------------------------------------------------------------------------

    Global Positioning System (GPS) Accuracy Improvement: Initiative is 
currently projected to provide a 32% increase in accuracy for our 
warfighters in April 2000. The requested FY98 funding increase ($6 
million) would allow us to accelerate delivery of this dramatic 
improvement to provide a majority of the capability (18-28% accuracy 
improvement) by November 1998.

----------------------------------------------------------------------------------------------------------------
                                                        FY98      FY99      FY00      FY01      FY02      FY03
----------------------------------------------------------------------------------------------------------------
RDAF Adjustment.....................................      +6.0  ........  ........  ........  ........  ........
Total RDAF Required.................................      12.3       2.6  ........  ........  ........  ........
----------------------------------------------------------------------------------------------------------------

    MEECN: The FY98 PB starts procurement of the Minimum Essential 
Emergency Communications Network (MEECN) Extremely High Frequency (EHF) 
capability for the ICBM Launch Control Centers in FY99. By adding $1.5 
million for Request for Proposal (RFP) package development, the RFP 
package could be developed and released in FY98 allowing contract award 
to occur at the beginning of FY99 avoiding approximately six months of 
RDT&E schedule delay.

----------------------------------------------------------------------------------------------------------------
                                                        FY98      FY99      FY00      FY01      FY02      FY03
----------------------------------------------------------------------------------------------------------------
RDAF Adjustment.....................................      +1.5  ........  ........  ........  ........  ........
Total RDAF Required.................................       1.5      12.5      23.6      12.0       0.0       0.0
----------------------------------------------------------------------------------------------------------------

    SCAMP: The Extremely High Frequency (EHF) Single-Channel Anti-jam 
Man-Portable (SCAMP) satellite communication terminals outyear funding 
is currently being addressed in the FY99 APOM. Decisions on the funding 
are not yet complete. The SCAMP terminals will provide secure, 
survivable Milstar connectivity to strategic forces.
    $9.5 million in FY98 would procure for CINCSTRAT (a) installation 
and integration of 14 SCAMP terminals and (b) electro-magnetic pulse 
(EMP) hardened input/output devices for 87 SCAMP terminals. The input/
output devices will be utilized at tanker bases and with bomber 
dispersal terms to insure survivable force direction and reportback. 
Cost savings and earlier fielding could be achieved if $9.5 million in 
Other Procurement was provided in FY 98. $0.3 million would be saved 
due to inflationary costs and discontinuing the current communications 
system (the Ground Wave Emergency Network (GWEN)) would result in $20 
million of operations and maintenance cost avoidance.

----------------------------------------------------------------------------------------------------------------
                                                        FY98
                                                        Start     FY99      FY00      FY01      FY02      FY03
----------------------------------------------------------------------------------------------------------------
OPAF Adjustment.....................................      +9.5  ........  ........  ........  ........  ........
Total OPAR required.................................       9.5       0.4       0.0       0.0       0.0       0.0
----------------------------------------------------------------------------------------------------------------

    Nuclear-detonation Detection System (NDS): Outyear funding is 
currently being addressed in the budget process. Decisions on the 
funding are not yet complete.
    FY98 program start funding profile:

----------------------------------------------------------------------------------------------------------------
                FY98 Start                    FY98      FY99      FY00      FY01      FY02      FY03      Total
----------------------------------------------------------------------------------------------------------------
RDAF Required.............................       1.4       2.8       3.4       3.6       4.0       4.3      19.5
OPAF Required.............................       1.8       1.3       2.2       2.5       3.8      10.6      22.2
                                           ---------------------------------------------------------------------
      Total...............................       3.2       4.1       5.6       6.1       7.8      14.9      41.7
----------------------------------------------------------------------------------------------------------------

    Funding profile for FY99 program start:

----------------------------------------------------------------------------------------------------------------
                FY99 Start                    FY98      FY99      FY00      FY01      FY02      FY03      Total
----------------------------------------------------------------------------------------------------------------
RDAF Required.............................  ........       3.8       5.1       5.8       7.5      13.2      35.4
OPAF Required.............................  ........       1.5       2.0       2.2       2.9       5.0      13.6
                                           ---------------------------------------------------------------------
      Total...............................  ........       5.3       7.1       8.0      10.4      18.2      49.0
----------------------------------------------------------------------------------------------------------------

    Funding profile for FY00 program start:

----------------------------------------------------------------------------------------------------------------
                FY00 Start                    FY98      FY99      FY00      FY01      FY02      FY03      Total
----------------------------------------------------------------------------------------------------------------
RDAF Required.............................  ........  ........       8.4       9.8      12.2      14.8      45.2
OPAF Required.............................  ........  ........       3.3       3.8       4.0       5.9      17.0
                                           ---------------------------------------------------------------------
      Total...............................  ........  ........      11.7      13.6      16.2      20.7      62.2
----------------------------------------------------------------------------------------------------------------

    The potential savings to the program (assuming FY98 Start) are $7.3 
million over an FY99 program start and $20.5 million over a FY00 
program start.
                               LOGISTICS
    The POMM approved a 12-year modernization program (fiscal year 1999 
through fiscal year 2010) for the Vehicular Equipment procurement 
account (Budget Program 82) in the Other Procurement, Air Force (3080) 
Appropriation. An additonal $95 million in fiscal year 1998 would start 
the modernization program one year earlier and result in outyear 
(fiscal year 2010) savings of $127.1 million. Current POM funding 
stream: FY99--$203.6 million; FY00--$261.4 million; FY01--$226.2 
million; FY02--$234.8 million; FY03--$269.8 million.
    Fielding of the improved M1642 modification kits for M16 rifles can 
be done earlier and potentially cheaper if funds are provided in FY98. 
The total funded FYDP requirement of almost 51,400 kits can be procured 
in FY98. The kits modify existing equipment to fire steel-jacketed 
bullets with greater accuracy, range and penetration; they provide 
three-shot burst firing (vice full-automatic) modern sights, new 
handguards and stock.

Appropriation 3011*

Total Current Program:
    FY98..........................................................   6.0
    FY99..........................................................   2.8
    FY00..........................................................   2.0
    FY01..........................................................   4.0
    FY02..........................................................     0
    FY03..........................................................     0
                                                                  ______
      Total.......................................................  14.8

*Appropriation 3011 is munitions.

    Exact savings are difficult to quantify, but at the minimum, we can 
save approximately $.4 million in inflation costs.
    Question. Provide a list of R&D of production programs or projects 
for which funding is included in the fiscal year 1998 budget that are 
stretched out beyond technically attainable schedule primarily due to 
lack of funding in either fiscal year 1998 and/or the outyears.
    Answer. The following programs would fall under this category: 
Spacetrack; Eastern Ranges; the Minimum Essential Emergency 
Communications Network (MEECN) projects for Modified Miniature Receive 
Terminals (MMRT) and Defense Improved Emergency Messaging Automated 
Transmission System (IEMATS) Replacement Command and Control Terminals 
(DIRECT); Military Satellite Communications (MILSATCOM) terminals; the 
Global Command Support System-Air Force (GCSS-AF); the B1B Conventional 
Mission Upgrade Program (CMUP) Block D Simulator; and the B-1B CMUP 
Defensive System Upgrade Program (DSUP) Low Rate Initial Production 
(LRIP).
    Question. Indicate all programs for which procurement funding is 
included in your fiscal year 1998 budget that would be good candidates 
for multiyear procurement funding, assuming additional funding were 
available in fiscal year 1998 and the outyears. Provide for these 
programs a comparison of the current acquisition funding stream 
compared to a potential multiyear profile (assuming a fiscal year 1998 
start), along with the additional up-front investment that would be 
required and the potential savings that would be likely.
    Answer. There are no additional programs that would be good 
candidates for multi-year procurement except those that are currently 
funded with multi-year procurement.
    Question: Identify any procurement programs in the fiscal year 1998 
budget where provision of additional procurement funds in fiscal year 
1998 would have a very favorable impact on production unit prices?
    Answer.
                            air superiority
    F-15E Attrition Reserve Aircraft: To meet the 20 Fighter Wing 
Equivalents (FWE) force requirement, the Air Force needs to procure 3 
F-15E attrition reserve aircraft in addition to the 3 which are 
currently in the fiscal year 1998 budget. These aircraft must be 
procured no later than FY98 to take advantage of current foreign 
military sales (FMS) to Saudi Arabia. Buying these additional 
quantities in concert with FMS sales saves between $32 million and $38 
million per aircraft.
                                 SPACE
    Range Standardization and Automation (RSA): This is an 
infrastructure program developing instrumentation, communications, and 
control & display systems for a wide rang of functions at two 
geographically separate locations. A major program objective is 
equipment standardization to save acquisition and support costs. 
Consequently, large quantities of communications and computer equipment 
will be procured. Due to fiscal constraints, large quantity purchases 
planned for fiscal year 1998 are being broken up into smaller buys, 
increasing overall program cost. $36.8 million additional funds in 
fiscal year 1998 will alleviate this situation and allow the program to 
resume the plan for the large quantity buys. Accordingly, the unit 
costs will be reduced by the economies of scale possible with increased 
procurement funds.
                               LOGISTICS
    Vehicular Equipment: Most of the budget lines in the Vehicular 
Equipment procurement account (Budget Program 82 in the Other 
Procurement, Air Force (3080) Appropriation) would realize unit price 
savings by buying substantially higher quantities. Many of the vehicles 
are procured through GSA, whose contracts in most cases call for lower 
unit prices for increased quantities or contain clauses which allow the 
Air Force to negotiate directly with contractors for lower prices for 
higher quantities. In addition, inflation costs would be saved by 
buying the vehicles in fiscal year 1998 rather than in a later fiscal 
year.
                               PERSONNEL
    Joint Primary Aircraft Training System (JPATS): The planned JPATS 
acquisition profile meets military requirements; however, savings and 
decreased beddown times would be realized for each training based with 
a more efficient profile. Aircraft Procurement funds are in program 
element 84740F, New AEFC Aircraft. The current FY98 President's Budget 
FYDP profile is:

----------------------------------------------------------------------------------------------------------------
                       (TY$M)                           FY98      FY99      FY00      FY01      FY02      FY03
----------------------------------------------------------------------------------------------------------------
Aircraft Procurement, AF............................      65.4      92.5      92.4     123.0     181.7     256.3
Quantity............................................        18        12        18        34        43        43
----------------------------------------------------------------------------------------------------------------

    The increases required for a more efficient production rate are:

----------------------------------------------------------------------------------------------------------------
                       (TY$M)                           FY98      FY99      FY00      FY01      FY02      FY03
----------------------------------------------------------------------------------------------------------------
Aircraft Procurement, AF............................     +12.2     +27.0     +24.6      -0.5     +51.0     +69.5
Quantity............................................        +4       +10       +10      +/-0       +17       +17
----------------------------------------------------------------------------------------------------------------

    The accelerated profile will decrease JPATS unit cost, result in a 
program savings of $59.4 million decreased beddown time from 3 to 2 
years per base.
    Question. Identify each production program in the fiscal year 1998 
budget whose main rationale is to sustain a minimal industrial base.
    Answer. The Air Force has not budgeted any FY 1998 funds for 
programs whose main rationale would be to sustain a minimal industrial 
base.
    Question. Please indicate in total and for the top 20 largest 
weapon systems both the peacetime operating requirement (separately) 
for spare parts funded either as initial spares in procurement accounts 
or as consumable spares in DBOF, and the percentage of requirement met 
through the fiscal year 1998 budgeted level of funding. Project how 
this would change by the end of the FYDP.
    Answer. Beginning in FY 1998, replenishment spares are funded in 
O&M. The table below identifies what percent of known initial spares 
requirements by weapon system for the top twenty weapon systems is 
funded in the FY 1998 procurement accounts and what percent will be 
funded by the end of the FYDP.

------------------------------------------------------------------------
                                                              Percent of
                                                 Percent of  requirement
    Ranking and weapon system          FY98     requirement   funded by
                                                 funded in    the end of
                                                    FY98       the FYDP
------------------------------------------------------------------------
1 C-17 Aircraft..................       89.652            7           96
2 B-2 Squadrons..................       67.924           18           91
3 JOINT STARS....................       35.139            7           90
4 F-15E Squadrons................       22.870           28          100
5 Manned Reconnaissance System...       17.781            5           72
6 KC-135S........................       10.470           30          100
7 B-1B Squadrons.................        9.938            5           39
8 F-16 Squadrons.................        8.692            3           53
9 F-15 A/B/C/D Squadrons.........        7.231            6           92
10 Airborne Warning & Control            7.117            6           74
 System..........................
11 C-130 Airlift Squadrons.......        3.690            2           58
12 F-117A Squadrons..............        2.404           15          100
13 A-10 Squadrons................        1.560           19          100
14 C-141 Airlift Squadrons.......        1.193           16          100
14 B-52 Squadrons................         .837            6           65
16 Advance Communication System..         .823           29          100
17 Tactical Cryptologic Units             .782           22          100
 (ANG)...........................
18 Depot Maintenance (NON-IF)....         .559           10          100
19 MILSTAR Satellite Comm System          .513           19          100
 (SPACE).........................
20 Logistics Operations (NON-             .428            5          100
 DBOF)...........................
 Other Requirements..............         .287  ...........  ...........
 
Total Initial Spares: 289.89.
------------------------------------------------------------------------

    Question. Please indicate any potential FMS sales that are being 
discussed that could influence production unit prices once consummated, 
not including those whose impact is already factored into the 
production unit prices portrayed to Congress in fiscal year 1998 
budget.
    Answer. There are two potential system sales that are currently 
being discussed that could impact the FY98 budget.
    Discussions are ongoing with the United Arab Emirates and Norway 
for F-16 Fighter Aircraft purchases. If consummated soon these sales 
would have an impact on the FY98 budget. How much of an impact can not 
be determined at this time, as the impact would be dependent on the 
size of the buy.
    We are aware of direct commercial sales negotiations between 
McDonell Douglas and the United Kingdom for the lease or purchase of C-
17 Cargo Aircraft. This sale could result in savings to the US in the 
FY98 budget due to the company's increased business base. Exact dollar 
figures have yet to be finalized.
    Question. Please indicate what policy your service uses for major 
R&D and production programs, such as a ``budget to contract target 
cost'' or ``budget to ceiling contract costs'' or ``budget to most 
likely cost'' and identify which of your major programs in the fiscal 
year 1998 budget deviate from this policy and the attendant rationale.
    Answer. It is the practice of the Air Force to ``budget to most 
likely cost''. Responsibility for determining funding levels is left to 
the individual program manager, subject to review in the programming 
and budgeting cycles. While indeed there may be some programs with 
budgets equating to target or ceiling cost, the Air Force has 
determined that this is indeed the most likely cost for the budget.
    Question. Please indicate what policy your service uses to provide 
a budget within R&D and production programs for unknown allowances and/
or economic change orders, and identify any programs in the fiscal year 
1998 budget deviate from this policy and the attendant rationale.
    Answer. Determination of the amount of reserve budgeted for in 
modernization programs is based on the judgment of the individual 
program managers. These estimates are based upon the technical 
complexity and schedule risk associated with each program. These 
estimates are then reviewed during the programming and budgeting 
process for reasonableness.
    Question. Please identify any R&D or production program which has a 
contract for which all or a portion is budgeted in fiscal year 1998 for 
a contract award fee larger than $10 million. Provide the amount 
budgeted for the award fee, the basis on which the amount was 
calculated (e.g. 100% fee base don the contract), and the historical 
performance of the contractor in terms of percentage of award fee 
awarded during prior award fee periods under the same contract.
    Answer. F-22: $88,293,426 award fee for LMAS, 0006 Contract; 
$10,288,291 award fee for Pratt & Whitney, 0007 Contract.
    For both contracts the basis of the award fee amount is the 
estimated contract cost for that particular fiscal year. If the 
contractor meets all of the requirements during a given award fee 
period, the contractor will receive 100% of that period's award fee 
pool. Beginning with period 9 (1 Apr-30 Sep 95), any unearned portion 
of the award fee pool is available for rollover to incentivize high 
priority topics. Specific criteria are established for these topics. If 
the contractor meets the criteria, he will be awarded 100% of the 
rollover. Below are the historical performance of the contractors in 
terms of percentage of award fee earned during the prior award fee 
periods.

------------------------------------------------------------------------
                                    Percent of   Percent of
                                       LMAS         P&W      Fiscal year
------------------------------------------------------------------------
Period 1.........................           93           97         1991
Period 2.........................           91           96         1992
Period 3.........................           84           97         1992
Period 4.........................           91           89         1993
Period 5.........................           87           82         1993
Period 6.........................           88           81         1994
Period 7.........................           82           85         1994
Period 8.........................           84           80         1995
Period 9.........................           83           85         1995
Period 10........................           83           79         1996
Period 11........................           79           81         1996
------------------------------------------------------------------------

                       JOINT STRIKE FIGHTER (JSF)
    The budget for the Joint Strike Fighter Program includes $24.2 
million in FY 1998 for award fee under the Concept Demonstration 
Program contract with Pratt and Whitney. The available award fee amount 
for each period of the contract was determined as a percentage of the 
total available award fee, based on the amount and importance of work 
to be performed in each period. The key events for the FY 1998 award 
fee determinations are first engine to test and first lift system and 
nozzle to test. This is a new contract and no award fee payments have 
been made to date.
                             AIRBORNE LASER
     ABL's award fee pool in FY98 is $10,960,136.
     Award fee basis is 12% of the cost line items on contract 
for that period.
     No historical award fee performance on the contract.
     First PDRR award fee period ends 31 March 97.
                                  B-1B
    No single B-1B Conventional Mission Upgrade Program (CMUP) contract 
has more than $10 million for award fee in FY98. The total budgeted 
award fee pool in FY98 for all B-1B CMUP contracts (100% of fee based 
on actual contract or best estimate) is approximately $16.5 million (3 
different contracts for 4 programs). The percentage range previously 
awarded under these various CMUP contracts was 94% to 100%.
                                 TITAN
    Titan Space Launch Vehicles has two such contracts. The launch 
operations contract, F0471-95-C-0012, has an award fee of $12.5 million 
budgeted for FY98. The award fee is based on contract cost and up to 
100% of the $12.5 million may be awarded. For the past few years, the 
contractor has received between 95 and 100% of the award fee. The 
production contract, F0471-95-C-0001, has an award fee of $17.3 million 
budgeted for FY98. This is also based on contract cost and the award is 
also up to 100% of the $17.3 million. For the past few years, the 
contractor has earned between 95 and 100% of the award fee.
                                MILSTAR
    Milstar production contract (F04701-92-C-0049) for the BLOCK II 
satellites has an FY98 award fee of $62.9 million. The amount of the 
fee is based on contract cost. Up to 100% of the $62.9 million may be 
awarded. To date, Lockheed Martin Missiles and Space has been awarded 
94% of the award fee. There is a contract clause that enables the 
program office to roll forward unearned award fee from the previous 
contract period as additional incentives to the contractor.
                  SPACE BASED INFRARED SYSTEM (SBIRS)
    Space Based Infrared System (SBIRS) HIGH EMD Contract (F04701-95-C-
0017) has an FY98 award fee of $37 million. The amount is 100% fee 
based on contract cost. Due to recent award of contract (8 Nov 96), the 
first award fee period has not completed and no fee yet awarded. There 
is a contract clause that enables the program office to roll forward 
certain unused portions of the award fee pool to the next award fee 
period.
    Question. Please identify all R&D and production programs/projects 
for which Congress appropriated funds in fiscal year 1997 which since 
the Appropriations Act was enacted have been either terminated or 
significantly down-scoped. For each, indicate the status of the fiscal 
year 1997 and any earlier active fiscal year funds where funds have 
been diverted to another purpose.
    Answer. Congress appropriated $81.3 million in FY97 funds for 
advance procurement of F-22 Pre-Production Vehicles (PPVs). The Air 
Force has since terminated this project.
    The Air Force intends to use FY97 F-22 Aircraft Procurement Advance 
Procurement funding, which was appropriated for Pre-Production 
Verification (PPV) aircraft, for Out-of-Production Parts (OPP). The 
Defense Acquisition Board (DAB) approved an F-22 program restructure, 
thereby requiring a change in use of the FY97 funds. The Air Force is 
forwarding notification letters to the Congressional Defense Committees 
that will explain our purposed use of these funds.
    As documented in the FY96 President's Budget (PB), the original use 
for the FY97 Aircraft Procurement Advance Procurement funding was to 
support long lead funding requirements for PPV aircraft, with a lot buy 
to occur in FY98. The FY97 President's Budget submission moved all PPV 
funding for Aircraft Procurement to the RDT&E appropriation. The Air 
Force's interpretation of the FY97 Appropriation Conference position 
was that the Aircraft Procurement line ($81.3 million) was for PPV long 
lead buy usage. The DAB approved the F-22 program restructure which 
eliminated the PPV aircraft requirement and used for long lead funds 
for OPP.
    The use of FY97 Aircraft Procurement Advance Procurement funds for 
OPP will support the cost of partial redesign and the purchase of 
parts. Both of these efforts support production Losts 1-5. Funds to 
begin the redesign effort are required by May 97 to support forecasted 
contract award in June 97. In order to complete the redesign effort, 
additional funding has been budgeted on an incremental basis in Advance 
Procurement funding starting in FY98 through FY02. Loss of FY97 OPP 
funding forces a one year slip in production resulting in cost 
increases due to inflation, overhead, and breaks in production.
    Question. Identify all ACTD funding in the RDT&E, Air Force 
appropriation account in each fiscal year 1997 through the FYDP. 
Indicate total cost of each listed. ACTD and whether other service 
appropriations are contributing funds for it.
    Answer. The Air Force is using RDT&E funds in two active ACTDs, 
Combat Identification and Navigation Warfare. Funding is as follows, in 
thousands of dollars:
                         COMBAT IDENTIFICATION

----------------------------------------------------------------------------------------------------------------
                                                     FY96     FY97     FY98     FY99     FY00     FY01    Total
----------------------------------------------------------------------------------------------------------------
Air Force........................................    3,600    2,992        0        0        0        0    6,592
Army.............................................    6,824    6,929        0        0        0        0   13,753
OSD..............................................   17,459   15,268    4,000    4,000        0        0   40,727
                                                  --------------------------------------------------------------
      Total......................................   27,883   25,189    4,000    4,000        0        0   61,072
----------------------------------------------------------------------------------------------------------------

                           NAVIGATION WARFARE
    (Note: Totals include FY95 funds, not shown.)

----------------------------------------------------------------------------------------------------------------
                                                     FY96     FY97     FY98     FY99     FY00     FY01    Total
----------------------------------------------------------------------------------------------------------------
Air Force........................................   10,450   18,902    7,263      939    1,300        0   42,029
OSD..............................................    6,669    4,500    3,900      300        0        0   15,369
                                                  --------------------------------------------------------------
      Total......................................   17,119   23,402   11,163    1,239    1,300        0   57,398
----------------------------------------------------------------------------------------------------------------

    [Clerk's note.--End of questions submitted by Mr. Young.]
                                         Wednesday, April 16, 1997.

                   BALLISTIC MISSILE DEFENSE PROGRAM

                                WITNESS

LIEUTENANT GENERAL LESTER L. LYLES, UNITED STATES AIR FORCE, DIRECTOR, 
    BALLISTIC MISSILE DEFENSE ORGANIZATION

                              Introduction

    Mr. Young. The Committee will come to order.
    General, let me explain to you that some of our 
subcommittee members are marking up their portions of the 
supplemental, so our attendance might not be too good this 
afternoon. Also I wanted to tell you that I had a really great, 
exciting opening statement to make, but I am going to wait and 
talk to you about that later, because I want to recognize 
Chairman Livingston for any statement that he would like to 
make and questions that he would like to ask before he moves on 
to some of the markups.
    If that is okay with you, General, we will turn it over to 
Chairman Livingston.
    [The statement of Mr. Young follows:]

    Today, the Committee will conduct a hearing on the Department of 
Defense's programs in the area of Ballistic Missile Defense. Our 
witness is Lieutenant General Lester L. Lyles, the Director of the 
Ballistic Missile Defense Organization (BMDO). We welcome you on your 
first visit to the Committee General Lyles, and look forward to your 
testimony.
    This Committee has paid close attention to our nation's Ballistic 
Missile Defense programs. In part, this is because we remember the 
single SCUD attack which took the lives of 28 Americans during Desert 
Storm. Yet our concern is not focused on the past, it is focused on the 
future protection of our troops and our citizens.
    The proliferation of ballistic missiles has increased dramatically. 
The number of nuclear states has more than doubled over the last 20 
years. In addition to these 13 nuclear states, there are about 30 non-
NATO countries who collectively possess thousands of theater ballistic 
missiles. About 16 developing nations have chemical weapons programs 
and 11 others have biological weapons research programs.
    In light of this threat, and out of a desire to protect our troops 
and our citizens, this Committee added $800 million to the 1997 budget 
request for missile defense. We hoped that the same emphasis on missile 
defense would be reflected in this year's budget. Unfortunately, the 
President's Budget for 1998 is much less than we expected. The budget 
request for Ballistic Missile Defense is $2.9 billion, almost $700 
million below the 1997 appropriation of $3.6 billion.
    Although the President's budget plan is discouraging, there is some 
good news to report. There have been several successful flight tests 
over the last several months--in large part due to the additional 
resources provided by Congress to BMDO over the past two years.
    In January, the Navy Lower Tier system intercepted a Lance target 
missile and is now proceeding to the Engineering and Manufacturing 
Development phase of the acquisition process.
    In March, a SCUD missile was shot down by an upgraded guidance 
enhanced Patriot missile.
    And, on March 11, the Arrow missile had a partial failure but still 
destroyed its target, with a body-to-body kill.
    In addition, programs that were lacking direction a year or so ago 
now have been given new focus. The Navy Theater Wide program has been 
designated as a ``core'' theater missile defense program by the 
Undersecretary of Defense for Acquisition and Technology. And, the 
National Missile Defense (NMD) program has been designated as a 
``Deployment Readiness'' program.
    Unfortunately, there have also been some failures. Most notably, on 
March 6, the Theater High Altitude Area Defense (THAAD) missile failed 
to intercept its target. This was a difficult setback--particularly 
since this was THAAD's fourth consecutive failure.
    While there are certainly technical reasons for this failure, the 
Administration's erratic policy and budget approach to ballistic 
missile defense has certainly not helped in the management or execution 
of this program.
    General Lyles, this Committee would like to work with you to bring 
some stability into ballistic missile defense programs. A rational 
strategy and stable funding are critical factors for the proper 
management and execution of these programs. I know you will want to 
address these issues in your testimony and so I will not go into 
further detail at this time.

    Mr. Young. Mr. Livingston.
    Mr. Livingston. Thank you very much, Mr. Chairman.
    Rather than preempt your statement, let me simply ask 
unanimous consent, which I hope to get, which would put my 
exchange with General Lyles after your opening statement.
    Mr. Young. We can do that.

                           Helsinki Agreement

    Mr. Livingston. All right. General, we are glad to have you 
here. I appreciated your comments off the record just as we 
were standing there chatting, but I thought it was important to 
put a couple of comments of my own on the record.
    As you know, the administration has just worked out an 
agreement with the Russians, and I think three former states of 
the old Soviet Union, to put some degree of limits on our 
ability to intercept missiles from abroad. At the same time, 
the Russians, signatories to that agreement, we read, are 
selling, actively selling, some of their missile technology to 
the Iranians, who are not signatories to that agreement.
    It strikes me as a little strange why we are, on the one 
hand, negotiating to slow down our defenses and limit our 
ability to intercept incoming missiles, when the cosignatories 
or coparticipants to that agreement are selling highly 
technical capabilities to people who will not, even if they 
were signatories, abide by it, and certainly will not so long 
as they are not signatories.
    So I am very, very concerned about the wisdom of all of 
this, especially in light of the most recent revelations in the 
newspapers. But I accept your earlier assurances that currently 
the negotiations and agreements with the Russians would not 
limit our ability to deploy Theater High Altitude Area 
Defense--THAAD or Navy Upper Tier or some of the other systems 
that are on the books as being developed--unfortunately, not 
deployed, but developed.
    I am gratified by that, and I certainly would hope that, 
likewise, those agreements wouldn't preclude us in the future 
from adopting space-based systems.
    But I guess my one big question that I would like you to 
address on the record is specifically why we are slowing down 
our defenses, agreeing with the Russians to slow down our 
defenses, when in fact adversaries who are not parties to this 
agreement may develop faster systems, faster offensive weapons, 
which will take faster defenses, and because of this, we would 
have to go to the Russians and those other countries to get 
permission to upgrade our defenses before we could deal with 
them. Why is that?
    General Lyles. Congressman Livingston, I can't comment 
exactly on what stimulated some of those discussions and the 
rationale for all the words that are there. I can assure you, 
however, that the agreement that was struck at Helsinki in no 
way dumbs down, slows down or affects our current theater 
missile defense systems. Nor does it affect any system that we 
currently have planned in the theater missile defense arena.
    In fact, the demarcation limits specifically impact the 
types of targets that we can test against, targets that 
potentially could replicate an strategic intercontinental 
ballistic missile, or ICBM--I am sure that is the primary 
concern of the Russians--to 5 kilometers per second, 3,500 
nautical mile range. Those are essentially the limits in terms 
of the types of targets that we could test against with our 
current Theater Missile Defense or TMD systems.
    The part that impacts speed for our particular intercepts 
as referred to in the language of the Helsinki agreement is 
that we currently have no plans for systems that have a speed 
greater than the numbers that are quoted in the Helsinki 
agreement. Our interpretation, the interpretation of our policy 
people is, since the words say ``planned for,'' if we saw a 
need to actually develop something that has a higher velocity, 
yes, under the agreement we would have to notify the Russians. 
But I don't think that would in any way constrain us if we 
thought the threat required that we have a system with certain 
capabilities.
    The words were carefully construed to ensure that for those 
systems that maybe require higher velocities, that they would 
be put in a planned-for stage, and not forbidden stage. We are 
not forbidden from having systems with certain speeds.
    Mr. Livingston. Just for the sake of argument, suppose the 
Iranians or Chinese or North Koreans or Libyans or somebody 
else were to develop two types of missiles, say, missile A and 
missile B, and missile A could be easily intercepted by a 
countermeasure traveling 5,000 kilometers per second or slower, 
but missile B took a countermeasure traveling at least 6,000 
kilometers per second.
    Why would we logically, under any circumstances, wish to 
limit the speed of our ability to defend against such a weapon?
    General Lyles. Congressman, I think, again, the rationale 
was to ensure that we had some confidence-building measures 
relative to dealing with the Russians, to assure them that our 
theater systems, theater missile defense systems--I remind you, 
we are not talking about national missile defense systems, but 
theater--would not have the capability to be used to counter 
their strategic ICBMs.
    If we saw, however, a threat out there that had the speed, 
say, of a strategic ICBM, it was much, much higher and we 
required something with higher speeds for our interceptor, I am 
sure, again, the way the words are worded, that we can go ahead 
and develop that. We would have to notify the Russians, though, 
according to the Helsinki agreement. But the words do not 
require us to actually stop it. It doesn't say you cannot do 
that.
    Mr. Livingston. I can only judge from the press reports, 
but the press reports indicate to me that we have to gain their 
consent because we have mutually agreed with them not to 
develop these systems; and it would seem, if we want to develop 
faster systems, that we have to gain their consent.
    Now, we have agreed the Chinese are selling to the 
Iranians, the Russians are selling to the Iranians, the 
Iranians are not signatories to this thing. Presumably the 
Russians are not making a distinction between whether they are 
a theater or national defense system or offensive weapons. They 
are just selling missile technology. I don't see why we should 
make that distinction.
    Frankly, this entire set of issues is not only mind-
boggling to me, but I think to 98 percent of the American 
people. We have made a distinction without a difference. We 
have proclaimed to be for arms control without any gain to the 
American people, and if anything, I think we have jeopardized 
the American people.
    Suppose our intelligence is not up to snuff, and one day we 
find out there is not only a threat, but that a potential 
attack is imminent within a week. Are we going to say to our 
striped trousers folks to go out and negotiate an agreement 
with the Russians so we can defend ourselves against getting 
New York blown up?
    General Lyles. I am obviously not the right one to answer 
that question, but my personal view is, given a threat of that 
particular nature, I am sure we will do what is right to 
protect our troops and our resources analysis, et cetera, and 
not go back and beg for forgiveness, if you will, in a scenario 
like that.
    Mr. Livingston. General, you are answering me, as well you 
should. You are an outstanding, not only public servant, but a 
representative of the armed forces; and I am sure the Air Force 
is proud of you, and you can't criticize current policy. But 
the current policy, as negotiated between this administration 
and the Russians, doesn't make sense when you compare it to the 
potential threat from the Iranians, the Libyans, the Chinese, 
the North Koreans, or any other asinine group out of there that 
doesn't give a whit about what we have signed our names to.
    Moreover, we are sitting here discussing whether or not we 
should develop systems in the distant future, and there is not 
one single word in any of this discussion about deployment of 
antimissile systems. I think that we ought to stop dithering 
about developing and start deploying, and I mean start 
deploying as quickly as we possibly can. Because the people 
that wish to eliminate hundreds or thousands or perhaps 
millions of our people in one fell swoop aren't going to sit 
around and worry about our agreement with the Russians, and 
they are not going to sit around and worry about whether or not 
we are developing an antimissile system.
    If they know we don't have an antimissile system, that is 
the time they are going to want to strike.
    General Lyles. Yes, sir.
    Mr. Livingston. Thank you very much. Thank you, sir.
    Mr. Young. Mr. Chairman, thank you very much. I know you 
have an extremely busy schedule today, with all of the 
subcommittee markups, so we appreciate your being here.
    Mr. Murtha, do you have any opening comments?
    Mr. Murtha. No.
    Mr. Young. General Lyles, you have the floor, sir. Your 
entire statement will be placed in the record and you can 
summarize any way you like.

                   Summary Statement of General Lyles

    General Lyles. Thank you, Mr. Chairman, I appreciate that.
    Mr. Chairman, members of the Committee, it really is a 
pleasure to be here to testify before you about a very 
important set of programs, our missile defense programs for the 
United States. I do have a formal statement that I will submit 
for the record, but if you don't mind, I would like to take 
just a couple of minutes to run through a very, very short 
statement and run through a few charts to illustrate exactly 
some the concerns of where we are today with our missile 
defense programs.
    I hope Congressman Livingston got a copy of the charts, 
because some of them are intended to illustrate some of his 
concerns about deploying and executing and getting programs out 
on the field to protect our resources.
    [Clerk's note.--The charts referred to by General Lyles are 
printed after his prepared statement. See page 468.]
    Mr. Chairman, when I was nominated to be the Director of 
the Ballistic Missile Defense Organization--BMDO, last year, 
last summer, I was charged by Dr. Kaminski and our Deputy 
Secretary of Defense, Dr. White, to bring my now 28 years of 
acquisition experience to all the issues that we are dealing 
with in the area of missile defense.
    There are two critical issues that they asked me to 
address. One is to ensure that our acquisition programs, all of 
our programs, are executable, that we are not just in an 
research, development and demonstration phase, but we are 
clearly trying to get systems out and capabilities out to the 
field; and also to ensure that our requisite technology 
programs, which have been the heart and soul of the old 
Strategic Defense Initiative Organization, SDIO, the early 
incarnation of BMDO, that those programs have an acquisition 
focus, that they are intended to help supplement and support 
both our current acquisition programs and even the future 
programs that we may have to take on in the near term.
    I consider this to be my personal charter, a charter for 
the Deputy Secretary of Defense, the Secretary of Defense, and 
obviously Dr. Kaminski. And the one keyword that I used with 
our people to illustrate exactly our key focus, it is the word 
``execution,'' to make sure we are doing things that have 
executable programs.
    My report to you today is along those lines, to show you 
where we are today, what we have accomplished, what some of our 
challenges are, and the things that we are trying to address in 
the very near future, and obviously, for the far term.
    I realize that this particular Committee has been very, 
very supportive of all of our missile defense programs, 
particularly our theater missile defense programs; and in that 
light, I am very pleased to report to you, Mr. Chairman and 
members, that we are aggressively moving on towards protecting 
our forward deployed forces, protecting our allies, protecting 
our assets, and improving our Theater Missile Defense--TMD 
systems and national systems to provide protection for the 
homeland in addition to our forward forces.
    I will give you a couple of examples of where we are today 
with some of the charts, but I also want to just illustrate we 
are complying, I think, with the National Missile Defense Act 
of 1991, 1993 and 1995 in trying to provide those capabilities 
as rapidly as possible.

                             Patriot System

    As an example, the Patriot system, the air and missile 
defense system we are fielding today, is much, much more 
capable than the system used during the Gulf War. We recently, 
as an example, completed fielding the first of three 
improvements that are part of the Patriot Advanced Capability 3 
or PAC-3 system. We are scheduled to field the final phase 
which consists of the full configuration PAC-3 in fiscal year 
1999, about a year and a half from now. This will include the 
very critical hit-to-kill capability that we think is 
absolutely necessary to be able to counter the threat out 
there, particularly the threat against weapons of mass 
destruction, whether they be nuclear, chemical or biological.
    The full-up system, which is very similar to the Extended 
Range Interceptor--ERINT, which this Committee has long 
championed from the technology development early on and the 
SDIO through the integration with the Patriot system, that full 
system will be tested and undergoing tests starting this 
summer.
    Mr. Chairman, I would like to call your attention and the 
attention of the members to the charts in front of you, if you 
will, and very quickly walk through those to illustrate exactly 
the kinds of things that we are accomplishing today.

                       The TMD family of Systems

    The first chart illustrates the total family of systems in 
the theater missile defense arena. There are a wide variety of 
weapons systems there, battle management command and control 
systems, sensor systems from space, ground-based systems. You 
see even the airborne laser program reflected there.
    Though this is not a BMDO program, it is managed and funded 
fully by the United States Air Force. It is part of our theater 
missile defense architecture, so we do consider it an integral 
part of our family of theater missile defense systems. It 
represents the tiered capabilities, the layered capabilities of 
defense that we feel that we have to have in order to protect 
our resources; and they all very, very complimentary in terms 
of the battlespace they are intended to protect, the assets 
they are intended to protect and how they would work together.
    They are also intended to be and will be interoperable, 
sharing information and also providing backup to each other.

                        TMD Capability of Growth

    If I can call your attention to the next chart, a key point 
that I think has been in the minds of the Congress for some 
time, since the Missile Defense Acts of 1991, and again 1993 
and 1995 and beyond, is to ensure that we are providing a 
robust set of capabilities for missile defense. What you see 
there, with the time lines at the bottom, are the kinds of 
improvements we have made since Desert Storm in our current 
missile defense posture, and the systems and capabilities that 
we are going to provide to increase that improvement so that we 
can really say we have an effective family of systems, a robust 
family of systems, to provide missile defense protection.
    You see up until today leading up to the top blue bar that 
says PAC-3, configuration 2, that is where we are as of today. 
Those capabilities are significantly greater than what we had 
in Desert Storm, as illustrated by the star to the far left-
hand side of the chart. We made changes in weapons systems and 
also made changes in some of our battle management command and 
control, and those are primarily shown in the blue bars here. 
We have made improvements, but we still have a long way to go.

                             Patriot System

    The next two charts give a better illustration relative to 
where we are today and where we will be very shortly with 
Patriot versus the Patriot system we had in Desert Storm. What 
you see illustrated on the first chart is the Patriot system 
performance versus a 500-kilometer theater ballistic missile 
threat, the kind of threat we saw during Desert Storm.
    The white space that you see, the white tear-shaped space 
you see on the left-hand side of the chart, is the capability 
in terms of battlespace, et cetera, that Patriot was able to 
provide for protection during Desert Storm.
    The green space is where we are today, significant 
improvement in terms of capability.
    The blue space is where we will be with the full-up PAC-3 
missile in the next year and a half or so.
    The second part of the chart to the right-hand side shows 
sort of a perspective of range capabilities. The numbers for 
the actual ranges are classified. I can provide those for the 
record. But the baseline is that we have essentially an 800 
percent increase in volume of protection with the Patriot 
system for 500-kilometer theater ballistic missile threats.

                       Patriot System Performance

    The next chart, if I can call your attention to that, shows 
the same Patriot system performance versus a 1,000-kilometer 
ballistic missile threat, a much longer threat than we saw 
during Desert Storm. You don't see a white space there 
representing what we had in Desert Storm, because we 
essentially had no capability with the Patriot for this sort of 
range of theater ballistic missile threat.
    The green is where we are today, and you see a tremendous 
improvement with PAC-3 when we get that hit-to-kill capability. 
That is where we are going with the PAC-3 system.

                              Willow Dune

    I would like to call your attention to an illustration of 
where we have dramatically shown what PAC-3 can do with the 
next chart. It is labeled Willow Dune. We have had over the 
last couple of months a series of tests that we code named 
Willow Dune. They were tests of the Patriot system against an 
actual SCUD. A couple of months ago, I could not have said that 
in an unclassified forum. The information is now unclassified.
    We tested the Patriot system in the Kwajalein and Pacific 
missile range against actual SCUDs. The type of SCUD is still 
classified, and where we got the SCUDs from is classified, and 
I will be very happy to provide that for the record or provide 
that outside of this particular forum.
    We tested in early February, and then again in early March, 
the Patriot system against a SCUD missile fired from some 360 
kilometers away. In the first test, in February, we used both a 
Guidance Enhanced Missile, GEM and a PAC-2 missile firing from 
a Patriot battery. We were very, very successful.
    We fired two missiles. The first one hit the target, hit 
the SCUD, and intercepted it perfectly. The second one was 
absolutely not necessary, but we had fired it anyway to 
demonstrate this salvo capability.
    We repeated the same test in March, in early March, again 
with another SCUD from our assets, again with a Patriot system. 
This time we used the Guidance Enhanced Missile, the GEM 
missile, fired from a Patriot battery. Once again, it was very, 
very successful.
    This test illustrated to us that with the threats that 
exist out there today, the SCUD missile threats and its various 
applications or variants that are in the hands of potential 
adversaries, that we can, even with the current Patriot 2 and 
the enhanced missile for the Patriot system, we can intercept 
it and have a very successful way to protect our resources.
    Also illustrated on that Willow Dune chart you see the list 
of assets at the very top. We not only tested the Patriot 
system against the SCUD, we had other sensors that were on 
board and being checked out to see how they worked in the 
interoperability sets, and a whole wide variety of various 
instruments that we had, both airborne and ground, to collect 
data, to make sure we fully understood exactly what a Patriot 
looks like when it is being fired as a threat system and 
exactly what kind of intercept we would accomplish.
    The tests were extremely successful. I would be happy to 
provide for you, or for any of the members or their staff, more 
details about both of the tests that we had.
    [The information follows:]

    In the first WILLOW DUNE test, the PATRIOT Fire unit 
acquired the Willow Dune target, and determined that a PAC-2 
missile could successfully engage and destroy the target. A GEM 
missile also was available and was launched immediately after 
the PAC-2 missile as part of the salvo firing doctrine against 
Theater Ballistic Missiles--TBMs and to additionally support 
the engagement if the PAC-2 did not successfully destroy the 
target.
    Data show the PAC-2 missile properly acquiring and fuzing 
its warhead at the intended intercept point against the target 
and that, after warhead detonati9on, the Willow Dune target was 
destroyed. The GEM missile following the PAC-2 missile could 
only identify target debris when it reached its intended 
intercept point. Additionally, ground sensors did not identify 
any ``large'' pieces of the target hitting the water under or 
near the intercept point. A THAAD radar tracking the engagement 
identified only target debris after the detonation of the PAC-2 
warhead.
    In the second WILLOW DUNE test, the target was engaged with 
a PATRIOT GEM missile. The missile had good Track Via Missile 
guidance and fuzed and detonated on the target (initial data 
data indicate detonation was at 5 meters or less from the 
target). The target telemetry package continued to provide data 
after detonation, however, the datastream did not continue from 
the previous Willow Dune engagement (this is indicative that 
more fragments were directed toward the target warhead, 
illustrating the differences between the GEM and PAC-2 
missiles).

                         NAVY AREA DEFENSE TEST

    General Lyles. If I can call your attention to the next 
chart, we not only have had successes with our Patriot system 
and the Army system and the Navy area program, we have also had 
successful intercepts very recently to demonstrate the 
capabilities there.
    The chart you are looking at is one that is very, very 
dramatic, particularly for those of us in the technology and 
acquisition realm. Much of what you see on the left-hand side 
of that chart is the last infrared image taken from the seeker 
of the Navy area system, the Navy area missile, just before it 
intercepted a Lance target. That particular target was a 
replicate of a SCUD; it was not an actual SCUD, but a replicate 
of a SCUD, and we had a very successful body-to-body intercept.
    Again, you can see the dramatic picture just from the 
seeker prior to the actual intercept itself. The right-hand 
side just shows the obvious explosion when the interception did 
take place. This test was on the 24th of January. It was a 
milestone test, and allowed us to proceed with the next phase 
of the Navy Area Defense Program.

                        SYSTEM INTEGRATION TEST

    The next chart illustrates another part of our 
responsibility within BMDO. It is not just to develop 
individual weapon systems, but to ensure that all of those 
systems are interoperable, that they can play together. We have 
been doing a series of what we call systems integration tests, 
really trying to check out and test the interoperability of all 
of the systems, all of the intercept systems, their radar 
systems, their battle management command and control, their 
sensor systems.
    We have done a series of tests involving the subsystems 
that you see listed in this chart to see how they play 
together, how we pass information from one system to another, 
and each one of them has also been very, very successful. We 
have done a series of those since last summer up until about 
the last month or so, and we will continue some of those tests 
starting this coming summer.
    I talked about the successes. I obviously can't go without 
talking about some of our failures. As you know, Mr. Chairman, 
we have not been very successful recently in our planned 
intercept test for our showcase high altitude program, the 
Theater High Altitude Area Defense Program, or THAAD.

                      THAAD SYSTEM ACCOMPLISHMENTS

    What you see illustrated on the next chart are really a 
compilation of all the tests we have done with the THAAD 
program. The last four tests were intended to be intercept 
tests. They were to show that we could really pull together all 
the different elements, all the capabilities of THAAD, and 
actually have a body-to-body intercept.
    It is a major, major milestone in our program, not just to 
demonstrate the capability, but also to allow us to proceed 
into the next phase of the program.
    We have not been successful in accomplishing that 
intercept. What we do illustrate on this chart, or try to 
illustrate to you, is that we have been successful in 
demonstrating a lot of the other things that are necessary to 
develop and provide a viable weapons system.
    I won't talk to all the details on that chart, but each one 
of our tests, including the ones where we did not have a 
successful intercept, provided us some success relative to 
developing an integrated total weapons system. But we will not 
try to fool ourselves. The key is to ensure that we do have a 
successful intercept, and we have yet to do that.
    I will be happy to address any of your questions later 
about where we are in regards to our THAAD program.
    I will mention to you that as a result of the most recent 
failure, I have chartered a very, very detailed scrub of the 
THAAD program. We are doing a review of the recent failures and 
what occurred. We are reviewing the design of the program. We 
are reviewing the margins associated with the program. We are 
reviewing the management on the part of the contractor and 
contractor team. We are looking at the requirements of the 
program. It is a complete end-to-end scrub of the entire THAAD 
program to ensure we know not only what happened, but where do 
we go next with this program and do we have confidence it is 
the kind of thing we need to invest our time, energy and money 
in.
    Mr. Chairman, I can tell you that my initial opinion is 
that I am still very, very confident that THAAD is going to be 
a successful program. Each one of the tests, anomalies we have 
had, the test failures we have had, have occurred during the 
end game. Every other aspect of the total weapons system, 
including the radar, the battle management command and control, 
work very, very, very well. We failed in the very last few 
seconds in the actual intercept.
    Something is happening there relative to design margins, 
and we are going to get to the bottom line to ensure we can fix 
it and provide an adequate capability.

                              TEST RESULTS

    If I could draw your attention to the next chart, we like 
to show this chart to illustrate some of the challenges we have 
relative particularly to THAAD and even for our future Navy 
Upper Tier program, and that is how difficult hit-to-kill is. 
As you know, that is essentially the kill mechanism, the 
mechanism we are planning for THAAD and some of our other 
systems in the future.
    What you see illustrated on this chart goes back and shows 
history of what we have done, and more importantly, what we 
have not done relative to hit-to-kill intercept tests, attempts 
and successes over the years. We go all the way back to 1982 
and some of the SDIO programs.
    What you see listed there, the charts or the parameters 
were zeros there, are plan intercepts where we missed a target. 
Those that are darkened in are the plan intercepts where we hit 
the target. Unfortunately, you can see a lot more open zeros 
than closed zeros.
    This a very, very challenging problem we are trying to 
address. We think we know how to do this in terms of 
technology; I have no doubt in that regard. We are doing some 
basic systems engineering, and engineering issues we are trying 
to grapple with to ensure we cannot only do this one time, but 
do it in a stressing environment and do it every time, to 
provide the kind of capability we need. That is the challenge 
we have ahead of us relevant particularly to the THAAD program.

                NATIONAL MISSILE DEFENSE SYSTEM ELEMENTS

    Mr. Chairman, I would like to move very quickly to our 
National Missile Defense Program. What you see illustrated on 
the next chart are the system elements, the key elements of the 
National Missile Defense System we are trying to provide.
    We are now up and running. We now have a formal joint 
program office established as of the 1st of April to work 
together with all of the various elements required, all the 
program offices, all the various systems, to provide an 
integrated capability for national missile defense.
    What you see listed on the chart are the various elements 
of a National Missile Defense System, and they comprise not 
only Army systems, but Air Force systems, BMDO systems. This is 
not just the purview of one service, it is the purview of a 
national perspective, and we are trying to manage and develop 
an integrated capability along those lines.

                        NMD SYSTEM ARCHITECTURE

    The next chart gives you just a picture of a notional 
systems architecture for a National Missile Defense System. 
This particular illustration is from a single-site National 
Missile Defense System.
    We are looking at the various alternatives to try to 
understand what capabilities do we really need. Is a single 
site going to be sufficient to provide us protection against 
our territories, or do we need to have multiple sites? We are 
examining all options that might be available to ensure we get 
not only the best capability, the most effective capability, 
but also the most affordable capability.

                        NMD DEPLOYMENT READINESS

    The next chart is one that is probably very familiar to 
you, Mr. Chairman and the other committee members. It is just a 
notional cartoon to illustrate our 3+3 Program. We are still 
aggressively pursuing our 3+3 strategy; that is, trying to 
rapidly develop as much as we possibly can a capability within 
the next 3 years for a National Missile Defense System to test 
in an integrated sense all of those different elements and, if 
that test is successful, review the threat to see what the 
threat looks like, and if a decision is made we need to deploy 
something, be able to deploy that in another 3 years. That is 
our 3+3 strategy.
    Mr. Chairman, as I have told you personally, and I would 
have told other members, and will always tell this to the 
Congress, I intend to be very, very honest with you. I will 
tell you, this is a very, very difficult task. It is very, very 
high risk relative to the schedule that we are trying to meet.
    Nevertheless, the urgency of this problem, the urgency of 
the issue of protecting our homeland, is such that we are 
aggressively pursuing this, and this is still the strategy we 
are trying to embark upon, our 3+3 strategy.

                        THE JOINT PROGRAM OFFICE

    The next chart goes back to a point I mentioned earlier, 
Mr. Chairman. As of the first of April, we stood up a formal 
joint program office for our National Missile Defense System.
    That joint program office is now managed by Army Brigadier 
General Joe Cosumano, who is sitting behind me over my right-
hand shoulder. He has now been chartered to bring together all 
the different elements to ensure we have an integrated 
capability and the right kind of talent to develop a National 
Missile Defense System.
    His program office is one we call sort of a federated 
approach, very similar to one of the acquisition streamlining 
initiatives we have taken from the Joint Strike Fighter 
Program.
    General Cosumano has a very small office here in the 
Washington area reporting to him, and he in turn reports to me. 
We will have no more than about 60 people in this program 
office here in the Washington area, and they will draw upon the 
expertise of the talents where the various elements are to 
actually manage and help us develop the total system.
    We will take advantage of the expertise down at Huntsville, 
we will take advantage of the expertise in the space sensors 
out at the Air Force's space organization in Los Angeles, we 
will take advantage of the Ground-Based Battle Management 
Command and control capability up at Hanscom Air Force Base in 
Boston, and we will take advantage of our own national test 
facility out at Colorado Springs that I think you have visited 
last year.
    This is, I think, an appropriate centralized approach to 
managing the program but decentralized execution relative to 
the various elements and bringing in its right expertise.

                         FEDERATED ORGANIZATION

    The next chart of the United States shows you the various 
elements and where they are. We think this is the right way to 
manage this program, and we are now aggressively marching 
forward in that particular manner.

                          TECHNOLOGY PROGRAMS

    Mr. Chairman, to try to wrap up very quickly, let me just 
hit the last part of our responsibilities in BMDO. It is our 
very, very important technology programs. We have had great 
success over the years since the original SDIO program in 
developing unique and innovative technologies to help provide 
missile defense capabilities for the United States. I can tell 
you that we would not be where we are today with our various 
systems or success-systems were it not for the technology 
programs that went back all the way to the SDIO days.

                          CLEMENTINE SATELLITE

    We are still working aggressively on a technology program, 
looking at various components and also looking at advanced 
capabilities. As an illustration of one reason that I am very 
concerned to make sure that we never forget about our 
technology is your next chart which talks about the Clementine.
    All of you are very familiar with the announcement made 
last December about the discovery of the possibility of water 
on the moon. What most people, certainly most Americans, are 
not aware of was that the satellite that made that discovery 
was the Clementine 1 satellite, an SDIO-sponsored satellite. We 
had support obviously from NASA, from the National 
Reconnaissance Organization, and other agencies, but it was 
primarily an SDIO and BMDO innovative satellite technology 
program that allowed the mapping of the back side of the moon 
and made that discovery.
    My baseline concern in the technology realm is, if we don't 
keep up a robust technology program, we will not be able to 
brag about these kinds of successes 5 or 10 years from now and 
we will not be able to ensure we have the kind of capabilities 
to add to our missile defense systems that we will need for the 
future. So we try to make sure we still continue a very robust 
technology program.

                       Midcourse Space Experiment

    One illustration of how we are using technology and how it 
plays into our existing capabilities is on the next chart, the 
last chart in front of you in your package. It talks about the 
Midcourse Space Experiment. This is another BMDO experiment 
that was launched almost exactly a year ago, last April 1996. 
This satellite is intended to measure and provide information 
about sensing targets in space in the midcourse realm: What 
happens after they are passed their boost phase? We know we can 
detect the launch of a theater missile or even a satellite 
system, a space system, or an ICBM with the current systems we 
have in space. What we do not know for sure is, can we measure 
what happens after the boost phase, after the booster is cut 
off? This is vital information for our theater missile and 
national missile defense systems. We need to be able to 
identify, characterize, and discriminate what is an actual 
target and what is a decoy. The Midcourse Space Experiment--MSX 
is helping us to do that, and we have had great success since 
we made that launch last April.
    The picture on your left-hand side may look to some people 
like a photograph of little pin points. What you are actually 
seeing are from 2,000-plus kilometers away decoys and an actual 
Re-entry Vehicle--RV from a dedicated launch where we use the 
MSX to try to determine can we discriminate between the RV and 
decoys or surrogates that might be launched in an adversary's 
threat missile system. We were able to do that.
    Those little points you see, some of those are as small as 
a football, and we were able to not only detect them but to 
characterize them and to discriminate them with the Midcourse 
Space Experiment.
    The right-hand side of the photo in that particular chart 
shows a similar sort of concern, what happens if you are trying 
to detect an RV or decoy against a background of the earth. The 
earth limb, if you will, where you have a contrast between the 
warmer atmosphere and the cold background of space, we were 
able to show with our various test that we can, with the MSX 
system, discriminate and determine what are actual RV's and 
what are decoys.
    All of this information is now being provided to our 
various sensor systems, and particularly provided to our space 
and missile tracking system--SMTS to ensure that we have a 
robust capability.
    Those are the kind of technologies we want to continue over 
the next few years to ensure that we are protecting our ability 
to provide a robust missile defense system both in the theater 
realm and in the national realm.

                                Summary

    Mr. Chairman, I would like to close my statement there. I 
probably talked a little bit too much, but I wanted to give you 
some illustration of things that we have actually done and what 
some of our challenges are and where we are going.
    I would be happy to take any of your questions, but I 
wanted to be sure you were fully dedicated as you have asked us 
to be to all of our missile defense programs, and we really 
appreciate the strong support we have received from you and all 
the other Committee members personally in ensuring that we have 
been able to get to where we are today.
    Mr. Chairman, thank you very much.
    [The statement and unclassified charts of General Lyles 
follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




                         Unfunded Requirements

    Mr. Young. General, thank you very much for an outstanding 
statement and presentation of where we are and where we are 
going. I would like to ask you just a couple of quick questions 
about the budget.
    This budget request is about $700 million less than the 
actual appropriations for fiscal year 1997. Are there any 
unfunded requirements in the Theater Missile Defense Program 
that are not included in the President's budget?
    General Lyles. I think the best way to answer that is sort 
of twofold: One, to explain the difference between the budget 
and what was appropriated. The numbers that are reflected in 
the budget, the fiscal year 1998 budget, are actually about 
$100 million higher than what we initially went in for last 
year for fiscal year 1997.
    As you know, thanks to you and the Congress, we got a 
significant plus-up in our fiscal year 1997 budget for missile 
defense systems. We ended up getting about a $855 million plus-
up across the board in all of our various areas, national 
theater missile defense and technologies.
    What we tried to do is to go back and ensure that, based on 
last year's original budget that we were able to address some 
of our shortfalls, and we did provide a 1998 budget that is 
about $100 million higher than last year's original input, 
though it is less, if you will, if you look at it in terms of 
the plus-ups we got for 1997.
    To answer the question about unfunded requirements, as I 
look at trying to provide executable programs and I look at the 
risks we have for all of our theater missile defense systems, 
and even for our National Missile Defense System, I would have 
to say yes, I am concerned that we have some unfunded 
requirements relative to things that could help reduce the 
risk. Additional test assets as an example, additional test 
capabilities in our infrastructure, things of that nature, 
areas where I consider we have some unfunded requirements that 
probably need to be addressed to help us to ensure that we can 
do the job and do it with as low a risk as possible.
    We have accepted the current risk, but, as an acquisition 
expert, I would always like to see a low-risk program as much 
as possible, and from that context I would have to say yes, 
there probably are some unfunded requirements that could help 
us to address the risk area.
    Mr. Young. You might think about those and provide some 
more specific examples for the record, if you don't mind.
    General Lyles. I would be very happy to do that, Mr. 
Chairman. We could do that very quickly.
    Mr. Young. Okay. We would like to take a look at some of 
the things you think should have been funded.
    [The information follows:]

    The Fiscal Year 1998 President's budget could be augmented with the 
following prioritized list. Funding the items on this list will 
minimize outyear tails and assist in solving immediate pressures. First 
priority goes to risk reduction programs for the Major Defense 
Acquisition Programs (MDAPs); second, joint interoperability risk 
reduction issues with MDAP enhancements, third, improvements to our 
Advance Technology base, and finally, procurement of weapon systems not 
funded by BMDO.
    Navy Area Defense (Lower Tier) ($44 million RDT&E)--for risk 
mitigation efforts associated with EMD testing that were not in the 
previous program baseline.
     ($35 million)--for upgrades to the Pacific Missile Range 
Facility (PMRF) to meet Congressionally mandated use of PMRF and 
Multiple Simultaneous Engagement (MSE) testing. Funding would avoid 
offsets from other ballistic missile defense activities.
     ($9 million)--for targets, target support and range 
support due to new requirement for UOES characterization testing.
    Joint Theater Missile Defense (JTMD) ($94 million RDT&E)
     ($50 million)--to ensure sufficient fiscal year 1998 
Family Of System (FoS) testing and activities for joint 
interoperability testing, system exerciser simulations, hardware-in-
the-loop, CINC exercises, and system integration tests (SITs). Although 
the MDAPs' activity level has been increased by plus ups, JTMD has not 
received an additional TOA for interoperability support in step with 
activity levels. Outyear funding for JTMD through fiscal year 2003 in 
the areas PMRF, FoS Strategic Targets (STARS) and MEADS will be 
addressed in the POM update.
     ($22 million)--Attack Operations. To make an investment in 
definition and development of joint attack operations: The required 
investment is comprised of four major activities: (1) perform field 
tests, exercises, and training that focus on Attack Operations, (2) 
develop a joint attack operations operational requirements document, 
(3) formulate an integrated investment strategy, and (4) define the 
payoff to other mission areas from investments/improved performance in 
Attack Operations.
     ($12 million)--Cruise Missile Defense. To execute new role 
as Integration Systems Architect for Theater Air and Missile Defense, 
incorporating analysis, modeling and simulation for Cruise Missile 
Defense.
     ($10 million)--Israeli Cooperative Projects--to foster 
system interoperability between Israeli Arrow system and US TMD 
systems.
    PATRIOT ($15 million RDT&E Defense Wide)--additional funding would 
support unanticipated range and hardware funding requirements needed 
during the ongoing Engineering and Manufacturing Development flight 
test program without changing the number of flight tests or reducing 
other risk mitigation activities.
    Navy Theater (Upper) (not to exceed $80 million RDT&E)--to increase 
risk reduction activities by increasing the number of pre-EMD flight 
tests and ship and missile system engineering to support early entry 
into EMD. Consistent with current program approach.
    PATRIOT PAC-3 (($14.7 million) Although Army procurement is not 
funded by BMDO, we are the BMD managers.
     ($10.5 million Weapons Procurement, Army) Additional 
missile procurement funding. Addition to funds would restore eight 
missiles to the production schedule, deferred to beyond the Future 
Years Defense Program in order to solve an immediate fiscal year 1998) 
$10.5 million RDT&E missile target underfunded requirement. Workaround 
in place does not impact the publicized 4th quarter fiscal year 1999 
First Unit Equipped (FUE), but does delay deployment of the second 
PATRIOT PAC-3 battalion.
     ($4.2 million Weapons Procurement, Army) Radar kit 
procurement funds. Additional funds would allow PATRIOT to restore one 
radar kit, deleted following receipt of undistributed cuts in fiscal 
year 1996, ensuring timely fielding of the second PATRIOT battalion.

                 Procurement of Missile Defense Systems

    Mr. Young. The President's budget proposes to shift 
procurement of missile defense systems to the services in 
fiscal year 1998. Do you have any concern about this from your 
vantage point at BMDO?
    General Lyles. Mr. Chairman, again, in all honesty, we did 
have some concerns. We understand the rationale for the 
decision made back last December by Dr. Perry and the leaders 
within the Pentagon. The decision primarily was in some 
respects to try to provide additional ownership on the part of 
the services relative to our missile defense systems and all 
the other things that are trying to be done within the 
Department of Defense.
    In some respects, to use a vernacular that Dr. Kaminski, my 
boss, likes to say, the services before him have had sort of a 
free lunch, if you will. They can concentrate their service 
budgets on planes, boats, trucks, et cetera, and not have to 
worry about missile defense because they knew that was under 
the purview of BMDO.
    The decision was made to provide procurement ownership to 
the services and in part to get their ownership and make some 
tough decisions in the out years relative to whether or not 
they need to provide money for missile defense systems or money 
for other priorities within the services. The concern that 
causes us obviously is, is there a chance that the services--as 
an example, the Army or the Air Force or the Navy--may they 
take some of the money that is planned for our missile defense 
system and use it to buy trucks or airplanes or boats? So we do 
have a concern that we have lost a little bit of control in 
that regard.
    I might mention, Mr. Chairman, that to help alleviate that 
situation a little bit, the Deputy Secretary of Defense, Dr. 
White, sent a memo out shortly after that decision was made to 
all the service chiefs and all the service secretaries to 
reinforce the role and responsibilities of BMDO and indeed my 
particular role as the acquisition executive for the missile 
defense systems.
    The bottom line of that memo was to tell them that our 
charter responsibility to provide integrated capability has not 
changed, and it also gave us the leeway to have at least a 
voice all the way up to the Secretary of Defense if it turns 
out that somebody does want to take some of our missile defense 
money and use it for other things. That is not quite the same 
as being totally in control, but it does provide us a little 
bit of an out and at least gives us a voice up through the 
Secretary of Defense if anybody does try to make a move of that 
nature.
    Mr. Young. You explained the position on that very well, 
but now what do we gain by having the services deal with this 
procurement as opposed to your office?
    General Lyles. Again, Mr. Chairman, the only thing that I 
think we really gain from that is a sense of ownership, if I 
can use that terminology on the part of the services, that they 
are going to have to make some tough choices. And, by the way, 
we are looking at some of those in the Quadrennial Defense 
Review right now. The services are agonizing over those, not 
just because of missile defense programs, but they have to make 
tough choices, sometimes between our vital need for missile 
defense capabilities and some of the other needs that they have 
within their service purview. So that sense of ownership is the 
primary gain, and in all honesty the primary rationale for 
making that decision.

                             Arrow Testing

    Mr. Young. General, this Committee has always been very 
excited about THAAD and supportive, but the news on that 
program isn't all that good right now. Tell us about ARROW. We 
understand that some of the ARROW testing is doing very well.
    General Lyles. Sir, the ARROW program, which, as you know, 
is a joint program that we are working jointly with the 
Israelis. The ARROW program recently has been very successful. 
They have had two intercept tests planned over the last 6 
months, one last August and one last month. Both of those 
intercept tests were very successful. There was a slight 
anomaly I might mention for the last test, intercept test.
    The warhead itself did not go off, but they had an actual 
body-to-body intercept, so they did manage to kill the specific 
target they were going after.
    This is a joint program. We are working it cooperatively 
with the Israelis. There is some sharing of technology relative 
to ARROW. There are some capabilities like the focal plane 
array that they use in the ARROW system, which is made of 
materials similar to the focal plane array we will be using in 
the THAAD. So we are gaining some information and knowledge 
about some of the things that we will need and plan to have 
within our own systems, missile defense systems. It is also 
intended, obviously, that this be an interoperable program, so 
whatever we do with the ARROW system, working with the 
Israelis, we intend for it to be interoperable with our Patriot 
system, eventually our THAAD system and our Navy systems. So we 
are very happy that that program has been very successful.
    But I am always very careful to point out that that system 
is unique to the Israeli requirements. It does not meet our 
requirements, so it is not something that we can look to and 
point to their success and say we should consider bringing it 
into our inventory. It does not meet our requirements at all.
    Mr. Young. General, thank you very much. I have some 
additional questions when I get a second chance. Now, I would 
like to recognize Mr. Murtha.

               Theater High Altitude Area Defense Testing

    Mr. Murtha. General, what is the problem with THAAD 
specifically?
    General Lyles. Congressman Murtha, the problems we have had 
on the intercepts have all been in the critical end game, as I 
like to define it. We have had, unfortunately, a different 
failure mechanism in each one of the four anomalies we have 
had. The system in terms of the total system, the radar, the 
battle management command and control, the rocket motor, all 
seem to work very well. But when we have gotten to the critical 
intercept, the ability to actually hit-to-kill the actual 
target, in each case we have had a different failure mechanism 
and it has been a different thing. We would repair or figure 
out what it was in one test, we fix that, and the next test it 
would be something else.
    From my experience, what that brings to mind is a question 
about systems engineering, a question about quality control on 
the part of the contractor. Those are the kind of things we are 
looking at very aggressively in this scrub we are doing.
    Mr. Murtha. That is the impression I got. This was a 
quality control, because there are things you didn't 
anticipate. The areas that you anticipate you may have a 
problem, you didn't have a problem.
    General Lyles. None whatsoever, Mr. Congressman.

                    National Missile Defense Program

    Mr. Murtha. So does that translate into being able to solve 
the national ballistic missile defense problem, for instance? I 
know you are early on, but four failures here, since this is 
the centerpiece of your system, does that translate at all into 
problems down the road in the bigger system?
    General Lyles. Congressman Murtha, it doesn't translate 
directly in terms of technical problems. What it does do, 
however, is make us very, very conscious and be very careful, 
as you know from all the experience you have had in DoD 
programs, to ensure we have the best acquisition strategy, the 
best test strategy, and a realistic schedule relative to our 
programs.
    Right now, the reason I stated about our National Missile 
Defense Program being very high risk, is because we structured 
it specifically because of the urgency of time in trying to do 
the 3+3 element. We structured it with a minimum of tests. We 
have structured it with a minimum of time. I think THAAD is a 
perfect example of the old Murphy factor, if you will, that we 
need to look very carefully as to how we have structured our 
National Missile Defense Program and provided the kind of 
assets and resources, including dollars, to provide back-up 
spares in case we have a failure, those kind of things, so that 
they don't provide a link-up to us.
    Mr. Murtha. Are you saying that 2003 is at best an estimate 
of when you can deploy the system?
    General Lyles. Right now, Congressman Murtha, I would say 
that is at best, yes. But once again, I am not hesitant in 
saying that it is very high risk in our ability to do that. 
That 2003 is based on absolutely everything being perfect, 
working everything perfectly, no failure, no THAAD-like 
anomalies.
    My experience tells me that is probably not realistic, but 
we laid it out that way because of the urgency.
    Mr. Murtha. In fact, we have never had a system where we 
went perfectly the whole way through I am familiar with. Maybe 
there have been some, but I am not familiar with them.
    General Lyles. None that I am familiar with, Congressman. 
We have seen a lot of different programs, obviously, including 
some of our black programs that have gone in a short time 
frame. They have had a lot of anomalies, too, usually not well 
known by people, but they have had anomalies.
    Mr. Murtha. We appreciate the problem you are taking on, 
because the district I represent lots more people in the Gulf 
War than any other district because of the SCUD missile and the 
fact that that missile happened to go through a slot that 
wasn't protected by the missiles. I know there has been a lot 
of controversy about it, but it looks like the PAC-3 and the 
ERINT are coming along, and THAAD, it sounds like they are 
controllable problems and we are going to get there in the end 
with that system.
    General Lyles. Congressman, I think that is a correct 
statement. I might just mention for you and the Chairman and 
the other committee members, we are within the next week or so 
going to get the out briefing back to me of the detailed 
analysis and scrub we have done on the THAAD program, looking 
at all the requirements, looking at the issues, and looking at 
where we go from here. I would be very, very happy to provide 
that information back to you and your staff after that is 
completed.
    Mr. Murtha. I appreciate it. Thank you very much.
    Mr. Young. Mr. Dicks.

                   Theater High Altitude Area Defense

    Mr. Dicks. General, I am sorry I missed part of your 
statement, but I, too, am concerned about the THAAD program. 
Obviously, it is a great disappointment to have this fourth 
consecutive failure. Can you tell us, maybe in a little more 
detail what you think the problem is?
    General Lyles. Congressman Dicks, for the most recent 
failure, what happened is what we call the divert in attitude 
control system, the sort of roll control, the vector control 
system for the missile, failed to operate properly. We got an 
initial signal, we think, from the guidance systems, from the 
computers, to turn on that roll control, turn on those 
thrusters on the system, but, for some reason, it failed to 
operate.
    Obviously, without roll control, without divert control, 
even though we got within the basket of the actual intercept, 
we actually have a photo that shows the target coming in and 
the intercept missile all within the same frame, there was no 
way we could divert to actually make the body-to-body 
intercept. That was the most recent failure, and that is what 
we are concentrating on there.
    As I mentioned with Congressman Murtha, there has been a 
different failure mechanism for each of the previous three 
failures.
    Mr. Dicks. That can be even more worrisome than if you had 
the same problem. At least you can fix one. It sounds as if you 
have some kind of a management problem here. We have had this 
on other weapons systems. I can remember one of the cruise 
missile problems, we continued to have, it was always something 
different. I think finally we had to cancel it. Now, do you 
believe in the technical viability of the current missile 
design?
    General Lyles. Congressman Dicks, I do believe in the 
technical viability of that design. However, I want to qualify 
and tell you that is one of the key questions I have asked this 
independent team to look at and scrub very, very thoroughly.
    Mr. Dicks. When is the independent team going to come back 
and give its report?
    General Lyles. They will be reporting back within the next 
week or so to me and I will in turn be reporting to Dr. 
Kaminski and eventually to the Secretary of Defense within the 
very near future.
    Mr. Dicks. Dr. Kaminski has suggested the THAAD program 
will probably require some sort of restructuring. What does he 
mean? Will the program be delayed further? What will be the 
impact on resources? Or are we going to have to wait for this 
independent group to get back before we can make a judgment?
    General Lyles. It is definite in detail, Congressman Dicks. 
We probably need to wait to see what the report is back to me 
relative to the total program. I think what Dr. Kaminski was 
referring to, and I wholeheartedly agree, we know just because 
of the anomalies and failures that we have had in the last four 
tests that we have not been able to meet our current 
milestones.
    We were hoping to have proceeded into the engineering, the 
manufacturing and design phase for the program, to have 
actually made the decision to go on contract for our UOES 
capability, our User Operational Evaluation Systems capability. 
We have not done that because a key milestone criteria, exit 
criteria to allow us to do that, was an actual intercept. So 
there has been a slip within the program.
    What I am waiting for in terms of the details from the 
review teams is what is the nature of the problem, what kind of 
fixes do we have to do, and how does that translate to more 
schedule concerns, if necessary.

                         Airborne Laser Program

    Mr. Dicks. Can you tell me what you see as the primary role 
of the airborne laser ABL system?
    General Lyles. Yes, sir. The airborne laser system, as I 
showed in one of my earlier charts, is an integral part of our 
family of systems with theater missile defense. It provides 
what I consider to be a very, very key air joint that we 
absolutely must have in our capabilities, and that is to boost 
phase intercept, to be able to intercept and kill theater 
missile system while they are in the critical boost phase. This 
adds several benefits.
    One is that it destroys the target. Two it has a deterrence 
element to it, particularly if you consider the possibility 
that some of those threats may have weapons of mass destruction 
in the warheads, chemical or biological or, God forbid, nuclear 
warheads. The fact that we, if we have this capability and we 
hold that threat over an adversary and he knows there is a high 
probability that his systems could get shot down and fall down 
in his territory, there is an element of deterrence there that 
we think the boost phase intercept system can provide us. ABL 
right now is our primary boost phase intercept program.
    Mr. Dicks. What can you tell the committee about the status 
and progress of the ABL program?
    General Lyles. Sir, the ABL program proceeded as of last 
November into its first phase. It is a program definition 
phase, an early concept definition phase. As you are well 
aware, the Air Force down-selected to a single contractor team, 
to manage this particular effort. It involves Boeing, TRW, and 
several other contractors who are working together to provide 
the capability. I have great confidence that the program in 
this new revolutionary technology is going to be very, very 
successful. They are still in the early phase in that program 
and leading up to some initial tests of the laser system 
itself, design tests of the laser systems, and some surrogate 
intercept tests they would do on the ground about this time 
next year.
    As far as everything I have seen in my latest review, the 
program is on track and seems to be proceeding as successfully 
as the Air Force and the contractors would hope it to.

                   THEATER HIGH ALTITUDE AREA DEFENSE

    Mr. Dicks. Mr. Chairman, just a little indulgence. On going 
back to THAAD now, is the contractor giving you the best effort 
here to try to deal with this problem? Are you getting good 
management attention on this?
    General Lyles. Congressman Dicks, I can assure you we are.
    Notwithstanding my earlier concern about quality control, I 
can tell you that I have great confidence in Lockheed Martin 
and their efforts to do the job. Norm Augustine, their CEO, and 
I and his other people in the senior office have been not only 
corresponding but talking very, very aggressively together and 
working together to ensure that they understand our concerns 
about their management attention and the right team to do the 
job and looking at it with all the best talent they can muster 
literally in the United States, not just Lockheed's talent, but 
anybody that is necessary to address the issues associated with 
THAAD.
    I know I have the attention of Mr. Augustine. I know I have 
the attention of the senior management within Lockheed Martin 
headquarters here in Bethesda. I feel also we have the 
attention of the people who are managing the effort in their 
Sunnyvale plant out in California. I visited them to ensure 
they understand our concerns and personally to look to ensure 
they are putting the right attention to that.
    Mr. Dicks. All right. One final thing. How about the cost 
on this program? Is the cost staying within the bounds of what 
you had anticipated or have there been escalations in the cost 
of this program?
    General Lyles. Congressman, there have been some 
escalations, and we had a recent--what we call an over-target 
baseline for the program, to increase the baseline--program 
baseline--above what was originally approved or last approved--
within the last year.
    Currently, however, we think we can do all of this and 
manage these things within the current budget we have for 
THAAD. It is above the baseline we established for the program 
director and the program office; but we think that, right now, 
we can operate currently within the current budget that we have 
for the THAAD program.
    Mr. Dicks. Is there any technical alternative? Is there any 
other program that can do the high altitude piece of theater 
missile defense?
    General Lyles. No, sir, there is not, not to do that 
particular part of the mission.
    We, obviously, have two upper-tier programs. THAAD is one 
for our ground systems, if you will. The Navy Upper Tier 
program, which is far less mature, further along relative to 
THAAD and anything else we have, the Navy Upper Tier will 
provide us an additional Upper Tier program. Navy Theater Wide 
is another name we call that. That program does not meet all 
the requirements that we have for THAAD. It is a complimentary 
program and is not intended to be a substitute for the THAAD 
program.
    Mr. Dicks. All I can say is when we cancel these things, 
you have to start over, and it costs billions and billions of 
dollars. My instinct is it is always better to try to fix a 
system if you can and keep the program going.
    General Lyles. Congressman Dicks, I can assure you I agree 
with that wholeheartedly; and I am sure we can address the 
question.
    Mr. Young. Mr. Visclosky.

                            NAVY LOWER TIER

    Mr. Visclosky. Thank you, Mr. Chairman. Thank you, General.
    General, I would like to talk to you about the Navy Lower 
Tier program. My understanding is that the Navy has designated 
from your testimony the USS Lake Erie and the USS Port Royal as 
the cruisers to support the system, and that would be in the 
year 2002. Do you think the Navy is fully committed to this 
system and having it installed on those ships in the year 2002?
    General Lyles. Congressman Visclosky, I think they are 
absolutely committed to it; and I reaffirmed that in recent 
months with the Chief of Naval Operations (CNO), with the 
Secretary of the Navy, in addition to the program office and my 
own visits to actual operational units of Navy systems down at 
Norfolk. They are fully committed to the program.
    Mr. Visclosky. My understanding is in this year's budget 
the Navy has not asked for any money for these two ships in 
preparation for the installation of this system. When will we 
see those monies in the Navy's request?
    General Lyles. I have to take that for the record. I am not 
sure when they actually need the dollars for that, but I will 
provide that information for the record, Congressman.
    [The information follows:]

    Office of the Secretary of Defense--OSD Program Budget 
Decision of December 1996 transferred BMDO TMD procurement 
funds (SM2 Block IVA and AEGIS) to the Navy, specifically to 
the Weapons Procurement, Navy (WPN) Standard Missile SM-2 
(12FE) account. Recognizing a misalignment of funds, the Navy 
set aside, within the PB98 WPN, Standard Missile SM-2 (12FE) 
account, funds necessary to conduct the AEGIS TBMD 
modifications. The Navy will realign these funds to Other 
Procurement, Navy (OPN) during Off-Year POM to modify and equip 
AEGIS ships for the TMD mission.

    Mr. Visclosky. If the ships are not operational, what 
impact would that have on the system? What would that do to our 
cost?
    General Lyles. As I understand it, those two specific ships 
have been designated to have the initial capability for the 
Navy Area system. As I know, the Navy is committed to ensuring 
that that capability is there. They are working to ensure the 
ships are prepared by that time period----
    Mr. Visclosky. By the year 2002.
    General Lyles. We are obviously working to ensure the 
missile systems and the battle management command and control 
are there also to support the integrated weapons system that we 
need.
    Mr. Visclosky. I am concerned about both parts. I am 
particularly concerned because, again, my understanding of the 
budget this year is there is no money in the Navy's budget to 
begin any modifications of equipment of these ships, that there 
is a coincidence of both being ready in the same year. If you 
could comment on that for the record, I would appreciate that.
    General Lyles. I would do that, Congressman. It was my 
understanding one of the primary reasons there were no dollars 
this year is because they didn't need to have those dollars 
this year. I will go back and verify that.
    Mr. Visclosky. That may very well be the case.
    [The information follows:]

    The two User Operational Evaluation System (UOES) AEGIS 
cruisers, USS Lake Erie and USS Port Royal, will be configured 
to support the UOES beginning in fiscal year 1998 with the 
installation of the UOES computer program. At sea testing of 
the UOES will commence in fiscal year 2000 as the first UOES 
SM-2 Block IVA missiles are delivered. Equipment to support the 
UOES installation aboard these two cruisers was procured with 
BMDO procurement funds in fiscal years 1996 and 1997. This 
procurement supports a fiscal year 1998 fielding of the AEGIS 
TBMD UOES computer program. The Navy Area program is currently 
scheduled to achieve First Unit Equipped (FUE) in fiscal year 
2002.

                             ARROW FUNDING

    Mr. Visclosky. On the ARROW program, it is my understanding 
the administration recently announced that they would provide 
additional funding for the program. Do you know what that 
amount of money is?
    General Lyles. Yes, sir. We, as a result of a meeting a 
couple of weeks ago with Minister of Defense Mordechai and the 
Secretary of Defense, Secretary Cohen, an agreement was made we 
would look to see ways we could help them with the ARROW system 
and help the Israelis, who would like to provide additional 
capabilities for their forces, additional ARROW capabilities 
for their forces.
    We have an agreement, however, that we are not responsible 
for nor are we going to procure additional ARROW systems for 
them, ARROW missiles. Our responsibility is to help them 
develop the system and specifically to ensure we have an 
interoperable capability.
    We have--in this recent agreement, we have reached an 
accord where we think that we can provide an additional $48 
million over the next four years and use that money to offset 
some of the interoperability needs of the ARROW program and 
allow the Israelis to take some of their development money and 
align it to their procurement needs for their additional 
systems.
    So what we are going to use that money for is to support 
what we are chartered to do--to help do, and that is work the 
issue of interoperability and development. We are not using the 
money to buy systems for them. That would violate our agreement 
with the Israelis. It is $48 million over the next four years.
    Mr. Visclosky. So we are in it for the development 
knowledge and not the procurement?
    General Lyles. Yes, sir.
    Mr. Visclosky. The range, as far as procurement, was 
anywhere from $2 to 10 billion, as I understand it. Is there a 
narrower figure or range now? For the ARROW system?
    General Lyles. I have to provide that for the record in 
terms of where we are today.
    The only reason I am hesitating on that is because of the 
current desire on the part of the Israeli defense system to 
procure an additional battery, additional missiles, over and 
above, beyond what we were originally working towards even a 
few months ago. So that number has changed a little bit, and I 
need to verify that, and I will provide that for the record.
    [The information follows:]

    The cost estimate of Arrow at program inception in 1994 of 
approximately $1.2 billion remains valid today. Phase I (Arrow 
I) of the program cost $158 million, Phase II (Arrow II) costs 
$330 million, and Phase III (Arrow Deployability Program) costs 
$556 million. These costs do not include $42 million in 
infrastructure costs and $252 million for Arrow Weapons System 
components (Radar, Launcher, Fire Control) both of which were 
funded entirely by the Israelis.

    Mr. Visclosky. We are not obligated for any of the 
production costs?
    General Lyles. That is not our responsibility, to worry 
about the production costs.
    Mr. Visclosky. If this program was in your budget, would 
you give it more money?
    General Lyles. In terms of our agreement, I have sort of 
answered that question in part by our R&D area. In terms of 
working research and development, working interoperability, 
this additional $48 million, I and my people in my organization 
agreed that was a fair sum to consider adding to the ARROW 
program. Anything beyond that--anything beyond that $48 million 
or anything that even smacks of production is not our 
responsibility, and we would not fund that at all.
    Mr. Visclosky. General, thank you very much.
    Thank you, Mr. Chairman.

               MEDIUM EXTENDED AIR DEFENSE SYSTEM (MEADS)

    Mr. Young. Thank you, Mr. Visclosky.
    General, I would like to ask you about MEADS. This started 
out as a U.S. program and because of the expense we went into a 
multinational, basically a NATO program. Now France has dropped 
out, which I expect will increase our share of the cost. I 
would like for you to tell us why France dropped out and also 
why we need to do MEADS at all?
    General Lyles. Congressman, as I understand it, the French 
dropped out primarily because of budget considerations of their 
own, their own internal needs. We have restructured the program 
between us and our two allies, Germany and Italy, the two 
cooperative partners, in terms of their and our share of the 
program, both the dollars and potential work share for the 
future.
    MEADS is a vital program, just like the original Corps Sam 
that you alluded to, because of the specific requirement to 
provide maneuver force protection for our troops and our 
assets. We do not have that in the sense that we really need it 
with today's Patriot system or even the THAAD system. They do 
not have the maneuver capability that we really need.
    They also provide defense against multiple and simultaneous 
attacks of both short- and medium-range ballistic missiles, 
cruise missiles and air breathing threats. So there is a wide 
compendium of capability that we will get with the MEAD system 
we don't have today, particularly in the aggregate of all those 
potential threats. We don't have those today with THAAD and 
with the Patriot system. Maneuver force and cruise missile 
defense, air breathing defense, multiple engagement defense 
capability is a primary requirement for MEADS.
    Mr. Young. The budget request for 1998 is $48 million. 
Where will that take us?
    General Lyles. That $48 million, plus I think an additional 
$9 million in fiscal year 1999, are essentially going to take 
us through the program definition phase for MEADS. It will 
allow us to, in working with our partners, working with the two 
international contractor teams that have been established to 
define the concepts, the valid concepts for a MEAD system, to 
try to down-select, if you will, to the appropriate concept for 
the design for the MEAD system, and that is as far as it will 
go.
    The obvious question is, what do we do from there and how 
do we proceed on? I think probably the best way to answer that 
is to tell you that this is a very, very tough decision that is 
currently being addressed in the Quadrennial Defense Review. 
Even as late as last night, that issue was being discussed 
within QDR; and sometime within the next week or two we are 
going to present options to the Secretary of Defense and make a 
decision from there what is going to happen with the MEAD 
program.

                    QUADRENNIAL DEFENSE REVIEW (QDR)

    Mr. Young. The Secretary of Defense has been complaining 
that the QDR has not been quite as aggressively approached as 
he would like it to be. Are we getting near the end of the QDR 
process?
    General Lyles. As I understand it, Congressman Young, the 
Secretary has mandated and he is going to report to Congress on 
time; and I think you can see that with the scurry of activity 
that is happening within the building and all the QDR meetings 
that are taking place.
    The ones I have been involved in recently, particularly as 
late as yesterday at the senior steering group level with the 
deputy secretary and the vice chiefs of the various services 
and the vice chairmen of the Joint Chiefs of Staff, there are 
some very, very tough issues and alternatives and very, very 
tough decisions that are being laid out. And everything I saw 
showed it is being done very aggressively, but there are no 
easy answers there as to how we are going to address some of 
our needs.

                           HELSINKI AGREEMENT

    Mr. Young. General, Mr. Livingston at the beginning of our 
session this afternoon asked you about the Helsinki agreement. 
You and I had discussed this previously, and I wanted to have 
you answer for the record your role in reaching the actual 
agreements and the wording in the Helsinki agreement. Because 
we have come upon a few instances where the actual user, the 
commander that was involved in a particular issue, was not 
consulted when certain decisions were made.
    Were you consulted and were you part of the decision making 
as to the Helsinki agreement?
    General Lyles. Congressman, it would be probably unfair to 
say we are part of the decision making; but we definitely were 
part of the consultation process. Let me explain exactly what 
took place.
    Literally over the last year, even before I came on board 
and certainly as I have seen it since the end of August, the 
activities that have taken place, all the previous--the 
preliminary discussions with the Russians prior to the Helsinki 
agreement for the most part had been done through the Standing 
Consultive Committee and some other bodies, primarily in 
Geneva. And for each one of those sessions we did have a 
technical representative from BMDO who was part of the 
consultation body and part of the advisory body to the United 
States representatives at that particular forum.
    Each time there was a meeting, a senior level meeting 
involving senior leadership from the Pentagon, be they Office 
of the Secretary of Defense, OSD, civilians or military people 
from the joint staff, each time prior to one of those meetings 
I was consulted, my senior staff and I were consulted, and our 
issues, our concerns were provided to those who were 
representing the United States. And our views--clearly our 
views and the views as we understood it from the warfighters, 
from the CINCs were clearly presented to them so that they 
could proceed with caution in all of the discussions.
    I admit I consider my view to be sort of a minority one 
relative to the bigger view that was provided to each one of 
those forums, and that is the view of the Chairman of the Joint 
Chiefs of Staff, General Shalikashvili, in short. Prior to each 
one of those meetings, one key mandate was there, and that was 
we do nothing to impact the ability to protect our forces for 
the future.
    So from the position of consultation, we were an integral 
part of the activities, both prior to the meetings, as people 
prepared for them here, and even at the meetings with our 
technical representatives there. It would be unfair to say we 
were part of the decision-making process; but I feel very, very 
comfortable that we did have a say-so as far as consultation.
    Mr. Young. Well, let's jump over the decision part and go 
to the end product. Do you feel that the end product reflected 
to a large extent or a small extent the views of your 
technicians and your consultants that were involved or 
consulted?
    General Lyles. For the most part, Mr. Chairman, I think 
that was the case.
    Obviously, we are still looking at questions relative to 
future systems, particularly the words in the agreement that 
talk about theater missile defense by other physical properties 
other than OPP, as they refer to it, space-based primarily, to 
ensure that what we think that means--and when I say we, not 
just BMDO but our representatives for the United States and the 
Russians are exactly the same thing.
    But as far as the other issues, the demarcation limits, the 
limits on the types of speed and range for the targets, our 
concerns were aired properly there and our issues were 
represented relative to the final statement.

                          ACQUISITION PROCESS

    Mr. Young. General, thank you very much.
    Now the easiest question that I have for you. We have 
talked with you about acquisition reform, and you have a very 
strong record in acquisition reform. Tell us some things that 
you think ought to be done or at least considered in the area 
of reforming the acquisition process.
    General Lyles. Mr. Chairman, as we mentioned just briefly 
yesterday, we are trying to do as much as we can to embrace 
acquisition reform in all of our programs. I think as I look at 
it back in my experience with other programs, one of the key 
things we want to ensure that we do is to, as much as possible, 
give free rein to our program directors to make decisions 
without being encumbered with lots of layers of somebody 
checking or double-checking what he is trying to do.
    A key way of trying to address that is to ensure that we 
work as integrated teams. So integrated product teams, IPTs as 
we refer to it in the vernacular, is the way we are trying to 
manage all of our programs.
    What we like to do is bring all of the stakeholders 
together and help them to help us make decisions and 
recommendations for our programs so we don't have somebody 
second-guessing or, worse, still coming in at the last minute 
and disagreeing with a decision in terms of how we acquire a 
program, our strategy for a program, our contract strategy or 
any decision that we might make.
    General Cosumano behind me, General Dan Montgomery over on 
my left behind me, are also working as part of their activities 
in both the national missile arena and the theater missile 
arena to ensure we use Integrated Product Teams to manage each 
one of our efforts. That is a major, major breakthrough I think 
in terms of the way we manage programs; and it really provides 
streamlining in terms of decision making and coming to the 
right conclusion as to what we want to do.
    The other thing I think we are trying to ensure we do is to 
minimize the paperwork in the bureaucracy associated with each 
one of our programs. We are trying to manage each one of our 
efforts very, very aggressively to use electronic means for 
communicating information, to use the minimum amount of 
documentation.
    You may be familiar with the term we call the Systems 
Acquisition Management Plan, SAMP, a document only about 2 or 3 
inches thick, to define what it is we are trying to do with our 
program as opposed to the reams and reams and literally table 
full of documentation that our program officers have had to 
provide in the past to define our programs. We are using that 
mechanism to streamline not only in time but in dollars what it 
is we are trying to do, and that is another thing that we are 
embracing totally.
    I might mention for our national missile defense program 
one key area of acquisition reform that I think is really sort 
of a breakthrough is one we have used successfully in other 
programs, and that is to go as much as we possibly can to an 
electronic means of communication. It is a paperless 
environment as much as we can possibly embrace it.
    The request for the proposal that we have for bringing in a 
prime contractor for NMD was sent out electronically to 
industry. All the updates to that request for proposal were 
done electronically with industry; and industry, in turn, 
provided us their proposals that we are currently evaluating 
through electronic means. There are no big documents, no big 
mailings of paper that they had to submit to us. All of this 
was done electronically.
    We are also doing the evaluation of the proposal in an 
electronic mechanism, and we will eventually make a 
determination and decision on that program through electronic 
means so we can give quick feedback to industry as to what we 
are trying to do.
    There are lots of other things like that, Mr. Chairman, 
that we are trying to do.
    Perhaps to better answer your question, what I would like 
to offer to you is the opportunity to come back to talk to you 
or any one of the Committee Members and tell you specifically 
how acquisition reform is being applied to each one of our 
programs and then, more importantly, what I think the payoff is 
going to be for each one of those examples.
    Mr. Young. Well, General, thank you very much for that 
offer. We will take you up on that, because we are extremely 
concerned and interested in acquisition reform and getting more 
for the dollar as the dollar continues to shrink and the budget 
requests seem to get smaller and smaller.
    Thank you very much, General.
    Mr. Murtha.

                           DEMARCATION LIMITS

    Mr. Murtha. Let me ask you, is the demarcation agreement 
between tactical and strategic weapons in the Helsinki Accord 
under development in any of the six TMD systems currently under 
way?
    General Lyles. Congressman, none of the six systems we 
currently have under way are impacted by that. They all fit 
very well within the Helsinki agreement.
    Mr. Murtha. Does it hinder in any way your ability to 
develop theater systems to protect our troops?
    General Lyles. Currently, no, sir. It does not hinder our 
ability to do that.
    Mr. Murtha. Thank you.
    Mr. Young. Mr. Dicks.
    Mr. Dicks. Was it not a fact, as I recall--and I can speak 
directly on this. Wasn't there a bill that Congress passed, the 
defense authorization bill in fiscal year 1995, that codified 
the 5 kilometers a second or 3,500-kilometer range?
    General Lyles. I think that was the case, Congressman 
Dicks.
    Mr. Dicks. So all the administration basically did was 
agree to something the Congress had already enacted into law?
    General Lyles. Well, that is one of the key reasons why we 
are not currently impacted with our current programs. I am not 
exactly sure what was in the law for the 1995 act relative to 
the demarcation limits, but we have been talking about the 5 
kilometer per second speed of a target and 3,500-nautical-mile 
range for some time, and we felt very, very comfortable with 
that agreement would not impact any of our current programs.
    Mr. Dicks. Is it true that nothing was limited in terms of 
space-based systems that isn't already part of the ABM 
agreement?
    General Lyles. Congressman Dicks, I think that is the one 
area that we have a little bit of a concern about. The 
statement relative to space-based theater missile defense 
systems or directed energy systems is one that could impact--
and we are trying to verify this--could impact our current 
space-based laser program.
    We think the current interpretation of the Helsinki 
agreement, that is, we can still do a space-based laser program 
as long as it is couched in the area of research and SBL. And 
we are not trying to deploy a limited capability. We think our 
current space-based laser program can still proceed.
    However, I am in the process of defining exactly what it is 
we need to do in space-based laser, run that by Secretary 
Cohen, get his concurrence on that, so we can make sure we 
aren't doing anything that violates the agreement.
    Mr. Dicks. Would the airborne laser have a similar problem?
    General Lyles. No, sir. One of the key things--going back 
to answer an earlier question from the Chairman, one of the key 
things that we were very careful about relative to the 
discussions at Helsinki was to ensure that nothing was in the 
language that would impact the airborne laser.
    There were some discussions, to be honest with you, of some 
words that could have impacted ABL. They were taken off the 
table thanks to the people who listened to our concerns, and 
airborne laser is not impacted by the Helsinki agreement.
    Mr. Dicks. So you are saying--and do you think it is 
compliant with the ABM agreement?
    General Lyles. I did not say that. I mentioned the Helsinki 
agreement. We still have to go through the formal process. I 
say we--I mean the Air Force, working with us at BMDO, have to 
go through the formal process of the compliance review group 
assessment of ABL, when it is ready to go through that. We 
still have to do that to get formal compliance certification. 
But nothing happened relative to the Helsinki agreements that 
would impact the current ABL program.
    Mr. Dicks. And nothing happened there on national missile 
defense either?
    General Lyles. No, sir. They specifically were looking at 
theater missile systems, so nothing happened relative to NMD 
programs.
    Mr. Dicks. Thank you, Mr. Chairman.
    Mr. Young. Mr. Visclosky.
    Mr. Visclosky. No further questions, thank you.

                   COOPERATIVE ENGAGEMENT CAPABILITY

    Mr. Young. General, let me ask you just a few more 
questions on the Navy Lower Tier. We are being asked to approve 
a multiyear procurement for the DDG 51s. Most of us are 
concerned, I think all of us are concerned, with the fact that 
this budget does not provide funding for any missile defense, 
theater missile defense on those ships. Cooperative engagement 
capability, or CEC, which has been a big item with this 
committee, is not going to be on any of those ships.
    Given that it takes three to five years in construction 
time to build a ship, the earliest that the Navy could field 
theater ballistic missile defense is 2005. I am wondering why 
BMDO--why did you state that Navy Lower Tier will be deployed 
in 2002? There seems to be a difference of opinion on the dates 
here by three years.
    General Lyles. Congressman Young, Mr. Chairman, we and the 
Navy are still dedicated to providing that capability by the 
year 2002. I would like to take for the record and provide some 
specific answers as to why the Navy doesn't reflect that kind 
of money for CEC and the ship improvement in their current 
multiyear.
    [The information follows:]

    The Navy Area Theater Ballistic Missile Defense (TBMD) 
program will add TBMD capability to the AEGIS computer program 
under development by the Navy. This Navy-developed computer 
program, AEGIS Baseline 6 Phase I, includes Cooperative 
Engagement Capability (CEC). The TBMD Tactical computer program 
(AEGIS Baseline 6 Phase 1T) is scheduled for delivery in Fiscal 
Year 2000 and will be retrofitted to previously built AEGIS CGs 
and DDGs and will be forward fitted to DDGs as they are being 
built.
    Because the Department decision to transfer all procurement 
funds to the Services starting in Fiscal Year 1998 was made 
relatively late in the budget submission process, all Navy TBMD 
procurement funds, including AEGIS TMD upgrade funds, were 
placed in the Standard Missile procurement line (Project 12FE, 
Flight Hardware--SM AEGIS improvement, totaling over $360 
million between Fiscal Year 1998 and Fiscal Year 2003). During 
this Summer's budget cycle, the procurement funds will be 
realigned from Standard Missile to the appropriate AEGIS TMD 
Weapon system procurement line, as specified in the Cost 
Analysis Requirements Description (CARD). The CARD identifies 
DDG AEGIS Weapon System acquisitions beginning in Fiscal Year 
2000 (for installation if Fiscal Year 2003), and AEGIS cruiser 
TMD retrofit schedules beginning in Fiscal Year 1998 (for 
installation in Fiscal Year 2000).

    General Lyles. As far as I know, as I answered Congressman 
Visclosky, the Navy is fully dedicated to not only providing 
the Navy Lower Tier and Navy Area Defense capabilities but also 
getting CEC in as many of their ships as possible. What that 
tells me is, at least for this next fiscal year, they didn't 
think that the money was necessary, but I will go back and 
verify that and find out exactly how this is being handled.
    Mr. Young. I would appreciate that.
    We have been asking this question of a lot of witnesses. 
Does it make sense to build the ships without the ability to 
defend themselves or be part of the theater missile defense 
program? So we would appreciate your answer.
    I want to thank you very much for the dynamic way you have 
responded to our questions.
    Mr. Murtha.
    Mr. Murtha. Isn't CEC absolutely essential to the 
deployment of these ship self-defense systems?
    General Lyles. I wouldn't say it is absolutely essential. 
It does provide you an enhanced capability, because you can net 
information from one ship to another. You can provide advanced 
sensor information. You can provide fire control information.
    It is not absolutely essential, the way you stated it. The 
ships can be autonomous, but you get a greatly enhanced 
capability. You get a greatly force multiplier capability with 
something like CEC, and that is why the Navy is very much 
interested in it, and we are very interested in assuring we 
have CEC-like capability for our ground systems and eventually 
for any air systems like ABL, connectivity for that.

                           SHIP SELF DEFENSE

    Mr. Murtha. As the Chairman pointed out, we have had a 
terrible problem with the Navy. For instance, five or six years 
ago, we put money into--at the suggestion of one of the staff, 
because the fleet was saying we don't have good self-defense 
for individual ships. So we put money in. They resisted it, 
reprogrammed it. Finally, they said, it is now a priority. Then 
they don't put the money in again.
    I can't understand with the incidents we have had with low-
flying cruise missiles that the Navy is having such a problem 
getting this through their head or we have had such a problem 
convincing them this is something that needs to be done. I know 
once they get it developed they will take full credit and say 
they developed this whole system and this is all our idea and 
we were way ahead of everybody else, as they have done in many 
other systems that this Committee has suggested to them.
    I wish you would take a look at that and let us know what 
you think of their spending pattern.
    General Lyles. Congressman Murtha and Mr. Chairman, I am a 
little bit embarrassed, because I thought for sure that that 
capability was something that the Navy was fully embracing. You 
and Congressman Visclosky have raised something I was not aware 
of, and I feel so bound to make sure that we get an answer. I 
would like to bring Admiral Rod Rempt, who is the Navy Theater 
Missile Defense Program Executive Officer, with me and come 
back literally in the next week or two and give you an answer 
to that.
    Mr. Murtha. Well, if the Navy comptroller is still there 
when we get done with the bill, then you might bring the 
comptroller up also.
    General Lyles. I will ask him to join me, yes, sir.
    Mr. Young. Incidentally, we have asked the Secretary of 
Defense, the Secretary of the Navy and the Chiefs on that same 
issue, so if you can bring the comptroller, that might help. 
Maybe he will get us an answer.
    General Lyles. Yes, sir. I will do that.
    Mr. Young. Mr. Dicks.
    Mr. Dicks. No further questions.
    Mr. Visclosky. One follow-up on the Chairman's remarks on 
the three to five discrepancy. The USS Lake Erie and USS Port 
Royal are, I assume, existing ships.
    General Lyles. Yes, sir.
    Mr. Visclosky. That may be part of the differential. I do 
think it would be important for you to follow-up with the 
Committee.
    General Lyles. I just got an update from my deputy, Admiral 
West behind me. It mentions the initial capability is upgrades 
to current ships and initially those two specific cruisers.
    I think, again, that is the rationale as to why they didn't 
feel that a lot of money needed to go into that particular 
effort. These are upgrades. I failed to mention that earlier. 
It is not like we are building ships from scratch in order to 
provide this capability.
    Mr. Visclosky. I would still have a concern.
    General Lyles. Yes, sir, I agree. I am very anxious to get 
the answer and very anxious to bring it back to you.
    Mr. Young. General, thank you very much for a really 
outstanding hearing. We appreciate the way you have responded 
to our questions. We look forward to working with you on the 
issues we agreed to follow up on.
    If there is nothing further, the Committee will stand 
adjourned.
    General Lyles. Thank you, Mr. Chairman.
    [Clerk's note.--Questions submitted by Mr. Skeen and the 
answers thereto follow:]

                           Over Land Testing

    Question. General Lyles, we've had several discussions about the 
THAAD missile testing program today, and I appreciate your comments on 
the future of this important program.
    One of my major concerns is that the program to date has justified 
the need for over-land missile testing. We've had four failures of the 
THAAD to date, but because the tests were conducted over land, we've 
been able to find the missile after each test, do an autopsy, and make 
a conclusive finding as to the reasons for each test failure, and 
provide this information to Congress, the Department of Defense and the 
program managers.
    Would you comment on the need for continued over-land testing of 
BMDO missile programs and your experiences at the White Sands Missile 
Range?
    Answer. As noted in your question, our experience with THAAD has 
benefited from our ability to recover test hardware in support of post-
flight failure investigation. THAAD will continue its Program 
Definition and Risk Reduction (PD&RR) flight testing at WSMR; 
currently, 6 flight tests remain. The choice of where to conduct a 
system's test program, however, is directly related to its stage of 
development, level of design maturity, and the specific test 
objectives. In the case of THAAD, the goal of PD&RR is to resolve key 
system integration and technology issues, which will allow the program 
to then move into the Engineering and Manufacturing Development (EMD) 
phase. While WSMR has proven adequate for THAAD to work out these 
technical issues during PD&RR, our flight test scenarios have been 
constrained by WSMR's boundaries. During EMD, the more mature system 
design will require target trajectories more representative of the full 
range of threats the system will face when fielded. This is true for 
not only for THAAD, but for our other missile defense systems that must 
engage the longer range targets. Overland ranges limit our ability to 
engage long range targets--we simply lack protected real estate of 
sufficient are to safely launch these targets, drop their boosters, 
fire interceptors to engage them, and contain the debris within 
restricted boundaries.

                        Space Based Laser (SBL)

    Question. Would you please update us on the status of the Space 
Based Laser Program and your plans for the future of this program?
    Answer. The Space Based Laser (SBL) technology program has 
demonstrated key laser system components, including the laser, the 
large lightweight optics, beam control, tracking and pointing, and 
structural isolation. These components have shown performance close to 
what is needed for a demonstration/ validation flight experiment. With 
the recent alpha Lamp Integration high-power test, we have increased 
our confidence that these components will work together in the presence 
of megawatt-class laser radiation.
    The approved SBL program, which is funded at $30 million per year 
in fiscal year 98 and the Future Years Defense Program, is still a 
technology development program.
    Question. Is the Air Force going to become a partner in this 
program?
    Answer. Because of increased Congressional interest, and Air Force 
interest in this program, I am considering transferring the SBL 
Readiness Demonstrator (SBLRD) program execution to the Air Force while 
maintaining overall Directed Energy Program management and funding 
authority here in the Ballistic Missile Defense Organization.
    Question. We've been hearing a lot lately about a Spaced Based 
Laser demonstrator. Would you please tell the Committee your plans for 
a demonstrator?
    Answer. The SBL Technology Readiness Demonstrator, currently in 
concept design, would test in space the components required for an 
operational missile defense platform but at reduced scale. Successful 
completion of this readiness demonstration would establish the 
feasibility of this approach to defending against hostile ballistic 
missiles during their boosting phase.
    I recently appointed an Independent Review Team, chaired by retired 
General Larry Welch, to review the SBL technology readiness to support 
a research and development proof-of-concept flight and to recommend a 
program among several options presented to his team. In their report, 
they observed that the technology is mature enough to support an SBL 
sub-scale flight experiment with medium risk by 2005. This would be an 
important step in demonstrating the feasibility of Space-Based Lasers 
as an option for future defense against ballistic missiles.
    The next step is to investigate and document the cost, technical 
feasibility, and treaty compliance of completing an integrated ground 
demonstration and a flight demonstration, and present program options 
for prioritization in the fiscal year 00 Program Objectives Memorandum.

    [Clerk's note. End of questions submitted by Mr. Skeen. 
Questions submitted by Mr. Young and the answers thereto 
follow:]

                    Fiscal Year 1998 Budget Request

    Question. The Administration's 1998 budget request is $2.9 million. 
This is almost $700 million less than the 1997 appropriation of $3.6 
billion. The budget also proposes to fund all BMD procurement within 
Service accounts, not under the Ballistic Missile Defense Organization 
(BMDO). General Lyles, the 1998 budget request is significantly less 
than the 1997 appropriation. Does the budget contain a sufficient level 
of funding to continue to develop and deploy the core Theater Ballistic 
Missile Defense programs?
    Answer. a. Yes--the fiscal year 1998 budget for Ballistic Missile 
Defense does contain a sufficient level of funding to continue to 
develop and deploy the core Theater Ballistic Missile Defense programs.

                    FY97 AND FY98 PLUS-UP COMPARISON
------------------------------------------------------------------------
                                   FY97 in    FY97     FY98 in   FY98 in
                                   FY97 PB    Appn     FY97 PB   FY98 PB
------------------------------------------------------------------------
BMDO managed programs:
    PROCUREMENT
    THAAD System................       0.0       0.0       0.0    \1\0.0
    HAWK........................      19.4      19.4       0.0    \1\0.0
    TMD-BMC3....................      19.3      19.3      20.2   \1\20.1
    PAC3........................     215.4     215.4     361.4  \1\349.1
    Navy Area Wide..............       9.2       9.2      15.5   \1\15.4
                                 ---------------------------------------
        Total Procurement.......     263.2     263.2     397.1     384.6
RDT&E:
    Support Tech................     226.3     366.3     244.1     249.5
    THAAD System................     481.8     621.8     481.5     556.1
    Navy Theater Wide...........      58.2     304.2      96.2     194.9
    CORPS SAM/MEADS.............      56.2      30.0      48.1      48.0
    BPI-DEM/VAL.................       0.0      24.3       0.0      12.9
    NMD.........................     508.4     833.4     511.5     504.1
    Joint TMD...................     520.1     525.5     557.0     542.6
    PAC3-EMD....................     381.5     381.5     195.3     206.1
    Navy Area Wide..............     301.6     301.6     268.5     267.8
                                 ---------------------------------------
        Total RDT&E.............   2,534.2   3,388.7   2,402.2   2,582.0
MILCON:
    NMD.........................         0         0       0.0       0.5
    Joint TMD...................       1.4       1.4       2.0       2.0
    THAAD System................         0         0       4.6       4.6
                                 ---------------------------------------
        Total MILCON............       1.4       1.4       6.6       7.1
            Total BMDO Program..   2,798.8   3,651.8   2,805.9   2,973.7
------------------------------------------------------------------------
\1\Procurement Funding has been transferred to the services.
These figures are displayed here for information only.

    Question. Do you have any unfunded requirements in theater missile 
defense?
    Answer. The fiscal year 1998 President's budget could be augmented 
with the following prioritized list. Funding the items on this list 
will minimized outyear tails and assist in solving immediate pressures. 
First priority goes to risk reduction programs for the Major Defense 
Acquisition Programs (MDAPs); second, joint interoperability risk 
reduction issues with MDAP enhancements, third improvements to our 
Advance Technology base, and finally, procurement of weapon systems not 
funded by BMDO.
    Navy Area Defense (Lower Tier) ($44 million RDT&E)--for risk 
mitigation efforts associated with EMD testing that were not in the 
previous program baseline.
     ($35 million)--for upgrades to the Pacific Missile Range 
Facility (PMRF) to meet Congressionally mandated use of PMRF and 
Multiple Simultaneous Engagement (MSE) testing. Funding would avoid 
offsets from other ballistic missile defense activities.
     ($9 million)--for targets, target support and range 
support due to new equipment for UOES characterization testing.
    Joint Theater Missile Defense (JTMD) ($92 million RDT&E)
     ($50 million)--to ensure sufficient fiscal year 1998 
Family Of Systems (FoS) testing and activities for joint 
interoperability testing, system exerciser simulations, hardware-in-
the-loop, CINC exercises, and system integration tests (SITs). MDAPs 
have been accelerated, but JTMD has not received any additional TOA for 
interoperability support in step with program schedules. Outyear 
funding for JTMD through fiscal year 03 in the areas of PMRF, FoS 
Strategic Targets (STARS) and MEADS will be addressed in the POM 
update.
     ($22 million)--to make an investment in definition and 
development of joint attack operations. The required investment is 
comprised of four major activities: (1) perform field tests, exercises, 
and training that focus on Attack Operations, (2) develop a joint 
attack operations operational requirements document, (3) formulate an 
integrated investment strategy, and (4) define the payoff to other 
mission areas from investments/improved performance in Attack 
Operations.
     ($10 million)--JTAMDO. accelerate system engineering and 
modeling and simulation and complete the Technical Requirements 
Document.
     ($10 million)--Israeli Cooperative Projects--to foster 
system interoperability between Israeli Arrow system and US TMD 
systems.
    PATRIOT ($15 million RDT&E Defense-Wide)--additional funding would 
support unanticipated range and hardware funding requirements needed 
during the ongoing Engineering and Manufacturing Development flight 
test program without changing the number of flight tests or reducing 
other risk mitigation activities.
    Navy Theater (Upper) (not to exceed $70 million RDT&E)--to increase 
risk reduction activities by increasing the number of pre-EMD flight 
tests and ship and missile system engineering to support early entry 
into EMD. Consistent with current program approach.
    Question. Is the funding in the budget sufficient to continue to 
develop and deploy the National Missile Defense (NMD) program?
    Answer. No. As part of the acquisition review process, the 
Department has revised its estimates of the costs for the current 3 
plus 3 program. We now estimate that another $2.3 billion will be 
required across the Fiscal Year 1998 through 2003 Future Years Defense 
Program (FYDP) to maintain the currently defined program and schedule. 
The Department established during the Quadrennial Defense Review that 
the program cannot meet the 3 plus 3 schedule with currently programmed 
funds.
    The Department felt the funding programmed for the 3 plus 3 NMD 
program was adequate at the time the Fiscal Year 1998 President's 
Budget was prepared and submitted to Congress. But during the past year 
NMD program maturity was increasing as a result of DoD--and 
Congressional--focus, review, and definition. Before accurate or even 
reasonable cost estimates can be defined for the NMD system, we must 
define what ``it'' is.
    Early last year the Department designated the NMD program a major 
defense acquisition program. While the NMD technologies continue to 
mature, the NMD program itself is still composed of multiple concepts 
common to early acquisition programs. Thus, the requirements, designs 
and resulting cost estimates to date have been, of necessity, coarse. 
All of these estimates will be refined as the program proceeds through 
the acquisition process.
    During the definition period, the warfighting community prepares 
and submits mission needs statements and capstone operational 
requirements documents. In August 1996, the Joint Requirements 
Oversight Council (JROC) approved a National Missile Defense Capstone 
Requirements Document (CRD) specifying the preliminary operational 
requirements that the NMD system would need to meet. On March 10, 1997, 
the JROC validated the Key Performance Parameters of Joint Operational 
Requirements Document (ORD).
    The NMD program has undergone a formal review process, called the 
Systems Requirements Review (SRR). This process began last August and 
concluded on April 4, 1997. This greatly increased our understanding of 
the NMD system's requirements, as well as its projected cost, schedule 
and performance. This activity ensures we inject realism and rigor into 
both the planning and execution of the NMD program. When the SRR 
concluded--in the middle of the QDR process--the final result was a set 
of NMD System and Element requirements and a baseline architecture that 
would meet all the NMD Capstone Requirements Document objectives, 
namely protecting all 50 states against a small number of 
unsophisticated ballistic missile threats.
     The NMD development program is at an early stage of program 
maturity. This has led to a situation in which our previous cost 
estimates were based on rough order of magnitude costs, grounded in 
parametrics, lab tests, and simulations. The Department's cost 
estimating process was further complicated by delays in forming the NMD 
Joint Program Office--which limited the number of people who could help 
manage these issues--and in the awarding of the Lead System Integrator 
contract.
    The recent completion of the Systems Requirements Review will lead 
to increasing system definition and stability in cost estimates. Our 
systems engineering and cost analyses provide us a better understanding 
of the RDT&E funding required to develop an NMD system on a highly 
compressed schedule.
    Question. Do you have any unfunded requirements in National Missile 
Defense?
    Answer. Based on the NMD life-cycle cost estimate supporting the 
QDR process, the NMD program will require an additional $474 million in 
fiscal year 98 RDT&E funds to execute the 3 plus 3 schedule and 
program. These additional resources would be roughly spent on:
     Program shortfalls ($100 million). Delays and hardware 
(additional target) associated with Integrated Flight Test 1 failure; 
delays in transferring the THAAD dem/val radar to the GBR-P; BMC3 
development as a result of contract negotiations; EKV communications 
development as a result of contractor estimates; and radar 
discrimination algorithms.
     Previously deferred program content ($85 million). EKV 
telemetry unit development; EKV hardness and lethality testing; and 
Forward-based X-band Radar and UWER development under the LSI 
contractor.
     Cost Risk Reduction ($74 million). Additional funding to 
all elements (in line with established cost estimates) to allow for 
development/test unknowns without sacrificing program content.
     Schedule risk reduction ($110 million). Accelerate 
procurement of and add hardware (such as targets and boosters) to 
mitigate test delays or failures (most items are lead-time away and 
still unavailable until fiscal year 99 timeframe); accelerate Hardware-
in-the-loop model and hardware procurements; and improve test launch 
capabilities.
     Technical risk reduction ($105 million). Increase Systems 
Engineering to include development of high fidelity system simulator 
for performance verification; continued EKV competition through first 
intercept flights; long-lead procurement of hardware for added test 
flights beginning in fiscal year 00; and explore alternative 
technologies, such as radar transit/receive modules, to maintain 
program flexibility and to reduce procurement costs.
    Question. The budget proposes to shift procurement of missile 
defense systems to the Services in 1998. Do you have any concerns about 
this? Will you continue to have adequate management control over these 
systems once the funds have been transferred?
    Answer. In February memorandum to Department's senior leadership, 
Deputy Secretary of Defense White affirmed BMDO's role as central 
planner, manager, and integrator for the BMD mission, and in 
particular, the role of the Director of BMDO as the BMD Acquisition 
Executive (BMDAE). As such, the Director will continue to serve on the 
Defense Resources Board (DRB) when BMD programs and issues are 
discussed and, thereby, will be able to influence the allocation of 
funds to programs and DoD components. As the BMDAE, the Director will 
have the opportunity to concur or non-concur with Service funding 
proposals that impact BMD programs. Third, the DoD Comptroller will 
provide BMDO the opportunity to review any transfer proposed by a 
Service. Should BMDO and the Service be unable to reach an agreement, 
the issue will be evaluated to the DRB level where the Director will 
work with the Service and the Department's senior leadership to ensure 
BMD programs are appropriately funded.
    However, despite these three venues for managing BMD procurement 
funding, there remain significant challenges to doing so.
    First, BMDO will not be able to affect BMD procurement funding 
directly. New procedures for BMDO to influence BMD procurement funding 
levels, on a program-by-program basis will have to be established. 
These could prove to be cumbersome and less efficient.
    Second, it is inevitable that the Military Services will attempt to 
budget for BMD programs in the context of total Service requirements. 
To the extent that BMD programs are not a Service's top priority, there 
could be attempts to move BMD funding into other accounts, or to offer 
BMD funding as a bill payer when Congress or the Department issues non-
specific reductions to the DoD budget.
    Third, each service will tend to favor its own BMD programs over 
those of the other Services, and to resist a BMDO plan which, while 
optimizing performance and/or response to the total threat, favors one 
particular Service's system at the expense of another Service's system.
    Fourth, in the past, BMDO has tended to produce system cost 
estimates that substantially exceeded cost estimates generated by the 
Services for the same system. While in full control of the funds, BMDO 
has typically budgeted at the higher number to minimize risk. Should 
the Services continue to produce lower cost estimates and insist on 
budgeting at those lower levels, the risk of not meeting schedules or 
having to reduce system performance could increase substantially.

     Navy Area Theater Ballistic Missile Defense (Navy Lower Tier)

    Question. The Navy Area Theater Ballistic Missile Defense (Navy 
Lower Tier) system detects, tracks, and engages short and medium range 
theater ballistic missiles. In January, the Navy Lower Tier 
successfully intercepted a Lance missile at White Sands Missile Range. 
Subsequent to that test the program entered into the Engineering 
Manufacturing and Design (EMD) phase of acquisition. The budget request 
for 1998 is about $268 million.
    General Lyles, last year when this Committee met, the Navy Lower 
Tier program had some delays and setbacks. However, we understand that 
a recent flight test was successful and that a Lance missile was 
intercepted. Will you please tell the Committee about that test? What 
were the objectives of that test?
    Answer. The Standard Missile Block IVA (SM-2 Blk IVA) Developmental 
Test Round (DTR-1A) intercept was accomplished on January 24, 1997. The 
objectives of the test were to intercept a TBM-like target utilizing 
infrared (IR) guidance, to demonstrate dome cover removal and dome 
cooling, to demonstrate IR acquisition, track, handover, and guidance, 
to demonstrate IR aero-optical performance, and to place a warhead 
fragment on target. We successfully demonstrated these test objectives 
and Dr. Kaminiski approved the program's proceeding to EMD.
    Question. Did the Navy Lower Tier system meet all the objectives of 
that test?
    Answer. Yes, all test objectives were met.
    Question. The Congress directed that a User Operational Evaluation 
System (UOES) be deployed by 1997 and provided full funding for Navy 
Lower Tier to ensure the earliest possible deployment of that system. 
The President's Budget projects a UOES capability by 2000. Please 
explain why the Navy requires an additional three years to deploy this 
system. Are there technical problems? Are there resource problems?
    Answer. There were programmatic and technical issues that have 
delayed the UOES and deployment dates. Those issues have now been 
resolved and the program has left the ``Preliminary Design and Risk 
Reduction'' phase and entered the Engineering and Manufacturing 
Development (EMD) phase.
    Prior to the Navy Area TBMD program entering EMD, a 1994 OSD 
Acquisition Decision Memorandum required the Navy to obtain OSD 
concurrence on an acquisition strategy and for the program to conduct 
specific Risk Reduction Flight Demonstration (RRFD) activities, 
including demonstration of Infra-Red (IR) seeker performance. Delays in 
this process included the following:
     Approval of the acquisition strategy involved getting 
permission from the Department of Justice to combine two competing 
contractors (Raytheon and Hughes) into a single company that could then 
leverage the best of competing design concepts. Delays in obtaining 
required approvals, and then accomplishing this unique strategy, 
contributed to approximately a six month schedule slip.
     Problems integrating an IR seeker into the missile's 
existing Radio Frequency guidance section, and then adequately testing 
it prior to flight, took almost a full year longer than originally 
planned.
     The first Environmental Test Flight failed when the 
missile booster malfunctioned. Although the booster was not a new 
design, to confirm the reason for the failure and prepare another 
missile for that specific test required approximately 5 additional 
months.
     Finally, the first intercept test flight was a ``no-test'' 
when the interceptor could not be launched due to problems confirming 
target telemetry at the test site. The interceptor had to be 
refurbished after this no-test to replace batteries.
    Following the successful intercept on January 24, 1997, a Defense 
Acquisition Board Readiness Meeting was conducted on February 19, and 
permission to enter EMD was granted on February 22. On March 14 the 
Navy completed Critical Design Review (CDR) of the UOES computer 
program. The first AEGIS cruiser is scheduled to receive the TBMD UOES 
computer upgrade in Fiscal year 1998 and the UOES missiles are 
scheduled to begin delivery in Fiscal year 1999. UOES at-sea testing is 
now scheduled for Fiscal Year 2000.
    Question. In the absence of a Phase II agreement, will compliance 
determinations still remain a ``national responsibility''? In other 
words, will it still be up to the U.S. to decide whether or not a TBM 
system is compliant?
    Answer. Yes, if the negotiators in Geneva fail to reach a Part II 
agreement, the United States will continue to make its own compliance 
determinations regarding TMD systems.
    Question. If we are capable of deciding what is compliant or not on 
our own now, what is the need for the demarcation agreement? What do we 
gain by signing this agreement? Doesn't the agreement just tie our 
hands in terms of future TBMD systems?
    Answer. The demarcation agreement has two parts. Part I says that 
TMD systems with interceptor missiles having velocities of 3 km/sec or 
less are compliant with the ABM Treaty, provided they are not tested 
against ballistic target missiles with velocities greater than 5 km/sec 
or ranges greater than 3,500 km. Thus, as long as these parameters are 
not exceeded, lower-velocity TMD systems--Patriot, THAAD, and Navy 
Area--will no longer require time-consuming national compliance 
determinations, even when the configurations of these systems change. 
Although Part II will still require national compliance determinations 
for higher-velocity TMD systems, such compliance determinations will 
less likely be challenged by the Russian Government so long as the U.S. 
adheres to the target limitations of the Part II agreement. Both 
agreements continue to evolve the cooperative, non-threatening, 
strategic relationship between the U.S. and Russia. Regarding the 
impact of the Helsinski Agreement on future TMD systems, it does not 
affect any aspect of TMD systems that are currently planned for future 
deployment.

    Question. How many ships and how many missiles will be used in the 
UOES system?
    Answer. UOES is comprised of two AEGIS cruisers and thirty-five 
missiles.
    Question. The President's Budget also projects that the First Unit 
Equipped (FUE) for Navy Lower Tier will be 2002. Are your fairly 
confident with this projected date?
    Answer. Yes.
    Question. All told, how many ships will be equipped with Navy Lower 
Tier?
    Answer. Seventy-nine (79) ships (22 cruisers and 57 destroyers) 
will be equipped with the Navy Area TBMD system.
    Question. Do you have any unfunded requirements?
    Answer. The fiscal year 1998 President's budget could be augmented 
with the following prioritized list. Funding the items on this list 
will minimize outyear tails and assist in solving immediate pressures. 
First priority goes to risk reduction programs for the Major Defense 
Acquisition Programs (MDAPs); second, joint interoperability risk 
reduction issues with MDAP enhancements, third, improvements to our 
Advance Technology base, and finally, procurement of weapon systems not 
funded by BMDO.
     ($44 million RDT&E)--for risk mitigation efforts 
associated with EMD testing that were not in the previous program 
baseline.
     $35 million)--for upgrades to the Pacific Missile Range 
Facility (PMRF) to meet Congressionally mandated use of PMRF and 
Multiple Simultaneous Engagement (MSE) testing. Funding would avoid 
offsets from other ballistic missile defense activities.
     ($9 million)--for targets, target support and range 
support due to new requirement for UOES characterization testing.
    Question. The Navy Lower Tier system on AEGIS ships is comprised 
of: a modified Theater Ballistic Missile Defense (TBMD) capable Navy 
Standard Missile and an improved SPY-1 radar. The Navy's new DDG--51 
shipbuilding plan drops funds for theater ballistic missile defense 
from all new DDG-51 ships funded through the year 2001. BMDO plans to 
deploy Navy Lower Tier by 2002.
    Given the 3 to 5 year construction time to build a ship, the 
earliest that the Navy could field theater ballistic missile defense is 
2005. Why does BMDO state that Navy Lower Tier will be deployed in 
2002? Who is wrong, BMDO or the Navy?
    Answer. The Navy has not stated Navy Lower Tier will be deployed in 
2005. They do not have new construction ships with TBMD upgrades funded 
until 2001. However, the Navy Area TBMD First Unit Equipped (FUE) will 
be an already commissioned AEGIS cruiser that will be upgraded to 
accommodate TBMD. This upgrade consists of installing adjunct processor 
software and firmware modifications (a TBMD ship set) to the ship's 
combat systems during a planned maintenance availability period. These 
TBMD upgrades will begin in late 1998. The Navy has over $300 million 
budgeted for TBMD upgrades between 1998 and 2003. The first TBMD 
missiles (SM-2 BLK IVA) will be available for TBMD retrofitted ships in 
fiscal year 2002. This will allow deployment of the Navy Area TBMD 
``Navy Lower Tier'' in 2002. After 2001, TBMD ship sets will be 
installed on the DDG-51 class (AEGIS) destroyers as they are being 
constructed while retrofit of AEGIS cruisers (22 total) and all 
previously commissioned DDG-51 class destroyers continues.
    Question. Do you believe that the Navy is fully on board with the 
Navy Lower Tier program?
    Answer. Yes.
    Question. Does the Navy agree with the First Unit Equipped date of 
2002?
    Answer. The Department's position for the Navy Area program FUE is 
2002.
    Question. If the Navy is fully committed to the Navy Lower Tier 
system, is there a reason why funds were not included in the budget to 
modify planned AEGIS ships to accommodate theater ballistic missile 
defense systems?
    Answer. The Department's fiscal year 1998 President's Budget submit 
included the transfer of BMDO TMD procurement funds (missile and AEGIS) 
to the Navy, specifically to the Weapons Procurement Navy (WPN), 
Standard Missile SM-2 (12E) account. The Navy set aside funds within 
the FY 1998 President's Budget, WPN Standard Missile SM-2 (12E) 
account, necessary to conduct the AEGIS TMD modifications. The navy 
will realign these funds to Other Procurement, Navy (OPN) to modify and 
equip AEGIS ships for the TMD mission.
    Question. What would the impact be to theater ballistic missile 
defense systems if the Navy does not modify these ships as they are 
built?
    Answer. The Navy is fully committed to fielding theater ballistic 
missile defense systems across the AEGIS fleet. Indeed, every effort is 
being made by both the BMDO and the Navy to accelerate the fielding of 
these systems and provide the nation with this critical defensive 
capability.
    Question. Is there potential for added cost and delay in the 
deployment of the sea-based theater ballistic missile defense systems?
    Answer. Barring any unforeseen problems, the Navy Area TBMD program 
is assessed as being low to medium risk for both cost and schedule.

                  Patriot Advanced Capability (PAC-3)

    Question. The Patriot Advanced Capability (PAC-3) missile defense 
system is comprised of four basic elements: a radar, an engagement 
control station, a launching station and interceptors. PAC-3 will 
engage and destroy short and medium range theater ballistic missile and 
cruise missiles within the atmosphere. Development is being done in 
stages: configuration 1 upgrades the guidance system; configuration 2 
enhances the radar; configuration 3 includes the PAC-3 hit-to-kill 
missile (formerly known as Extended Range Interceptor, ERINT). The 
budget request for 1998 is $556.1 million ($206.1 million in R&D, $350 
million in Service procurement.). The PAC-3 missile defense system is 
being developed incrementally. General Lyles, will you please explain 
the differences between the various development stages and 
configurations?
    Answer. Based on the lessons learned from Operations Desert Shield 
and Desert Storm, the Army initiated a new development program that 
improved the PATRIOT systems' performance. This new development program 
planned to extend the PATRIOT units' battlespace while enhancing 
lethality of the system against TBMs. The first improvements were near-
term upgrades fielded in 1992-1993 to the PAC-2 system that: (1) 
provided for rapid, accurate fire unit emplacement through the use of 
the Global Positioning System and a North Finding Seeker; (2) improved 
the defended area of the fire unit by remoting missile launchers up to 
12 km from the ground radar set; and (3) provided ground radar 
enhancements that improved TBM detection and increase system 
survivability.
    More substantial improvements to the PAC-2/QRP system were 
initiated under the Army's new PATRIOT Advanced Capability-3 (PAC-3) 
program. To more rapidly field improvements and modifications to the 
PATRIOT system as they were developed, the PAC-3 program was separated 
into three separate configurations.
    Configuration 1 modifications include: the Guidance Enhanced 
Missile (GEM), a new pulse Doppler process for the ground radar, and 
new processing and data storage upgrades to the Expanded Weapons 
Control Computer (EWCC). The new EWCC provides four times the 
throughput of the current WCC and eight times the memory. This 
expansion in memory is critical to allow PATRIOT the ability to 
continue to grow in its performance capabilities with advanced software 
techniques since the current WCC cannot support any substantial 
increase in lines of software code. The new pulse Doppler processor 
improves the ground radar dwell time for the pulse Doppler waveforms 
and well as improving the performance of the radar against targets in 
clutter. The GEM missile provides improved system effectiveness and 
lethality against high speed TBMs and reduced radar cross section (RCS) 
air breathing targets (ABTs). All of these modifications have completed 
development and were fielded starting in 1995, with the last of the 10 
PATRIOT Battalions modified in spring 1997.
    Configuration 2 modifications included: (1) communications upgrades 
through the use of the JTIDS terminals at the Battalion level for 
interfacing on the Joint arena net; (2) ground radar enhancements that 
improves detection of lower cross section targets at a greater 
distance; (3) an improved defensive capability against Anti Radiation 
Missiles; (4) provides for the first phase of Classification, 
Discrimination, and Identification (CDI), an upgrade which correlates 
target tracks received from external sources to a fire units tracks 
generated by the ground radar; and (5) PDB-4 software, which maximizes 
the capability of all previous hardware improvements and additionally 
has TBM message capability. These upgrades have completed operational 
testing and the first tactical unit was fielded with these improvements 
in December 1996. Two of the ten PATRIOT Battalions have received these 
modifications, with the remaining receiving the modifications through 
1998.
    Configuration 3 modifications include: (1) the new PAC-3 hit-to-
kill missile which provides improved lethality against TBMs: (2) 
improved defended area of the fire unit by remoting missile launchers 
up to 30 kms from the ground radar set; (3) CDI Phase III modifications 
to improve identification and classification and discrimination of 
TBMs; (4) adding several improvements to the ground radar that 
significantly increases its detection range while at the same time 
increases its reliability; (5) communications upgrade that provides 
JTIDS terminals at the Fire Unit level; and (6) adding PDB-5 software 
upgrades which will maximize the capabilities of the previous 
improvements to the PATRIOT system. These upgrades are currently in 
either engineering and manufacturing development or production and will 
be fielded as a complete system in 4th Quarter, fiscal year 1999.
    Question. The Army recently conducted two tests of the PAC-3 
configuration. What were the results of those tests? Did the system 
meet all of the objectives of the tests?
    Answer. The PATRIOT program recently conducted extensive testing 
and two missile firings at Kwajalein Missile Range. The PATRIOT program 
participated in a tri-fold event which included Willow Dune, TMD 
Critical Measurements Program (TCMP) and System Integration Test (SIT)-
97.
    During the Willow Dune engagement, the objectives for the PATRIOT 
Missile System were to search, detect, track, engage, guide to and fuze 
on the target. A tactical PATRIOT Fire Unit with Configuration 2 
modifications was used during this exercise. The tactical PATRIOT Fire 
Unit met or exceeded its test objects and engaged and intercepted the 
SCUD targets with both a PAC-2 and GEM missile.
    During the TCMP exercise (non-engagement), the objectives for the 
exercise were to characterize the capabilities of both the 
Configuration 2 and Configuration 3 ground radars against a medium 
range target. During the TCMP exercise, both radars demonstrated the 
ability to detect and track medium range targets.
    During SIT-97, the PATRIOT Configuration 2 modified Fire Unit test 
objectives were to demonstrate current interoperability capability, 
although full interoperability is not expected or achieved until the 
units receive Configuration 3 modifications. However, the Configuration 
2 modified Fire Unit did demonstrate a limited interoperability 
capability.
    Question. How will the PAC-3 Configuration 3 system benefit from 
these tests? What lessons have we learned?
    Answer. The direct benefit of such testing clearly demonstrates 
that the PATRIOT missile system can counter the current TBM threat. 
Furthermore, these tests enable the PATRIOT program to collect and 
analyze the performance data from actual threat targets and thus 
utilize that data during the development of the Configuration 3 
modifications.
    Additionally, the testing demonstrated that the PAC-2 and GEM 
missiles can successfully intercept a Scud target, and that the GEM 
missile can provide more fragments to the target warhead. The testing 
also demonstrated that the Configuration 2 ground radar provides a 
significant improvement over the PATRIOT ground radar used in Operation 
Desert Storm, and that the Configuration 2 ground radar. Finally, we 
demonstrated that the Configuration 3 CDI III Wide Range Resolution 
waveforms can provided warhead debris discrimination based on length, 
radar cross section (RCS) and drag measurements.
    Question. The Army has fielded that PAC-3 configuration 1 and has 
begun to field configuration 2. When will the PAC-3 missile be tested?
    Answer. Initial missile integration and Hardware-in-the-Loop 
testing has begun on the PAC-3 missile at the contractors facility. The 
first Controlled Test Flight of the PAC-3 missile is scheduled for late 
Summer 1997 at White Sands Missile Range, NM.
    Question. How many flight tests will be conducted with the PAC-3 
(ERINT) missile before the a decision to procure is made?
    Answer. Three flights tests will be conducted before a Low Rate 
Initial Production (LRIP) procurement decision is made. The first two 
flight tests are controlled test flights and the third is a guided test 
flight. The difference between the two are the first two missions are 
not intended to intercept targets while the third mission is designate 
as an intercept mission.
    Question. When will the PAC-3 configuration-3 be fielded?
    Answer. Configuration 3 is scheduled to be fielded in the 4th 
quarter of fiscal year 99. This configuration is the last in the series 
of three incremental improvements to the PARTIOT Missile Defense 
program.
    Question. What will the advantages of the PAC-3 configuration 3 be 
compared with the current PATRIOT System?
    Answer. The most significant advantage of the PAC-3 Configuration 3 
modifications is the combined effects of improvements to the ground 
systems coupled with the new hit-to-kill PAC-3 missile. The 
Configuration 3 system can detect a target at a greater range, better 
identify target type and will have a greater missile inventory. 
Furthermore, the PAC-3 missile has a significantly capability against 
more stressing threats, such as chemical submunition warheads.
    Additionally, the Configuration 3 system will have an eight fold 
increase in defended area and a 100% increase in lethality against 
stressing threats, over the Configuration 2 system. The Configuration 2 
system has an 8 fold increase in defended area coverage and a 50% 
increase in lethality, over the Desert Storm PATRIOT system.
    Question. What is the total acquisition cost of the PAC-3?
    Answer. The PATRIOT program then year (TY$) cost for the PAC-3 
program (Configuration 1 through Configuration 3) is $2.9 billion in 
development and $4.3 billion in procurement. The total acquisition cost 
is $7.2 billion.
    Question. Do you have any unfunded requirements?
    Answer. The fiscal year 1998 President's budget could be augmented 
with the following prioritized list. Funding the items on this list 
will minimize outyear tails and assist in solving immediate pressures. 
First priority goes to risk reduction programs for the Major Defense 
Acquisition Programs (MDAPs); second, joint interoperability risk 
reduction issues with MDAP enhancements, third, improvements to our 
Advance Technology base, and finally, procurement of weapon systems not 
funded by BMDO.
     ($15 million RDT&E Defense Wide)--additional funding would 
support unanticipated range and hardware funding requirements needed 
during the ongoing Engineering and Manufacturing Development flight 
test program without changing the number of flight tests or reducing 
other risk mitigation activities.
    Question. The budget includes $350 million in Army procurement for 
the PAC-3. What will be procured with these funds?
    Answer. Fiscal year 1998 is the first year of low rate initial 
production for the new PAC-3 hit-to-kill missile. Approximately $115 
million of the $350 million requested in fiscal year 1998 is 
specifically tied to procurement of these 52 missiles. The balance of 
the funding is for ground support equipment and the accompanying 
engineering support for Configuration 3 radar improvements, 
classification, discrimination and identification upgrades, and 
improvements to the remote launch capability. Other ground improvements 
include the enhanced launcher electronics system, allowing the existing 
PATRIOT launcher to fire either pre-RAC-3 missiles or the new PAC-3 
missile.
    Question. Do you have any concerns about being able to manage the 
BMD programs if the Services, in this case the Army, manage their own 
procurement funds?
    Answer. Subsequent to the notification of the transition of 
procurement funds to the Services in fiscal year 98, the Deputy 
Secretary of Defense sent a Memorandum to the Services validating the 
Acquisition Executive role of BMDO and mission to oversee the 
coordination and submission of all Ballistic Missile Defense efforts. 
The implementation of this memorandum is still underway. I remain 
confident that the Services will continue to support critical Ballistic 
Missile Defense programs.
    Question. What assurance do you have that funds programmed in other 
Service accounts for ballistic missile defense will be spent for these 
purposes and not programmed for other Service priority?
    Answer. The implementation of the Deputy Secretary of Defense 
Memorandum, dated February 12, 1997, will provide a test case on the 
Service's continued support to ballistic missile defense. To date, I 
have not observed any attempt by the Services to downplay the need or 
priority of ballistic missile defense programs. In fact, the Army is 
working hard to resolve an internal problem tied to PATRIOT 
interoperability via the Joint Tactical Information Distribution System 
to ensure success of the program. However, a true measure of the effect 
of the transition of procurement funds to the Services will become 
clear during the Summer and Fall review cycles of the Fiscal Year 1999 
President's Budget development.

               Theater High Altitude Area Defense (THAAD)

    Question. The Theater High Altitude Area Defense (THAAD) missile 
defense system provides protection against short and long range theater 
ballistic missiles by intercepting them both in and out of the 
atmosphere (endo and exoatmosphere). THAAD consists of four components: 
truck mounted launchers, interceptors, a radar, and battle management 
command, control and communications (BM/C3I) systems. The THAAD program 
is in its fourth year of demonstration and validation. To date, seven 
flight tests have been conducted. The first three were to test the 
propulsion, controls and the seeker. The fourth and following flight 
tests were to intercept a target. Each of the four interception tests 
failed. The budget request for 1998 is $560.7 million. General Lyles, 
the THAAD missile system has experienced a series of failures. The most 
recent failure was extremely disappointing because it was the fourth 
consecutive failure. What exactly happened? What components worked and 
what did not work?
    Answer. The THAAD missile program conducted its seventh flight test 
at White Sands Missile Range, New Mexico on March 6, 1997. This most 
recent failure was caused by anomalous behavior of the Divert and 
Attitude Control System (DACS). The DACS receives guidance and 
navigation control commands from the missile's in-flight computer and 
provides the divert and attitude control required to guide the THAAD 
kinetic kill vehicle toward intercept of its target. The DACS has 
performed nominally on all six prior flight tests. Although THAAD did 
not achieve an intercept, the radar, launcher, the battle management/
command, control, and communications all performed nominally. 
Corrective actions based on results of the flight test failure analysis 
are underway.
    Question. What do you intend to do to ensure that the next test 
will be a success? When is that test scheduled? Will there be a delay? 
How long of a delay?
    Answer. The date for the next THAAD flight test is still to be 
determined. As a result of this most recent failure, I chartered two 
independent review teams. One of those teams evaluated the design of 
the THAAD missile to determine if there are sufficient design margins 
to ensure reliability on future flight tests. The second team performed 
an evaluation of the total program concept and requirements to 
determine the developmental risk involved in executing the program. The 
teams' findings validated the THAAD concept of a hit-to-kill, endo/
exoatmospheric interceptor. Additionally, it was determined that the 
current THAAD design is capable of performing the intended mission. 
Numerous recommendations were made to rectify subsystem reliability, 
test, and quality assurance shortfalls. Recommended changes are being 
assessed by BMDO and the Army for implementation. The most immediate 
impact will be a delay in conducting the next flight test, previously 
planned for July 97, to allow implementation of the recommendations and 
corrective actions.
    Question. Last year the President's Budget proposed to severely cut 
the funds for the THAAD program and to delay its deployment to 2006. 
General O'Neill testified that the THAAD program could be deployed 
sooner if the proper resources were committed. He also said that the 
delay was due solely to budget cuts not technical problems. It was on 
that basis that this Committee decided to restore $140 million to the 
program. General Lyles, do you believe General O'Neill was mistaken? 
Does this program have serious technical problems?
    Answer. I do not believe Lt Gen O'Neill was mistaken. The problems 
that THAAD has encountered during flight testing have primarily been 
problems with subsystem reliability, verification, and quality control. 
This assertion was confirmed by the two independent review teams. In 
December, the Department of Defense added $722 million in Future Years 
Defense Program to accelerate the program to achieve a First Unit 
Equipped (FUE) in fiscal year 04. Although BMDO and the Army continue 
to assess the details of the impact of the flight test program on the 
FUE schedule, the Quadrennial Defense review (QDR) has restructured 
THAAD in light of the test difficulties and the Independent Review Team 
findings for an FUE of fiscal year 06.
    Question. Do you believe the THAAD program has been too aggressive 
in terms of schedule and resources? Did the Administration's decision 
last year to cut the program back and our subsequent reversal of that 
decision have an effect on the program?
    Answer. It is generally understood, that the threat from the 
theater ballistic missiles has warranted an aggressive schedule for the 
THAAD program. The decision to remove funding from the program in 1996 
effectively delayed the program from an fiscal year 02 to fiscal year 
06. The Department's decision to add funding back to the program has 
accelerated the program by 17 months to achieve an FUE in late fiscal 
year 04. However, the recent flight test setback and implementation of 
the review teams' recommendations will delay the FUE. The Quadrennial 
Defense Review (QDR) has subsequently restructured THAAD--in light of 
the test difficulties and the Independent Review Team findings--for an 
FUE of fiscal year 06. However, my staff is aggressively looking at the 
schedules and options available to meet the FUE as soon as 
programmatically possible.
    Question. How would a stable funding profile help the management of 
the program?
    Answer. Stable funding is critical to the successful execution of 
any program. The technical complexity associated with the THAAD 
development makes a stable funding profile all that more critical. 
Stable funding allows the project manager to optimize the development 
and test schedule and lay out the contractual efforts accordingly. 
Funding instability, specifically reductions, are particularly 
detrimental to a successful acquisition program.
    Question. Should the Congress continue to aggressively fund this 
program? Or should we reevaluate this program given its recent 
technical problems?
    Answer. The THAAD program is adequately funded to execute the 
program the BMDO and the Army are developing. It would be premature for 
me to suggest that the program be aggressively funded until I've had an 
opportunity to review, and the Department to approve, the 
aforementioned program options.
    Question. Do you believe in the technical viability of the current 
missile design?
    Answer. The technical viability of the missile is a concern which 
generated my desire to have an independent team look at the missile 
design. The team's findings validated the THAAD concept of a hit-to-
kill, endo/exoatmospheric interceptor. In spite of the failed 
intercepts, it was determined that the THAAD design is capable of 
performing the intended mission. The problems have been with the 
program subsystem reliability and verification, and in quality 
assurance.
    Question. Dr. Kaminski suggested that the THAAD program will 
probably require some sort of ``restructuring.'' What does he mean? 
Will the program be delayed further? What will the impact on resources 
be?
    Answer. Any restructure of the program would seek to lower the 
cost, schedule, and performance risk in executing the program. 
Additionally, a restructure would reestablish a THAAD program with 
achievable milestones, acceptable developmental risk, and within 
available resources when balanced against the TBM threat. The QDR, in 
fact, has done exactly that--restructure the program, with an FUE date 
of 2006.
    Question. Will the review include a look at other potential 
contractors? Have you made a mistake in putting all your eggs in one 
basket?
    Answer. The independent review teams I chartered are focusing their 
efforts on the program and its prime contractor. Seeking an alternate 
contractor for development of the THAAD system is an option, but not 
one we are currently pursuing. Seeking an alternate contractor to 
perform the remaining development on the program would be costly and 
likely delay completion of the program by several years. However, we 
are considering duel sourcing certain high risk subsystems and 
components. With respect to a single source acquisition strategy for 
THADD, I do not think we have erred. The urgency for the earliest 
possible development of an upper tier system drove the decision to 
limit the program to a single contractor.
    Question. Is the contractor applying enough rigor to reviewing its 
THAAD program?
    Answer. I am concerned about the contractor's performance with the 
THAAD development. I have expressed this concern to them on a number of 
occasions and believe that they are making an earnest effort to put the 
program back on a successful track. We, clearly, have the attention of 
the senior management at Lockheed Martin to make THAAD a successful 
program.
    Question. Given the urgent requirement for an upper tier missile 
defense system and the problems that THAAD is now experiencing do you 
think we should seek alternative systems?
    Answer. The THAAD design has been developed and improved for more 
than 5 years. The test program is performing its role of uncovering 
areas where changes must be made to ensure that the risks have been 
addressed and can be mitigated. This most recent flight test, while not 
successful in getting its primary intercept objective, was the first 
time that the entire THAAD system was used and demonstrates the 
progress that the program continues to make. I am convinced that the 
reliability and quality assurance problems can be overcome and that the 
system will work as intended.
    Question. What does the recent failure do to the current schedule? 
Will the User Operational Evaluation System (UOES) be deployed in 1999?
    Answer. THAAD is, and has been, developed on an event based 
schedule. Flight test failures have been investigated and design 
changes made consistent with a program in the Demonstration/Validation 
(prototype) stage of development. The UOES, minus the missiles, has 
already been successfully integrated into system level testing. 
Software increments will continue to be added for increasing 
capability. The UOES missiles will not be brought until at least one 
successful intercept has been made. Right now those UOES missile 
deliveries will begin in 1999, and be completed in 2000.
    Question. Is the Army planning to commit funds early for the 40 
UOES missiles? Has the Army reconsidered its position?
    Answer. The Army position is that THAAD is a vitally needed 
defensive capability. It is that urgency of need that calls for a 
balance between comprehensive testing and the production of 40 UOES 
missiles. An intercept of a representative target along with the 
extensive ground testing done and planned provides us the minimum 
confidence that the missile design is well understood and modeled, and 
that the ground testing is sufficiently rigid.
    Question. The General Accounting Office (GAO) recently issued a 
report criticizing the Army for planning to base a procurement decision 
for the 40 UOES missiles upon a single test. It seems that with the 
failure of flight 7, GAO's specific criticism is now moot. However, do 
you think that GAO's overall concerns about concurrency are valid?
    Answer. The Army position is that THAAD is a vitally needed 
defensive capability. It is that urgency of need that calls for a 
balance between comprehensive testing and the production of 40 UOES 
missiles. An intercept of a representative target along with the 
extensive ground testing done and planned provides us the minimum 
confidence that the missile design is well understood and modeled, and 
that the ground testing is sufficiently rigid.
    Question. What are you doing to assure that the Army's procurement 
plans are sound and executable?
    Answer. BMDO is reviewing the production schedules and costs to 
ensure that based on our lessons learned to date, and the changes 
planned, that the hardware and software can be delivered and that cost 
controls are in place. I review these plans regularly to make sure that 
we understand and control the process and provide assistance to the 
program where needed.
    Question. How can you enforce management decisions if the Army 
controls the procurement funds for THAAD in the future?
    Answer. Despite the transfer of BMDO procurement funds to the 
Services, several mechanisms exist which will allow BMDO to work with 
the Services and manage the funds. In a February 1997 memorandum to the 
Department's senior leadership, Deputy Secretary of Defense White 
affirmed BMDO's role as central planner, manager, and integrator for 
the BMD mission, and in particular, the role of the Director of BMDO as 
the BMD Acquisition Executive (BMDAE). As such, I will continue to 
serve on the Defense Resources Board (DRB) when BMD programs and issues 
are discussed and, thereby, will be able to influence the allocation of 
funds to programs and DoD components. Second, as the BMDAE, I will have 
the opportunity to concur or non-concur with Service funding proposals 
that impact BMD programs. Third, the DoD Comptroller will provide BMDO 
the opportunity to review any transfer proposed by a Service. Should 
BMDO and the Service be unable to reach an agreement, the issue will be 
elevated to the DRB level where I will work with the Service and the 
Department's senior leadership to ensure BMD programs are appropriately 
funded.
    Question. What is the exit criteria for Demonstration and 
Validation?
    Answer. The primary exit criteria for THAAD to proceed to 
Engineering and Manufacturing (EMD) is three body-to-body intercepts of 
threat representative targets within an accepted aim point.
    Question. When will the next THAAD flight take place?
    Answer. At this time, I am assessing the recommendations received 
from my review panels, the Air and Missile Defense Program Executive 
Officer, and the THAAD Project Manager. I plan to implement some 
changes, as necessary, to maximize our changes of success of the next 
intercept attempt. The next flight will not take place until I am 
satisfied that we have done all that is reasonable and prudent to 
ensure its success.
    Question. What is your present estimate as to how soon this system 
will be able to be fully deployed? Is 2004 still a reasonable date?
    Answer. While BMDO and the Army continue to assess the details of 
the impact of the flight test program on the FUE schedule, the QDR has 
restructured THAAD in light of the test difficulties and the 
Independent Review Team findings for an FUE of fiscal year 2006. 
Certainly, we need to get a couple of flight test intercepts to give us 
real confidence in when a First Unit Equipped date can be met.

     Navy Theater Wide Ballastic Missile Defense (Navy Upper Tier)

    Question. The Navy Theater-Wide program will intercept ballistic 
missiles in their ascent, apogee and descent phases. As with the Lower 
Tier system, Navy Upper Tier will use the extant capabilities of the 
Aegis weapon system. A Standard Missile with a kinetic (hit-to-kill) 
vehicle will provide exoatmospheric intercept capability. The budget 
request for 1998 is $194.9 million. Is this finding at a level 
sufficient to deploy Navy Theater Wide? Is the program a deployment 
program?
    Answer. Navy Theater Wide is currently transitioning from a 
technology program to a Major Defense Acquisition Program which will 
focus on developing and eventually deploying a viable, effective 
system. Our current program for Navy Theater Wide is consistent with 
the direction of last year's Ballistic Missile Defense Program Review. 
This program consists of three parallel efforts. The first of these is 
a kinetic warhead technology assessment. In parallel with the 
technology review, we are proceeding to a system level intercept, 
called the NTW Flight Demonstration program (FDP) or AEGIS LEAP 
Intercept (ALI). The third portion of our Navy Theater Wide program is 
risk reduction activities. These activities will examine the critical 
risk areas for NTW engineering and develop solutions that will allow 
BMDO and the Navy, at the appropriate time, to make a more informed 
decisions to enter the Engineering and Manufacturing Development phase.
    The Department has neither approved an acquisition strategy nor 
validated an operational requirement for Navy Theater Wide. 
Additionally, the program office has not prepared a program manager's 
life cycle cost estimate for the program nor has the Cost Analysis 
Improvement Group performed an Independent Cost Estimate. Until these 
actions are complete the Department can determine neither what the Navy 
Theater Wide program entails nor the required resources, including 
funding, required for deployment. Currently, we expect to have these 
actions complete for the fiscal year 1998 Defense Acquisition Board 
review of Navy Theater Wide. However, the program is fully funded 
through the completion of the Flight Demonstration program / AEGIS LEAP 
Intercept (FDP/ALI).
    Question. The Navy Theater Wide system has been through five major 
reviews which have all reaffirmed the requirement for a Navy Theater 
Wide system. In addition, the CINCs repeatedly testify that theater 
missile defense is their number one priority. Why is it then, that the 
Administration has not requested the necessary funds to deploy the Navy 
Theater Wide System?
    Answer. Funding is only one portion of program execution. prudent 
execution for this program (or any program) requires completing the 
program one phase at a time and not commencing a large number of 
parallel activities. This means retiring risk in an orderly, logical 
sequence, fully defining the program requirement based on warfighter 
needs, which ensures that public funds are not placed at risk to 
procure a system until the system is proven to meet a valid 
requirement.
    In the case of NTW, the next steps to retire risk are:
         completing the Flight Demonstration Program/AEGIS LEAP 
        Intercept (FDP/ALI) to demonstrate that the LEAP vehicle can 
        achieve an exo-atmospheric intercept,
         validating the warfighters requirement for a Navy 
        upper-tier system, and,
         confirming that LEAP is the proper solution for the 
        Navy upper-tier mission.
    Until the intercept is achieved and the Department of Defense 
confirms the material solution, there is significant risk in proceeding 
to engineer a tactical system based on LEAP.
    The Navy Theater Wide program is fully funded through the 
completion of the FDP/ALI. Additional funds may allow for additional 
risk reduction in specific areas. However, additional funds will allow 
only marginal acceleration in the initial intercept, currently 
anticipated in the second quarter of fiscal year 2000.
    Question. How much more would be required to fund a program that 
would actually deploy Navy Theater Wide?
    Answer. The Department has neither approved an acquisition strategy 
nor validated an operational requirement for Navy Theater Wide. 
Additionally, the program office has not prepared a program manager's 
life cycle cost estimate for the program nor has the Cost Analysis 
Improvement Group performed an Independent Cost Estimate. Until these 
actions are complete the Department can determine neither what the Navy 
Theater Wide program entails nor the required resources, including 
funding, required for deployment. Currently, we expect to have these 
actions complete for the fiscal year 1998 Defense Acquisition Board 
review of Navy Theater Wide. However, the program is fully funded 
through the completion of the Flight Demonstration Program/AEGIS LEAP 
Intercept (FDP/ALI).
    Question. What is the total acquisition cost of Navy Theater Wide?
    Answer. The Department has neither approved an acquisition strategy 
nor validated an operational requirement for Navy Theater Wide. 
Additionally, the program office has not prepared a program manager's 
life cycle cost estimate for the program nor has the Cost Analysis 
Improvement Group performed an Independent Cost Estimate. Until these 
actions are complete the Department can determine neither what the Navy 
Theater Wide program entails nor the required resources, including 
funding, required for deployment. Currently, we expect to have these 
actions complete for the fiscal year 1998 Defense Acquisition Board 
review of Navy Theater Wide.
    Question. The total acquisition cost for THAAD is expected to be 
approximately $13 billion. (The newspapers have said between $16 and 
$17 billion.) The Medium Extended Air Defense System (MEADS) is 
expected to cost the U.S. $11 billion or more--even with our allies 
sharing the cost. The Airborne Laser will also cost $11 billion. The 
total acquisition cost for Navy Upper Tier is estimated to be about $7 
billion. General Lyles, given its substantial capabilities doesn't the 
Navy Upper Tier seem to be a ``better deal'' compared to these other 
systems?
    Answer. The relative costs of TMD systems is an important factor to 
consider when making decisions regarding whether a system should be 
built. However, it is not the only factor, and more importantly not the 
most critical. The most critical factor is the ability to intercept 
missiles and provide an effective multilayered missile defense. The 
importance of a multilayered and multiservice missile defense system is 
the benefit of combining each individual system's capabilities, 
increasing the complete defense against any theater ballistic missile. 
There is no one single ``best'' form of active defense for stopping 
missiles armed with weapons of mass destruction. For example, PAC-3 and 
Navy Area Defense are terminal defense systems which have a multi-
mission capability against both ballistic and cruise missiles. MEADS is 
designed to be highly mobile and remain at the forward edge of the 
battle field providing protection against very short range TBM systems 
in addition to aircraft and cruise missiles. However, MEADS, PAC-3 and 
Navy Area are relatively short ranged, and less effective against long 
range missiles with high closing velocities. The THAAD and Navy Theater 
Wide systems greatly expand the warfighter's engagement battlespace, 
allow multiple shot opportunities and significantly increase our 
capability to defeat faster and longer range ballistic missiles. The 
Airborne Laser will offer further expansion of the battlespace, more 
shot opportunities, added capability against longer ranged missiles, 
and the prospect of causing collateral damage from intercept debris to 
occur over the aggressor's own territory. Boost Phase Intercept (BPI) 
has a high potential payoff as a BMD mission capability, but concepts 
to perform high performane BPI against TMD and NMD threats are 
generally less mature and therefore somewhat higher risk than terminal 
defense systems.
    The BMDO has adopted a prudent acquisition and development strategy 
that balances warfighter needs, system capabilities, and technological 
maturity against the threat. Adjustments to the strategy can be made if 
warranted by circumstances. BMDO's strategy is to develop an integrated 
and interoperable TMD Family of Systems (FoS) architecture. The 
elements of which can be tailored by the warfighting CINC for the 
specific conditions and threats which will be faced.
    Question. General Lyles, why has the Administration repeatedly 
decided to hold back on Navy Upper Tier in favor of other more risky 
and more expensive systems like the Airborne Laser?
    Answer. Although Airborne Laser is a member of the ``family of 
systems'' it is not a BMDO program. It is an Air Force Major Defense 
Acquisition Program (MDAP) and resources are allocated based on its 
designation (MDAP) and priority in the Air Force. Navy Theater Wide 
(NTW), a program for which BMDO is the resource sponsor, is designated 
as a ``core program'' and was declared a pre-MDAP in October 1996. 
Although NTW is not yet an MDAP, BMDO and the Navy have tentatively 
scheduled a Defense Acquisition Board (DAB) review for NTW in February, 
1998.

                          Airborne Laser (ABL)

    Question. The Airborne Laser is not technically part of the 
Ballistic Missile Defense Organization (BMDO) program. It is being 
funded within the Air Force's budget. Last year, the Air Force 
requested funds to integrate a high power chemical laser into a 747 
aircraft with the mission to destroy theater ballistic missiles in the 
boost phase. The program will develop, procure, and operate 7 aircraft 
an approximate cost of $11 billion. The budget request for 1998 is 
$157.9 million. General Lyles, your office is charged with the 
responsibility for setting priorities for Ballistic Missile Defense. 
Support for a moment that additional funding was available was 
available to your office and that the Air Force had not funded the 
Airborne Laser program. What would be your highest priority for use of 
the additional funds: to reduce risk on your current programs, to 
develop the Airborne Laser program, or to fund some other program?
    Answer. There is a definite need for a boost phase intercept 
capability in the architecture which could be filled by the Airborne 
Laser. Current priorities for the BMDO program provide for allocating 
additional funding: first priority for MDAP risk reduction efforts; 
second priority to joint interoperability risk reduction issues with 
MDAP enhancements, and finally improvements to Advanced Technology 
programs. Depending on the quantity of funds provided, BMDO would 
seriously consider maintaining the Airborne Laser Program (ABL) at a 
modest level to ensure contractor team stability and continued level of 
efforts pending our ability to fit a more substantial program in our 
top line. BMDO funding could not provide for a more aggressive ABL 
program until PAC-3, Navy Area, THAAD and Navy Theater Wide are well 
into the production phase.
    Question. The Administration recently decided to amend the ABM 
Treaty by agreeing to demarcation limitations. The Joint Statement also 
indicated that development and deployment of the Space-Based Laser was 
off the table. Are the Russians also concerned about the ABL? Is the 
ABL Treaty compliant?
    Answer. The Air Force's ABL is designed to be a theater missile 
defense system. When deployed, the system should not pose a realistic 
threat to the strategies nuclear forces of Russia (or any other 
successors to the ABM Treaty). The Air Force is pursuing the ABL in a 
manner fully consistent with all provisions of the 1972 ABM Treaty. The 
Russians have not offered any substantive comment on the Airborne Laser 
to date. During the Helsinki Summit, the Presidents developed an 
approach to concluding an agreement to higher velocity theater missile 
defense system which would not limit the Airborne Laser.
    Question. A recent study was done by the office of net assessment 
that suggested that there are operational limitations to the ABL. What 
are those limitations? How well did the ABL do in comparison to the 
Space-Based Laser? How will did the ABL do in comparison to other 
missile defense systems?
    Answer. The objective of these studies is to develop innovative 
concepts of operations for Space-Based Laser and to expose the ware 
game ``players'' to the challenges of integrating the various systems 
into the Joint Theater Ballistic Missile Defense Architecture systems. 
In the scenario that was analyzed, severe operational constraints were 
placed on the ABL which limited its effectiveness. The scenario was 
against a peer competitor with sophisticated anti-aircraft weapons. The 
``players'' preferred to establish air superiority before directly 
targeting the peer competitor or forward basing the ABL. In post-game 
analysis, however, it was concluded that this may have been too 
conservative an employment of the ABL.
    Question. What is the maximum range of the Airborne Laser?
    Answer. The Airborne Laser's (ABL) maximum range is dependent upon 
several factors including atmospheric conditions (e.g., optical 
turbulence, cloud height), location of the target relative to the 
aircraft, and type of missile (hardness and boost time). Thus a single 
maximum range value cannot be provided; however, the current estimated 
ranges for various types of missiles under nominal conditions are as 
follows. ------.
    Question. In circumstances where the ABL cannot reach a target due 
to the laser's range limitations, overflight would be necessary. Has 
the Air Force given ample consideration to this limiting factor? How 
would ABL work with other BMD systems?
    Answer. The ABL will be a highly flexible standoff weapon system. 
The theater commander will have the ability to place the ABL Combat Air 
Patrols (CAP) where he deems most effective (including locations over 
enemy territory) based on current intelligence, theater threats, level 
of air superiority, coverage requirements and optimal deterrence/
engagement potential. ABL will share AWACS and JSTARS escort. In 
addition, a defense suite will protect against surface-to-air and air-
to-air threats.
    The ABL will work with the remaining Ballistic Missile Defense 
systems using the Joint Tactical Information Distribution System (Link 
16) as an integrated member of the TMD architecture. Through this 
network, the ABL will provide early missile, track, launch and impact 
point predictions and kill assessments.
    Question. Can ABL perform its mission in all weather?
    Answer. Yes. The ABL is being designed to operate ``above'' the 
weather (notionally 40,000 ft.). Even with complete cloud cover, the 
ABL can detect, track and destroy theater missiles.
    Question. What are the fuel requirements for ABL? How many shots 
can the laser shoot with the allotted fuel aboard? What if a potential 
adversary were to fire more than 30 missiles? Wouldn't that defeat the 
ABL?
    Answer. ------. The number of TBMs which can be killed typically 
varies between 20 and 40 depending on the specific engagement geometry, 
target type, and atmospheric conditions.
    ABL will detect all 30 missile launches, prioritize and engage as 
many missiles as possible following the specific mission's rules-of-
engagement (e.g., the ABL may be directed to engage all missiles 
launched from certain regions due to their high probability of carrying 
weapons of mass destruction). In addition, track data will be passed to 
the joint missile defense architecture via Link 16 enhancing the 
overall architecture's effectiveness.
    No. Typically, there will be two ABLs on Combat Air Patrol (CAP) 
with overlapping coverage and the ability to deconflict engagements. In 
salvo launches, the ABL is not designed to defeat all missiles; rather 
it is designed to thin the threat, provide warning and tracking data, 
and to significantly enhance the effectiveness of the other missile 
defense systems.
    Question. What has been done to solve the problem of beam 
attenuation? Are you confident that you will be able to counteract the 
effects of the atmosphere and turbulence on the ABL?
    Answer. Atmospheric attenuation has a negligible effect on ABL's 
performance. The atmosphere at ABL's operational altitudes (nominally 
40,000 ft) is so thin that 90 percent or more of the weapon laser 
energy is transmitted.
    Therefore, we are highly confident ABL will meet the JROC-validated 
range requirements. To achieve these requirements, ABL will employ 
active and passive tilt jitter correction and atmospheric compensation 
subsystems to overcome the negative effects of the atmosphere and 
turbulence. Critical components and algorithms have been proven in a 
number of airborne, brass board, and field tests. The data from all 
tests conducted to date match detailed ABL simulation results and 
indicate ABL will exceed its range requirements.
    Question. The chemical laser must be reduced to meet certain size 
requirements of the aircraft. How does the Air Force plan to do this?
    Answer. The laser module design meets all performance, size and 
weight goals for the Program Definition and Risk Reduction (PDRR) 
system. A prototype laser module recently passed its Critical Design 
Review and is now being manufactured using proven lightweighting 
techniques such as composites, titanium and milled-out structural 
components.

                          Arrow Missile System

    Question. The ARROW is a U.S./Israeli cooperative program to track 
and destroy theater ballistic missiles. The Committee seriously 
considered terminating the ARROW program in 1995 because of extremely 
poor technical performance and the substantial level of past and future 
U.S. financial commitments for the program. The Administration has 
acted to shore up the program and last year signed a Memorandum of 
Understanding (MOU) which limited future U.S. funding to approximately 
$35 million a year from 1997 to 2001 ($175 million). The Administration 
has recently announced plans to commit additional funds to the program. 
General Lyles, you are aware that this committee has in the past had 
concerns regarding the performance and cost of the ARROW missile 
system. Will you please give us an update? How is the ARROW doing in 
its flight test?
    Answer. The ARROW missile is doing quite well. Of two intercept 
tests (August 20, 1996 and March 11, 1997), the missile has scored two 
direct hits, destroying the target.
    Question. the Administration has recently announced that it will 
provide additional funding for the Israeli ARROW program. What exactly 
has the Administration agreed to provide? How much funding? For what 
period of time?
    Answer. The Secretary of Defense has agreed to provide $48 million 
over a 4 year period beginning in FY 1998.
    Question. Is the Israeli government still committed to production 
of this system?
    Answer. The Israeli government has identified the Arrow program as 
its highest national priority and is fully committed to the program.
    Question. When we last discussed this issue, the total acquisition 
cost estimates for ARROW varied and ranged anywhere from $2 to $10 
billion. What is the latest, most accurate cost estimate?
    Answer. The cost estimate of Arrow at program inception in 1994 of 
approximately $1.2 billion remains valid today. Phase I (Arrow I) of 
the program cost $158 million, Phase II (Arrow II) costs $330 million 
and Phase III (Arrow Deployability Program) costs $556 million. These 
costs do not include $42 million in infrastructure costs and $252 
million for Arrow Weapon System components (Radar, Launcher, Fire 
Control) both of which were funded entirely by the Israelis.
    Question. Has the U.S. committed to fund any amount of that 
production? Does the Administration intend to do so?
    Answer. A portion of the $48 million the United States has agreed 
to provide the Israelis will be used to accelerate the production of 
the User Operational Evaluation System (UOES).
    Question. Why should the U.S. continue to fund this program? Have 
we learned anything about our missile defense system based on our 
cooperation with the Israelis? What about the seeker?
    Answer. The U.S. has, and continues to, receive technical data, 
risk reduction, and lessons learned from the Arrow missile development 
efforts which are used in development of U.S. ballistic missile defense 
efforts. With respect to the seeker, the focal plan array in the Arrow 
is the same as that used in the THAAD. Moreover, we look to ensure 
interoperability between U.S. and Israel's missile defense to systems.
    Question. Would you find this program in your budget if you were 
given no additional funds to do so?
    Answer. No. We could not because we have no operational requirement 
for the Arrow missile. Arrow is not a mobile, transportable TMD system 
such as our warfighters require. Instead, it meets Israeli military 
requirements.
    Question. Where is the ARROW on your priority list?
    Answer. While low on the list in fulfilling DoD operational 
requirements, the technical benefits of Arrow development efforts are 
very useful and place it at a higher relative priority. In addition, 
the development and deployment of air missile defense capability by a 
key friend is a high priority.

               Medium Extended Air Defense System (MEADS)

    Question. MEADS is a mobile missile defense system that would 
protect maneuvering forces from short range ballistic missiles. The 
program was initially an Army program (Corps SAM) but was made an 
international cooperative program in order to defray the cost of 
developing the system. Originally, the U.S. agreed to provide 50% of 
the cost and work. Germany was to provide 20%, France was to provide 
20% and Italy was to provide 10%. However, France dropped out of the 
program last year leaving U.S. with 60% of the cost and work share. The 
budget request for 1998 is $48 million. DoD officials concluded during 
the Bottom-up Review, that the unilateral Army program, Corps SAM, was 
not affordable. However, shortly thereafter, the program was 
reestablished as MEADS, a multilateral program. Do you believe the 
multi-lateral MEADS program is affordable?
    Answer. MEADS funding has been constrained by affordability 
considerations and DoD examined this issue closely during the 
Quadrennial Defense Review (QDR). The QDR agreed to continue the MEADS 
program but only provided $35 million additional funding in fiscal year 
99, bringing the total fiscal year 99 funding to $45 million. DoD is 
proceeding with negotiations for the design and development phase of 
the program.
    Question. What is the current agreement between the U.S. and its 
partners on this program? What is the current cost share?
    Answer. The current cost share/work share agreement for the Project 
Definition-Validation (PD-V) phase is the U.S. 60%, Germany 25% and 
Italy 15%.
    Question. The total cost of MEADS is expected to be about $11 
billion for the U.S. How does this compare with the total acquisition 
costs of other theater ballistic missile defense systems?
    Answer. In perspective, the cost of MEADS is comparable to other 
air and missile defense programs. In conjunction with on-going PAC-3 
upgrades (ground equipment modifications and a new missile) and past 
Army procurement efforts, the Department is spending $7.2 billion 
(fiscal year 97) to acquire and field ten PAC-3 battalions. The two 
THAAD battalions are anticipated to cost $10.6 billion (fiscal year 
97). The expected U.S. cost to acquire and field six MEADS battalions 
is approximately $11.0 billion (fiscal year 97).
    Question. According to BMDO, the total acquisition costs of THAAD, 
PAC-3, Navy Lower Tier, HAWK, MEADS and Navy Upper Tier could be about 
$43 billion. General Lyles, do you believe that we can afford MEADS?
    Answer. I have conducted an independent review of the MEADS program 
to address affordability. We have examined with the Army several 
methods to rephase and restructure the program to continue to support 
the warfighter and our international partners while addressing 
modernization. The results of that study were fed into the Quadrennial 
Review (QDR). The QDR agreed to continue the MEADS program but only 
provided $35 million additional funding in fiscal year 99, bringing the 
total fiscal year 99 funding to $45 million. DoD is proceeding with 
negotiations for the design and development phase of the program.
    Question. Has MEADS been reviewed in the Quadrennial Review? What 
has been the outcome of those discussions?
    Answer. MEADS has been reviewed by the QDR. The QDR agreed to 
continue the MEADS program but only provided $35 million additional 
funding in fiscal year 99, bringing the total fiscal year 99 funding to 
$45 million. DoD is proceeding with negotiations for the design and 
development phase of the program.

                        National Missile Defense

    Question. The National Missile Defense (NMD) system will provide 
protection against long range ballistic missile threats using ``hit-to-
kill'' technology. The Administration's ``three plus three'' deployment 
readiness plan would allow for the deployment of a minimal NMD 
capability in 2003 if the threat warrants. This plan is ABM Treaty 
compliant. The budget request for 1998 is $504 million, $324.7 million 
less than the 1997 appropriation. General Lyles, if you were required 
to deploy a NMD system by the year 2003 would be 1998 budget request be 
sufficient?
    Answer. No. Based on the NMD life-cycle cost estimate supporting 
the QDR process, the NMD program will require an additional $2.3 
billion over the Future Year Defense Program, starting with $474 
million in fiscal year 98 RDT&E funds to execute the 3 plus 3 schedule 
and program. These additional resources would be roughly spent on:
     Program shortfalls ($100 million). Delays and hardware 
(additional target) associated with Integrated Flight Test 1 failure; 
delays in transferring the THAAD dem/val radar to the GBR-P; BMC3 
development as a result of contract negotiations; EKV communications 
development as a result of contractor estimates; and radar 
discrimination algorithms.
     Previously deferred program content ($85 million). EKV 
telemetry unit development; EKV hardness and lethality testing; and 
Forward-based X-band Radar and UWER development under the LSI 
contractor.
     Cost Risk Reduction ($74 million). Additional funding to 
all elements (in line with established cost estimates) to allow for 
development/test unknowns without sacrificing program content.
     Schedule risk reduction ($110 million). Accelerate 
procurement of and add hardware (such as targets and boosters) to 
mitigate test delays or failures (most items are lead-time away and 
still unavailable until fiscal year 99 timeframe); accelerate Hardware-
in-the-loop model and hardware procurements; and improve test launch 
capabilities.
     Technical risk reduction ($105 million). Increase Systems 
Engineering to include development of high fidelity system simulator 
for performance verification; continued EKV competition through first 
intercept flights; long-lead procurement of hardware for added test 
flights beginning in fiscal year 00; and explore alternative 
technologies. e.g., radar transmit/receive modules, to maintain program 
flexibility and to reduce procurement costs.
    Question. Do you have any budget shortfall?
    Answer. Yes. Due to our flight test failure in January, we have at 
least a $60 million shortfall in fiscal year 98. Based on the NMD life-
cycle cost estimate supporting the QDR process, the NMD program will 
require an additonal $2.3 billion over the Future Year Defense Program 
starting with $474 million in fiscal year 98 RDT&E funds to execute the 
3 plus 3 schedule and program. These additional resources would be 
roughly spent on:
     Program shortfalls ($100 million). Delays and hardware 
(additional target) associated with Integrated Flight Test 1 failure; 
delays in transferring the THAAD dem/val radar to the GBR-P; BMC3 
development as a result of contract negotiations; EKV communications 
development as a result of contractor estimates; and radar 
discrimination algorithms.
     Previously deferred program content ($85 million). EKV 
telemetry unit development; EKV hardness and lethality testing; and 
Forward-based X-band Radar and UWER development under the LSI 
contractor.
     Cost Risk Reduction ($74 million). Additional funding to 
all elements (in line with established cost estimates) to allow for 
development/test unknowns without sacrificing program content.
     Schedule risk reduction ($110 million). Accelerate 
procurement of and add hardware (such as targets and boosters) to 
mitigate test delays or failures (most items are lead-time away and 
still unavailable until fiscal year 99 timeframe); accelerate Hardware-
in-the-loop model and hardware procurements; and improve test launch 
capabilities.
    Technical risk reduction ($105 million). Increase Systems 
Engineering to include development of high fidelity system simulator 
for performance verification; contained EKV competition through first 
intercept flights; long-lead procurement of hardware for added test 
flights beginning in fiscal year 00; and explore alternative 
technologies, such as radar transmit/receive modules, to maintain 
program flexibility and to reduce procurement costs.
    Question. General Lyles, the NMD program has recently had a few 
delays not the least of which was a delay which we agreed in conference 
last year affecting the establishment of the Joint Program Office. I 
understand that this had more of severe impact than we expected at the 
time. Will you please explain the status of the Joint Program Office?
    Answer. We officially stood up the JPO on 1 April with Brigadier 
General Joe Cosumano in the lead. We're now finalizing organizational 
relationships between BMDO and the Services and staffing up to do the 
NMD mission. This has delayed our execution of the NMD program.
    Question. What is the importance of having a Lead System 
Integrator? What is the benefit to the government of having a 
contractor versus a Service manage this program?
    Answer. The JPO, which consists of BMDO and Service organizations, 
is managing the program. The Lead System Integrator serves only as a 
prime contractor for the end NMD product and assumes much of the risk 
associated with developing this complex system. The government 
historically has not excelled as a system integrator.
    Question. What has been done lately to get the program moving? What 
can we do to ensure no further delay in the program?
    Answer. We have officially stood up our JPO and are staffing up to 
do the NMD mission. We're also ready to award Lead System Integrator 
concept development studies to move us forward and help make decisions 
on various architecture solutions. Your support of these endeavors, in 
particular support for a Lead System Integrator, and stable program 
resources will ensure we move steadily forward.
    Question. In January, a planned test of the Exoatmospheric Kill 
Vehicle (EKV) failed. In your statement you suggest that the problem 
has been traced to a ``human procedural error and corrective procedures 
have been implemented.'' General Lyles, can you explain exactly what 
happened?
     Answer. During the countdown for the booster used to launch the 
EKV sensor payload, external power was disconnected but internal power 
did not come on. Investigation showed the booster's ground support 
equipment power supply had been improperly configured for 1.5 ampres 
instead of 15 amperes. Nine months before the test, a test engineer 
correctly set the power supply and a quality engineer verified the 
setting. However, the test engineer erroneously used the power supply's 
``multiply by one-tenth'' range selector switch, reducing the current 
to 1.5 amperes. Neither the test engineer nor the quality engineer was 
aware of the wrong setting, and subsequent testing did not check for 
correct current. As a result, the power supply delivered insufficient 
current to start the booster's internal batteries and the booster 
failed to launch.
    Question. What corrective procedures have been implemented?
    Answer. A team of Army, Air Force, and Lockheed-Martin (booster 
contractor) personnel reviewed the Payload Launch Vehicle (PLV) program 
and investigated the launch failure. The team reviewed 121 internal PLV 
procedures and found 30 which required change before the next flight 
text. The most significant changes would make laboratory testing 
exactly match flight hardware testing. To address the cause of the 
failure, the power supply circuit was modified to verify the minimum 
current for battery activation. Also, critical PLV system checks were 
added to the countdown prior to target launch to avoid wasting future 
targets.
    Question. What are the cost and schedule impacts of this failed 
test?
    Answer. We have to replace the target vehicle that was launched 
from Vandenberg AFB and continue to fund our competing Exoatmospheric 
Kill Vehicle contractors longer than planned. This will cost us about 
$60 million in fiscal year 98. We will repeat the test in July with the 
target intended for our second test. The second contractor will be 
unable to fly until January 1998, about an eight month slip in 
schedule.
    Question. How much additional funding would be required to make up 
for the loss associated with the payload launch vehicle?
    Answer. The payload launch vehicle is the booster used with the 
EKV. We did not lose this but we did expend a target vehicle which 
consists of the Multi-Service Launch System booster and target suite. 
The target vehicle will cost us about $20 million. Another $40 million 
is associated with the resulting delays to the test program.
    Question. As you have pointed out, this schedule has a high level 
of risk because you do not have backup test hardware. What would be 
required to reduce risk?
    Answer. With the funding Congress provided last year, we moved to 
procure additional test hardware to mitigate schedule delays. However, 
the long lead time to acquire these assets does not make them readily 
available and we continue to incur delays such as recent experienced 
with our first sensor flight test. Continuing to procure additional 
test assets, ground hardware and spares will mitigate schedule risks ad 
we move forward.
    Question. The NMD program was designated as a Major Defense 
Acquisition Program (MDAP). What are the benefits of this designation? 
Does this designation give the program more focus? Is it an indicator 
of the seriousness of a potential threat?
    Answer. The MDAP designation is warranted by the amount of the 
investment involved and commitment the Department has to the NMD 
program. It portrays a seriousness to development efforts that ensures 
a more thorough involvement by the user, OSD, and the Services that 
aids in fleshing out and addressing all issues. The designation causes 
a focus on meeting user requirements which is based on projected 
threats.

                     Anti-Ballistic Missile Treaty

    Question. At the Helsinki summit in March, President Clinton and 
President Yeltsin reaffirmed their commitment to the ABM treaty. They 
agreed not to deploy Theater Ballistic Missile (TBM) systems that pose 
a threat to the strategic nuclear force of the other side or to test 
TBM systems against strategic targets. General Lyles, which BMD systems 
have been judged to be ABM Treaty Compliant?
    Answer. The following BMDO sponsored systems currently under 
development have been certified treaty compliant as currently 
configured: PATRIOT, THAAD, Navy Area, and Navy Theater Wide. As these 
systems continue to develop and acquire greater capabilities, DoD's 
Compliance Review Group (CRG) will continue to review them for 
compliance.
    Question. What about Airborne Laser? Has the Treaty Compliance 
Review group assessed that system? Will you submit that?
    Answer. The Air Force has not yet determined when the ABL should be 
formally submitted to the CRG for review. When the ABL is sufficiently 
developed for a treaty compliance determination, I expect the Air Force 
will approach the CRG in accordance with DoD Directive 2060.1--
Implementation of, and Compliance with Arms Control Agreements.
    Question. How does the Joint Statement affect our current core 
programs?
    Answer. The Joint Statement will have no effect on our current core 
programs. Upon entry into force, Part I of the so-called demarcation 
agreement reached at the last meeting of the Standing Consultative 
Commission will remove PATRIOT, THAAD, and Navy Area-Wide from coverage 
by the ABM Treaty. The Part II agreement being finalized in Geneva 
pursuant to the agreed Joint Statement will not affect the U.S. 
Government's ability to make unilateral ABM Treaty compliance 
determinations in the future for the Navy Theater-Wide system.
    Question. In responding to questions for the record last year, BMDO 
indicated that the only system that would be a problem under the 
demarcation agreement would be the Navy Upper Tier program. However, 
there have been statements in the press which suggest that 
administration officials now do not believe Navy Upper Tier will be a 
problem. Why is this so?
    Answer. Prior to the March 1997 Helsinki Agreement, the U.S. and 
Russia had only reached agreement that TMD systems with interceptor 
missiles having velocities of 3 km/sec or less are compliant with the 
ABM Treaty, provided they are not tested against ballistic target 
missiles with velocities greater than 5 km/sec or ranges greater than 
3,500 km. The Helsinki Agreement provides the elements for a Part II of 
the demarcation agreement covering TMD systems with higher interceptor 
velocities such as Navy Theater Wide. Pursuant to that agreement, the 
U.S. will still be required to make national compliance determinations. 
However, that agreement establishes restrictions on the testing of 
higher velocity interceptors that won't impact the Navy Theater Wide 
development and test program, thus reducing the potential issues to be 
addressed in future U.S. Navy Theater Wide compliance determinations.
    Question. Are you deliberately limitation or ``dumbing down'' the 
capability of our TBM systems to squeeze into the tight framework of 
this agreement? Are the designs of our TBM systems being determined by 
the threat, by the requirements, or by the arms control negotiators?
    Answer. DoD is not ``dumbing down'' its TMD systems. TMD systems 
are designed to meet military operationally requirements established by 
the Joint Staff and those requirements are determined by the military 
threat.
    Question. General Ron Fogelman, Air Force Chief of Staff, recently 
was quoted saying. ``All the chiefs have great concerns about this 
[agreement], . . . I would hate to see us negotiate away any kind of 
advantage we might have in space-based sensors, or in the airborne 
laser or anything like that.'' General Lyles, do you have any concerns 
about the development of future ballistic missile defense technologies 
under this agreement?
    Answer. The Helsinki Joint Statement does not address the two 
issues previously raised by General Fogelman, nor does it address 
components or technologies that are necessary for our foreseeable TMD 
systems.
    Question. Does this agreement limit the advanced technology 
program?
    Answer. No it does not. Research activities up to the point of 
field testing a prototype system are not prohibited by the Helsinki 
joint statement.
    Question. The agreement specifically prohibits the development, 
test or deployment of space-based interceptor missiles or ``. . . 
components based on other physical principles.'' General Lyles, this 
agreement seems to require that the Space-Based Laser program be shut 
down. What is your understanding as to how this agreement affects SBL? 
Do you have plans to close down the program?
    Answer. No, we do not plan to close down the SBL program. The 
Helsinki agreement does not affect our plans for that program because 
our research plans for SBL fall short of any development, testing, and 
deployment that could violate either the proposed Part II agreement or 
the ABM Treaty.
    Question. Are there provisions for opening up discussions with the 
Russians should higher velocity systems and future capabilities be 
required due to a future threat?
    Answer. Yes, there are such provisions in the ABM Treaty. Any party 
to the ABM Treaty can raise questions or concerns through the Standing 
Consultative Committee (SCC), which was created for that very purpose.
    Question. Last year, the demarcation discussions included a Phase I 
(for lower velocity systems) and a Phase II (for higher velocity 
systems, e.g. Navy Upper Tier). Have the Russians agreed to discuss 
higher velocity systems?
    Answer. Yes, the Russians have agreed to discuss higher velocity 
systems. The Russians are participants in the ongoing Phase II 
negotiations, the purpose of which is to discuss such systems.

    [Clerk's note.--End of questions submited by Mr. Young.]
                                          Wednesday, June 11, 1997.

                FUTURE BOMBERS/DEEP ATTACK CAPABILITIES

                               WITNESSES

JOHN J. HAMRE, UNDER SECRETARY OF DEFENSE, COMPTROLLER GENERAL EUGENE 
    HABIGER, USAF, COMMANDER IN CHIEF, UNITED STATES STRATEGIC COMMAND
GENERAL RICHARD E. HAWLEY, USAF, COMMANDER, AIR COMBAT COMMAND
LIEUTENANT GENERAL DAVID McCLOUD, USAF, DIRECTOR FOR FORCE STRUCTURE, 
    RESOURCES AND ASSESSMENT

                              Introduction

    Mr. Young. The Committee will come to order. Gentlemen, 
please be seated.
    This hearing is closed. I would say to everyone we are 
cleared to the top secret level today. If we should get to the 
point there is any compartmentalized or special access 
information that you would like to present or that we would 
like to ask about, then we would clear the room for those not 
cleared at that level.
    This morning we are going to be discussing one of several 
major issues that face the Committee this year, and that is the 
Nation's overall deep attack and strike capabilities and 
specifically the future direction of the U.S. bomber program.
    This is a critical period for our Nation's air power, and 
the decisions we make this year will have a lasting impact on 
our ability to field an appropriately balanced mix of forces 
for the next century.
    So we take this very seriously, and that is the reason that 
we invited you specifically to be here, because you have a 
major, major role in this whole effort, and you are, as far as 
we can tell, the best witnesses we could have to help us make 
our decisions as to what we will do this year, because what we 
do this year, I think, is going to affect where we are 20 years 
from now, to be honest with you.
    We have as witnesses the Honorable John Hamre, well known 
to the Committee, Under Secretary of Defense/Comptroller; 
General Eugene Habiger, Commander in Chief, United States 
Strategic Command; General Richard Hawley, Commander, Air 
Combat Command; and Lieutenant General David McCloud, director 
for force structure, resources and assessment.
    Many of the members of this Committee have been here from 
the inception of the B-2 program when it was developed in the 
black world. As we all know, initially the Department planned 
on procuring 132 B-2s. Then the threat changed, and the 
Department thought it needed 75 B-2s. Then that number changed 
to 20. Last year it became 21 through a manipulation of some of 
the funding.
    The question we face today is, do we need more B-2 bombers? 
Can we afford to buy more B-2 bombers? These questions can't be 
addressed in a vacuum. Instead, they must be addressed in the 
context of all the other force structure and modernization 
needs facing the U.S. military.
    The B-2 provides our CINCs with a powerful tool, the 
ability to accurately deliver large payloads at long ranges 
against heavily defended targets. Under current plans and with 
funds provided in prior years, the Air Force will have 21 
operational aircraft, enough to outfit two squadrons.
    This year we have been asked by several members to consider 
beginning the process of buying an additional 9 B-2s, bringing 
the total force to 30 aircraft, enough to outfit three 
squadrons. So today we are here, in part, to assess the need 
and cost of such an expanded B-2 bomber force.
    During the course of the hearing, there are several 
questions that need to be addressed: What are the missions we 
expect to assign B-2s in the future? What are the missions we 
expect to assign B-2s in the future? Are more B-2s required to 
adequately conduct these missions? Are there alternative means 
of accomplishing these missions? What is the cost of an 
expanded B-2 program? What might we have to give up to fund an 
expanded B-2 program, and are the trade-offs worthwhile?
    Another element of this equation is the B-1 program. The 
committee has supported the B-1 and the mods that have been 
made to it. It is an impressive platform, but we are often 
asked by our colleagues, if the B-1 is such a great aircraft, 
why don't we ever use it? We would like to hear how you respond 
to questions like those and how the B-1 fits into the overall 
heavy bomber force mix.
    Finally, the issue does not just involve bombers. If we go 
to war, there are many other assets to consider, such as 
carriers and their air wings, tactical fighters and fighter 
bombers, as well as a variety of smart and dumb munitions.
    As I mentioned earlier, this year may well be critical, 
because we are also being asked to make an important decision 
on the next generation of tactical aircraft, the F-22, the F/A-
18E/F, and the Joint Strike Fighter.
    All of these programs, as well as the B-2, were reviewed in 
the context of the recently completed Quadrennial Defense 
Review. The QDR concluded we should not go ahead with 
additional B-2 production, but it also recommends cutting back 
on the F-22 and the F/A-18E/F. As Secretary Cohen has pointed 
out, the QDR is just a proposal and it is largely up to the 
Congress to decide what elements of the QDR are turned into 
reality.
    So these are very important issues, and this committee 
takes them extremely seriously. We want to explore them 
thoroughly.
    Because of the time constraints we all face, we will have 
to adhere to the 5-minute rule, with each of our members having 
5 minutes of questioning in the first round, and we will have 
as many rounds as we possibly can in the time available. I also 
urge each witness to be as brief as possible with the answers 
so we can delve into more and more issues.
    Again, I thank you all for coming. I apologize for the 
length of my opening statement, but as chairman of this 
Committee, I have to be responsible for what I recommend not 
only today, for fiscal year 1998, but for fiscal year 1999, and 
the balance of the payments in 2000, 2010 and 2020.
    We have some very serious decisions to make, and we 
appreciate your being here to help us with those decisions.
    Dr. Hamre. you are recognized, sir.

                     Summary Statement of Mr. Hamre

    Mr. Hamre. Mr. Chairman, thank you very much, and thanks to 
all of the members for letting us come up to this hearing. I 
personally am very pleased to be here this morning.
    When Mr. Dicks came in, he said, ``I have got nothing to 
say about you, Hamre,'' and I said, ``Well, that is the highest 
compliment a comptroller ever gets.'' I am not kidding when I 
say the patron saint of all comptrollers is Judas Iscariot. 
This is high praise indeed.
    Mr. Young. We are going to give Mr. Dicks a chance to 
respond to that later on.
    Mr. Hamre. We really are glad to be here.
    I must say on a very personal level, these last 5 days have 
been pretty tough in Washington for those of us in the 
Department, and all of us personally lost working with a very 
good friend, with what happened to Joe Ralston. And when I see 
this cacophony going on outside, this Committee is holding a 
serious hearing about one of the most important subjects we are 
facing, and I thank you for it. This is exactly what 
congressional oversight is about, and so I personally am very 
grateful.
    I am grateful for, again, this Committee bringing back the 
Congress to the fundamental, what is it about? I think I really 
do applaud you for doing that.
    When I was coming in the door, I got hit by one of the 
press types that are out there on a stakeout, you know, and 
again there are those that would like to characterize this 
hearing in a very cheap way, that this is just about narrow 
interests and parochial interests, and that is absolutely not 
the case. This is about a very important thing for the future, 
what is the best way we are going to protect this country. This 
is not about narrow interests at all.
    So we are glad that we can be here. We appreciate very much 
having a change to be invited to come and address, because I 
think everybody in this room is dedicated to exactly the same 
thing, how do we get a stronger defense in the long run?
    Here I think this Committee, unlike probably everybody else 
in Washington, this Committee is the only Committee--well, your 
counterpart Committees--are the only people that have the same 
job that the Secretary of Defense has, and that is, you have 
got to bring together an integrated defense program, not just, 
am I for this little project or that little project, but you, 
like the Secretary, have to put together a composite program 
and say this is what we need to defend the country in the 
future.
    The Secretary has a little bit harder job in the sense that 
he has to build that over a 5-year period, but, frankly, you do 
too. The decisions that you are going to be making in this 
Committee really are going to dictate the composition of our 
program over the next 5 years, and we know you understand that, 
and that is very much the frame of reference that we come today 
to this hearing with.

                            BOMBER QUESTIONS

    I think that there are five questions, not to be 
presumptuous, but I think there are five questions that you are 
going to be, in your minds, asking about us today. Maybe they 
aren't the questions you ask, but it is in the back of your 
minds.
    You are going to first say, did we honestly look at the B-2 
during the QDR, or was it just a sham? Did we just do a make-
work job to come to a preconceived conclusion that we already 
had, or did we really look at it fairly? I think that is the 
first question in your mind.
    Second, I think if we did look at the B-2, did we look at 
it properly? Did we evaluate it in the right context? Did we 
use the right tools? Or did we not use the right tools and 
therefore didn't give a fair evaluation to the B-2? I think 
that is probably the second question.
    I think the third question in your minds is, why cannot we 
afford the B-2? I mean, even when it gets to its full run, it 
is $1.5 billion a year, and that is only about a half of 1 
percent of the DOD budget. Why in the world can't we afford 
that? Why did you guys decide you couldn't afford that? I think 
that is a very important and fair question.
    I think a fourth question in your minds may be, was this 
just a political deal? Was this just something that Secretary 
Cohen had in his mind and he wanted to shove it down 
everybody's throats? And is there dissention in the Department 
over this, or is this a decision that we all came to reach 
together? And you need to look at that.
    Finally, I think probably the most important question is, 
can we defend America with only 21 B-2s? Would it be a better 
program if we had to change other things and give them up in 
order to have more B-2s? Would that be a better defense 
program?
    I think those are the questions really that shape what is 
on your minds. Maybe they are not the questions you will ask 
us, but I know that is the backdrop, and I hope that in this 
hearing today that we can go through all of that. We ought to 
absolutely ask those questions in that way, and hopefully we 
can answer them.
    But ultimately you are going to reach a conclusion. All of 
you have the responsibility to decide in your own minds on 
behalf not only of your constituents but the entire Congress 
what is the best defense program for the future.
    We honestly feel we have brought it to you, but I have 
never seen a defense program we ever delivered that was not 
improved by Congress, and I fully expect this to go through a 
rough tumble, and that is what this hearing is about, and the 
fact you would invite us here, I think, again, is a testament 
to how important this issue is and how important this committee 
considers these decisions. So we thank you for being here.
    Back in 1883, Mark Twain and Rudyard Kipling were on the 
stage together, and Mark Twain said, ``Well, between Rudyard 
Kipling and I, we know everything in the world. He knows 
everything that is important, and I know the rest.'' And that 
is really the way I am today.
    I don't know anything of importance about the B-2, but I am 
joined by three people who do, and I am very delighted that 
they are here as the real experts at this hearing, and then I 
would like to answer at the very end, any resource questions 
that you might want to ask me.
    Thank you.
    Mr. Young. General Habiger, are you going to be next?

                  Summary Statement of General Habiger

    General Habiger. Yes, sir. I look forward to the 
opportunity to express my views today.
    I would like to point out, I have spent most of my adult 
life as a bomber crew member, commander, squadron and wing 
level. I have over 3,000 hours in the airplane, 75 combat 
missions in bombers as a colonel. I was involved in the start-
up beginning of the B-2 program while assigned to Air Force 
plans and policies back in the early eighties and now, as 
Commander in Chief of Strategic Command, I am intimately 
involved with all three legs of the triad, to include the 
bombers, and I look forward to expressing my observations, 
views, and professional judgments today.
    Thank you.
    Mr. Young. General Hawley.

                  Summary Statement of General Hawley

    General Hawley. Like my colleagues here, Mr. Chairman, 
members of the Committee, I am delighted to be here to talk 
about an important issue.
    As I think most of you know, I am a force provider to a 
number of CINCs, to include General Habiger on my right. I 
provide the bomber leg of the nuclear forces. Of course, we 
provide fighter assets, bombers, C41SR capabilities, and search 
and rescue capabilities to all of the warfighting CINCs.
    Our forces are very heavily tasked today. Perhaps the most 
difficult issue that we deal with in air combat command on a 
day-to-day basis is our operational tempo, because the tasking 
levels of our forces are very high.
    Therefore, as we go through this discussion on the B-2, I 
think one issue we need to keep at the forefront is the need 
for a balanced set of capabilities in our national defense 
establishment, because that is what my customers, the 
warfighting CINCs, ask me to deliver, is a balanced set of 
forces that can cover the whole spectrum of responsibilities 
that we have given them to deal with our national security 
interests around the world. Today I think we do that. We have a 
pretty good balance in the force, and we need to make sure we 
maintain it.
    Thank you.
    [The statement of General Hawley follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Young. General McCloud.

                  Summary Statement of General McCloud

    General McCloud. Sir, if you think it is appropriate, I 
would like to read a very short statement, about 3 to 3\1/2\ 
minutes long.
    As director of force structure, resources, and director for 
the past year, I have cochaired one of the most comprehensive 
studies of our Nation's deep attack capabilities ever 
undertaken. The Deep Attack Weapons Mix Study, or DAWMS has 
been an extraordinary, unprecedented effort, conducted by top 
experts from OSD, the Joint Staff, services, and the CINC 
staffs. Hundreds of operators and analysts dedicated hundreds 
of thousands of hours to develop insights on weapons and 
operational concepts that will enable us to win conflicts 
decisively with minimum loss of life.
    This effort draws from joint doctrine, analysis, military 
judgment, and is founded in our National Military Strategy. We 
strove to provide a balanced force, capable of executing our 
strategy in the face of an uncertain, ambiguous world.
    DAWNS employed a campaign level model called TACWAR and an 
optimization model called WORRM. I don't like the acronym, I 
didn't name it, but we used it for the primary analysis. These 
models were available and familiar to all participants. We 
understood their strengths; we understood their weaknesses.
    To overcome their shortfalls, we initiated nine parallel 
studies to ensure that DAWMS' effort was bounded and all issues 
considered. As individual issues arose, if we could agree, 
changes were made; if we could not, we ran sensitivities to 
encompass the extremes and articulate the impact.
    If you will refer to your tabletop slide that I have put on 
all of your desks, it is a little bit complex, you will see the 
scope of the nine supporting studies and many organizations 
that participated in them. We can return to this topic later, 
if you wish.
    [Chart follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    
    Mr. Young. General McCloud.

                  Summary Statement of General McCloud

    General McCloud. We have completed more than 1,500 
sensitivities to ensure we have captured each issue. Instead of 
pointed solutions, DAWMS, The Deep Attack Weapons Mix Study, 
has given us a range of valuable insights. We applied military 
judgment at every step of the way.
    Another key to the study's success was the openness to all 
participating parties. We had nothing to hide, no preordained 
outcomes.
    As we did in the QDR, DAWMS sought to balance the needs and 
risks of today with the ambiguities of tomorrow. The key was to 
understand how force changes impact our overall capability to 
support our National Military Strategy. In part 1, we 
determined an optimized mix of deep attack weapons the CINCs 
will need to cover a broad range of conditions. While the 
programmed weapons budget is sufficient, modest adjustments to 
the mix of next-generation munitions will ensure our forces 
retain their superior engagement capability.
    For example, investing in additional precision standoff 
munitions and smart antiarmor submunitions will increase force 
survivability and lethality. We also determined that our 
intelligence, surveillance, and reconnaissance architecture 
will increasingly provide the leverage needed to maintain our 
advantage over future enemies.
    Insights gained during the first part of DAWMS established 
the foundation for our follow-on trade-off analysis in part 2.
    In DAWMS part 2, we assessed a broad range of bomber, land, 
and sea-based TACAIR force options across a variety of two 
major theater war scenarios. We ran excursions that restricted 
force access during the halt phase of a major theater war. To 
further investigate the issues, DAWMS explored a wide range of 
factors, including stealth capabilities, CINC goals, strategic 
airlift availability, and potential budget changes.
    The procurement and infrastructure costs of the force 
options we assessed were based on a 20-year weapons system life 
cycle. Over a 20-year period, savings from retiring forces are 
used to fund a cost equivalent number of B-2s. Our estimates 
include about $2 billion in modifications to maximize the 
conventional capabilities of existing and additional B-2s.
    Our force comparison focused on four main areas: 
Warfighting capability, risk caused by changes to the force 
mix, savings and costs, and support of the National Military 
Strategy.
    Based on extensive analysis, we determined additional B-2s 
can deploy quickly and improve our capability to halt an 
adversary's advance during the opening stages of a major 
theater war, especially when access is limited or warning times 
are reduced. However, this advantage diminishes after the first 
weeks of combat as the full weight of U.S. air power arrives 
and enemy air defenses are suppressed.
    To maximize savings, we assume the trade-off force 
structure retires immediately. Since it requires several years 
for the first B-2 delivery and 10 to 14 years for the final 
aircraft to become operational, the end result is a capability 
gap of a decade or more. Additionally, the savings generated by 
retiring current forces only partially offset the up-front B-2 
procurement costs, requiring additional unprogrammed funding 
for a decade or more before annual savings exceeds costs.
    Finally, we determined that reducing current force 
structure to pay for B-2s will have a negative impact on other 
mission areas. For example, assuming we do not change our 
current level of global commitments, retiring fighter wings or 
carriers increases personnel and operational tempos, increasing 
presence gaps in the Mediterranean Sea and Indian Ocean, and 
further stresses the forces that remain engaged globally.
    Mr. Chairman, based on this comprehensive analysis, we have 
concluded that while there are advantages to procuring 
additional B-2s, they do not provide a sufficient range of 
capabilities to shape and respond to the full spectrum of 
national military strategy.
    I would like to conclude by saying the insights we have 
gained from DAWMS will pay substantial dividends in the future. 
The study has been a means for all participants to increase 
their knowledge of existing and emerging capabilities. DAWMS 
has been, and remains, a catalyst for increased competition 
between deep attack capabilities we will filed. While the 
process is sometimes painful, this competition is good for the 
warfighter and the American taxpayer.
    Finally, the comprehensive efforts like DAWMS and the 
insights they provide will ensure we fight the next war, and 
not the last one.
    I thank you, and would be glad to take your questions.
    [The statement of General McCloud follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Young. General, thank you very much.
    I assume that all of you have seen the DAWMS and explored 
it fairly thoroughly. Is that a safe assumption?

                             DAWMS Analysis

    General Hawley. In my case, I have seen a briefing on the 
DAWMS study but have not had an opportunity to review the study 
or the background or analysis that went into it.
    Mr. Young. That is basically my exposure to the DAWMS. I 
haven't digested every page of it. I have had the overview.
    Does anyone disagree with the analysis that came out of the 
DAWMS?
    General McCloud. Lots of people disagree with it, sir.
    Mr. Young. I am talking about any of the four of you.
    General Habiger. No, sir.

                         B-2 Strategic mission

    Mr. Young. Now, were there any scenarios involving 
strategic use of the B-2 or strategic use of any of the other 
aircraft? I understood you did a lot of various scenarios while 
going through the DAWMS.
    General McCloud. Sir, we did not go into the nuclear role 
of the bombers. We covered various options on the tactical 
side.
    Mr. Young. Could we go into that at this level, just 
briefly? I spent a lot of time with Admiral Jones in your shop, 
and he gave us a number of BB-2s that he thought would required 
for your strategic mission. I think the number he said was 14 
would be the number that----
    General Habiger. 16, sir.
    Mr. Young. 16.
    General Habiger. Yes, sir. Would you like me to elaborate 
on that?
    Mr. Young. Please.
    General Habiger. The way we apply weapons in the single 
integrated operational plan is a matter of looking at the 
target base that we have and looking at a targets base in the 
year 2002-2003 ------ it is articulated in the national 
security decision directive--that would be targeted to deter 
the Russians.
    If we look at the forces available today and the forces 
available under a START II agreement, we have a balance of 
bombers, intercontinental ballistic missiles, and sea launch 
ballistic missiles coming off our Ohio class Trident submarine. 
The B-2 is part of the bomber triad leg, along with the B-52s 
and the cruise missiles that would be carried by the B-52s.
    Today, sir, with the B-1 also in our nuclear war plan, the 
end of this fiscal year, the B-1 becomes completely a 
conventional carrier, it will no longer be part of our war 
planning, although I will tell you, though we are looking at 
out in the out years, and perhaps, will use the B-1 in a 
conventional role to support our single integrated operational 
plan. The utility there is that the B-1 will no longer be 
counted under the arms control agreements of START II and 
beyond ------.
    Mr. Young. General, in order to have 16 B-2s available for 
your mission, how many B-2s do we have to have in the 
inventory?
    General Habiger. Sir, my force provider, General Hawley on 
my left, will give you perhaps a little longer answer. I go 
into the system with a requirement for 16 B-2s to do my job. 
then as a force provider, he will then look at what is required 
to give me those 16.
    So, sir?
    General Hawley. As you know, Mr. Chairman, when we 
structure an aircraft fleet, we include aircraft for a number 
of purposes, our PMAI, Primary Mission Aircraft Inventory, 
which in this case is 16, and then we need some backup aircraft 
inventory to support other needs.
    Sometimes in a large fleet we will break those additional 
aircraft into categories to include BAI, Back-up Aircraft 
Inventory, depot support, tests and training. So we will have 
five airplanes when we take delivery of the 21st airplane, and 
we will use that to satisfy all those requirements.
     This unit, of course, only has experienced pilots, so all 
pilots come to this program with experience, and we train them 
in the unit using those 16 primary assigned aircraft. So we 
don't have any tests or training.
    There will be continued tests, of course, and we will use 
both the operational airplanes and those designated as BAI. You 
can't tell the difference on a day-to-day basis, by the way. 
And we will just use out of that inventory airplanes that we 
need to go do continuing follow-on tests for the system. They 
will also serve our needs for attrition reserve.
    As we look at all of those requirements, that is why we 
structured the program as we did. Twenty-one, as you know, 
wasn't our number. We got issued 21 airplanes, and we 
concluded, out of 21, we could support an operational fleet of 
16, and that is what we will plan and equip for.
    Mr. Young. You raised an excellent point that makes me very 
curious, but my 5 minutes has expired. I want to come back to 
that point. I am going to adhere to the 5-minute rule so 
everybody else won't think I am sneaking up on their time.
    Mr. Dicks, 5 minutes.

                     DEEP ATTACK WEAPONS MIX STUDY

    Mr. Dicks. Mr. Chairman, first of all, I want to welcome 
all the witnesses here today. I believe that what the Deep 
Attack Weapons Mix Study shows, is that we can stop an enemy in 
the halt phase with the B-2. The problem is, we don't have 
enough B-2s. The studies that have been done by Rand, and by 
General Jasper Welch, all conclude that 21 B-2s is not 
adequate.
    I think the analysis done in the Deep Attack Weapons Mix 
Study demonstrates that if you have a lockout situation, if you 
can't get TACAIR in, you can't get those aircraft carriers in, 
and this study again puts the carriers in the play right away. 
They have two carriers, I think, in the Persian Gulf within 150 
miles of the assault, again, so that they can make a TACAIR 
look good. But if you don't have that and the enemy invades, 
like Saddam did, you can't stop him unless you have an adequate 
bomber force that can come in from outside. That is what this 
study shows.
    It also shows that bombers in the halt phase can play an 
enormously effective role. With stealth bombers, you can come 
in and stop the enemy before he gets to his target. And if you 
can continue to use them and then make usable the B-1s, the B-
52s, TACAIR, et cetera, it is a force enabler.
    Now, every one of the Joint Chiefs, I asked them at a 
hearing a week ago, do they think these models that we used are 
fair and accurate? They said no. They all said that these 
models are no good, that they should be replaced, that there 
are force-on-force models that simply do not look at the 
effectiveness of the forces that we have today. So I think it 
is flawed.
    On the integrity question that Mr. Hamre raised here 
initially, I asked the President of the United States to give 
us a fair, objective study. I don't think we got it.
    I want to read to you just a couple things from a person 
who is intimately involved in this. Let me just tell you what 
he says right up front. ``Outcome has been predetermined. No 
more B-2s. PA&E officials stated study conclusions before 
analysis conducted. OSD has been party to irresponsible 
modeling and subjective support inputs.'' And basically they 
say that the Tactical Warfare war model and WORRM simply do not 
give you a fair look at the effectiveness of these weapons.
    This deeply bothers me, because the President of the United 
States, the Commander in Chief, promised us a fair, objective 
study, and by using these models, I am afraid that study was 
inherently flawed. All of the Joint Chiefs, each one of them, 
said we ought to have new models, a new way to do this in the 
future, so we can effectively look at all these weapons.
    Now, what I am concerned about here, frankly, is the 
question of balance. How can you say we have a balanced tour 
when we are going to spend $350 billion on TACAIR and not spend 
a nickel on bombers? That is no balance. That is just going 
with the existing programs that the services want. It is rice 
bowl protection at its worst, and it is a failure on the part 
of this administration to make hard priority decisions on this 
issue. It is just, we are going to do it our way, and the hell 
with everybody else. And I think it is terrible, I think it is 
irresponsible, and here is why I think it is so outrageous.
    It is because the halt phase is the most important phase. 
If you can stop the enemy before he achieves his objectives and 
destroy him in the field, then you don't have to spend $70 
billion going over there and fighting the war, $10 billion to 
deploy your forces, $60 billion to fight the war with us and 
our allies. If you can stop him before he gets there, because 
you have got an adequate bomber force, then you can save 
American lives and save American dollars.
    And that is why I am so upset, again. And I must tell you, 
I am deeply, deeply disappointed in the Department for, one, I 
think failing to do a good study, and, two, failing to make the 
hard priority decisions. And the idea, it is the position of 
this administration that we are never going to build another 
bomber----

                               HALT PHASE

    Mr. Lewis. If the gentleman will yield, I hope the panel 
will ask the question about the halt phase. That is a very, 
very fundamental question here. I think you were asking that 
question.
    Mr. Young. The gentleman's time has expired.
    Mr. Dicks. The Minority wasn't given an opportunity to make 
an opening statement, and I made the opening statement for the 
Minority.
    Mr. McDade. Mr. Chairman, I would like to yield some time, 
if I may, of my time to the panel, to answer, because I think 
the dialogue is excellent. I think we should hear it.
    Mr. Young. Mr. McDade, you are recognized for 5 minutes. 
You may yield your time any way you like.
    Mr. McDade. Go ahead, John.
    Mr. Hamre. I would just like to start by framing a brief 
response and then turn it over to my colleagues.
    First of all, I think the DAWMS study showed exactly what 
Mr. Dicks said, that there is no question that the B-2 is very 
important to the halt phase, and it clearly demonstrates that. 
That is one of the reasons why we consider it such an important 
asset.
    The DAWMS study went beyond it to say would we get more 
benefit if we had more of them, and if we were to do that, what 
would we give up and how much would be lose in doing that? I 
think that becomes this analytic issue, where we will have some 
dispute.
    Now, Mr. Dicks----

                               FORCE MIX

    Mr. McDade. He asked you a very specific question about 
TACAIR and bombers. He gave you numbers. Respond to that. Are 
you claiming you have a balanced program?
    Mr. Hamre. Sir, first of all, we did in this analysis--and 
Dave McCloud led it--I think they did 1,500 runs on the best 
models we have. Are they perfect? Heck, no. Should they be 
better? Yes, absolutely.
    Mr. McDade. You gentleman are responsible for the resource 
allocation, and the gentleman from Washington asked you, what 
was the number, $350 billion?
    Mr. Dicks. That is about what it was. Maybe with the cuts 
in the F-22, it is going to be less. But there is zero in 
bombers, I hope some in weapons. We have to weaponize the 
bombers. We are buying no additional bombers. There is no 
bomber program for the future. We are investing all in TACAIR.
    Mr. McDade. Let me reclaim my time so I can ask a question.
    You all agree that the number $350 billion is the number in 
the ball park for TACAIR?
    Mr. Hamre. It is down to about $290 billion now because of 
changes we made in the QDR.
    Mr. McDade. What would you describe the bomber?
    Mr. Hamre. The investment for the bombers is for upgrades 
for the existing fleets.
    Mr. McDade. $290, $300 billion in TACAIR?
    Mr. Hamre. Yes.
    Mr. Dicks. And zero for bombers.
    General Hawley. You have to look at the balance over a 
period of time. If you look at investments in other systems and 
bombers in the eighties and nineties, you will find the 
predominance of our investment has gone into bombers and 
airlift within the Air Force. That is when we equipped the 
bomber force. We bought the B-1, we bought the B-2. We invested 
large sums in modernizing those and bringing them from the 
nuclear era into an era where they can provide the robust 
capabilities we need from the bomber force.
    Beginning around the turn of the century, we will begin 
reinvesting in the fighter force. That is why there appears to 
be an imbalance, if you just take one slice of time. I think 
you have to look at this over the decades that it takes to 
build and shape a force.
    Mr. McDade. That is a look back. We are trying to look 
forward. The purpose the hearing is to say, what are we 
supposed to do tomorrow?
    And while looking back, General, I agree and appreciate 
what you said, because I was here when all those programs came 
through. But what the gentleman from Washington is saying is, 
we look forward and see a ramp-up in TACAIR and a flat or 
perhaps ramp down, whatever.
    General Hawley. It might be interesting to correlate that 
ramp-up with the age of the weapons system in the inventory and 
being replaced.
    Mr. McDade. You define the comparison any way you want. I 
don't want to go back and hear about what we did 20 years ago. 
I wanted to talk about what we are going to do in the next 10 
years.
    Would you describe it that way? What is the allocation of 
recourses that makes you comfortable that we are spending the 
right amount of money on the bombers compared to TACAIR for the 
next 10 years out?
    General Hawley. I think studies like DAWMS highlight that 
this produces a balanced force structure. Certainly as I try to 
do my job in supporting the needs of the CINCs, responding to 
their requests for support, this looks like a balanced force 
structure to me.
    If we said we want less fighter force in order to support a 
larger bomber force, I would have to say no to the CINCs for 
their request today. I am not in a position today where I have 
to say no to the CINCs on any bomber issues. So I think from 
the CINCs' perspective, at least as I see their demand for 
forces, we have a balanced force that satisfies those 
requirements today, and this program will sustain that balance.
    Mr. McDade. Does anybody disagree with that?
    Mr. Hamre. May I add, sir, that I think Mr. Dicks is right, 
that bombers, long-range bombers, are enormously helpful in 
that halt phase, as are all aviation assets, frankly. But there 
are other things that tactical aircraft do that bombers cannot 
do. It was a much richer mix of requirements that the generals 
are facing and why it leads them to their conclusion.
    Mr. Young. The gentleman's time has expired.
    The gentleman from California now has 5 minutes, and he may 
use it to continue this discussion.

                    CHALLENGES TO THE UNITED STATES

    Mr. Lewis. General Hawley, when you talked about our not 
spending money on the fighter force and we are building up the 
bomber force, during that very time we were moving forward with 
the F-15 and the F-117, so I wonder about that. Clearly, there 
were expenditures there. And Norm is saying there is zero in 
terms of bomber focus looking forward.
    I might remind you that the building did not want to go 
forward with the numbers of F-117s that eventually we procurred 
to. It was Senator Nunn who drug you all, kicking and screaming 
down the halls, and following our experience in the Gulf with 
the F-117, the halls couldn't be happier about the numbers of 
aircraft.
    It is of great concern to me that we try to use that sort 
of background perspective as we look forward.
    The halt phase is critical, in my mind's eye. If you think 
it is critical, what kinds of wars are we likely to fight in 
the coming two decades, and is that halt phase likely to be 
required in a very short time of notice? And, if so, then it is 
fundamental.
    So tell me, what are we going to face? What is the real 
challenge from? If you can't answer that, why are we here?
    General Hawley. We have some scenarios in DAWMS that would 
be enlightening.
    General McCloud. DAWMS did look at various options in major 
theater wars in northeast Asia and southwest Asia. We did 
excursions to try to address the issues that Congressman Dicks 
alluded to. We did lock out various forces from a theater to 
see the role that the bomber would play and how it would play 
best. We locked out naval tactical air. We locked out Air Force 
tactical air. We locked out the combination of the two at 
various levels from 10 percent all the way up to 90 percent. So 
we got a good feel for where the bombers played.
    He is absolutely right, the bomber plays heavily in the 
early halt phase, and it is a critical phase to play. It comes 
with the stealth precision.
    Mr. Lewis. I know you have all kinds of scenarios. But in 
terms of the real challenge to us in the next 2 decades, what 
is likely in terms of our needs? We are not going to have the 
wonderful notice that we got in the Middle East last time. A 
lot of people observed all that, I can tell you.
    So assuming that the first 2 weeks are not automatically 
available to move troops, et cetera, et cetera, how important? 
What priority is this? Should we shift the priority, assuming 
that?
    General McCloud. Sir. I think it gets back to balance. We 
have to be prepared for that; we have to be prepared for the 
options of short warning. We don't think that will happen, but 
if it does, we ought to be prepared for it. The bombers play a 
central role in that.
    Mr. Dicks. Will the gentleman yield?
    Mr. Lewis. Just a moment. Let me just kind of interrupt you 
myself. There is little question within the building as you 
talk about a ``balanced force,'' if you move in the direction 
of saying we need more B-2 stealth assets, that has an impact.
    The National Training Center for the Army is in my 
district. I know how they get excited about discussion like 
that. We are talking about peace maybe in our time or not 
having peace in our time. What is the priority and what is the 
likely reality of serious confrontation ahead of us?
    Let me add to that, General Hawley, 2 years ago we had a 
panel like this. About that time, I was red hot for the B-2 at 
that point, and I began backing off. The panel sat there and 
said we don't need any more B-2s. The only guy who said we 
needed more was sitting in your chair, General Loh, the force 
provider. He said we need more. Why did he say it and the rest 
didn't then?
    General Hawley. I think General Loh and I would probably 
look at this through very similar eyes.
    Mr. Lewis. I beg your pardon?
    General Hawley. General Loh and I would look at this issue 
through similar eyes, because we face the identical problem.
    Mr. Lewis. Let me back you off one more time. Yesterday I 
was having a discussion with another colleague of mine on 
another Committee. The subject was F-18E/F or C/D. The 
discussion was, if we back off of the E/F, it will save us $18 
billion and that will get us to the Joint Strike Fighter 
faster.
    Friends, we are in this together. We need advice and 
counsel that reflects your best judgments, not balanced force 
to keep one portion of the force happy. I am concerned we are 
getting a lot of that.
    Mr. Young. The gentleman's time has expired for this turn.
    Why don't you go ahead and somebody respond to the issue 
Mr. Lewis raised.
    General. Hawley. I will try. I think the analysis and 
studies we keep doing over and over keep yielding a similar 
result.
    You referred to General Loh's support for the B-2. Believe 
me, I support the B-2. I think the B-2 is a marvelous weapons 
system that fills a very important role within the ACC force 
structure we provide to our fighting CINCs. The issue is not, 
would I like more B-2. I would love to have more B-2s. I would 
love to have a bomber force that is all B-2s. But I don't have 
enough budget authority to buy a bomber force of all B-2s.
    Therefore, we have developed a mix that includes 21 B-2s, 
95 B-1s, 71 B-52s in the out years that will satisfy our 
overall requirement within the constraints that we face in 
terms of our obligation authority for the budget. We think that 
is the right balance.
    Congressman Dicks pointed out this is a great enabler. It 
is an enabler. That is how we will use it. It will be used to 
leverage all of the other capabilities that we bring to the 
fight. it will allow our B-1s to get in and do that heavy 
lifting that the B-1 is so good at.
    Mr. Chairman, you commented on the B-1 in your opening 
statement. ------. And that capability will be leveraged by the 
B-2, which will be able to go in and take out command and 
control structures and take down defenses and open the door for 
that heavy lifter, the B-1.
    Meanwhile, the B-52, which will initially do standoff work 
with its CALCM capabilities and its HAVE NAP, then it will get 
in. After we have taken down those defenses, using the B-2 and 
our other high end weapons systems, it will be able to get in 
and do that heavy bombardment mission which will be so crucial 
in the halt phase.
    But we will also need air superiority and need to provide 
that over the battlefield, because non of these weapons 
systems, to include the B-2, can be used with impunity in a 
high threat environment. So we have got to be able to control 
that airspace. We will need to be able to deliver sustained 
firepower against a whole array of targets. That is what the 
fighter force will do as it comes in and is able to generate 
those high sortie rates of two to three sorties per day per 
airplane, be able to attack that broad array of targets that we 
really can't get out of the bombers.
    So this balance that we have created within the fiscal 
constraints that we have been given, frankly, is about right, 
and it will produce a modern bomber force, it will by 2010 or 
2015 produce a modern fighter force.
    We have already begun to modernize the airlift force so we 
will have the mobility assets that we need with the C-17 and 
with our sealift capabilities to get these people to the fight 
in a prompt and timely way and we will be able to get our job 
done. While we are doing those opening days, we will be able to 
launch bombers from the States and deliver that long-range 
combat firepower to the theater. But that comes at great cost. 
------. This is tough work, we do, and it requires a balanced 
and a flexible force that can satisfy a broad array of 
contingency requirements.
    As we have gone through and used tools like those imperfect 
models that the DAWMS study used and that have been sued in 
other ways, but they do provide insight, though they are not 
perfect and you can't just take the results on a spreadsheet 
after analysis like that and say, there is my force structure, 
you have to apply judgment to it.
    That is, I think, what you pay us to do, is to bring our 
judgment to the table and the judgment of people like Dr. Hamre 
who have been involved in this business for a long time, as 
well as your own judgment. And out of that, collectively, we 
produce a force for this country. I think the one that has been 
proposed is a balanced force that will do a pretty good job of 
satisfying our national security requirement.
    Am I a bomber advocate? You bet I am. I am not a fighter 
general, I am an airpower general, and my job is to deliver 
combat airpower for our warfighting CINCs. I am supposed to 
make sure that that force is well trained, well equipped, well 
organized, and capable of responding to those needs on short 
notice, and that is what they can do today.
    And they do it because over the years, together, between 
various administrations and this Congress, we have delivered a 
very capable set of airpower forces for the country. They are 
ready to go to war today and fight effectively, and the B-2 
will be a tremendous addition to that. It is now committed to 
the SIOP. It is now available to the CINCs. I made that 
available on the first of January. ------. A tremendous 
capability. And we will be able to use that as an enabler to 
help leverage all of our other investments.
    Mr. Dicks. I just want to point out, we had to provide that 
GATS/GAM over Air Force objections.
    Mr. Young. Thank you for that excellent response.
    Mr. Skeen, you are recognized for 5 minutes.

                           B-2 and Halt Phase

    Mr. Skeen. Thank you, Mr. Chairman. I will not use all of 
my time.
    I was very interested and engaged with the treatise that 
General Charles Horner came out with a few days ago in which he 
analyzed our experiences in that Desert Storm operation and 
what we didn't learn, and I was very impressed, with having 
known him well. I think the crucial point that he made was the 
time limit for the halt phase, and his summary was that the 
only kind of response we had that would be adequate would be 
the use of B-2s.
    I know we need the DAWMS study. The critical thing is, how 
much time do we have for the next go abound in these situations 
to respond? ------ which becomes more and more tackier day by 
day. When you are talking about that. ------. You folks have 
done a great job, and I know you do your job well or you 
wouldn't be where you are today, but there is a lot to be said 
for the allocation to the kinds of Air Force resources. So put 
us down as second-base umpires. We are not the greatest, but we 
are concerned. We appreciate the dialogue that you have given 
us today.
    Thank you.
    Mr. Young. Mr. Hobson.

                        Cost of Bomber Aircraft

    Mr. Hobson. Thank you, Mr. Chairman.
    I have some concerns about how we pay for things, since I 
sit on the Budget Committee as well as this Committee. I also 
have some district concerns because we do a lot of stuff at 
Wright-Patterson in may district. And I remember General Loh 
when General Loh was at Wright-Patterson, and he inherited 
that.
    What bothers me is this configuration that we have got 
ourselves into. You have the B-1 that we are going to spend all 
the money on. I am worried not about the next 10 years alone, I 
am worried further out, because you aren't going to have B-52s 
around. Well, you have them longer than I think we all thought 
we would have them. That is going to go by the board.
    You have the Navy that doesn't have any stealthy aircraft 
now, that I know of. And excuse me, Duke, for talking about the 
Navy. you have a lot of assets there that have a certain need 
for a lot of money.
    We have got all these airplanes, all these fighter 
airplanes we are building, I understand we want to have it all, 
but I am worried. I don't have quite the passion that Mr. Dicks 
has, but have four grandchildren that I am worried about out in 
the future of this threat and of not having the capability to 
stop that early threat.
    I want to figure out how we can pay. If I had my druthers, 
I would like to see us reconfigure circumstances and 
reconfigure so we have that ability to stop that initial threat 
better long-term. I think you can do it today. I think you 
probably have got the capability that you can do that today. 
but I am worried when you don't have some of this stuff out 
there. And I want to ask, can't we reconfigure so we can pay to 
keep this line open and to keep this technology moving forward?
    The other question, sir, I would ask is, was he right? We 
always get blamed for forcing people to buy things. Was he 
right? If it did work in buying that system, over the objection 
of the Air Force, why are we being forced to second-guess the 
Air Force in how we pay for this stuff?
    General Hawley. It is true the Air Force was not on board 
buying GATS/GAM and it was issued to us. the reason was because 
the air Force, I think, viewed it as an interim capability and 
our judgment was that we would prefer to take a risk for a few 
years not having that precision capability, given that JDAM was 
going to be delivered this year, and we were willing to do 
without that capability for the 2 years that the GAM gives use 
a B-2 precision capability.
    There was a difference in judgment, and the wisdom of the 
Congress said we think we need it sooner. So we took it, we 
have implemented it, we have it on the airplane today, and we 
have committed it to the warfighting CINCs. So we honor that 
judgment. It is now available to the CINCs. As I said, I made 
it available to the CINCs on the first of January.
    Mr. Hobson. Where is----
    General Hawley. Joint Direct Attack Munition is essentially 
the same weapon as the GAM. It will be procured in much larger 
quantities and be much cheaper, and therefore GAM will be 
phased out beginning this year as we begin to take delivery of 
block 30s which begin this summer, and those will be delivering 
JDAMs, while the block 20 deliver GAMS. So we will have a 
period of time where we will have a unique capability that we 
wouldn't have had it the Congress hadn't directed us to buy the 
GAM.
    The difference in opinion really lies in the area of risk. 
Our assessment was, I think, that we should tolerate the risk 
and save the money, and the Congress' judgment ran counter to 
that, so we incorporated it, trained our crews to it, and 
demonstrated it very effectively.

                             B-52 Aircraft

    Mr. Hobson. Answer my other question, sir. How do we long-
term reconfigure when we don't have the B-52? You are going to 
have B-1s that people don't really fly very much to do things 
with when we have had past engagements, which may or may not be 
there. What do you have? You have 21 B-2s. That is all you have 
in the future to cover the world out. You don't have anything, 
as far as I know, on the drawing board to replace the B-2s.
    General Hawley. Okay, I think I can answer that. Number 
one, the B-52 will be around a long time. I am not sure that 
there is a retirement date for the B-52. It is a very well 
constructed airplane and will fly for a long time, and we have 
no projections to retire it. So it will be a significant part 
of our bomber force structure for the next 3 decades.

                      BOMBER WEAPONS CAPABILITIES

    The B-1, although it has not been employed in combat to 
date, that is because it didn't have conventional capabilities 
that were valued by the CINCs. Now it has that capability to 
deliver sensor fused munitions. We just delivered that 
capability this year. It will soon have the capability to 
deliver JDAMs, just like the B-2 did last October.
    So it will have that capability, and in fact for most 
munitions in that new family of near precision capable 
munitions, the B-1 will carry significantly more than any of 
our other bombers. I call it our heavy lifter. That is because 
it has the largest payload of any of our bombers. Once you can 
enable its access to the theater with systems like the B-2, 
then the B-1 what can really bring firepower to bear. I could 
give you some examples.
    The B-1 will deliver 24 JDAMs, the B-2 delivers 16, and the 
B-52 12; the B-1 delivers 12 JSOWs, the B-2 will deliver 16, 
and the B-52 will deliver 12. The B-1 will deliver 24 JASSMs, 
the B-2 16, and the B-52 12.
    So this family of weapons systems gives us a very effective 
balance between that high-end system that can open the door, 
the high-speed penetrator that can deal with medium threats, 
the B-1, and then the standoff weapon system, the B-52, that 
can eventually be rolled into the fight.
    Mr. Hobson. Don't you have to have a whole lot of other 
weapons out there to protect the B-1 and the B-52 that you 
don't have to have with the B-2?
    General Hawley. Our tactics for employing these weapons, we 
would employ the B-2 against that family of targets that are 
heavily defended and that the B-1 can't get access to.
    There is another whole class of targets that are less well 
defended that the B-1 can deal with. So we will use the B-1 to 
deal with those, and then other targets once the systems like 
the B-2 have taken down the defenses.
    Then the B-52 is a standoff weapon initially, and we will 
use it from outside the threat envelope and launch standoff 
munitions. Once the defenses are beat down, then it will be 
able to go in.
    So this is an array of threats and an array of targets both 
geographically and in the dimension of threats and over time, 
because over time, the complex of the threat will change as we 
defeat some of those systems and take down both of the command 
and control structure that supports them and the weapon 
systems.
    Mr. Hobson. I will ask a last question, and that is, when 
Secretary Perry was here, I thought he gave us a much shorter 
date on the B-52 than you are giving us.
    Mr. Young. Mr. Hefner.

                         REMARKS OF MR. HEFNER

    Mr. Hefner. Thank you, Mr. Chairman.
    I feel inadequate, I don't feel the passion that I have 
heard here, but there are some things that bother me. I 
remember many years ago we sat in this room and we were told we 
can have the B-1 and we can also have the B-2, and going ahead 
with the B-1, it will not delay the production of the B-2; we 
don't have to skimp on either one of them; we can have them 
both; we can have a full contingent of everything.
    We were sold on that concept, and we did the B-1s, and I 
have been to some places, and the B-1, to my knowledge, has not 
taken part in any significant programs that we have had in the 
Persian Gulf or anywhere else.
    If I understand you right, you said, the B-1 is going to be 
downgraded to where it won't be counted in the agreements we 
make with the Russians?
    General Hawley. Right.
    Mr. Hefner. So we spent billions of dollars to fix the 
thing, and now we have downgraded it where it won't be counted.
    Talk about the long-range plans. One of the things that has 
always bothered me is, I don't have any manufacturing 
facilities in my district, per se, but it is a lot more sexy to 
talk about ships and planes and things like that. But we have 
got a real problem as far as quality of life for our men and 
women that are manning these systems. We have got a shortfall 
that goes 50 years out into the future.
    It seems the argument changes every few years. I remember 
back in the beginning, if you weren't for the B-1, you weren't 
for God and country and apple pie. That was the thing, the B-1: 
We have to have the B-1, and don't give away the canal. That 
was on everybody's political mind.
    I just wanted to make one other point--somebody, Norm, 
talked about the halt phase, and that is very important. I 
understand that. But I don't foresee that we would have a real 
threat in the future that would have to deal with the halt 
phase.
    But just say we did. The overall plan that you have put 
into effect, I feel sure, dealt with the halt phase, but you 
have got to have some other stuff to back up after you first 
initiate the halt phase. If you go too far the other way, would 
that take away some of the effectiveness of the overall 
operation?
    Does that make any sense?
    General Hawley. I think that is my argument for balance, 
sir. We do need that balance, so you can deal with the halt 
phase, and then you can have a sustained capability to engage a 
determined foe after that.
    As to the B-1, I quibble with the word ``downgrade.'' We 
rerolled it.
    Mr. Hefner. I was oversimplifying it.
    General Hawley. In fact, we have significantly upgraded the 
capabilities of the B-1 in the conventional area in order to 
give the CINCs that tool they need during the halt phase to put 
a lot of firepower on target quickly, which it will do along 
with the B-2 and B-52. So I would quibble with that a little 
bit. And it has been in the fight. It is just that it was 
unseen.
    During the Gulf War, we took a number of B-52s off alert 
and the nuclear commitment in order to make them available to 
do conventional work in the theater, and we put the B-1 on 
alert to back them up. At that time, that is what it was best 
at, the nuclear mission. So it freed up other forces.
    Mr. Hefner. It never flew any missions.
    General Hawley. It didn't fly any missions.
    Mr. Hefner. I guess I am not knowledgeable enough about the 
strategic planning for future wars, but one of my big concerns, 
having been on Military Construction for all these years, my 
big focus has been on quality of life for our guys that man 
these sophisticated weapons. and I guess people get tired of 
hearing it, but to me, it is a little bit ridiculous when we 
talk about the most sophisticated weapons that man could 
conceive and you have still got guys living in conditions that 
they have to walk across an unpaved parking lot to take a 
shower and living in facilities that were, some of them, around 
in World War II.
    To me, that is just about as critical as all the other 
stuff. If you don't have retention and you don't have morale, 
then it is not going to make that much difference; people are 
not going to be that committed.
    I don't have an argument with your--I don't know about your 
models or what you have used or what-have-you. Norm is our 
expert here. But I am concerned that we should know where we 
are going, because our money is so limited, it is about dollars 
any more, and we have got to make sure that we spend them in a 
prudent manner in my view.
    Mr. Hamre. May I just very briefly say I think it is very 
important you bring that up. This is not a decision about 
spending $300,000 in fiscal year 1998. This is really about, 
are we prepared to enter into a $20 billion commitment over the 
next 15 years, and what is it that you have to give up if you 
want to go into that, because we feel our top line is 
constrained.
    We just have gone through the budget negotiations that 
clearly indicate we have a constrained top line. Therein lies 
that very painful choice. There isn't a person sitting in this 
room that doesn't want exactly the same thing. In the next 
conflict, we want our people walking off the airplane carrying 
a flag, and not carried off an airplane under a flag. Everybody 
wants that. But that means we have to go through that very 
painful process of looking at all of the things that the 
Department needs and deciding what is an appropriate balance.
    This was a hard decision. It didn't come easy. We would 
much rather have more B-2s, much rather have barracks. We still 
have guys living in deplorable conditions in Korea, and it is a 
shame, it is a real shame. That is all of the things that we 
had to struggle with. That is why we didn't come to this with 
any joy. This was a hard decision.
    Mr. Hefner. I am glad you mentioned Korea.
    Just one second. General Ladd, who was at Fort Bragg and 
Korea, came before this Committee and begged and pleaded, and 
we gave $40 million to upgrade the living conditions in Korea. 
That was atrocious, expecting these people to be on the front 
lines. And we can talk about all the sophisticated weapons, but 
there is a human element out there. They are counting on us to 
look after them.
    I yield back the balance of my time.
    Mr. Young. Mr. Bonilla.

                       QUADRENNIAL DEFENSE REVIEW

    Mr. Bonilla. Thank you, Mr. Chairman.
    I would just like to start out by concurring with your 
opening statement, Dr. Hamre. I am proud this Committee is 
dealing with a serious issue here rather than some of the 
things reported on the evening news each night. I am convinced 
that a lot of that initiative results from people who are, 
frankly, regularly trying to make a mockery of the military, 
and I find it disgusting. I am delighted that this Committee 
has chosen to discuss this very important issue.
    It also ties into what I believe philosophically overall. 
There are a lot of other agencies in Washington who, quite 
frankly, waste and squander billions of dollars. No one is out 
there asking for a comparable QDR for the Commerce Department 
or the Energy Department or for the bureaucracy of the 
Education Department. I wonder why we don't have a call out 
there for comparable QDRs on some of these agencies.
    It seems like the agendas that the Dan Rathers of the world 
each night have are to constantly hammer the Defense Department 
and constantly hammer one other area, and that is the 
Agriculture Department. But no one will go in and do comparable 
reporting on HUD or Energy or Commerce or some of these others. 
So that bothers me, frankly, not just as a Member of Congress, 
but as a citizen of this country.
    Unfortunatley, we are faced with having to make decisions 
within the Defense Department as to what we are going to pay 
for in the future.
    The chairman asked a good question in his opening statement 
that I would like to have elaborated on, if I could, and Dr. 
Hamre almost started to answer this a minute ago. But what 
might we have to give up to fund an expanded B-2 program, and 
are the trade-offs worthwhile? What are we talking specifically 
about--I am talking about a hypothetical reality that we may 
face here.
    Are we talking about eliminating, cutting back on, another 
aircraft like the F-22 or the joint strike fighter, or is there 
something else with a comparable pricetag that we could look at 
if we choose not to go with the recommendations of the QDR?
    Mr. Hamre. May I just make a very general comment, and then 
I would ask Dave McCloud to speak to what we did in the 
analysis that led to the recommendation in the QDR.
    The easiest money in town is other people's money. It is 
always easy to say I would like somebody else, the Air Force 
would love to have two fewer Army divisions so they could have 
more F-22s, or the Army would love to get rid of TACAIR so they 
could have more divisions.
    We all ride our hobby horse around a little bit, but you 
have to get off it and sit down and say how does it all land 
because I have to pay for what is important for me. And when it 
goes beyond the resources I can take care of myself, I have to 
come in front of everybody else and make a good case for it. 
You are absolutely in no different situation that was the 
Secretary when he had to look at all of this.
    Could we find room in the budget for the B-2? Of course we 
could. The problem is giving things up for it. And all those 
other shortfalls we have got, and we have got them all over the 
place. We really did look at alternatives. Let me ask Dave to 
talk about it, because the most important thing, as I say, is 
you have to look at the opportunity costs. That is what led to 
us.
    David, General McCloud, if you would speak to that.
    General McCloud. We looked at major force structure as we 
went through the study, and we started out with, if you take 
fighter wing equivalents, roughly 1,800 airplanes for example, 
we looked at one, we looked at two, we looked at four. We 
looked at carriers: Take out a carrier and its associated air 
wing, take out two carriers and its associated air wing. We 
looked at B-1s: Take out all of the B-1s, and that is an apples 
to apples trade, so you could get an understanding.
    In each case what we did, as I say, if we take out that 
force structure today to pay for additional B-2s, what 
happened? The general trend continued through all of those 
looks. One was, as you take it out, as you free up monies to 
pay for the B-2, you lose that capability. Each of those assets 
I talked about--wings, carriers, bombers--has different 
characteristics and capabilities, but when you take it out, you 
lose that for a period of time. In general, that was a decade 
or more.
    So if you retired all the B-1s tomorrow, freed up the money 
to pay for additional B-2s, by the time you get the B-2s on 
line to take up that capability gap, it will have been roughly 
10 to 14 years, depending on which of the comparisons you are 
talking about.
    Mr. Dicks. Will the gentleman yield to me out of my own 
time, out of my next round of time?
    Mr. Young. The gentleman's time has expired.
    Mr. Bonilla. I have no time.
    Mr. Dicks. Could I just ask one question on this point?
    Mr. Young. Go ahead. We will deduct it from your next 
allocation.

                           PAYING FOR THE B-2

    Mr. Dicks. This will be very brief.
    That isn't how I see this. What you would say is, maybe we 
won't buy something out there; instead, we will buy this. Why 
couldn't you do it that way? Why do you have to say instead of 
taking something out of the force structure right now, that you 
already got--and F-16s would be the top of my list, by the way, 
if you wanted to look at something that didn't have a 
significant rule in the Gulf War--why not just say we are not 
going to buy something that is nonstealthy that can't penetrate 
and we are going to buy something that is stealthy and will 
work? Why didn't you do it that way?
    Mr. Hamre. I think it really is a cash flow problem, sir. 
We have got to pay for $1.5 billion every year for the next 8 
years in order to buy the B-2, and I can't simply use future 
weapons systems not in the budget now to pay for that. I have 
to pay for it right now. The only way to pay for it right now 
is with force structure, frankly.
    Mr. Dicks. We are talking about $1.5 billion over 6 years. 
It isn't like a lot of money, John. That isn't how you do it, 
John. You take it out of lower priority stuff and make room for 
it.
    Mr. Young. I would have to say we are barely touching the 
surface of a lot of issues members are going to get to. We have 
to stick to the 5-minute rule.
    Mr. Dicks. Take that out of my time. This is a crucial 
point, and I wanted to get to it.
    Mr. Young. Mr. Nethercutt.
    Mr. Nethercutt. Mr. Chairman, I came late. I know Mr. 
Cunningham and Mr. Istook were ahead of me. Let me come back 
after they finish.
    Mr. Young. That is fine with me.
    Mr. Istook.

                           B-2 Delivery Dates

    Mr. Istook. Thank you, Mr. Chairman.
    I wanted to ask really about two particular points. One 
relates to this trade-off issue that you are discussing, and 
that was in your testimony, General McCloud. If you could 
quantify for us the current plan to finish off the purchase of 
the B-2s, what are the delivery dates and operational dates, 
because you thought it was a crucial factor. How long would it 
be before additional bombers were delivered or operational? I 
would like to have that information fleshed out.
    Also I realize that sometimes that is a variable, but I 
realize it is not as variable when you are building bombers as 
when you are building fighters.
    The second point to which I would like to get a response: 
We are talking about the capabilities of 16 operational B-2s 
out of 21 total, but I haven't heard anything mentioned about 
what happens when a system has that few aircraft. If you lose 
one bomber, that is 6 percent of your operational capability.
    I haven't heard how that was accounted for in your study. 
When you place assets at risk, even though this particular one 
is designed for risk, I don't know if the word is defend 
itself, but how do you make it less susceptible to being lost? 
Nevertheless, I haven't heard anything that factors in what 
happens when you have such a small number when you have any 
losses whatsoever. Doesn't that really expand a lot of your 
risk and therefore diminish a lot of the potential capability 
that you are going to have?
    I would like to hear those two things accounted for on the 
delivery and operational dates and potential losses.
    General McCloud. In the delivery and operational dates, 
basically let me take an example. I think that will help 
outline it.
    If we retired all the B-1s tomorrow and we started freeing 
up the money to pay for additional B-2 production, those monies 
freed up immediately would mean the first airplane delivery 
would be roughly 2003.
    Mr. Istook. First additional airplane.
    General McCloud. The first additional bomber, 2003.
    Could Northrop do a different profile? They probably could. 
We believed this was a reasonable profile to do. So part of 
that, the up front cost there is associated with essentially 
putting the production line back together, gearing up, getting 
the work force in place, starting that process. It takes time 
to build these very complex airplanes.
    Mr. Istook. Of the 21, when is the last delivery date on 
the current profile?
    General McCloud. What I was describing for you was B-1s 
versus B-2s. In this case, the worth of the B-1 frees up enough 
money to buy 16 B-2s. One fighter wing equivalent frees up 
enough money to buy a certain number of B-2s. We have 21 B-2s 
in place today.
    Mr. Istook. 21 have not been delivered?
    General McCloud. Correct.
    Mr. Istook. When is the last delivery date?
    General Hawley. As you know, they are going through an 
upgrade program. In the year 2000, we will have all the 
airplanes.
    Mr. Istook. And as far as the issue I raised about what 
happens when you lose even a single one, much less if you have 
multiple losses?
    General Hawley. That is essentially what the five BAI 
airplanes will have to cover. I am not the expert here, but I 
have a note passed to me that says ------ DAWMS, during the 
halt phase, ------. If we fought a major conflict and used this 
conflict, and if the models are right--and I am not here to 
defend models, but they are the best we have got ------ you 
would have two left to support your tests and your depot 
program and so on and so forth.
    Typically in most of our force structure, we program 10 
percent addition for BAI, so you would still have 10 percent 
left at the end of that campaign.
    Mr. Istook. That is modeling one major engagement ------.
    If, for example, you had a scenario where there are two 
engagements----
    General Hawley. That was two, sir.
    Mr. Istook. That had two engagements, different parts of 
the globe, using the B-2 for halt in both of those?
    General Hawley. Right.
    Mr. Istook. ------?
    General Hawley. ------.
    Mr. Istook. Thank you.
    Mr. Young. Mr. Sabo.

                          B-2 MAINTAINABILITY

    Mr. Sabo. Thank you, Mr. Chairman.
    Welcome. I have a question that doesn't relate to the 
question of whether we should have more or not, but I am very 
serious about General Hawley's testimony on the operations of 
the B-2 which says in effect, if I understand it right, that 
they can only be used once a week? So it true that the 
maintenance after a flight requires so much time, so they are 
only used once a week?
    General Hawley. Yes, sir. The way we are operating the 
airplane today is, we will fly two or three times a day for 
training, and then we stand it down for as long as necessary. 
As it turns out, necessary is about six days to make sure that 
we sustain the stealthy characteristics of the airplane to the 
levels that are required to support our commitments of General 
Habiger.
    Mr. Sabo. The turnaround is seven days. What is it for a B-
52 or B-1?
    General Hawley. We don't have that problem with the 
nonstealthy airplanes. This is a function of the materials used 
to deliver the stealthy characteristics of the airplane. Many 
of those have significant cure times. We have some material on 
the B-2 that must cure for up to three days. If a blemish 
occurs, and they occur on every flight, what we try to do is go 
in and try to restore the finish, if you will, of the airplane 
to like new conditions so that it retains the fullest measure 
of stealth that we can deliver to the CINC in the event that he 
should need it.
    General Habiger. If I could add, my requirement for the 
nuclear was plan is to have ------.
    That is what General Hawley referring to. In order to get 
------, he has to go through this maintenance program on the 
composites in the wing and that sort of thing.
    Mr. Sabo. What is the time required for the F-117?
    General Hawley. The F-117 has similar materials. It is a 
much smaller airplane, of course, and it has a different nature 
of material. We use a lot of what we call putty on the F-117s. 
When it comes back from a flight, a crew chief can actually 
repair the F-117 using this putty and get it back in the air 
pretty quickly, so we don't have the same kind of standdown 
requirement. But it is a whole different generation of 
material.
    One of the things we are trying to do with the B-2 is 
upgrade those materials, and in fact we are migrating much of 
the materials technology out of the F-22 program and the joint 
strike fighter program in order to gradually upgrade the 
materials so we can reduce this need for long standdowns after 
flight.
    Mr. Sabo. What is the projected turnaround on the F-22 
versus our current fighters?
    General Hawley. The requirement for the F-22 is to be able 
to sustain on the order of a 3.0 sortie rate per day. It is not 
supposed to degrade in this day. That is why it is nice to 
migrate those materials into the B-2 program so over time we 
can upgrade the surface finish on the airplane to be more 
durable.
    Mr. Sabo. Is the material on the F-117 better than the B-2?
    General Hawley. Different. I think you are talking 
different generations of stealth technology. The F-117, of 
course, was essentially our first stealthy airplane, so in fact 
there are five different kinds of 117s. If you really went out 
and looked at them, you would find five different sets of 
materials on that fleet of barely 40 airplanes.
    So you have got--as that technology matured, we changed the 
surfaces on the F-117. The B-2 was delivered with a next 
generation technology, and then, of course, as we have invested 
in further stealth technologies in both our technology 
programs, the F-22 and JSF, we will further improve the 
technologies.
    Another thing we use is a tester. One of the difficulties 
we have is, it is hard to tell whether a blemish is, in fact, a 
serious problem for the airplane. You may have after a flight 
20 blemishes.
    If I were to use an analogy, any of us who fly airplanes, 
we look at what we call the 781, the airplane forms, before we 
fly. On the back page of the 781 is a list of discrepancies on 
the airplane. They have little red dashes next to them which 
indicate it is okay to fly with them.
    Our problem today is, when we send a crew chief out to look 
at the B-2 after it lands, he really doesn't have any way, he 
or she, to tell whether a blemish is a red dash, which you can 
fly with, or a red X, which is grounding and has to be 
repaired.
    So our policy, in order to make sure that we have the most 
stealthy aircraft that we can provide to the warfighter, is to 
fix them all and fix them all immediately after flight. So that 
is what has generated this kind of fly one, maintain six.

                            F-117 Production

    Mr. Sabo. When was the last F-117 produced?
    General Hawley. I would have to get back to you with that 
answer. It was in the early eighties.
    Mr. Sabo. That was before most of the B-2s were built.
    General Hawley. Correct. The B-2 was in development.
    Mr. Sabo. If the material for the F-117 was better, why 
wasn't that used in the B-2?
    General Hawyley. It is not that it is better, it is 
different. It is an earlier generation, and it is designed 
against a slightly different problem. The B-2 was developed, of 
course, as a nuclear bomber, and it was designed to have a more 
balanced signature reduction than the 117. The 117 was 
primarily designed ------. The B-2 is designed to have a more 
balanced signature ------. So it requires a different set of 
materials, different kinds of technology in order to produce 
it.
     Mr. Young. The gentlemen's time has expired.
     Mr. Cunningham.

                       Quadrennial Defense Review

    Mr. Cunningham. Thank you, Mr. Chairman. You have stated 
that the DAWMS is based on balance, but yet it is disputed as 
not effective. If I was a lawyer, I think I would tear apart 
your argument.
    I looked at the QDR. The QDR was based not on what is the 
real need and the real shortfall in dollars, but was based on 
fiscal constraints, what bang can we get for the dollars that 
we have. I think that is wrong.
    I also know that the QDR is nothing like what went to the 
White House. I know the board members and I talked to them 
individually, and we are going to have hearings on that to show 
the disparity of the preconceived analysis that came out of 
QDR.
    I would take a look and say what is the real problem? First 
of all, why are we in this constraint? Why do we have to phase 
in the difficult decisions that you are making right now?
    First of all, the White House has had a propensity to cut 
defense. Second, BRAC, including the proposed additional BRAC 
rounds cost lots of money upfront. Third, ``defense 
conversion'' is the cry of the left and the way to take DOD 
dollars. Peacekeeping, I even read in the wire service that the 
Southern Command is going to go down and protect endangered 
species in South America.
    Then we take a look at the contingencies in the OPTEMPO and 
the equipment use. And then, last of all, those that want to 
decrease the defense spending have always said we are going to 
do it in the out years, just like the President. We are going 
to do it in the out years. Trust me, we will build it up in the 
out years. But they know good and well there is no way in the 
out years you are going to be able to afford the things that 
you need because of the deficit that you created. And that is 
what the QDR does. It takes and causes the military to cut out 
of its own bone marrow to make up the deficiencies of defense 
spending in the past. And that is upsetting.
    You say it yourself, the fiscal constraints we have, we 
have to operate under. But why do we have those fiscal 
constraints? I think that is the important thing that we are 
not really attacking. What do we do when we have two babies and 
we can only feed one? We kill one baby. That is not very good, 
in my opinion.
    The QDR, you know that Captain O'Grady wasn't even ACM-
trained when he got shot down because you didn't have the 
assets to train him? You take a look at your adversary program, 
it is deficient across the board. You said readiness. These 
kind of things that we need to take a look at and say what is 
the threat and what do we need and identify the dollars versus 
this is what we have got. This is a direction that is totally 
wrong in my opinion.
     When most of us served in the military, we always assumed 
the enemy had more than we thought he did, and that way we 
didn't get caught with our pants down. Now, we are saying that 
the Cold War is over, we are not going to need these assets.
    Well, what if we do? ------. Why? How about the three 
Typhoon-class nuclear submarines that they just dropped and the 
three deep submersibles going down to the bottom of the 
Atlantic using welded and molded titanium? How about the SU-27, 
35 and 37 that is going to be at the Paris Air Show that 
doesn't even give parity to our F-15 and F-14 with the A-10 and 
the advancements we can't even talk about here?
    I mean, we are saying what if. In the meantime, who is 
going to pay for it? You talk about retention, because we can't 
take care of the kids back home. It is not just the airlines 
that are hiring that causes retention problems. You may say 
before a hearing it is okay.
    I go out into the street like you do, and you know who is 
against this study and you know who is against the QDR? The 
flag officers retired, not under the tentacles of the White 
House. They are laughing. They say they cannot believe these 
studies and what they are doing to the national security 
forces. Instead of doing it the other way. I mean, we are 
talking Air Force, we are talking Navy, I talked to ANA, I 
talked to Marine Corps folks, and I guarantee you, General 
Krulak, when he made statements like that in the hearings, I 
was walking out, he had phone calls with OSD and the White 
House before he got out of the building for saying what was 
really needed. So did Admiral Boorda when he was alive.
    I think that is the real concern in these things, we are 
not meeting the threat. We are not talking about what do we 
really need. Rather, we are talking here are the dollars we 
have available. Live with it I think we need to identify what 
are the dollar shortfalls so that we can have the B-2 like the 
Air Force wanted it in the first place, and the B-1, instead of 
getting our kids killed, which is, in my opinion, happening. We 
are not going to have them come back with flags. They are going 
to come back in body bags.
    Mr. Young. The gentleman's time has expired.

                           Budget Shortfalls

    Mr. Hamre. May I make one point. Sir, I missed probably 
half of the last sessions on the QDR because I was spending my 
time up here trying to get a budget negotiation to support the 
President's budget level, and, indeed, we were modestly 
successful, but we failed in the year 2003 budget numbers. I am 
short $6 billion with the budget agreement that was negotiated. 
I would love to have more money. There isn't anybody that 
doesn't feel we couldn't give you a stronger Defense Department 
if we had more money. And the criticism that you lodge, we all 
feel very intently. We are now going to have a defense program 
that will consume 2.9 percent of our GNP. I think that is 
pretty cheap insurance. But I don't think, because we were 
wrestling with it ourselves, there isn't support for more money 
up here on the hill.
    In fact, we have a problem. We spent late into the night 
trying to avoid another $6 billion cut to our budget, and, 
thankfully, all of you were with us, and we won that by only 
two votes.
    Mr. Cunningham. I agree. All I am asking is the White House 
and you and my blue-belly friends here--I say that with 
respect, they know that--but would identify that it is the 
dollar shortfall, not that we have to cut out of bone marrow. 
That is not the issue going out before us.
     Mr. Young. Let me make one brief announcement. Our guests 
have agreed that they could come back at 1 o'clock for a one-
hour continuation of this very interesting hearing, so from 
1:00 to 2:00 we will continue. We will continue now until 
12:00. Most of you indicated you could be back at 1 o'clock. 
The other Members that have already left, we are polling them. 
So that will be our plan, so go now until 12:00, and then be 
back here at 1:00 for another concentrated hour on this issue.
    I would like to yield to Mr. Visclosky for his 5 minutes.

                          B-2 Maintainability

    Mr. Visclosky. Thank you, Mr. Chairman.
    General Hawley, if I could get back to Mr. Sabo's line of 
questioning, I understand the concept that there are different 
stealth materials involved, and that some are better than 
others and that there are different purposes.
    What I am having a hard time understanding is if you have a 
sophisticated aircraft such as the B-2 and it is used three 
times, that potentially it is then on the ground for 6 days.
    General Hawley. We adopted that profile because the 
airplane is not as durable as it was supposed to be when 
delivered. Frankly, our requirement was for an airplane that we 
could fly, turn and fly again, and we did not get that kind of 
durability on the airplanes as they are currently delivered. --
----.
    So we fly the airplane multiple times for training in one 
day. Every time the airplane flies, defects occur. We have bird 
strikes, at low altitude we have a lot of turbulence. The 
turbulence has tape backs. Believe it or not, there is tape on 
the surface of this airplane. Other defects occur. So after it 
recovers from all that training activity, some of which is 
tough, and do landings which are tough on the airplane, all of 
the training requirements for the pilots, then it has some 
defects.
    One of our shortcomings with the B-2 and with the F-117 
today is that we don't have a tool that I can give to my crew 
chiefs so they can assess the importance of those defects. So 
they really have to assume that every defect must be repaired 
in order to assure the signature of the airplane for the 
mission. So we go repair them all. And it takes us about 6 
days.
    It doesn't take 6 days of steady work. They go repair a 
piece of the airplane and it requires the application of new 
tape or new sealant or whatever, and then it has to cure for 
some period of time. In some cases, it takes as much as 72 
hours, like a new windshield in a car. You take your car down 
and get a windshield put in, it takes some time, because it has 
to cure, the sealant around the windshield. These fixtures have 
to cure for, in some cases, up to 3 days in order to complete 
the fix. And it has to stay in a climate-controlled hangar 
during that period of time.
    So on average, it is taking us about 6 days to get the 
signature of the airplane fully restored after we fly it about 
three times in one day.
    Mr. Dicks. Would my colleague yield for a brief question?
    Mr. Visclosky. No. On the fighter you said you had five 
other variants of the stealth material. We have 21 B-2s. Are 
there variations, and if there are on the B-2, have they 
improved? Then my follow-up question, and I will then yield to 
the gentleman. We are talking about potentially purchasing more 
of these aircraft. I do find it amazing that you would have 
them parked that long. If we are going to invest in additional 
aircraft----
    General Hawley. There are two kinds of B-2s on the flight 
line. We have block 20. The block 30 is the fully upgraded 
airplane that has the final configuration to include the most 
stealthy configuration of the fleet. And that is what we will 
be converting all of the B-2s to, so by the year 2000, when 
they have all either been delivered as block 30's or 
retrofitted to the block 30 configuration, they will all look 
alike.
    Mr. Visclosky. Will maintenance be simplified? Will the 
period of time be shortened?
    General Hawley. We are making progress every day as we 
improve the materials, migrate technology from other weapons 
programs onto this airplane. So I think it will be better. But 
we have to invest some money in that, and that is kind of what 
we have to work on within the Air Force, is identifying those 
upgrades and trying to improve that durability of the 
signature. We don't have a fix today for that. We still have to 
invent it.
    Mr. Visclosky. I yield.

                           F-117 IN GULF WAR

    Mr. Dicks. In the Gulf War, the F-117 in the first two 
weeks of the war, with two percent of the assets, took out 
something like 38 percent of the targets, and not one was shot 
down. So it appears to me whatever little defects they had, it 
certainly didn't slow down General Horner's utilization of this 
aircraft during the Gulf War.
    General Hawley. That is true.
    Mr. Dicks. So, I mean, in wartime you are going to use this 
airplane, you are going to go out there and stop the enemy with 
it. If you have a flaw or defect, you might lose a couple 
airplanes. In fact, I think it makes a major argument for 
making sure you buy additional B-2s so you can get a fix on 
this thing so you have a more survivable airplane.
    Thank you.
    General McCloud. Can I comment on that very briefly? The F-
117 in the early days literally had radar-absorbant coatings 
that were glued on to the airplane, top of the wings, bottom of 
the wings. In those early days of flying the machine, which we 
did at the Tonopah test range in the desert, it was not unusual 
to come back from a mission and have a 4-foot section peeled 
off the bottom of your airplane. We went from there, invested 
some money with the contractor, Lockheed, and they developed 
through the auto industry a robotic spraying technique to put 
the same type of materials on, but through very precision 
spraying.
    That dramatically changed the equation in stealth 
technology. Those types of advancements are being made all the 
time. That is why we have high confidence that an airplane like 
the F-22, when you sit it on the ramp outside at Langley Air 
Force Base, will last and be very durable. But it has taken 15 
years to get to this stage.
    Mr. Visclosky. Thank you very much.

                          STEALTH CAPABILITIES

    Mr. Istook. Mr. Chairman, one point that hasn't been 
mentioned that I would like to make certain of from General 
Hawley. When you are talking about this layover period of time 
for the plane, you are only talking about assuring the stealth 
capabilities. This doesn't affect airworthiness?
    General Hawley. That is correct. The time is strictly 
required to maintain the signature characteristics of the 
airplane. It is done to make sure that for its nuclear mission 
it is ready, and the nuclear mission is the most demanding, 
because it has not other support. It is going to go in alone. 
It is going to go into a potentially very heavily defended 
environment, and we want to make sure that we provide the air 
crew with the most survivable airplane that we can. So we are 
taking these measures in order to do that. It has nothing to do 
with airworthiness, with the avionics on the airplane. They are 
all very good. In fact, I reviewed the status of this airplane 
twice a wee, and our supply stats have been getting better at a 
dramatic rate. It flies well. It is a good airplane.
    Mr. Young. Mr. Cunningham for 10 seconds.
    Mr. Cunningham. I support the B-2, but I don't want to 
fight on false assumptions. If we had not had air superiority, 
air dominance in Desert Storm, we would have lost 117's. That 
is why the balance is needed over the target, because I can 
shoot down F-15s with A-4 Skyhawks by putting a picket out 
there, with no radar. It is important to have a balance in air 
superiority.

                         B-2 ACQUISITION COSTS

    Mr. Young. Mr. Cunningham makes an excellent point. I want 
to change the subject just a little in the last few minutes 
remaining.
    The proposal to buy nine additional B-2s, 1, 2, 3 and then 
3, the fly-away cost estimated by the contractor is $9.3 
billion over the life of the program. The DAWMS estimate is 
$20.8 billion for the same program, but DAWMS includes some 
military construction for the forward operating locations, 
upgrades of $1.7 billion, O&S and indirect costs of $4.7 
billion, coming to a total of $20.8 billion. That is more than 
twice as much as the contractor is estimating.
    John, where do we really stand on the actual cost of this 
and the requirements that go along with the procurement of the 
additional nine airplanes?
    [Chart follows:]

              [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]



    Mr. Hamre. Yes, sir. We prepared a little handout to try to 
give a crosswalk that would explain the relationship between 
these. As you see, there are three items that were not in the 
contractor's estimate, but you wouldn't criticize them for it. 
It wouldn't be their responsibility to do that. For example, 
the military construction, the upgrades, which we really 
probably want to do with the existing fleet anyway, and the O&S 
and indirect support costs. So you wouldn't criticize Northrop 
for not having those costs.
    Mr. Dicks. This is a 20-year ownership package, not just 
flying the airplane.
    Mr. Hamre. The real difference is it is a $9.3 billion 
investment program compared to our estimate, which is $13.8 
billion. Both of them are large amounts of money, and both of 
them are spent over the next 4 to 5 years. This is an enormous 
near-term cost commitment that we would have to finance inside 
our top line that has been frozen through the budget 
negotiations. So it is going to displace $13.8 billion worth of 
program content. That is why it became a very difficult thing 
for us in the QDR.
    Mr. Young. I wanted to get this information on the record, 
because there was this great difference. What you are saying is 
that the $9.3 billion would be the fly away cost of the 
airplane.
    Mr. Hamre. Just the airplane. Our estimate is it is $12.4 
billion. We think there are some----
    Mr. Young. Your estimate is $12.4 billion, right. You show 
$1.4 billion for support----
    Mr. Hamre. Support, gear, things of that nature.
    Mr. Young. The point is that the nine aircraft aren't 
really usable unless you have the additional----
    Mr. Hamre. That is right.
    Mr. Young. The upgrades, the MILCON, the indirect costs, et 
cetera.
    Mr. Hamre. The head-to-head comparison is $9.3 or $13.8 
billion, but it still represents a $20 billion commitment that 
we would be making here.
    Mr. Young. For the record, let's quickly indicate the 
amount of money that the nine additional aircraft would cost in 
the fiscal year 1998 appropriations. How much would have to be 
appropriated?
    Mr. Hamre. My understanding is it is approximately $300, 
$350 million, something like that, which is to get it started.
    Mr. Young. What would be the fiscal year 1999 requirement?
    Mr. Hamre. I think that is like $1.1 billion. I don't have 
that number right in front of me or in my mind. I think it is 
like $1.1 billion. Then it goes to $1.5 billion per year.
    Mr. Dicks. That is right.
    Mr. Hamre. That is the contractor's number.
    Mr. Young. I am looking at a paper that says $1.8 billion.
    Mr. Hamre. Maybe it is $1.8 billion.
    Mr. Young. And $1.8 billion in 2000, $1.7 billion in 2001, 
$1.9 billion in 2002.
    Mr. Hamre. Those are probably right.
    Mr. Young. These are the contractor's figures.
    Mr. Hamre. Then we would have some extra costs probably on 
top of that, sir.
    Mr. Dicks. Do you have another copy of those, Mr. Chairman?
    Mr. Hamre. We would be glad to go over and validate any of 
this. But I think, sir, you are raising a very important point. 
The decision to add $300 million this year, $350 million this 
year, simply presumes we are going to add the $1.6 billion next 
year, and we are not. We don't have the money for it.
    Mr. Young. Let's assume that the contractor's numbers are 
accurate, the $1.8 billion for next year. How much would you 
have to add to that for support, spare parts, MRSP, production 
costs, upgrades, indirect costs, et cetera?
    Mr. Hamre. I will get you an answer for the record. My 
suspicion is that will lag a couple of years. You don't need to 
have the support gear, because it is a shorter production 
cycle, so you probably don't need that much more immediately in 
fiscal year 1999.
    Mr. Young. When will you estimate that you would need that?
    Mr. Hamre. Permit me to come back to you. We will get you a 
very prompt response. I will do that promptly.
    Mr. Young. I expect that you all have noticed that this 
Committee is full of supporters of the B-2. I think that 
General Hawley spoke to it very effectively, that he would like 
to have a lot more that he could provide to the CINCs when they 
call on him for bombers. But we also have the problem of--
suppose we can afford the down payment this year--are we 
responsible if we make the down payment this year, but can't 
afford the payments in the out years? That is what we have to 
wrestle with.
    Mr. Hamre. Sir, we wrestle with that, too. If you were to 
put in the $300 million, we just don't have the money to do the 
follow-through. We would confront this very same problem next 
year and it would be much larger, because we just don't have 
the resources.

                            B-2 Capabilities

    Mr. Dicks. Mr. Chairman, I would like to make just a couple 
comments on this point. First of all, you know, as General 
Horner says, and I believe this, you must look at the value. 
Mr. Hamre is very good at giving us numbers, but you have got 
to look at what you are buying and what you get for it compared 
to all the other things you are buying and what you get for it. 
I would argue that you get a lot more with the B-2 and the 
smart conventional weapons than with any other conventional 
system.
    As we go to START II or START III, as you downgrade your 
strategic forces, you have fewer strategic forces. A bomber 
that can go both ways, that can be used in the nuclear role and 
used in the conventional role, I believe, becomes much more 
valuable.
    The third point, the industrial base is there and alive 
now. If we don't do this now, then the industrial base goes 
away and we have to spend $25 billion to get back to where we 
are producing a new bomber. So if you are ever going to do 
this, this is the time to do it, because you have the line 
open, it will be least expensive now, than if you start 15 
years from now or 10 years from now.
    Again, the idea that this is the last bomber we are ever 
going to build, I must tell you makes my stomach turn. The fact 
that this administration, as Secretary White said, this is the 
last bomber we are going to build, I can't believe this is the 
policy of this administration. Again, I look forward to the 
afternoon session.
    Mr. Young. I appreciate very much the fact you are willing 
to come back at 1 o'clock. I wish we could just continue on, 
but a number of Members have commitments right now. We will 
concentrate the balance of the hearing from 1:00 to 2:00.
    John, you wanted to say something and I cut you off.
    Mr. Hamre. I was just going to say I am a budget geek. I 
don't pretend that I can speak to military value. That is, I 
look to see those people who have spent their careers in the 
military, and there is not dissent among the senior people in 
the Department. Every chief and every CINC has said they agree 
with this recommendation. It isn't just a finance weeny that 
decided this.

                           PAYING FOR THE B-2

    Mr. Young. I wanted to ask any one of you who would like to 
respond, if we were to move ahead with the B-2 program, I know 
that in the DAWNS you have exercised various options on how to 
pay for it. Could one of you give us an example of maybe three 
or four of the top options for paying for the B-2 program?
    Mr. Hamre. Why don't I begin, and then I would welcome 
anyone else to join in. I think this is a very hard question to 
answer, because it gets to the core of how we build budgets in 
the Department. It is rarely a case where you put in one thing 
and you take out one thing. It tends to be in the mix. But, 
unfortunately, as we are building things up, everybody that 
comes to the table comes with shortfalls.
    I look at the shortfalls, frankly, that are in our 1998 
budget request. We didn't get into our 1998 budget request. 
Frankly, I think we have written several letters to you. We 
were short on our medical program this year. We were short by 
$550 million, I think, growing to $650 million on our flying 
hours for the flight force for the Navy and Air Force, things 
that will affect readiness if we can't get additional funds in 
1998. We have gone through a number of discussions and I have 
with Mr. Dicks about some special intelligence capabilities, 
enormously important programs.
    Mr. Young. I don't think you satisfied him on that 
conversation.
    Mr. Hamre. He is not satisfied on that. I have broken his 
heart on that one, too. So there are a number of things that 
really come to the table with just this year. We probably have 
$1 billion of things that we need you to help us with this 
year, and things that we want in the Department. Then, of 
course, there are things that others want intensely for us up 
here on the Hill. We have got destroyers that people think we 
need fairly badly, and we have got just a whole range of things 
that people are anxious for us to have.
    My experience has been there isn't anybody up here that is 
asking us to support something they want that we genuinely 
don't need. It is a question of priorities, how high a priority 
it is. So coming to answer the question that you have posed, 
Mr. Chairman, which is what would we give up or what two or 
three things would we consider?
    First of all, the actual truth is we wouldn't do it even if 
you put in some money this year, because we don't have things 
that we would take out to take out next year, so we would be 
coming back to you again a year from now, but in this case a 
year from now it is not a $300 million problem, it is going to 
be a $1.8 billion problem. And unlike this year, where you have 
$2.8 billion or $3 billion to add, next year we are going to be 
submitting a budget resolution number, and you now have to 
displace $1.8 billion worth of program next year to make room 
for this.
    You will be confronting next year exactly the condition 
that the Secretary found himself in this year, where he was 
saying I have to knock things out.
    When you sit down with the chiefs, when you sit down with 
the CINCs, everybody is coming to the table with things they 
really need, and it is really a balancing process. There is no 
algorithm or no computer program we have that says on the 
margin, how would you want to spend another $1 billion or how 
would you like to spend $1 billion less if you had to cut it 
out.
    As I said, there is a tendency for everyone to look to 
somebody else's service to offer the money. The Navy would love 
to have the Army be smaller and use the money for aircraft 
carriers, and the Air Force would love to take fewer carrier 
battler groups or something. When you get down to it, the true 
requirements in our business is what are you prepared to pay 
for; what do you think is so important for warfighting you are 
prepared to pay for it?
    This is where the trade-offs then become in aviation, and 
in TACAIR, and with the terrible dilemma that the Air Force and 
the Navy and these CINCs have when they are looking at, as I 
say, I have to worry about a broad spectrum of things, not just 
the halt phase, although the halt phase is very important. I 
have to worry about all kinds of things. So it really has to go 
into that process.
    That is what led us to say we don't have the 300 million 
this year, we don't have the $1.8 billion next year, we don't 
have the $20 billion over the next 5 years for this. We do very 
much want to keep the B-1 fleet we have, and to upgrade it, and 
that becomes our first priority.
    Mr. Young. Dr. Hamre, thank you very much.
    Would any of the generals like to respond to that?
    General Habiger. Mr. Chairman, just to make one comment, 
sir. In addition to the issues that Dr. Hamre just discussed, 
in an arms control environment, I would have to give up 
something for those nine additional airplanes, because they 
would count against the force structure I have got today. I 
have got a good balance today between bombers, missiles, and 
submarines. So there is another price to pay in terms of giving 
something up, and I, at this particular point, wouldn't 
particularly want to give up anything in that regard.
    Mr. Young. Mr. Dicks.

                               Halt Phase

    Mr. Dicks. Well, Mr. Chairman, on this issue, this is a 
very important issue, and I can say, sitting on this Committee 
for 19 years, that I have watched this Committee every single 
year go through that budget that many comptrollers have 
submitted up here, and we cut money out of that budget. Every 
single year we find items that for one reason or another are 
low priority items and in a $250 billion budget, you can find 
$1.5 billion if you want to.
    I could go through that R&D section of the budget and I 
could get you $1.5 billion without any sweat.
    In fact, you and I have had a conversation where I said to 
you what about cutting 5 percent across. Do it. And maybe we 
could do it that way. An that is, as far as I am concerned, the 
way to do this.
    It gets back to judgment and military value. General 
McCloud, your notion that we are going to have warning troubles 
me, we have never had a war in which we had warning. We had two 
days of actionable warning at the time of the Gulf. In World 
War II, surprise attack, zero actionable warning time. Very 
little in Korea. I mean, it is in that situation when thousands 
and thousand of American lives are at stake.
    John, frankly, the halt phase is the most important phase 
when it comes to losing lives and whether we are going to be 
able to stop a war quickly and bring it to a quick end and save 
the taxpayers' money and lives.
    So having capability in the halt phase, in my judgment, is 
crucially important. And one of the things we haven't talked 
about, in the National Performance Review, it was very critical 
of this, I said however, U.S. forces' long-term access to 
foward bases, to include air bases, ports and logistical 
facilities, can't be assumed.
    You can't assume we are going to have carriers and be able 
to fly TACIAR in the theater. Access may be granted or denied 
for any number of political or military reasons. Moreover, U.S. 
forces may find themselves called upon to project power in 
areas where no substantial base structure exists. Perhaps more 
important, with the proliferation of cruise and ballistic 
missile technology, weapons of mass destruction and access to 
space, the capability to hold at risk large soft targets, i.e. 
carriers, at great range, will likely accrue to even regional 
rogue states.
    The QDR, in our in view, accorded insufficient attention to 
our ability to project power under these circumstances. And 
that is where the bombers come to play. And your own studies 
show dramatically that you don't have enough bombers now if you 
are locked out. If you can't get carriers into place and you 
can't TACAIR there, then you have got nothing to rely on but 
the bombers. Isn't that correct, General McCloud?
    General McCloud. The study does show basically what you 
said. If you were locked out and we ran problems with access, 
we locked out the TACIAR, it shows that the bombers are very 
effective in that halt phase.

                             STUDY FINDINGS

    Mr. Dicks. It also shows have an insufficient bomber force 
in every scenario, insufficient stealth bombers in every 
scenario, isn't that correct?
    Generall McCloud. It said the overall bomber force we could 
get there is adequate.
    Mr. Dicks. The new you can use initially, the enablers, the 
B-2s. In each of the scenarios, it says you need additional 
bombers in every situation, or you can lose. If you don't have 
then, you can lose the war, isn't that correct?
    General McCloud. What is says is that you need adequate 
force in 2014 to take on that halt phase, and if you have the 
extreme scenarios----
    Mr. Dicks. Look at the scenarios we faced, World War II, 
Korea and Desert Storm. We don't even get one that is easy like 
you guys draw up on the board over there, 14 of preparation 
time, under the kaminski study. Tell me when we got one like 
that?
    General McCloud. We ran excursions to make sure we 
bracketed the problem. We did exactly what you said. That was 
the purpose of the study, to look at the options----
    Mr. Dicks. Didn't do it in the first bomber study, by the 
way.
    General McCloud. We did it in this one.
    Mr. Dicks. It showed you in every situation, you need 
additional bombers.
    Mr. Hamre. It also said we need additional aircraft 
carriers in the QDR and additional divisions. We are accepting 
risk in every warfighting area.
    Mr. Dicks. In this case, we have something that you know 
will work, that gives you the potential to come from outside 
the theater, that stops this lock-out potential. It trumps the 
enemy's ability to use chemical and biological weapons on the 
airfields and lock you out. It trumps that. And that is why I 
see this tremendous value in having enough of it, and you can 
still use it.
    General Horner said he used the F-117's throughout the 
entire war. It wasn't just at the front. You guys down play 
this, but if you cant get TACAIR into Korea, and General Estes 
worries about when he was the Air Force General over there an 
told me about it, if you can't get that Air Force in there 
because you are getting locked out, then our kids are going to 
die. We are going to take more losses because of that.

                           Aircraft Carriers

    With all due respect to the aircraft carriers, and I have 
great respect for aircraft carriers, from Bremerton, 
Washington, those planes can't do what the B-2 can do, because 
they can't penetrate initially. The have to go in packages. And 
the numbers you used, by the way, in this study, completely 
overstate what the carriers can do or did do in the Gulf War. 
You have them at 100 sorties a day, at some number like that, 
when only 17 was achieved in the Gulf War.
    They didn't perform very effectively, and you still don't 
have a stealthy airplane coming off of there. So you have made 
the comparisons even more favorable to nonstealthy airplanes 
than, in fact is realistic, according to the people who have 
looked at this study and know something about it and say that 
you have had all kinds of assumptions in there about carriers 
that are positive and not substantiated by the facts.
    General McCloud. Let me respond to that briefly. In the 
Gulf War, the carriers were launching somewhere between 50 and 
60 sorties per day, of which about half of those were strike 
sorties. The Nimitz off the cost of Washington just recently 
ran 3-day exercise where they were launching between 170 and 
180 sorties per day. The difference is that in those surge 
rates, with airplanes that can generate more sorties, the newer 
airplanes, in the year 2014, we think that is a reasonable 
thing to do.
    The question becomes what percentage of those go to strike, 
what percentage of those go to air defense. As you evolve the 
AEGIS class cruisers and destroyers and they become a principal 
supporting force for the carriers, that air defense load is 
going to be picked up by the long-range shooters, the surface-
to-air missiles. We don't have that capability today.
    We will have it in that time period. So it will be a lower 
demand for the air defense aircraft in that time period than we 
see today. So a much bigger potion of the 170 sorties per day 
can go to strike.
    So all I am saying is what we put in the study, we 
bracketed, we raise it up and down, but that 170 per day or 174 
average that we used is reasonable----
    Mr. Dicks. But you don't do much for self-defense. You have 
to defend these things against Cruise Missiles and other 
threats that are being built up. There are a whole series of 
other things that affect the carrier's ability to operate, that 
were not taken into account, I am told.
    Mr. McCloud. Sir, that was taken into account.
    Mr. Dicks. By some of your colleagues.
    General McCloud. It was done by parametrically looking at 
the problem and saying a portion of that force would be used 
for the other missions that the Navy has to do to maintain a 
balance. So we think we bracketed that problem. You can 
disagree with the results, but we think we gave that a fair 
sake.
    Mr. Dicks. But you will admit that the attack rates, the 
sorties rates for attack purposes, are dramatically higher in 
the studies than they were during the Gulf War.
    General McCloud. Absolutely correct.
    Mr. Dicks. See, what bothers me here is you are still not 
going to have a stealthy plane until you get the joint strike 
fighter, and I am worried about that in terms of whether you in 
actuality can do this. You have to have a number of carriers 
operating together in order to do this, at least that was the 
experience during the Gulf War.
    Thank you, Mr. Chairman.
    Mr. Young. Mr. Lewis. We are going to have to vote. We will 
carry your time over until after the vote.

                            BUDGET ESTIMATES

    Mr. Lewis. We could have a series of votes which could blow 
this whole meeting. In that meantime, I want you all to know in 
spite of our enthusiasm, Norm and I and the Chairman and others 
are very appreciative of the work you are doing and it is very, 
very important work. I sometimes scratch my head, though, for I 
have difficulty understanding how numbers come out of the 
building.
    I note with interest that we got a chart yesterday, last 
night, that showed this difference in cost between the 
contractor and the DoD, and yet you have been working closely 
with Northrop for a couple of years. So I am wondering about 
that.
    I am reminded of the fact that when I first got an analysis 
of the air facility just off Fort Irwin, the Army gave me a 
figure for developing it and so on. It was $30 million. The 
next time they weren't sure they want it, the figure as $200 
million. I see that happening a lot and it is of great concern 
to me. When we went through the supplemental process, $4.8 
billion, it has to be offset within the Department, $2.8 
billion of that was specific, and then go find another $2 
billion somewhere.
    Having said that, I think we in our Committees have got to 
be looking well into the 21st Century, 2025. You look beyond 
the problems of terrorism and otherwise that we must deal with. 
The challenges lie with China and the developing world, very, 
very real questions of war and peace and freedom. It seems to 
me the decisions we are making now are going to dramatically 
impact that. And that is why I suddenly find myself going back 
in the direction of stealth and the selection of the assets 
that are critical to our ability to be successful in that new 
environment.
    So, a couple of questions. I would first like to know where 
you are about developing and recommending a policy that would 
move us towards this kind of feasibility of acquisition and the 
trade-off beinging cutting back the number of personnel. There 
is not any question the driving cost behind all of this 
involves personnel, and that load over time.
    I have got the National Training Center for the Army in my 
district, the Marine Corps has Twenty-Nine Palms in my 
district. I am concerned about the foot soldier. But, one way 
or another we have to make sure we don't kill them before they 
have a chance to fight.
    Where is your recommendation regarding that aspect? Should 
we be moving in the direction of shifting dollars away from 
personnel, perhaps strengthening the Army Reserve, of a quality 
and nature we see in the Air Force Reserve and cutting back? Do 
you have a recommendation? General, I am asking you.
    General Hawley. I don't participate in that.
    Mr. Lewis. Shall we close the door and go off the record?
    General Hawley. I will tell you in ACC our personnel are 
stretched very thinly. So within my purview, the command I 
oversee, I would be hard-pressed to say we could give up any 
people in order to accommodate more force structure. It takes 
people to run force structure. Ten percent of my own budget 
goes to support the B-2.
    Mr. Lewis. I am being very specific about the Army.
    Mr. Hamre. May I speak to this?
    General Hawley. Maybe somebody with a broader look than I 
have.
    Mr. Hamre. General Hawley has been in previous assignments 
where he has these kind of broader responsibilities. He is not 
in one now. He is perfectly capable to offer his own view, and 
he should if you want him to.
    The QDR that we are recommending already has us cutting out 
200,000 people. We would be cutting out 80,000 civilians. We 
will be cutting out 60,000 active duty personnel and 60,000 
Reservists, already.
    Mr. Lewis. No. Let me read a paragraph from something else 
that says the same thing in a different way. If colonels ran 
the Pentagon, the QDR might recommend the U.S. military shelf 
the 2-war strategy, cut three Navy aircraft carriers, three 
Army divisions, and six Air Force fighter wings, and use the 
savings to invest heavily and radical new systems.
    There are different views here. We have got to be looking 
towards that view.
    Mr. Hamre. Sir, we actually looked at that. That was one of 
the paths that we explored in looking at the QDR. We didn't go 
that route for a couple of reasons. One is that certainly is a 
long-term view. That is a view to say I don't perceive that we 
have a near peer threat my time in the next 15 years, and we 
ought to be thinking out 15 years to be ready for that.
    What it discounts in our mind is being ready to take on 
real world challenges that could occur in the next 5 years. 
Three times in the last 4 years, the Secretary of Defense has 
two nearly simultaneous emergencies. Just a year ago, at the 
very time we were sending the fleet to the Formosan Straits, we 
were sending a reinforced brigade to Kuwait.
    Deciding now you are not going to do that means that we, as 
a Department, have to choose which of the--if we have two 
contingencies, which are we prepared to abandon?

                          VIABILITY OF STEALTH

    Mr. Lewis. John, I understand that. ------. There is 
another question that I don't know the answer to that concerns 
me a lot as we go down this pathway, which is can you tell me 
what your best information is relative to the lifetime of the 
value of stealth? When are we going to get to the point where 
stealth isn't stealth? Have you done that sort of analysis?
    General Hawley. I will take that one. Yes, we have. We have 
Read Teamed Stealth, and the answer keeps coming back that we 
have a very durable capability in stealth. There are no systems 
on the horizon that can neutralize the advantage that we have 
gained through the development of stealth technology, and our 
lead in stealth technology exceeds that in most other areas of 
technology. We have a huge lead in this area over the rest of 
the world, which is one reason we are so anxious to protect it.
    Mr. Lewis. Mr. Chairman, I think we need to learn a lot 
about that subject.
    Mr. Young. You still have 2 minutes left in your time 
allotment. Why don't we catch two votes, it will take us maybe 
3 minutes, and we will be back.
    Mr. Dicks. Could I ask a couple of questions? You go ahead. 
I will wait for you.
    Mr. Young. Wait for us. You have a second vote coming right 
away.
    Mr. Dicks. I would like to proceed.
    Mr. Young. Go right ahead.
    Mr. Dicks. Let's go back to the subject, now that I know 
what the answers are going to be. That is why I was on the 
phone.
    Mr. Young. Rephrase your question.

                          B-2 MAINTAINABILITY

    Mr. Dicks. These were not asked on the record. Now we are 
going to fulfill the record here.
    That is one thing I learned in law school, don't ask 
questions you don't know the answers for. Even I screw that up.
    Let's go back to the question of the materials, General 
Hawley. In terms of usability, if we were in a wartime 
situation, based on what you know now, we would still use the 
B-2. We don't know anything now that any of these blemishes 
degrade the signature to such a point that you would feel 
uncomfortable in using it, isn't that correct?
    General Hawley. All of the evidence we have to date 
indicates the kind of blemishes you usually experience as a 
result of a flight, do not significantly degrade the signature 
capability of the aircraft.
    Mr. Dicks. You tested that?
    General Hawley. We have tested that. We have taken 
airplanes across the range that have been degraded as a result 
of flights and the signature has not been significantly 
degraded.
    Mr. Dicks. As I understand it, we don't know anything yet 
that tells us that we have got all these problems solved for 
the F-22 either. So it is still an issue for the F-22, as well, 
I think?
    General Hawley. It is certainly to be proven in the F-22. 
The SPO and the contractor say they are going to deliver a very 
durable airplane.
    Mr. Dicks. Is there anything we could do to fix or improve 
the B-2 with the planes that are still being built to try to 
take lessons learned from what we supposedly are learning in 
the F-22 and incorporate it in improving the B-2?
    General Hawley. In fact, we are doing that. We recently 
changed out one material, a tape as it happens, that required a 
72-hour cure time. We brought material in from the F-22 program 
that requires a 3-hour cure time. So we got rid of 69 hours of 
cure time on the fixtures to which that material is applied.
    Mr. Dicks. So if, in fact, the Congress, in its wisdom, 
decides to go forward, we could incorporate these improvements 
and have a better plane and maybe retrofit the older ones in 
order to get as much durability and to take advantage of 
lessons learned, if we did go ahead with additional B-2s, is 
that not correct?
    General Hawley. In fact, I think that accounts for part of 
the difference in the cost estimate between Northrop's estimate 
and the government's estimate is to incorporate those kinds of 
enhancements.
    Mr. Dicks. You would recommend that?
    General Hawley. I certainly would. And some others as well.

                             B-2 PRODUCTION

    Mr. Dicks. Again, nobody would dispute if we are going to 
buy additional bombers, buying them when the line is open would 
be the best decision for the taxpayers. Rather than coming back 
and doing a 25 to $40 billion until R&D before we could get 
into production of additional airplanes. If you wee going to 
buy them, isn't the time to buy them now while the line is 
open?
    General Hawley. Yes, sir.
    Mr. Hamre. Although there is still a fair amount of 
nonrecurring that has to be spent in order to get it up and 
running again, because a fair amount of the subcontractor 
structure is gone away.
    Mr. Dicks. John, you would have to agree, 15 years from 
now, if you said we have to build another stealth bomber, we 
are going to have to spend at least, I would say, the last 
program was $22 billion, I would say you would have to do at 
least 30.
    Mr. Hamre. Sir, the premise of your argument is right, it 
is better to do it earlier while you still have some of the 
capability than to do it later when you have none of the 
capability. I think it is important to note though one of the 
reasons there is a price differential is we think there are a 
fair amount of started up costs not captured in the Northrop 
program.
    Mr. Dicks. Is it true it is the Air Force plan to destroy 
the tools for the B-2?
    Mr. Hamre. No, sir. I believe we are using some of the 
tools for its ongoing maintenance of the maintenance at depot.
    Mr. Dicks. I would love for you to check on that, because I 
think you are going to find it is in your plan. I plan on 
stopping that if I can get the committee to agree with me. I 
think they would be foolish, to get rid of the tooling for the 
B-2. I understand currently that is your plan, to do away with 
it. That doesn't make any sense to me at all. I hope we can 
work together on that.
    Mr. Young. If the gentleman would yield, what would be the 
cost to close down the B-2 line?
    Mr. Hamre. Sir, the cost is already embedded in our 
program. I will find out what it is we are spending to shut 
down the line, to orderly close out the dismantlement of tools, 
if we are dismantling tools, the shipping of tools to the depot 
for ongoing support where you do have a need for them. I will 
find that out. That is already included in our budget.
    Mr. Young. Then also, John, if you don't mind, find out 
what it would cost to start up again if for some reason a 
decision was made to start the B-2 program again. And for 
anyone that thinks that sounds a little strange, we did exactly 
that on the B-1.
    Mr. Hamre. And, sir, we did that with the C-5s, and we 
thought that would be cheap to start up the C-5 line again, and 
it didn't turn out to be as cheap. We basically built tooling 
again. We will check and find out.

                         B-2 STRATEGIC MISSION

    Mr. Young. ------?
    General Habiger. I would characterize my forces that I 
would employ, if deterrence were to fail, into three 
categories, three kinds of bullets, if you will. I have got 
ICBM bullets which are very prompt, not very survivable. I have 
the submarine bullets which are rapid reacting, but not nearly 
as reactive as ICBM's, but much more survivable and accurate, 
and I have bomber bullets that are, whether cruise missiles or 
B-2 kind of delivered weapons, that get to the targets in a 
relatively slow manner, are relatively accurate, and I can 
recall them and use the resources again. ------.
    I look in the overall equation, and it provides the target 
coverage I need, whether it is today, 5 years from now, or 10 
years from now, and, again, as I look out 10 years from now, I 
don't know what the arms control environment is going to be, 
but ------ will do the job. ------.

                           B-2 MODIFICATIONS

    Mr. Young. General Hawley, do you agree with the DAWMS 
study that the B-2 requires another $2 billion of investment in 
modifications that are currently not programmed in order for it 
to participate fully in the halt phase of a conventional 
conflict?
    General Hawley. I don't think I would agree that it needs 
that much modification in order to participated fully I would 
agree that on our list of mods that we would like to do to the 
airplane, there are somewhere around $2 billion worth of mods 
we would like to do to the current fleet to make it more 
capable. But it can do a great job in halt phase just the way 
we are getting it.
    Mr. Young. So if you didn't spend the $2 billion, it would 
still be an effective force in the halt phase?
    General Hawley. B-2 is by far our most effective bomber, 
that is right.
    Mr. Young. Which would be a higher priority of investment, 
the $2 billion for the modifications or the procuring of 
additional B-2 aircraft?
    General Hawley. In my view, we would get a greater return 
on our investment by upgrading the current fleet than by adding 
to the current fleet.

                               B-2 BASING

    Mr. Young. Would there by any plan to forward base the B-2 
in any of the scenarios?
    General Hawley. That is our intent, is to be able to 
forward deploy the airplane and operate it on a forward deploy 
status. You really need to do that in order to get the number 
of sorties from the airplane you would like.
    Mr. Young. From what we have learned today, the B-2 
requires certain types of climate control hangars to protect 
it, to keep the temperatures, the moisture levels, et cetera, 
proper. Are those programmed in this year's budget, John?
    Mr. Hamre. Sir, the resources we have are programmed for 
the existing fleet of 21. I can't say that they are actually 
the 1998 budget. They are probably programmed through the 
period. We don't have, of course, anything budgeted for any 
extension beyond the current fleet.
    Mr. Dicks. If the gentleman would yield, I don't think you 
are planning on any forward deployment, money for forward 
deployed B-2s at this juncture.
    Mr. Hamre. Not right now.
    Mr. Dicks. There is nothing in the budget for that nor 
expected.
    Mr. Young. The GAO says that Air Force officials said it is 
unlikely that the aircraft's sensitivity to moisture and 
climates or its need for controlled environment to fix LO will 
ever be fully resolved, even with improved materials and repair 
processes. Therefore, some form of aircraft sheltering at a 
forward operating location will become a requirement in the 
future if B-2s are to be deployed.
    How does that fit in with what we are talking about?
    General McCloud. If I could take a cut at that very 
quickly, sir. In 2014, the focus of this study, we did, in 
fact, put in the bomber costs, the B-2 costs in this. My set-
aside to do just what you said, to forward base it, to have the 
right hangars in place to do that, so that we could closer, 
generate higher sortie rates, so that was included in that, But 
that is a long look out to 2014.
    Mr. Dicks. Just let me raise one other point.
    Mr. Young. We are down to 57 seconds left to vote. Take one 
other point, I would say about a minute. Then, I think we will 
cut off the hearing.

                        STRATEGIC NUCLEAR FORCES

    Mr. Dicks. The National Defense Panel says, strategic 
nuclear forces remain an essential element of our national 
security strategy. Our strategic forces have been scaled back 
significantly over the past decade. We believe that to move to 
START II force levels should proceed even if the Duma fails to 
act on START II this year. This is not the DOD issue.
    Now, what they are raising here is a very significant 
question. You didn't even look at nuclear weapons. With all due 
respect, General, 18 Tridents, and I have eight of them right 
near my district, didn't stop Saddam from coming south, nor did 
the MX missile, which I was the strongest supporter of in the 
United States Congress.
    Mr. Young. Saddam never saw a B-2. Once he sees that, he is 
really going to think twice.
    Mr. Dicks. That is the point. The point is those strategic 
weapons cannot be used, will not be used, unless the national 
security of the country is directly threatened. So a 
conventional bomber that has smart conventional weapons, that 
can be utilized if deterrence fails, I think is a much greater 
deterrent.
    So I think we should have looked at nuclear forces in this 
as well. I could put together a little package for Mr. Hamre of 
where we can save some money in reducing strategic nuclear 
forces that will never be used. Dr. Kissinger is completely 
correct, they are there only for deterrence, and if deterrence 
fails, we will not use them. And they weren't used against 
Saddam.
    So it is usability that seems to me to be at the highest 
order. If you have to make trade-offs, you could certainly make 
some reductions in nuclear weapons, as the National Defense 
Panel said they may well recommend, in order to finance a 
conventional weapon that can be used if deterrence fails. That 
was another major selling point for the B-2 that I don't think 
you have fully analyzed.
    Mr. Young. We are totally out of time now. The vote is on 
the floor. We will likely miss this vote if we don't hurry. 
Thank you very much for coming today. We really appreciate it. 
I think it has been the best hearing we have had all year, and 
certainly very, very instructive and informative for all of us. 
We do have some additional questions that we would like to 
submit to you in writing and ask if you would respond.
    As I think you all know, we will do the very best we can to 
provide you with the best tools we can for you to do your jobs. 
Again, thank you very much.
    The Committee is adjourned.
    [Clerk's note.--Questions submitted by Mr. Hefner and the 
answers thereto follow:]

                             B-52 Aircraft

    Question. Recognizing the significant combat capability of 
the B-2, have you considered other alternatives to enhance the 
existing bomber force? Specifically, are you looking at any 
improvements to the venerable B-52 that increase capability, 
extends service life and/or reduces long term operating costs?
    Answer. The Air Force continues to upgrade its long-range 
bomber force with conversion of the B-1 to a conventional role 
and Block 30 upgrades to the B-2 bombers. With respect to the 
B-52, modernization efforts are in the works to improve 
communications capabilities and weapons interface improvements 
that will allow utilizing future families of GPS-guided 
weapons. Modifications to sustain avionics systems include 
Electronic Countermeasures, Electro-optical Viewing System and 
GPS Tacan improvements. The Aircraft Structural Integrity 
Program (ASIP) has certified the B-52 aircraft airframe through 
the year 2040.

    [Clerk's note.--End of questions submitted by Mr. Hefner. 
Questions submitted by Mr. Young and the answers thereto 
follow:]

                B-2 Strategic Capabilities and Missions

    Question. DOD originally justified the requirement for the B-2 
solely in terms of its contribution to the strategic nuclear mission. 
Today we primarily focus on modifications that make the B-2 a more 
potent conventional bomber, although the aircraft nevertheless 
continues to be an important part of the strategic nuclear triad. Are 
the B-2s assigned to the nuclear mission at all times, or are they 
assigned other missions until a threat situation requires them to chop 
to you?
    Answer. B-2 aircraft are tasked to support both nuclear and 
conventional plans. Day-to-day operational control of B-2 aircraft is 
assigned to United States Atlantic Command. When a nuclear generation 
is directed by the National Command Authorities, operational control of 
the B-2 is transferred from United States Atlantic Command to United 
States Strategic Command.
    Question. What kinds of nuclear weapons are carried by the B-2 and 
how many of each can it carry?
    Answer. The B-2 can carry 16 B-61-7, 16 B-83 or ------ weapons.
    Question. What kinds of targets are best attacked with the B-2?
    Answer. The B-2 is uniquely capable of holding hard and deeply 
buried targets at risk as well as other high priority targets ------.
    Question. The B-52 is the only bomber that will carry nuclear 
tipped cruise missiles including the Air Launched Cruise Missile (ALCM) 
and the Advanced Cruise Missile (ACM). General Habiger, compare and 
contrast the capability of the B-2 with gravity nuclear weapons with a 
B-52 with stand-off weapons. Is having to fly over each target 
sequentially a limitation compared to launching multiple weapons at 
multiple targets quickly from stand-off ranges?
    Answer. The B-52 and B-2 each have a specific role to play in the 
bomber leg of the Triad. A penetrating bomber, the B-2 with gravity 
weapons is uniquely capable of holding at risk hard and deeply buried 
targets. ------. They can get the job done right, the first time.
    In contrast, the B-52 is essentially a truck. Its standoff 
capability allows the aircraft to stay out of harms way ------.
    Question. DOE is developing a glide variant of the B-61 bomb for 
use on the B-2. Do you have a requirement for such a weapon? If so, how 
has this requirement been documented?
    Answer. The glide bomb program is an in-house DOE effort to develop 
options to increase flexibility and survivability of stockpile bombs 
while advancing and sustaining their technology base. ------.

               B-2 Conventional Capabilities and Missions

    Question. Increasingly, the B-2 is being viewed as a major 
contributor to conventional missions. General Hawley, what types of 
weapons can the B-2 carry now and in the future?
    Answer. Our present Block 20 B-2 fleet has the USAF's only adverse 
weather, near-precision weapon using the GBU-36B, GPS-Aided Munition 
(GAM). The B-2 can also carry the Mk-84, and the B-61 and B-83 nuclear 
weapons. When the Block 30 B-2 is delivered this summer it will be 
capable of employing the Joint Direct Attack Munition (JDAM); Mk-84, 
Mk-82, and M-117 General Purpose Bombs; M-62 Sea Mines; Tactical 
Munition Dispensers (TMD) capable of dispensing (CBU-87, 89, or 97 
Cluster Bomb Units (CBU); and B61 and mod 7 and mod 11 and B-83 nuclear 
weapons. Additionally, we are integrating BLU-113, a 5000 pound deep 
penetrating weapon, with a GPS Aided Munition (GAM) tail kit. This 
weapon should be available in the spring of 1998. We plan to put the 
Joint Standoff Weapon (JSOW) and the Joint Air to Surface Standoff 
Missile (JASSM) on the B-2 with JSOW capability in mid 1999 and JASSM 
in mid 2003.
    Question. Please characterize the types of targets and threat 
situations in which you recommend using a B-2 rather than other weapons 
systems, including for example B-52 launched CALCM, ship launched 
Tomahawk, or tactical aircraft launched munitions?
    Answer. The B-2 provides a unique combination of stealth, long 
range, near precision strike, hard target kill capability, and large 
payload. Other systems have some of these characteristics, but none 
share them all. Selection of the B-2 rather than another weapon system 
would depend on the overall situation, mix of available forces, and 
target set. The B-2 is optimized for deep attack on hard targets in 
heavily defended enemy airspace with line or no support. The B-2 and 
cruise missiles can attack targets well behind enemy lines and are very 
difficult to defend against, but CALCM and ship launched Tomahawk 
weapons do not provide hard target kill capability and are 
significantly more expensive than the munitions used by the B-2. 
Additionally, the B-2 crew will be able to identify targets that may 
have moved while they are enroute. So the B-2 would be preferred 
against hard or imprecisely located targets, and cruise missiles would 
be used when defenses are too heavy for even the B-2 to penetrate. 
Other heavy bombers closely match the B-2 in range and payload, but the 
B-2 would be used when defenses are too heavy for the B-1 or B-52. 
Conventional tactical aircraft are capable of attacking targets in less 
heavily defended areas with precision weapons but are less survivable 
than the B-2 in the heavy threat environment. Tactical aircraft do not 
provide the range and large payload carried by the B-2 but generate 
higher sortie rates. Additionally, tactical aircraft other than the F-
117 and F-22 would not be able to service deep targets without 
considerable support and risk to that additional support.
    Question. What is the Air Force doing to remedy these apparent 
deficiencies?
    Answer. Each year we look at our current and future shortfalls in 
all mission areas and identify solutions to meet these shortfalls. 
DAWMS identified potential areas that we are looking at to upgrade the 
B-2 not only to enhance its effectiveness during the halt phase, but to 
ensure its effectiveness in all its mission areas and to ensure the it 
remains effective within our overall force structure. We will invest in 
B-2 enhancements when they provide the best overall combat capability 
improvement for the amount of money available. We pursue those 
solutions which most effectively solve our most pressing needs.
    Question. What do you see as limitations, if any, of the B-2 
aircraft relative to other forces?
    Answer. With the B-2 we have been able to wrap the characteristics 
of stealth, long range, large payload capacity, and the capability to 
deliver near precision munitions in all weather into a total package. 
However, this is the first time stealth has been applied to such a 
large airframe. With any relatively new technology, there are unique 
problems that have to be overcome. The primary limitation of the B-2 is 
the heavy Low Observable (LO) maintenance required for this aircraft's 
skin. Other conventional ``aluminum'' aircraft do not face this 
limitation. As noted in my testimony, the B-2 is currently limited to 
flying each aircraft one out of seven days. It was not until we began 
measuring the adequacy of our operational LO repair capability in mid 
1996 that we identified and understood the amount of work required to 
maintain an acceptable signature. At the same time, we identified 
procedures, training, facilities, manning, and materials as areas that 
if improved could help to alleviate some of our LO maintenance 
difficulties.
    Question. Please elaborate on the maintenance issues that are 
currently limiting B-2 operations to flying each aircraft one day out 
of seven.
    What is being done to improve them? At what cost?
    Answer. As stated before, we assessed the entire LO maintenance 
issue last year as we prepared the B-2 fleet for initial operational 
capability. We instituted several initiatives, to include contract LO 
technicians, direct procurement of LO materials from Northrop-Grumman, 
additive Air Force LO technicians, and the ``fly one, sit six'' 
philosophy, that have already improved the B-2 mission capable rate 
significantly. In addition, we identified facility shortages for LO 
maintenance and have a new facility and upgrades to current facilities 
programmed. Improved LO materials and processes are paramount for the 
B-2 and are therefore a high priority. The B-2 System Support Manager 
formed a dedicated team last September to pursue improved LO materials 
and processes. The team has produced several successes to date, 
including reducing the cure time for one of the most commonly used LO 
materials from 72 hours to just 3 hours. Many of the LO material 
advances funded in the F-22 program are now being transferred to the B-
2. We have also applied LO lessons learned on the B-2 to the F-22 and 
several LO initiatives have estimated completion dates between now and 
1999 and will be funded consistent with availability of sustaining 
engineering funds.
    Question. What are the benefits of a 3 squadron B-2 force compared 
to a 2 squadron force?
    Answer. Any plus up on B-2 force structure would be additive to the 
existing 2 squadrons allowing more aircraft per squadron and some cost 
and manpower efficiencies. More aircraft would provide greater 
flexibility and capability. However, ACC believes the current 
programmed force structure provides the best possible mix of bombers 
and fighters when considering the postulated future threat and 
projected budget constraints.

                     Deep Attack Weapons Mix Study

    Question. The DAWM study was a two year effort analyzing over 1500 
scenarios with 1 million variables each. Additional B-2s were compared 
to a host of alternative force structures. General McCloud, there have 
been a number of studies over the years involving the B-2. Can you 
summarize the results of these studies, their shortcomings, and how in 
your view the DAWM study has better addressed these short-comings?
    Answer. Our review of studies identified nine relatively recent 
force-level studies related to the B-2 to include; analysis authorized 
by Maj Gen (Ret) Jasper Welch, Brig Gen (Ret) Leon Goodson, RAND, the 
CORM, the Deep Attack issue team of the CORM, three studies sponsored 
by Northrup Grumman and the FY-95 Heavy Bomber Force Study.
    These studies resulted in a variety of conclusions. Three 
recommended buying more B-2s with general supporting rational. Four 
recommended buying more B-2s to improve our capability to stop an 
invading army in a short-warning scenario (all assume very few U.S. 
fighter assets are available in the critical early stages). The other 
two studies recognized the effectiveness of the B-2 but concluded that 
our current program was more cost effective.
    The DAWM study is the most up-to-date with respect to U.S. and 
Allied force structure. It includes modern rotary wing aircraft (RAH-66 
Comanche), Army Tactical Missile System (ATACMS) with Brilliant Anti-
Tank munition (BAT) and modern stealth assets (F-22, Joint Strike 
Fighter) in a two Major Theater War (MTW) scenario set in 2014. It is 
the first study to include a proper characterization of all future 
stealth assets and planned onboard electronic countermeasure upgrades 
to conventional aircraft. It is also the first study to adjust the 
weapons mix to fit alternative force configurations and include C4ISR 
as a major input to force effectiveness. It is one of only two studies 
to consider a robust mix of force tradeoffs and one of four studies to 
consider force acquisition and operations and support (O&S) costs (six 
of the earlier studies did not explicitly include costs in their 
analysis). Its comprehensive analysis of four scenarios; 2-Major 
Theater Wars, short-warning, Near Peer, and limited access is also a 
first. The data base contained extensive target, threat, and weapons 
effectiveness data and the tactics and concept of operations that were 
used in the scenarios were approved by all services. Finally, 
throughout every phase of the study, DAWMS had the active participation 
of OSD, the CINCs, JCS, and the four Services.
    Question. The DAWM Study shows that the B-2 is a valuable asset 
during the halt phase of a conflict, assuming that $2 billion is 
invested to better optimize the aircraft for this mission. General 
McCloud, if we fail to make these investments which are currently 
unfunded, what then is the capability of a B-2 in the halt phase?
    Answer. The Deep Attack Weapons Mix Study modeled both the funded 
Block 30-configured B-2 and an enhanced B-2. The latter included 
unfunded upgrades for improved maintenance, communications, cockpit 
controls and displays; the 1760 data bus interface and modified bomb 
racks to allow expanded weapons carriage; and a Moving Target 
Indicator/Moving Target Tracker for autonomous targeting of moving 
targets. Including flight testing, these upgrades cost $2 billion for 
the first 20 aircraft and $460 million for an additional 20 aircraft. 
Several sensitivities focused on the added value of a partial set of 
these upgrades, measured in terms of the B-2's contribution to the 
warfight.
    Improved maintainability is reflected in higher daily sortie rates. 
We modeled B-2 sortie rates both above and below the reference values 
to capture this improvement and other operational factors that affect 
sortie generation. In general, lower sortie rates reduce the 
contribution of the B-2, and basing has more of an impact on sortie 
rate than does the $220 million improved maintenance upgrade.
    The impact of improved communications and cockpit controls was not 
examined since this was beyond the fidelity of our models.
    ------. A Moving Target Indicator/Moving Target Tracker capability 
improves the accuracy of delivering these new weapons against maneuver 
targets.
    ------. However, neither of these weapons benefit from the planned 
weapons rack and targeting radar upgrades. Rather, the upgrades 
improved the B-2s ability to more accurately deliver the Wind Corrected 
Munitions Dispenser which is normally used for attacking maneuver 
targets and can be delivered by many other platforms. Given the 
priority and lack of alternatives for attacking heavily defended, 
hardened infrastructure targets in the Halt phase when the air defense 
threat is greatest, most B-2 sorties are used to deliver the Global 
Positioning System Aided Munition-Penetrator and the Joint Direct 
Attack Munitions against these targets, rather than attacking maneuver 
targets with the Wind Corrected Munitions Dispenser or small Joint 
Direct Attack Munitions. In summary, the impact of failing to invest 
the $2 billion to upgrade the B-2's weapon system will have minimal 
impact on the Halt Phase of the warfight.
    Question. Even after the Halt phase in a conflict, there will 
continue to be targets and circumstances in which long range stealth 
will be required. For example, going against targets in downtown 
Baghdad. General McCloud, to what extent did the Deep Attack Weapons 
Mix Study address these missions, and how did the B-2 perform relative 
to alternative force packages?
    Answer. There are three characteristics that describe ``missions to 
downtown Baghdad,'' they are; long distances to the target, the 
presence of heavy air defenses such as the SA-10C, and striking 
infrastructure targets such as buildings or bunkers. The Deep Attack 
Weapons Mix Study took a careful look at the requirement to perform 
this type of mission.
    In the baseline scenario for Iraq, with normal warning time, Allied 
forces destroy over ------ targets of all kinds across all phases. 
Within this target set there are about ------, infrastructure targets 
that were located 80-180 nautical miles from the Iraqi-Kuwait border 
and were protected by heavy air defenses. It's easiest to capture both 
the difficulty of these missions and the continued value of the B-2 
after the Halt phase if we address how these specific targets were 
attacked by phase. ------. This heavy reliance on long range standoff 
munitions and stealth platforms in the early days is similar to our 
strategy in Operation Desert Storm, where the initial attacks used 
stealth and long range standoff to cripple the Iraqui Integrated air 
defense system. ------. There is very little use of long range standoff 
during this phase since the strategic air defense threat is much lower. 
------. By the start of the Counter-offensive phase, air superiority is 
well established and the need for long range stealth or standoff 
diminishes greatly. In this phase, payload and flexibility are most 
important and become the greater factors in determining how the 
remaining targets are distributed amongst the strike assets. ------. We 
did not do a direct comparison of the deep strike alternatives for 
targets and circumstances requiring long range stealth. Rather, we 
examined force structure alternatives within the context of the entire 
target set in a two Major Theater War scenario. What we found is that, 
the B-7 has a major role to play in the ``mission to Baghdad'' subset 
of targets but, we also found that there are a variety of alternatives, 
including both stealth platforms and standoff weapons, that were used 
during the first 60 days of the war to attack heavily defended targets. 
This variance in the mixture over time demonstrates the inherent need 
for flexibility within our munitions inventories and platform 
capabilities.
    Question. Briefly discuss some of the noteworthy observations and 
conclusions resulting from the study with regard to the various 
precision guided munitions currently in the inventory and in the 
acquisition pipeline.
    Answer. The Deep Attack Weapons Mix Study determined that the 
current munitions programs, with modest adjustments, will provide the 
capability to defeat potential aggressors in the years ahead. The next 
generation of munitions will give our forces superior precision 
engagement capability against projected threats. The fielding of 
unitary and cluster bombs that can be delivered accurately from 
altitudes above the effective range of enemy anti-aircraft artillery 
and manportable surface-to-air missiles, standoff weapons that avoid 
dense concentrations of air defenses, and highly effective precision 
munitions will increase the survivability and lethality of our forces 
in future conflicts as called for in Joint Vision 2010.
    For the ``deep battle,'' the Wind-Corrected Munitions Dispenser 
carrying Combined Effects Bomblets or the ``brilliant'' Skeet anti-
armor submunitions, the Army tactical Missile System with Brilliant 
Anti-Armor Submunitions (ATACMS BAT/BAT Pre-Planned Product Improvement 
(P3I), the product improved version of the Sensor-Fused Weapon, and the 
Joint Stand-Off Weapon with a unitary warhead should be procured in 
accordance with existing plans. In addition, we recommend the Services 
review the acquisition objectives of the Joint Standoff Weapon (JSOW) 
variants carrying Combined Effects Bomblets (CEB) and Skeet for reduced 
procurement; the Joint Air-to-Surface Stand-off Missile (JASSM) for 
increased procurement; and the Joint Direct Attack Munition (JDAM) for 
appropriate variant mix. We also recommend continuing Hellfire II 
production as well as follow-on analysis to identify the appropriate 
mix of Hellfire II and Hellfire Longbow missiles. GBU-24/27 Laser 
Guided Bombs are required to destroy hard targets, therefore, current 
production should continue for a minimum of one year. Finally, GBU-28 
Laser Guided Bombs or other appropriate munitions for hard and deeply 
buried targets are required and we must continue to identify 
specialized weapons required for targeting WMD storage, production and 
launch sites.

                               B-2 Costs

    Questions. The nation has invested $45 billion already on the 21 
aircraft B-2 program. The discussion this year has mainly focused on 
expanding this force by 9 additional aircraft. What is the current 
status of the B-2 production base and what is/are the projected costs 
to reconstitute it to produce additional aircraft?
    Answer. The Air Force has no requirement for additional B-2s. For 
this reason, the Air Force has not requested a detailed cost estimate 
from the B-2 Program Office to determine the required funding to 
procure additional B-2 aircraft. Thus far, 19 of the 21 aircraft 
purchased have been delivered and delivery of the last production 
aircraft is expected in FY98. The last 2 production aircraft will be 
delivered as Block 30s. Upgrades to modify the first 19 aircraft to the 
Block 30 configuration began in 1995 and will continue into 2000.
    Although the Air Force has not developed a detailed cost estimate, 
the contractor has presented its own (unsolicited) figures for non-
recurring and recurring costs of $1.6B (FY 96 $s) for re-establishing 
the production line for 9 additional aircraft.
    Question. What is the Department's best estimate of the total 
weapon system cost for 9 additional aircraft in real (then-year) 
taxpayer dollars? For the record, please provide a breakdown of this 
estimate including recurring, nonrecurring, support, etc. by fiscal 
year.
    Answer. The Air Force has no requirement for additional B-2s. For 
this reason, the Air Force has not requested a detailed cost estimate 
from the B-2 Program Office to determine the required funding to 
procure additional B-2 aircraft. Thus far, 19 of the 21 aircraft 
purchased have been delivered and delivery of the last production 
aircraft is expected in FY98. The last 2 production aircraft will be 
delivered as Block 30s. Upgrades to modify the first 19 aircraft to the 
Block 30 configuration began in 1995 and will continue into 2000.
    Question. Do these costs include any of the conventional 
modifications assumed in DAWMS?
    Answer. Not applicable. Since the Air Force has not developed a 
detailed cost estimate, the costs of the conventional modifications 
assumed in DAWMS have not been addressed.
    Question. Are further facilities required at Whiteman Air Force 
Base to accommodate 9 more aircraft? What is the cost of these 
additional facilities?
    Answer. The Air Force has no government estimate since we have no 
requirement. We have never requested the Program Office prepare an 
estimate. Such a detailed estimate would require in excess of 120 days 
to prepare (150 days and several million dollars).
    Although additional B-2s would add to our combat capabilities, they 
are unaffordable in today's fiscal environment. The funds required to 
procure more would be better spent on higher priority initiatives.
    Question. What would be the yearly operation and support cost for 9 
additional B-2s?
    Answer. Because there is not a documented requirement for 
additional B-2s, the Air Force has not completed a budget level cost 
estimate, including operations and support cost, for additional B-2s. A 
budget level estimate would require several months to complete after 
Northrup was put on contract to help the Air Force complete the 
estimate.
    Question. Because of its stealth, the B-2 is less reliant on 
expensive stand-off weapons to ensure aircraft survivability. This 
means that a B-2 can drop inexpensive weapons whereas less stealthy 
forces must use more expensive stand-off weapons. What analysis has 
been conducted to determine the relative cost effectiveness of an 
expensive platform such as the B-2 that carries cheap weapons compared 
to a less expensive platform such as a tactical aircraft that carries 
more expensive standoff weapons?
    Answer. No recent analysis has specifically compared, in isolation, 
the value of B-2 with direct attack munitions verses non-stealth forces 
with standoff. However, all Air Force munitions modeling annually take 
these factors into account when munitions requirements are calculated.
    Several issues must be addressed in order to adequately answer this 
question: (1) While direct attack weapons normally are less expensive, 
standoff weapons cost (CALCM, JASSM, and JSOW) are essentially equal to 
or cheaper than some direct attack munitions (SFW): (2) ------. (3) 
Non-stealth platforms employ the vast majority of direct attack 
munitions throughout the conflict; (4) The limited number of B-2s (even 
with an increase to the B-2 inventory) and associated sortie generation 
capability, when compared to the large number of available tactical 
aircraft, limits the B-2s contribution to the war once stealth is not 
required (due to sortie generation rate capabilities, operational 
flexibility which multiple platforms provide the CINC, etc.). ------. 
Additional B-2s, at the expense of standoff munitions programs, 
severely limit the Air Force's ability to prosecute a conflict. The 
current B-2 inventory fills a vital niche in the Air Force combat 
arsenal and provides a synergistic enhancement of all our weapons 
delivery platforms.

                               B-1 Bomber

    Question. The Air Force is describing the B-1 as the ``backbone'' 
of the conventional bomber force. General Hawley, the B-1 has been 
plagued in the past by operational and supportability concerns. This 
Committee has taken the lead in trying to address these issues. In your 
view, have we turned the corner on the B-1 program, and can we expect 
to see this aircraft used more heavily in future conflicts.
    Answer. Absolutely. I'm comfortable we have been and are continuing 
to do the right things to ensure the B-1 plays a key role in fighting 
and winning our nation's next conflict. Operationally, in 1997 we added 
our latest technology cluster munitions to the B-1's arsenal, provided 
a much better capability to hold invading armies at risk. We still need 
to add precision weapons and enhanced defensive capabilities to 
increase the number of targets we can attack. In terms of 
supportability, we demonstrated we can achieve the ACC goal of 75% 
mission capable rate during the June-November 1994 operational 
readiness assessment, provided we receive adequate funding. This 
committee has supported our efforts to field continued growth in B-1 
warfighting capability. Still, we must remain vigilant against creating 
long-term support equipment shortages due to accelerated buy-back of 
reconstitution reserve, a vanishing vendor base, the expansion from 3 
main operating bases to 5, and the long team times (2 to 5 years) t 
deliver equipment already ordered. Given them, I believe we turned the 
corner and theater commanders will be satisfied with what the B-1 
brings to the fight.
    Question. There are several survivability upgrades unded for the B-
1. General Hawley, briefly describe these upgrades and indicate 
whether, in your view, they will make the B-1 a more survivable 
platform than the B-52?
    Answer. With the fielding of Block C in Oct 1997, we brought the B-
1 to the point where it has similar electronic countermeasures 
capabilities to the B-52. With the ALE-50/Towed Decoy upgrade in late 
98, and more significantly the fielding of the Defensive System Upgrade 
Program (DSUP) in early 2002, we greatly enhance the B-1's ability to 
penetrate and survive not only low to medium threat areas, but some 
high threat areas as well. The approved architecture for DSUP is an 
ALR-56M providing situational awareness and an integrated Defensive 
Electronic Countermeasures (IDECM) system, providing protection against 
a wide variety of radar threats. The primary jamming source is an off-
board towed decoy developed in conjunction with the Navy. The projected 
capability against all threat systems considered a threat to the B-1 is 
excellent. In short, DSUP gives the CINCs more flexibility on how and 
when to use the B-1 in a conflict. The B-52 remains a survivable 
platform under certain conditions, but will be mroe restrict than the 
B-1 in its employment once DSUP is oeprational. However, we anticipate 
each aircraft will be equally survivable in the roles and missions we 
expect to use them. The B-52 will primarily launch standoff weapons and 
only overfly selected medium to low threat areas. The B-1 will overfly 
targets within low, medium and some selected high threat environments 
using newly fielded standoff weapons like JSOW and JASSM, fighting its 
way into certain target areas, and making way for other aircraft to 
follow:
    Question. General McCloud, how would you characterize the 
performance of the B-1 in the wargame scenarios analyzed in the DAWM 
Study? Would you agree with the characterization of the aircraft as the 
backbone of the conventional bomber force?
    Answer. The Air Force characterization of the B-1 as the backbone 
of the conventional bomber force is based on the greater number of B-1s 
in the conventional bomber force, its larger payload and its higher 
speed. A comparison of the operational capabilities of the three Air 
Force bombers supports this claim. The performance of the B-1 in our 
Deep Attack Weapons Mix Study validates the importance of these 
capabilities to the conventional battle.
    The B-1 is the only bomber that will have a purely conventional 
role. ------. Thus, in sheer numbers alone, there are more B-1s in our 
conventional bomber force than any other type of bomber.
    Conventional bombers will be tasked to deliver a wide array of 
munitions to include: general purpose and cluster bombs, laser guided 
and precision standoff weapons, and naval mines. In the general purpose 
bomb category, the B-1 can carry more 500 lb bombs than any other 
bomber. For cluster bombs, the B-1's greater payload for Wind Corrected 
Munitions Dispensers and Combined Effects Bomblets offsets is payload 
disadvantage relative to the B-52 in less effective cluster munitions. 
The B-52 is the only bomber capable of delivering laser guided bombs. 
The B-2 is the only bomber capable of delivering the Global Positioning 
System Aided Munition-Penetrator. But, the B-1 can carry 30-50% more of 
the other advanced unitary weapons like the Joint Standoff Weapon, and 
the Joint Air-to-Surface Missile. It can also carry more naval mines 
and, with the exception of laser guided bombs, can carry more of the 
advanced conventional weapons than either of the other two bombers.
    While the B-2 will be used to penetrate the most sophisticated 
enemy defenses, the B-1 will be used to strike critical targets in the 
medium threat environment. Because of its superior speed and electronic 
countermeasures relative to the B-52 and its ability to fly nap-of-the-
earth, the B-1 can be integrated with composite strike packages of 
fighters and defense suppression aircraft. The Air Force currently has 
two B-1 squadrons deployed to Fairford England that are proving this 
capability as part of an Air Expeditionary Force.
    The Deep Attack Weapons Mix Study modeled the bomber force using 
the platform-specific characteristics outlined above. ------. Its 
ability to deliver Wind Corrected Munitions Dispensers and Joint Direct 
Attack Munition proved indispensable in attacking maneuver units and 
their logistics tail. These results are consistent with the Air Force's 
assessment of the B-1 as the backbone of the conventional bomber force.
    Question. It has come to the Committee's attention that expansion 
of the number of B-1 bases to five has led to shortages in support 
equipment. How are these shortages impacting the readiness of the B-1 
force, and what is the Air Force doing to address them?
    Answer. Expanding the B-1B to six operating locations, to include 
Edwards AFB, has stretched support equipment (SE) resources to their 
limits. B-1B fleetwide SE shortages result from a combination of 
factors to include accelerated standups, re-activations, buy-back 
schedules, under funded requirements and procurement lead times. 
Specifics impacts are:
    --Existing workarounds of borrowing SE from other units is 
disruptive to operational missions of the loaning units and receiving 
units.
    --Workarounds will become less effective as accelerated buy-back 
and force re-structuring efforts continue.
    --Problem is acute for Air National Guard units requiring SE 
capability for autonomous operations. Daily operations/Initial 
Operational Capability is jeopardized by SE shortages.
    --Accelerated unit standups/reactivations and historic funding 
constraints coupled with 3 year procurement lead times severely 
restrict our ability to support mission requirements.
    In summary, the Air Force is requesting funding to help alleviate 
the SE problem, along with putting together an IPT to come up with more 
solutions. Unit readiness has decreased, but can undertake most wartime 
missions for which it is designed. The lack of SE may cause isolated 
decreases in flexibility but will not increase vulnerability of the 
unit under most envisioned operational scenarios. The units will 
require little, if any, compensation for deficiencies in SE.

                    Costs Involved With B-2 Program

    Question. In the course of this hearing, I want to make sure we 
have a full understanding of the costs involved with the B-2 program. 
The contractor has provided an estimate of $9.3 billion for 9 aircraft, 
but this does not include many of the costs associated with fielding 
the aircraft including spares and support equipment. The DAWMS estimate 
for the 9 aircraft is $16 billion including military construction and 
various upgrades. Dr. Hamre, does the $16 billion estimate include the 
additional $2 billion identified in the DAWM Study to optimize the 
aircraft for the halt phase?
    Answer. Yes, the $16 billion estimate for 9 additional B-2 aircraft 
does include the $2 billion for all the aircraft improvements that the 
B-2 was configured with throughout the conduct of the Deep Attack 
Weapons Mix Study.
    Question. Does your estimate include the additional funds required 
to improve the LO maintenance problems recently identified on the 
aircraft?
    Answer. No, the $16 billion estimate does not include any costs 
associated with the recently identified LO maintenance problems.
    Question. Does the estimate include any shelters, or other major 
support requirements associated with forward deployments?
    Answer. Yes, the estimate for the 9 additional aircraft include 
estimates for the costs associated with; new hangar construction, 
maintenance docks, fuel storage tanks, munition facilities, and 
security.
    Question. Please elaborate on the $3 billion difference between the 
Northrop and DAWMS estimates for flyaway costs.
    Answer. The $3 billion difference between Northrop and DAWMS 
flyaway cost estimates is due to differences in the costs associated 
with; engineering change orders, sustaining engineering, liability, 
warranty, and learning curve. Northrop's estimate includes recurring 
flyaway, government furnished equipment, and non-recurring production 
line restart costs but does not include costs for initial support and 
spares, military facilities in Guam and Diego Garcia, and other minor 
elements of non-flyaway cost which were included in the DAWMS 
estimates. Additionally, Northrop assumes a rate of cost reduction 
(learning curve) that is greater than B-2 history warrants, they 
include a ``management challenge'' or reduction in the estimate not 
attached to specific measures that would be used to achieve the 
reduction, and finally, they assume the aircraft's configuration will 
remain the same through the production period and therefore omitted 
cost estimates for engineering change orders. The DAWMS estimates 
include a more conservative learning curve, did not allow for a 
``management challenge,'' and include costs for engineering change 
orders.
    Question. GAO recently identified an $89 million shortfall 
associated with bringing the last 2 B-2 aircraft to the full block 30 
configuration. General Hawley, how did this problem come about and what 
is being done to address it?
    Answer. During the fiscal year 1998 President's Budget process, the 
Air Force removed $212 million from the fiscal year 1999 B-2 RDT&E line 
to fund other more pressing needs. The Air Force is committed to the 
schedule and content of the B-2 baseline program and is working the 
funding issue in the fiscal year 1999 budget process.
    Question. I am concerned about the problems we've been reading 
about with regard to maintaining the aircraft's low observable 
characteristics and how there problems might impact our ability to 
deploy the aircraft. Given the need for extensive LO maintenance, can 
we reasonably operate the aircraft from forward locations now? What 
would be required to operate from forward deployed locations in the 
future?
    Answer. We cannot reasonably operate the B-2 from austere forward 
locations now. The durability of the LO materials used on the B-2 
require maintenance after every flight to repair blemishes that, if 
allowed to add up, would cause degradation of the B-2's radar cross 
section. These same materials require a temperature and humidity 
controlled environment to cure properly, and the cure times are 
lengthy. There is an aggressive effort focused on developing more 
durable low observable materials and improved repair processes. This 
effort has paid off in the short term, and we expect other successes in 
the next two years. However, operating the B-2 from a forward location 
would require an environmentally controlled enclosure or hangar until 
these low observable maintenance issues are resolved.
    Question. What are the missions we expect to assign B-2s in the 
future?
    Answer. During the early stages of the conflict, the B-2 will first 
attack critical elements of an adversaries Integrated Air Defense 
System (IADS). The elements include selected Early Warning (EW) Radar 
sites, Surface-to-Air Missile (SAM) facilities, Sector Operations 
Centers (SOC), and critical nodes of the communications system. The 
destruction of the critical elements of an adversaries IADS will allow 
non stealthy bomber and fighter aircraft to be employed in support of 
the combat commander's campaign plan. While attacking the critical 
nodes of the IADS, the Joint Force Air Component Commander (JFACC) will 
commit B-2s against deep, strategic targets. Strategic Interdiction 
targets include critical choke points--bridges and tunnels; 
transportation targets--rail lines, truck parks, marshaling yards, and 
supporting maintenance facilities; the power grid--power generation 
facilities, switching stations, and transmission lines; war supporting 
industrial facilities--military hardware production sites, munitions 
plants, and machine tool production facilities; petroleum facilities--
refineries, storage tanks, pumping stations, and pipe lines; enemy 
command centers; and enemy troop concentrations prior to making contact 
with US or allied forces. The JFAAC will also assign the B-2 to 
offensive counter air mission. The B-2s will attack aircraft, aircraft 
shelters, runways, maintenance facilities, munitions storage bunkers, 
and petroleum storage tanks using gravity and standoff weapons. The 
combat commander will also use the B-2 counter Weapons of Mass 
Destruction (WMD, attacking storage areas and missile launchers in pre-
identified locations. The B-2 can also swing to a second theater should 
another aggressor decide to take advantage of the commitment to the 
first theater.
    Question. Are more B-2s required to adequately conduct these 
missions?
    Answer. Force structure analysis conducted during several studies 
indicates that the current B-2 force structure, 21 aircraft, is 
adequate to meet campaign objectives included in two Major Theater Wars 
(MTW).
    Question. Are there alternative means of accomplishing these 
missions?
    Answer. Yes, the flexibility of air power allows the 
characteristics of different aircraft to be packaged in many different 
combinations to achieve campaign objectives. For example, non stealthy 
aircraft could attack heavily defended targets assigned to the B-2 
using standoff munitions or precision gravity weapons after the 
defenses were eliminated by Suppression of Enemy Air Defense (SEAD) 
assets. The objective of any campaign planner is to efficiently employ 
assigned aircraft to achieve operational objectives while holding 
attrition to acceptable levels.
    Question. What is the cost of an expanded B-2 program?
    Answer. The Air Force has no requirement for additional B-2s. For 
this reason, the Air Force has not requested a detailed cost estimate 
from the B-2 Program Office to determine the required funding to 
procure additional B-2 aircraft. Such an estimate would require in 
excess of 120 days (150 days) and several million dollars.
    Question. What might we have to give up to fund an expanded B-2 
program and are the tradeoffs worthwhile?
    Answer. The Air Force believes the B-2 to be an extraordinary 
bomber-especially valuable in deterring and defeating distant armed 
aggression. Unfortunately, funding for additional B-2s within the Air 
Force topline would unbalance the Air Force and deprive future Joint 
Future Commanders of other needed capabilities. The Air Force would not 
expect to fund additional B-2s at the expense of other Air Force 
programs.

    [Clerk's note.--End of questions submitted by Mr. Young.]


                           W I T N E S S E S

                              ----------                              
                                                                   Page
Decker, G. F.....................................................     1
Douglass, John...................................................   131
Guenther, Lt. Gen. O. J..........................................     1
Habiger, Gen. Eugene.............................................   527
Hamre, Dr. J. J..................................................   525
Hawley, Gen. R. E................................................   525
Hite, Lt. Gen. R. V..............................................     1
Lyles, Lt. Gen. L. L.............................................   425
McCloud, Lt. Gen. David..........................................   525
Money, A. L......................................................   297
Muellner, Lt. Gen. G. K..........................................   297
Oster, Lt. Gen. Jeffrey..........................................   131
Pilling, Vice Adm. Donald........................................   131


                               I N D E X

                              ----------                              

                     AIR FORCE ACQUISITION PROGRAMS

                                                                   Page
Acquisition Cycle vs. Technology Cycle...........................   396
Acquisition Program Issues.......................................   413
Acquisition Reform...............................................   377
Additional Funding...............................................   392
Airborne Laser Program (ABL)...................................372, 394
Aircraft Procurement.............................................   385
B-2 Bomber Program...............................................   398
C-17 Aircraft....................................................   399
Cheyenne Mountain Upgrades.......................................   409
Contract Protests................................................   384
Enhanced Ground Proximity Warning System.........................   382
Evolved Expendable Launch Vehicle (EELV).........................   411
F-16 and F-15 Aircraft.........................................401, 403
F-22 Aircraft....................................................   385
Industry Mergers.................................................   380
Information Technology...........................................   384
Information Warfare..............................................   405
International Merchants Purchase Authorization Card (IMPAC)......   379
Introduction.....................................................   297
Joint Air-to-Surface Standoff Missile (JASSM)....................   403
Joint Strike Fighter (JSF).....................................373, 407
Joint Surveillance Target Attack Radar System (JSTARS) Aircraft..   393
    NATO JSTARS Aircraft.........................................   393
Lab Consolidation................................................   383
Making the Air Force More Expeditionary..........................   397
Mission Planning Systems.........................................   400
Modernization Shortfall..........................................   387
Reengine Programs, Large Aircraft................................   404
Remarks of Mr. Dicks.............................................   381
Spaced Based Infrared System (SBIRS).............................   412
Statement of Arthur L. Money and Lt. General George K. Muellner, 
  the Joint......................................................   323
Summary Statement of General Muellner............................   299
    Acquisition Reform...........................................   321
    Agile Combat Support.........................................   320
    Airborne Laser Program (ABL).................................   307
    Air Superiority..............................................   300
    B-1 Bomber...................................................   309
    B-2 Aircraft.................................................   313
    C-17 and F-22 Software Problems............................301, 316
    Evolved Expendable Launch Vehicle (EELV).....................   318
    F-22 Aircraft................................................   300
        Cost Saving Initiatives..................................   303
        Joint Estimating Team Recommendations....................   302
        Restructure..............................................   301
        Unit Costs...............................................   306
    Global Attack................................................   308
    Information Superiority......................................   318
    Joint Direct Attack Munition (JDAM)..........................   317
    Joint Strike Fighter (JSF)...................................   315
    Joint Surveillance Target Attack Radar System (JSTARS) 
      Aircraft...................................................   318
    Meeting the Warfighter's Needs...............................   299
    Precision Guided Munitions (PGM)......................311, 316, 318
    Precision Unmanned Aerial Vehicle (UAV)......................   319
    Rapid Global Mobility........................................   316
    Science and Technology.......................................   321
    Spaced Based Infrared System (SBIRS).........................   308
    Space Superiority............................................   307
    Summary......................................................   322
    Wind Corrected Munitions Dispenser (WCMD)....................   321
Summary Statement of Mr. Money...................................   298
Tri-Service Standoff Attack Missile (TSSAM) Lawsuit..............   407
Unmanned Aerial Vehicle (UAV)....................................   374

                       ARMY ACQUISITION PROGRAMS

Abrams Tanks.....................................................   112
Additional Funding...............................................   100
Advanced Concept Technology Demonstrations (ACTD)................   125
Ammunition Programs, Army.......................................83, 114
Army Tactical Missile System (ATACMS)............................   112
C-17 Aircraft....................................................    97
Chemical Munitions Demilitarization.............................86, 129
Command and Control Vehicle......................................    67
Crusader Program.................................................    68
Digitization.....................................................   117
Extended Range Multiple Launch Rocket System (ER-MLRS)...........   111
Family of Heavy Tactical Vehicles (FHTV)............75, 92, 94, 95, 102
Family of Medium Tactical Vehicles (FMTV).......................76, 104
Force XXI Initiatives............................................4, 123
Helicopter Programs:
    Apache Longbow Helicopter....................................   108
    Black Hawk Multiyear Procurement.............................   105
    CH-47 Improved Cargo Helicopter.............................96, 107
    Comanche Helicopter (RAH-66)........................68, 91, 95, 110
    Kiowa Warrior Helicopter (OH-58).............................   109
Hellfire II Missile..............................................   110
High Mobility Multipurpose Wheeled Vehicle (HMMWV)...............66, 77,
 93, 94, 103
Individual Soldier Equipment.....................................    67
Introduction.....................................................     1
Landwarrior Program..............................................    64
Modernization Shortfalls.........................................    98
Patriot Advanced Capability (PAC-3) Missile......................72, 80
Procurement Funding..............................................    89
Research, Development, Test and Evaluation Funding...............   101
Reserve Component Automation System (RCAS).......................    65
Starstreak Missile..............................................81, 111
Statement of Gilbert F. Decker and Lt. General Ronald V. Hite....     7
Summary Statement of Mr. Decker..................................     2
    Fiscal Year 1998 Budget Request..............................     3
    Force XXI and Army-After-Next................................     4
    Modernization Programs.......................................     5
Tactical High Energy Laser System (THEL).........................    87
Test and Evaluation Infrastructure...............................    90
Theater High Altitude Area Defense System (THAAD)............69, 78, 97

                   BALLISTIC MISSILE DEFENSE PROGRAM

Acquisition Process..............................................   498
Airborne Laser (ABL) Program...................................492, 517
Anti-Ballistic Missile (ABM) Treaty..............................   523
Arrow Missile Program:
    Funding....................................................495, 519
    Testing......................................................   488
Budget Request, Fiscal Year 1998.................................   505
Cooperative Engagement Capability (CEC)..........................   501
Helsinki Agreement.............................................426, 497
    Demarcation Limits...........................................   500
Introduction.....................................................   425
Medium Extended Air Defense System (MEADS).....................496, 520
Missile Defense Systems, Procurement of..........................   487
National Missile Defense (NMD) Program.........................489, 521
Navy Area Theater Ballistic Missile Defense (Navy Lower Tier)....   493,
 508
Navy Theater Wide Ballistic Missile Defense (Navy Upper Tier)....   515
Over Land Testing................................................   503
Patriot Advanced Capability (PAC-3) Missile......................   510
Quadrennial Defense Review (QDR).................................   497
Ship Self Defense................................................   502
Space Based Laser (SBL)..........................................   504
Statement of Lt. General Lester L. Lyles.........................   439
Summary Statement of General Lyles...............................   429
    Clementine Satellite.........................................   436
    Federated Organization.......................................   436
    Midcourse Space Experiment...................................   437
    National Missile Defense (NMD):
        Deployment Readiness.....................................   435
        Joint Program Office, The................................   436
        System Architecture......................................   435
        System Elements..........................................   435
    Navy Area Defense Test.......................................   433
    Patriot Missile System.....................................430, 431
        System Performance.......................................   431
        Willow Dune Tests........................................   431
    Summary......................................................   438
    System Integration Test......................................   433
    Technology Programs..........................................   436
    Theater High Altitude Area Defense (THAAD):
        System Accomplishments...................................   433
        Test Results.............................................   434
    Theater Missile Defense (TMD):
        Capability of Growth.....................................   430
        Family of Systems........................................   430
Theater High Altitude Area Defense (THAAD) Testing...489, 491, 492, 512
Unfunded Requirements............................................   486

                FUTURE BOMBERS/DEEP ATTACK CAPABILITIES

Aircraft Carriers................................................   580
B-1 Bomber Program...............................................   593
B-2 Bomber Program:
    Acquisition Costs.....................................573, 592, 594
    Basing.......................................................   586
    Capabilities.................................................   576
    Conventional Capabilities and Missions.......................   588
    Delivery Dates...............................................   566
    Maintainability.......................................567, 571, 583
    Modifications................................................   586
    Paying for the B-2 Aircraft................................565, 577
    Production...................................................   584
    Stealth Capabilities.........................................   573
    Strategic Capabilities and Missions...................551, 585, 588
B-52 Aircraft..................................................560, 588
Bomber Aircraft, Cost of.........................................   559
Bomber Weapons Capabilities......................................   560
Budget Estimates.................................................   581
Budget Shortfalls................................................   570
Challenges to the United States..................................   555
Deep Attack Weapons Mix Study..................................552, 590
    Study Findings...............................................   579
F-117 Aircraft:
    F-117 in the Gulf War........................................   572
    Production...................................................   568
Force Mix........................................................   554
Half Phase................................................553, 558, 578
Introduction.....................................................   525
Quadrennial Defense Review (QDR)...............................563, 569
Remarks of Mr. Hefner............................................   561
Statement of General David J. McCloud............................   542
Statement of General Richard E. Hawley...........................   530
Stealth, Viability of............................................   583
Strategic Nuclear Forces.........................................   587
Summary Statement of General Habiger.............................   529
Summary Statement of General Hawley..............................   529
Summary Statement of General McCloud.............................   540
Summary Statement of Mr. Hamre...................................   527
    Bomber Questions.............................................   528

               NAVY AND MARINE CORPS ACQUISITION PROGRAMS

ADC(X) Ship Program..............................................   216
Additional Funding...............................................   235
Advanced Amphibious Assault Vehicle (AAAV).......................   275
Advanced Self-Protection Jammer (ASPJ).........................221, 222
Aegis Ship Follow-On (SC-21).....................................   260
Aircraft Programs:
    A-12 Aircraft Litigation.....................................   283
    EA-6B Prowler Aircraft.......................................   219
    F/A-18 E/F Aircraft...................................219, 220, 262
    Helicopter, Navy.............................................   266
    Helicopters, Marine Corps....................................   268
        V-22 Aircraft..........................................194, 265
    Joint Strike Fighter (JSF)...................................   263
    P-3C Aircraft Update III.....................................   221
Ammunition, Marine Corps.........................................   276
Arsenal Ship.....................................................   240
Budget Projections...............................................   200
Chemical Biological Incident Response Force (CBIRF)..............   279
Chemical/Biological Warfare......................................   196
Commander in Chief (CINC) Priorities.............................   223
CVN-77 Aircraft Carrier..........................................   217
    Research and Development (R&D)...............................   252
DDG-51 Destroyers................................................   239
Deep Ocean Relocation............................................   219
Fast Patrol Craft Program........................................   196
Ground Proximity Warning System..................................   199
Ground Systems Research and Development (R&D), Marine Corps......   272
High Mobility Multipurpose Wheeled Vehicle (HMMWV)...............   274
Industrial Base Concerns.......................................212, 218
Intercooled Recuperative (ICR) Gas Turbine Engine................   261
Introduction.....................................................   131
Large, Medium Speed, Roll-On/Roll-Off (LMSR) Ship Program........   215
Landing Craft Air Cushion (LCAC) Service Life Extension Program 
  (SLEP).......................................................217, 250
LPD-17 Amphibious Assault Ship Program.........................215, 242
Manuafacturing Technology........................................   282
Mine Warfare.....................................................   280
Modernization Shortfall..........................................   233
Multiyear Contracting............................................   212
New Attack Submarine.............................................   244
    Program Cost.................................................   208
    Contact Strategy.............................................   210
    Unit Costs...................................................   210
Private/Public Yards.............................................   199
Shipbuilding Plan................................................   232
Shipbuilding Rate................................................   229
Ship Self Defense..............................................193, 227
Statement of John W. Douglass, Vice Admiral Donald L. Pilling, 
  and Lt. General Jeffrey W. Oster, The Joint....................   145
Strategic Sealift................................................   247
    Support Equipment (Lighterage)...............................   248
Submarine Technology Research and Development (R&D)..............   254
Summary Statement of Mr. Douglass................................   132
    Acquisition Reform...........................................   143
    Advanced Amphibious Assault Vehicle..........................   139
    Anti-Submarine Warfare.......................................   143
    Arsenal Ship.................................................   136
    Aviation Programs............................................   137
    Budget Summaries.............................................   134
    C4I Space and Information Warfare............................   140
    Combat Logistics Ships.......................................   137
    Communications Programs......................................   142
    CVN-77 Aircraft Carrier......................................   135
    CVX Aircraft Carrier.........................................   137
    DDG-51 Destroyer.............................................   136
    F/A-18 Fighter Aircraft......................................   138
    Joint Strike Fighter.........................................   139
    LPD-17.......................................................   136
    Marine Corps Aircraft........................................   139
    Marine Corps Ground Programs.................................   140
    MV-22 Aircraft...............................................   139
    Mine Warfare.................................................   143
    Navy Trendlines..............................................   134
    Procurement and Research and Development.....................   133
    Seawolf Submarine Program....................................   135
    SC-21 Surface Combatant......................................   137
    Shipbuilding Plan............................................   134
    Smart Ship Program...........................................   136
    Theater Ballistic Missile Defense (TMD)......................   141
Trident Submarine Backlift.......................................   251
Tri-Service Standoff Attack Missile (TSSAM) Lawsuit..............   284
Unfunded Requirements............................................   284
University Research..............................................   282

                                

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